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Brazil is beating the drumbeat of war. The forex variety, that is. According to the Finance Minister, “We’re in the midst of an international currency war, a general weakening of currency. This threatens us because it takes away our competitiveness.” By its own admission, Brazil will not be sitting on the sidelines of this war. Rather, it will do battle on behalf of its currency, the Real.

Brazil’s concerns are perhaps justified, since the Brazilian Real has surged to a 2-year high, and is amazingly not worth more than prior to the collapse of the Lehman Brothers and the ignition of the global financial crisis. (If anything, this shows just how far we’ve come in returning to stability). According to Goldman Sachs, the Real is now the most overvalued major currency in the world. This is confirmed by The Economist’s Big Mac Index, which shows that in Purchasing Power Parity (PPP) terms, Brazil is now the third most expensive country in the world, behind only Norway and Switzerland.

It’s not hard to understand why the Real is soaring.

Full article…

An interesting article that appeared in the LA Times a few days ago talked about the possibility that the FED and the US Government may set out to deliberately reduce the value of the US Dollar in relation to other currencies in an effort to improve the condition of the US economy.

This is something that every Forex trader should take notice of and indeed, the recent devaluation of the Dollar may indicate that some traders are already anticipating such initiatives.

I talked a little about this in a recent post about the value of the USD in which I said that the FED may wish to lower the value of the dollar to increase exports of American products.

Now it seems that the US Congress has joined this trend as one congressional subcommittee has announced a number of steps against China due to its refusal to allow the Chinese currency, the Yuan to rise in value in relation to the dollar.

Let me explain what is happening: the lower a currency is, the cheaper the prices of products made in that country when they are exported.

Full article…

“I hate to see all these aspiring forex traders losing their money. Why do they have to make everything so complicated when, in fact, it’s not at all hard to win?”- Joe Ross

Hello:

This is an update on some of the movements on the markets and what I’m doing about them, plus my losses and profits. The analyses are based on daily charts, looking at the Big Picture, though my entries are on a smaller timeframe. My preferred leverage is 1:100 and my position size is 0.01 lots for each $1000. My maximum drawdown in a week is 3% (worst case scenario). I use the Price Behavior rules for strategic decisions and customized indicators for tactical entries. I open primary positions without predetermined exit target in mind, riding the trend for as long as it continues. The value of patience will forever be emphasized. As long as I stick to my rules and keep my risk low, I’m immune to fear.

Another Ed Seykota? Certainly not! Just that I like to follow the rules of the masters when doing swing cum position trading. Full article…

I’ve just finished reading an interesting prediction on the US Dollar by Chris Vermeulen.   In this article, Chris connects his analysis of the Dollar to the stock and bond markets. He shows how everything is connected and seeing charts of the USD, the bond, and stock market one after the other really shows the interaction between all those markets. Even if you’re only into Forex at the moment, it pays to know what’s going on in the other financial markets.   As to the US Dollar, he makes a rather bold prediction. Check it out here:   Is the Dollar going to reverse its trend   <===   Chris doesn’t just talk about Forex and I like how he takes a more complete view on things. I believe that this is an approach that can help you understand more about the market, how it works, and maybe find new ways to judge the future direction of currency pairs.   By the way, he also offers some complimentary technical trading training which you may find useful whether you’re trading Forex, stocks, bonds, or commodities.

Full article…

EURUSD

Trading strategy: long at 1.3330, stop at 1.3260(0.5% risk), 1st objective at 1.3380, 2nd objective at 1.3460

Dollar’s weakness continues as the euro hits a 5-month top at 1.3440 – above last month’s high which may provide support now, around 1.3330. Important upside target comes at 1.3510 – half retracement of full decline from last year’s top at 1.5140 to June’s 1.1875, 5-year low. Market’s sentiment is bullish on a short-term basis, since breaking above 1.2900, but medium term studies are still in a bearish configuration since, technically, current recovery could be only corrective. We should be aware that if EURUSD’s decline from the 1.5 to 1.18 was all about euro’s weakness over Greece debt concerns – this recovery is not about euro’s strength, but dollar’s weakness and less apocalyptic fiction scenarios and news regarding Euro Zone’s integrity. Except for the past few months when the EUR fell like a rock – this pair is all about dollar’s sentiment and U.S. Full article…

Despite the Bank of Japan (BOJ) intervention, there doesn’t seem to be enough bullish sentiment to reverse the downtrend on the daily chart. On the other side of that coin, the bears certainly are not putting the pressure on the USD/JPY in a way that is pushing the the pair back into its former downtrend either. The stall comes from a lack of bullishness in a pair that is still reflecting the fact that there is still strength in the yen itself but the fear that the BOJ could act again and push the USD/JPY through 86.00.

The daily chart’s reversal of the Channel Down and subsequent resistance.

There is an intraday double top that should be watched on the 240-minute chart. Horizontal resistance along 85.90 and 85.93.

Check out my friend and new trader, Mark O’s blog on trading here. It follows much of my trading approach.