Monthly Archives: May 2013

Euro-Dollar & Dollar Index Analysis & Forecast, May 31st 2013 (English Language)

Hello traders,

Here below please find attached the video-analysis of the Euro FX currency futures and the Dollar Index for today May 31st:

Hereunder is the chart and explanation for the Euro FX currency futures.

The area between 1.3240 and 1.3357 is a short area. Here bears were clearly interested in selling. Their continued action was able to keep moving price down into the support area below. Bears will be gone if price moves above 1.3357 (level c). The short setup has targets at 1.2530 (please refer to the below picture):

Euro FX futures contract, daily chart - May 31st, 2013

Euro FX futures contract, daily chart – May 31st, 2013

The area between 1.2910 and 1.2800 has acted as a support for prices twice and we cannot exclude it will act again as support, but we cannot be certain. That area of demand will only disappear after price moves below 1.2714 (level b). Target for all the participants in this area of support is 1.41. Such target will only be confirmed if we manage to move above 1.3358 (level c).

Today bears defended the next measured move lower, from May 1st highs to mid-may lows and this is a sign they are still around. Particularly they defended the 1.3078-80 level (level a). Above such level there would be the high probability of retesting the 1.3240 area, the short area for the bears and possibly the challenge to the 1.3357 (level c). On the other hand if price stays below 1.3080 (level a) and moves below 1.2715 (level b), the target for the bears will be confirmed at 1.2530.

So still everything is open in the Euro and I will wait the current situation to resolve before committing on the long side (I am still short and I will be below 1.3078, as mentioned yesterday). The levels to watch on the daily/weekly are those specified (a, b and c). Those levels are not going to change whatever price does, and you know the meaning I attach to them.

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups (before they happen) for the Euro-Dollar cross, the S&P500 index and some high volume  stocks, please subscribe my newsletter. It’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and video-analysis that I don’t make available on my blog.

Thank you for subscribing should you decide to do so. Lots of other people are doing the same.

If you intend using this information for your trading please do your own due diligence, find the advice of a trading professional and trade at your own responsibility. The information provided is for educational purpose only. Please read the Disclaimer and accept all the risks. Thank you.

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Euro-Dollar Analysis & Forecast, May 30th 2013 (English Language)

Hello traders,

Here below please find attached the video-analysis of the Euro FX currency futures for today May 30th:

Yesterday I wrote about a possibility for Euro to keep moving higher and today the Euro delivered. The Euro continued higher piercing that 1.3047 level, meaning that the offer coming in the area above the 1.3000 and to that level is now gone, out of the market. Price also dipped well within the next and last area of offer (before the larger 1.3240), starting in the 1.3020 area and ending above 1.3076.

If the 1.3078 level is pierced on the upside (and I anticipate that happening, but do not it for sure) I will not be interested in swing shorts any more. Price would then be set to retest the 1.3240 for the second time, and we know that second tests are dangerous tests. The retest of that area is especially important because bears will need to decide whether they will keep their swing short positions initiated around the 1.3240 area, or will let the market continue higher, by covering shorts.

I won’t be there with my position to test that. I will exit shorts above 1.3078. If we break the 1.3078 level we are not likely to go up into the 1.3240 area in a straight fashion. We will move there not before we get some sort of price retrace. I have identified an important anchor (level from which I trace the Fibonacci studies to identify price structure and setups in the current market conditions) and that is the 1.2880 level. This level is being used by Program Trading at the moment and I suspect  it will still be important after/if price breaks above 1.3078 and in case we continue higher into and through the 1.3240 area and price breaks the 1.3357 level.

If the 1.3357 level breaks bears will be all gone into the woods and the Euro will have again an opportunity and free way to move all the way into the 1.41 area in the coming weeks/months.

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups (before they happen) for the Euro-Dollar cross, the S&P500 index and some high volume  stocks, please subscribe my newsletter. It’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and video-analysis that I don’t make available on my blog.

Thank you for subscribing should you decide to do so. Lots of other people are doing the same.

If you intend using this information for your trading please do your own due diligence, find the advice of a trading professional and trade at your own responsibility. The information provided is for educational purpose only. Please read the Disclaimer and accept all the risks. Thank you.

Have a good day

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Euro-Dollar Analysis & Forecast, May 29th 2013 (English Language)

Hello traders,

Here below please find attached the video-analysis of the Euro FX currency futures for today May 29th:

As said in my last review the Euro is in a box play between 1.2910 and 1.3230. There is still a possibility that we move higher due to the continued support coming in the 1.28-1.29 area. Still no need to rush in now.

In the above video I review the daily, 4-hour and 15min charts for the Euro FX futures (this is not the EUR/USD spot, but the measured moves are the same, so you can easily find them). If price moves below the 1.2918 level, the 15min extension long currently being observed by price will fail and the short scenario will be back in play.

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups (before they happen) for the Euro-Dollar cross, the S&P500 index and some high volume  stocks, please subscribe my newsletter. It’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and video-analysis that I don’t make available on my blog.

Thank you for subscribing should you decide to do so. Lots of other people are doing the same.

If you intend using this information for your trading please do your own due diligence, find the advice of a trading professional and trade at your own responsibility. The information provided is for educational purpose only. Please read the Disclaimer and accept all the risks. Thank you.

Have a good day

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Humans against Machines in the Markets, May 26th, 2013 (English Language)

ilsole24ore_italia&mondoThe below article, by Enrico Marro, was published on May 26th, 2013 on Il Sole 24 Ore, the major Italian Financial Newspaper. The article (which can be found here in its original format, in Italian language) discusses part of the content of the presentation I held on Friday May 24th at the Rimini IT Forum, the major Investing & Trading event in Italy.

Humans against Machines in the Markets: how trading robots amplify market collapses, creating systemic risk. Likewise in the 2010 Flash Crash.

“Humas vs machines, and even machines against machines. A huge Flash Crash happened on May 6th, 2010, when simultaneously with the other U.S. indexes the Dow Jones plummeted about one thousand points (over 9%) in a few minutes – traders and market operators staring – only to bounce vertically, recovering losses in a few minutes. But three years later, is also the recent Twitter flash crash, which took place on April 23rd, 2013: a pirate tweet from the Associated Press Twitter account with the phony news of two explosions at the White House, wounding the President Obama, causes a sudden loss of 1% for the Dow Jones, again recovered almost immediately with a “V” movement.

These are just two of the most resounding cases of the power of robots
The reason is in those High Frequency Trading (HFT) systems that have profoundly changed the structure of the market in recent years. Introducing new and unprecedented risks, as also underlined a rich series of Anglo-Saxon studies cited in the excellent Discussion Paper “High frequency trading. Features, effects, questions of policy” recently published by Consob. It’s not just about the risks related to the quality of the markets, but also about systemic risks.

Systemic risks

According to the study by Consob, HFT systems can create the conditions for profound and rapid destabilization phenomena in one or more markets. To trigger such events it’s enough a problem to just one single algorithmic trader: e.g. an operational fault (such as a hardware failure) which, in turn, by influencing the strategies of other high frequency traders, may have repercussions on the entire market, and also affect other markets, given the intense cross market operations of market operators. An example: on  August 1st 2012 Knight Capital, one of the largest operators on the US market, a HFT system has lost $440 million (equal to about four times the company’s net income) .

At the same time, the FIA EPTA (the Association of the main European traders) reiterated the importance for market participants to work with regulators to minimize the dangers to the stability of the markets (FIA at the time had published a paper with the recommended tests to be performed by trading firms when they change technology).

Faster and intense collapses
Unfortunately the spread of high-frequency trading can lead to amplifying the bearish pressures so much into generating situations of extreme chaos in market exchanges. As in the mentioned Flash Crash on May 6th, 2010, when the “robots” have amplified the fall of indexes, despite the fact HFT not being the triggering cause. A big sell order kicked off the dance. According to the reconstruction of events made by the Sec (Securities and Exchange Commission, american equivalent of Consob), sales orders generated by machines have subsequently triggered more sales of other “robots” by creating a “hot potato” (hot potato trading) whereby trade counter-parties were both HFT systems, that continued to sell. Thus amplifying the bearish spiral.

The instability brought by machines
That High Frequency Trading can be disruptive for the markets is convinced, among others Giuseppe Basile, computer engineer with 10 years of experience as an IT consultant around Europe and project manager at Accenture. Basile (who is also Technical Analyst and trader SIAT member) has devoted – at the recent ITForum of Rimini – a report to the impact of HFT systems on market price dynamics. «It is all about trades placed and removed very quickly, often hundreds or thousands of times a day” – explains – “with a high number of orders cancelled in comparison to filled orders, i.e. trades carried out”. To unleash the robots it does not take a lot: changes in volume or volatility, or market news, or delays in distribution of market data (prices, volumes, or other). «Some systems include listening components that skim the news headlines and immediately act on them, buying or selling on the basis of where prices are in relation to the “correct” estimated value», says Basile. And things in the future, are likely to worsen: “the next generation of programs will be adaptive and will learn from their experiences” — underscored – “and it will be hard to try to predict or control the dynamics of a market populated by a mix of human and algorithmic traders».

Liquidity becomes a ghost
A very common myth that circulates around in the trading environments is that HFT systems have at least a virtue, that is to make the markets more liquid. But it is indeed a myth, a legend that does not match operational reality. On the contrary, Consob explains – backed by Anglo-Saxon studies on the subject – that in specific conditions of market turbulence the HFT can absorb liquidity with major destabilizing effects for the markets. In the trading environment the offer (bid) by HFT systems is called ghost liquidity, to indicate a liquidity only “apparent” because it tends to disappear in the blink of an eye, often in very turbulent market conditions and then just when the traders most need it.

Also in Europe robots are everywhere
Particularly popular in overseas markets, HFT systems have become very popular even in the old continent. In most European countries the share of trading due to robots has grown steadily in recent years and currently fluctuates between about 10% and 40%. Piazza Affari (Milan Exchange) unfortunately is no exception. According to an AFM report, for the first five months of 2010, one order out of five in the Italian Stock Exchange comes from a machine, not a human being. But we are only at the beginning. The instability brought by robots on the market may increase, says Basile, with Flash Crash much worse than that in May 2010.”

Translated and published with the permission of Enrico Marro of Il Sole 24 Ore. © ALL RIGHTS RESERVED.

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Dollar Index Analysis & Forecast, May 27th 2013 (English Language)

Hello traders,

Here below please find attached the video-analysis of the Dollar Index futures for today May 27th:

The 84.70 area is the first target of the 81.40 area of support that found participation at the beginning of May (corresponding to Euro’s lower low at 1.3240). The 84.70 area lines up with previous highs in the Dollar Index which could suggest profit taking from those levels. If history repeats (it rarely does though) we could see something similar to what happen last year in the Dollar Index.

Dollar Index futures contract, daily chart - May 27th, 2013

Dollar Index futures contract, daily chart – May 27th, 2013

The above picture shows the two current scenarios I could anticipate

Scenario 1. Price could continue lower into the 83 area of support and then violently bounce higher into the 84.70 area of 1st target of the 81.40 long entry area. Then price could fail the next traditional measured move higher and start a series of lower lows and lower highs.

Scenario 2. After trading the 83 area, price could continues above the previous 84.70 profit level into the 85.30 area, 1st target of the 83 area long setup. If that happens profit taking could be seen at those levels (and we would deal with that at the proper time).

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups (before they happen) for the Euro-Dollar cross, the S&P500 index and some high volume  stocks, please subscribe my newsletter. It’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and video-analysis that I don’t make available on my blog.

Thank you for subscribing should you decide to do so. Lots of other people are doing the same.

If you intend using this information for your trading please do your own due diligence, find the advice of a trading professional and trade at your own responsibility. The information provided is for educational purpose only. Please read the Disclaimer and accept all the risks. Thank you.

Have a good day

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Euro-Dollar Analysis & Forecast, May 27th 2013 (English Language)

Hello traders,

Here below please find attached the video-analysis of the Euro FX currency futures for today May 27th:

The Euro is in a box play between 1.2910 and 1.3230. There is still a possibility that we move higher due to the continued support coming in the 1.28-1.29 area. No need to rush in now.

When this sideways move will be finally solved the Euro will be free to move higher into 1.41 or lower into 1.2530 first and then a retest of the 1.2150 (with a potential 1.14 target). All scenarios still open.

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups (before they happen) for the Euro-Dollar cross, the S&P500 index and some high volume  stocks, please subscribe my newsletter. It’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and video-analysis that I don’t make available on my blog.

Thank you for subscribing should you decide to do so. Lots of other people are doing the same.

If you intend using this information for your trading please do your own due diligence, find the advice of a trading professional and trade at your own responsibility. The information provided is for educational purpose only. Please read the Disclaimer and accept all the risks. Thank you.

Have a good day

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Filed under English language, Euro FX analysis and trade setups videos, Forex, Trading Plan, Weekly review

S&P500 e-mini Analysis & Forecast, May 21st 2013 (English Language)

Hello traders,

Here below please find attached the video-analysis of the S&P500 e-mini futures for today May 21st:

Let me show you my perspective. The setup long showing participation at 1530 in mid of April (see picture below) hit the first target in the 1623 area and then the 1671 second target. I don’t anticipate higher prices straight away now and the S&P500 could see profit taking. Price could stretch as high as 1677 area before we see a move lower. The reason for the 1677 level is explained in the above video.

S&P500 e-mini futures contract, daily chart - May 21st, 2013

S&P500 e-mini futures contract, daily chart – May 21st, 2013

These are the scenarios I could anticipate for the S&P500 going forward:

Scenario 1. Price corrects into the next support and long setup at the 1632 area (with a stop below 1622) and then continue higher into previous highs at 1670s or even continue into the first and second targets respectively at 1689 and 1719.

Scenario 2a. If participation on the long side does not show up at around the 1632 area and price dips below 1620, we could witness a swift move lower into the next area of support where Program Trading will pick up price. That is down at the 1454 area.

Scenario 2b. We could still see a bounce at the 1632 area and then current highs retested and then a swift move lower. The trigger, again, will be price piercing below the 1620 level.

If you want to have  access to trading plans, watch weekly video reviews as I develop or record them, or get information on setups (before they happen) for the Euro-Dollar cross, the S&P500 index and some high volume  stocks, please subscribe my newsletter. It’s free and you get additional content like market commentaries, setups, e-books, articles on HFT and program trading, learning material on my method and video-analysis that I don’t make available on my blog.

Thank you for subscribing should you decide to do so. Lots of other people are doing the same.

If you intend using this information for your trading please do your own due diligence, find the advice of a trading professional and trade at your own responsibility. The information provided is for educational purpose only. Please read the Disclaimer and accept all the risks. Thank you.

Have a good day

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