The US unemployment claims continue their decline and were yesterday confirmed at 963K, much better than expected 1120K. This gave some support to USD against EUR but the move was soon faded by traders that saw this as a buying opportunity in EURUSD. This price action is yet another reminder of how little actual economic data matters when the possibility of further economic stimulus hangs in the air. By reading further you agree with our disclaimer at the bottom of this page and acknowledge that we don’t provide investment advice.
Chinese industrial production and retail sales were both disappointing. While industrial production didn’t drop from the previous reporting period it came in at 4.8%, below analyst expectations of 5.1%. Retail sales at -1.1% signalled domestic demand having issues. The analyst consensus was looking for a much higher number of 0.1%. The Australian dollar remained almost unchanged against the USD while the pair remains in an uptrend a daily timeframe (see yesterday’s AUDUSD analysis here), AUD has been weak against EUR, GBP and CAD. The most upside momentum AUD has currently against NZD. The AUDNZD has risen 3.6% since July 13th this year.
Price action in AUDUSD has been a bit lacklustre this week. The pair is still in an uptrend but there have been no attempts to challenge 0.7190 resistance. This, however, doesn’t mean uptrend would be over. It just means we are witnessing one of those consolidations so often seen in price trends. Stochastics oscillator is starting to pick up from its lows signalling that this market isn’t bearish but should either continue consolidating or start moving higher. As per trend and moving average analysis this market is indeed in a process of moving higher but a good trader should also ask the question: what if these indications fail and market moves lower?
With currency trading the name of the game is to stay in the game. Those that have any other ideas or priorities don’t qualify to be in the arena for the long-term. We have to be prepared, i.e. to plan for every eventuality. There’s no point, nor is there any financial (or mental) reward, in closing your eyes on the possibility of prices moving against you. It does sound difficult to believe but there are traders that don’t use stops or they bet their whole account on one single trade. If they get this one trade wrong they are both mentally and financially scarred, or even worse: unable to continue trading. We strongly advise against such behaviour! Make sure you always have risks under control. Controlled risk-taking is wise and recommendable but reckless gambling is very unproductive.
Join our webinars (here) in which I’ll teach you how to better manage your risks and what kind of strategies could be applied to take advantage of my market analysis.
Apart from potential for profit there obviously is potential for loss and in order to thrive and survive in the markets we need two things: 1) losses that are limited and 2) profits that are greater than the losses. This is obvious but also too often forgotten by traders. It could be also called positive expectancy and can be achieved by using the right kind of methods which I’m looking forward to teaching you in our webinars. but let me touch upon two of them here. Risk obviously means potential for loss of money and it can be limited by placing protective stop-loss orders or by using TIOshield when trading. The first closes your trade if price trades through your stop-loss level while the latter allows you to get out of a losing trade within a certain time limit for a small premium you pay when entering a TIOshield trade. For more information on this exclusive tool, read here. Now you can reverse your bad trades if you so choose but please remember still place your stop-loss orders at levels where you comfortable with the overall risk you have taken.
Placing stop-loss orders in cases similar to AUDUSD example above the challenge will be how to choose the right levels. As we don’t provide investment advise we can’t tell you where to place the stops but I can share some strategies with you in our webinars and help you in defining your own trading plan.
We have the US retail sales figures coming up at 1.30 pm GMT which could give the USD pairs a reason to move a bit. In general the further away the actual number is from the expectations the better the moves in the market that follow the announcement. Lately, we’ve seen however that market operators are more interested in stimulus news than economic numbers. Therefore all we can do is to make sure we have our accounts sufficiently funded, trading plans written and our minds so committed to those plans that we don’t waiver from them – whatever the market throws at us. Your trading plan needs to include a variety of things but the first and foremost component that you need to include is a clear and reasonable plan on how you make sure you are able to stay in the game and don’t lose your shirt.
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Recent macroeconomic data
- German ZEW Economic Sentiment 64.0 (55.3 expected)
- New Zealand Official Cash Rate 0.25 (0.25% expected)
- US CPI 0.6% (0.3% expected)
- US Core CPI 0.6% (0.2% expected)
- US Crude Oil Inventories -4.5M (-3.4 M expected)
- Australian Unemployment Rate 7.5% (7.8% expected)
- US Unemployment Claims 963K (1120K expected)
- China Industrial Production 4.8% (5.1% expected)
- China Retail Sales -1.1% (0.1% expected)
Macroeconomic releases today
- US Retail Sales 1.9% expected
- US Core Retail Sales 1.3% expected
- Preliminary UoM Consumer Sentiment 72 expected
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Chief Market Analyst
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