Weekly Reports

[Kate Stewart]

Hi Everyone!

This thread will focus specifically on the individual weekly reports that are written by individual DailyFX Analyst and the discussion about those reports. Please feel free to post your opinions and thoughts on the specific topics discussed. This thread will be moderated by each of the individual analysts involved in writing those reports.

Happy Trading!

Kate

[John Kicklighter]

Friday's range trade recommendation has been triggered earlier this morning and it is looking good. We haven't seen a confident reversal in price yet, but the 25+ point retracement off of the 0.8350 move certainly puts it in a good position. The move to the big level seems to have come on a combination of modest dollar weakness and a sympathy commodity bloc rally on the kiwi move.

Fundamental risk ahead of us seems under control. Aussie data is questionable in its market-moving potential, but the quarterly wage numbers could certainly drive markets with big surprises. The US calendar is clearly the true concern. I don't expect much for tomorrow's numbers. We have seen the components of the other PPI and IPI numbers up speculation on the consumer basket. I'm expecting slightly cooler annual numbers to not shock anyone. That should keep the dollar relatively stable (barring a huge divergence in the Empire or NAHB numbers) and will leave the pair in technicians hands.

A quick update on the USDCHF recommendation made on the daily Range Trader through DailyFX+. The pair is really starting to consolidation in a tight range below 1.22. While the top of our range is holding, this congestion puts the pair at risk for a dollar rally. Since the pair is still within our levels and fundamentals are not too pressing, we will stick with it and keep our original target and stops in place. Swiss retail sales and US CPI will definitely be monitored for possible event risk.

[Antonio Sousa]

With carry trade making headlines across the world the DailyFX team decided to create a strategy based on interest rate differentials.

The Dynamic Carry Trade Basket is published every week on DailyFX and daily on FXCMTR. The strategy is based on the forward bias of exchange rates and has been profitable in the last 17 years.

Strategy Rules:
1- First, we selected a basket of currency pairs. We will only trade the majors NZDUSD, AUDUSD, GBPUSD, EURUSD, USDJPY, USDCAD, USDCHF and USDHKD. Any cross will be built synthetically.
2 - Then, we rank the currencies using the 3 months Libor rate and split the currencies between high Yielders and low Yielders.
3 - We go long the top 3 and short bottom 3.
4- Finally, we look into the economic calendar to avoid trading currencies that have significant event risks.

Let us know what you think and fell free to give any suggestion to improve the performance of the basket

LAST WEEK REPORT:
http://www.dailyfx.com/story/trading...266396777.html

[DailyFX Analyst]

Picking Tops and Bottoms Weekly Reports

By Jamie Saettele, Technical Analyst

The Elliott Wave count, a weekly bearish engulfing pattern, and a break of a weekly low all point to the GBPJPY plummeting soon. If the pair rolls over, how low will it go? No trade is a sure thing of course, so where can we limit risk? We address this and more in the top/bottom setup of the week.

Full Article

I also believe this is a major reversal for GBP/JPY, but believe the top will be somewhat higher (around 238.70). Shorted at 238.50 with a 238.90 stop.

[DailyFX Analyst]

We updated our comments on GBP/JPY in our radio podcast. Make sure you listen to it

Radio Podcast

[John Kicklighter]

How to Trade the UK Retail Sales Report with the GBPUSD


What is Expected

Time of release: 05/18/2007 08:30 GMT, 04:30EST
Primary Pair Impact : GBP/USD
Expected: 0.6%
Previous: 0.3%

How To Trade This?

The UK Retail Sales report tends to produce strong reactions in the British Pound, but often limited extension makes it a challenging report to produce post-news profits. We nonetheless see that two of the past three releases have allowed for solid gains—leaving hope for a similar result in the upcoming announcement.

Check out the full report by David here

[David Rodriguez]

UK Retail Sales came in considerably worse than expected, sparking an immediate GBP drop. According to our rules, the trader would have gone short the GBPUSD at 04:35 EST, getting filled at or near 1.9729. Given the extremity of the initial drop, our rule for stop levels would have set a stop-loss order at approximately 1.9780, or 50 points away. This is clearly a very large risk to take, and as such, we urge that the trader still in the trade take a more discretionary approach to how much he or she is willing to potentially lose.

The pair nonetheless remains slightly below the initial fill price, but it is clearly showing difficulty breaching the bottom of its recent channel.

Long story short, the person still in this trade may want to tighten stops and look to take (small) profits if the GBP is unable to break below 1.9700. As we highlighted in the Trading the News report, the short-term risk was clearly to the topside for the GBP, and USD bulls may be hard-pressed to force a larger move. Of course, a break below the psychologically significant mark could easily provide further extension, providing a move towards the 100-day SMA at 1.9650.

[John Kicklighter]

Though USDCHF is in a month-long, rising trend channel, it is also at the top of that channel and starring down considerable resistance. These two facts alone would make a range trade a good probability setup; however there is also fundamental support for a pullback. More literal, it is the lack of any top market-moving indicators on the docket that promises to keep all major technicals in place. The optimal scenario under our suggested strategy would have the short side triggered early Monday and book profit before the US calendar receives its first big release on Thursday. Even if the pair pushes higher in the interim, a stop of 1.2330 would have some buffer room over the 200-day SMA (currently at 1.2320), which is the next resistance level up. The long limit is very close to the rising trendline, but that is necessary to retain a viable risk/reward to survive a possible breakdown of the channel.

See The Entire Report Here

Update: Profit was taken on last week's range trade rather quickly, since resistance held up as expected and the dollar was bid across the board.

[jerrytoshi]

Originally Posted by Antonio Sousa With carry trade making headlines across the world the DailyFX team decided to create a strategy based on interest rate differentials. The Dynamic Carry Trade Basket is published every week on DailyFX and daily on FXCMTR. The strategy is based on the forward bias of exchange rates and has been profitable in the last 17 years. Strategy Rules: 1- First, we selected a basket of currency pairs. We will only trade the majors NZDUSD, AUDUSD, GBPUSD, EURUSD, USDJPY, USDCAD, USDCHF and USDHKD. Any cross will be built synthetically. 2 - Then, we rank the currencies using the 3 months Libor rate and split the currencies between high Yielders and low Yielders. 3 - We go long the top 3 and short bottom 3. 4- Finally, we look into the economic calendar to avoid trading currencies that have significant event risks. Let us know what you think and fell free to give any suggestion to improve the performance of the basket LAST WEEK REPORT: http://www.dailyfx.com/story/trading...266396777.html

I'd like to know the timing to buy those currencies in the carry trade basket. It just tells us the result of the trading. Thanks,

[Antonio Sousa]

Originally Posted by jerrytoshi I'd like to know the timing to buy those currencies in the carry trade basket. It just tells us the result of the trading. Thanks,

Hey jerrytoshi,

Thanks for your question.
The carry trade basket is based on short term interest rate differentials and as a result the strategy doesn’t generate trades very often. Still, low quantity doesn’t mean low quality! Carry trade has been working very well in the last 17 years.

We started trading the basket in February 2007, and most of the trades we did were discretionary and justified by exposure to significant event risks ahead. For example, our recommendation to close a long USD/JPY position following the last BoJ rate hike saved us from a big unwind in the yen. That's why we recommend our visitors to keep visiting our article in a weekly basis.

For 2007 trades, please visit the following link and click on the previous articles. http://www.dailyfx.com/story/trading...860065297.html

For 2006 trades, please take a look to the attached image.

[jerrytoshi]

Thank you Antonio, I will consider doing the carry trade you are publishing! I will just try to enter at the best moment for each currency.　Have a good week,

[David Rodriguez]

This week's installment of the DailyFX "Trading the News" report will be the all-important US Non-Farm Payrolls release.

To read the report, visit here.

Just as last week, I'd like to open this thread to discussion about the report, and I will write back here after the Non Farm Payrolls release to discuss the trade or potential open position.

[David Rodriguez]

This week's "Trading the News" strategy was a 'no-trade', as a strong NFP report actually produced a 5-minute dollar tumble. Look at the chart below for the actual graph. Perhaps interestingly, this is the second month in a row in which an initially dollar-bullish candle leads to a dollar rally.

Hindsight being 20/20, we could claim that we could have gone short the EURUSD on the initial rally, but this is against our trading guidelines and I didn't personally set the trade.

We'll hope for better 'luck' next time.

[Terri Belkas]

Check out our range trade for this week:
http://www.dailyfx.com/story/special...334636183.html

The trade was triggered this morning, and we admit, it's a bit risky. However, it's a tough week for range-trading given the huge amount of event risk out of the US and the possibility of central bank action from the SNB and BOJ. We'll update this later in the week with comments on how the trade went.