Trading webinars this August from InterTrader.com

This summer InterTrader.com continue their popular webinar programme which covers all aspects of spread betting and online trading from beginner to professional.  Our informative educational webinars are complemented by our live trading sessions where your host and professional trader Steve Ruffley interprets the figures as they are released and trades live during the session talking through the market movements.

Dates for the webinars in August:

·         Thursday 04/08/2011, 8.00pm -  Introduction to Financial Spread Betting

·         Friday 05/08/2011, 1.00pm - Live Trading Session: Non Farm Payroll

·         Tuesday 09/08/2011, 12.30pm - Introduction to Technical Analysis

·         Thursday 11/08/2011, 8.00pm - Trading the News

·         Friday 12/08/2011, 1.00pm - Live Trading Session: US Retail Sales

·         Tuesday 16/08/2011, 12.30pm - Channel Trading

·         Thursday 18/08/2011, 8.00pm - Introduction to the energy markets & Oil Trading

·         Tuesday 23/08/2011, 12.30pm - Trading Psychology

·         Tuesday 23/08/2011, 8.00pm - Poker player to Financial trader

·         Thursday 25/08/2011, 8.00pm - Money Management

·         Tuesday 30/08/2011, 12.30pm - Trading in Probabilities

To register for any of these events, please go to https://intertrader.omnovia.com/webcasts

https://intertrader.omnovia.com/webcasts

The webinars will be hosted by Steve Ruffley who is a career trader with over 7 year’s experience within the trading arena. He began his career with PWC on their IFA graduate scheme. He then went on to become a professional Intra-day trader with Marex and then a self-backed trader at Schneider’s; he also has experience with risk managing a large floor of traders at Refco.

Spread betting and CFD trading carry a high level of risk and you can lose more than your initial deposit so you should ensure these trading products meet your investment objectives and if necessary seek independent advice.

A sigh of Relief

Dean Peters-Wright

Senior Analyst

fxKnight.com

Although Europe is not out of the woods yet, at least there is some consensus about the navigation in which to get there. The markets have been rallying this morning with the news that authorities have finally come to an agreement in how best to deal with the Greek crises satisfying previous concerns. Even the bonds markets have been celebrating as yields have fallen throughout the Eurozone including Spain, Italy, Ireland, Portugal and Greece. The Greek 2 year bond yield in particular has dropped to 27 per cent and although still significantly high, this is a decrease from a high of around 39 per cent at the start of the week.

There have been significant compromises most notably by the ECB who have conceded on accepting Greek collateral if the EFSF guarantees the loans. The likely scenario is that the bailout will now be likely seen as a selective default by agencies. Private bond holders will be involved for the first time to contribute to a target of €37bn in addition to the new €109bn bailout fund.

A sigh of relief? For the time being, yes. The key is that a solution has been found to satisfy the parties involved and the idea being that until Greece is able to financially stand on its own two feet again, it will be supported by Europe. There will be relief also felt by Ireland and Portugal as well as Greece as the rate in which they have to pay back their own bailout fund will be cut to around 3.5% which were previously around 5.5%.

Greece still has a long way to go and most likely will still have a debt to GDP ratio that will be unsustainable and will have to be addressed again in the future. At least for now there is a light at the end of the tunnel although there could be some delay in getting there.

CFD trading and spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary. These products are only intended for people who are over 18.

US Debt Ceiling and its Impact on FX and Stock Markets

The US Federal Government spent more than it earned virtually from its inception.  The first recorded deficit budget that had to be financed by a loan was that of January 1791.

Since then, government spending has consistently been more than government income, although there were relatively short periods during which income exceeded expenditure. 

When the government spends more than it earns, it has to borrow the difference.  In the US, this is done through the issue of Treasury Bills.  Since the 1960s, the percentage of US Treasury Bills held by foreign countries has been steadily increasing.  At the moment the biggest buyers of US Treasury Bills are China, Japan, and the United Kingdom.

Ceiling

Article 1 Section 8 of the US Constitution has put Congress in charge of managing public debt.  Initially Congress had to authorise every issue of Treasury bills separately, but in 1917 it decided to simply implement a debt ceiling.  As long as Government debt does not exceed this limit, approval from Congress is not necessary.

US Government Debt Crisis

Over the years US deficit spending, often as the result of wars such as the American Civil War, WWI, WW2 and lately the invasion of Iraq and Afghanistan, has steadily pushed up the level of Government debt in that country.

When this debt level reaches a point where it approaches the debt ceiling, Congress has to authorise an increase in the ceiling.  President Obama is now ( July 2011) asking for a $2 trillion increase in this ceiling, which will only be sufficient to ensure the US Government can keep on functioning until the end of 2012.

When the politicians controlling the US Congress cannot come to a decision about increasing the debt ceiling, it raises the risk of the US Government being unable to meet its obligations.  In this case, welfare payments or other Government programmes might have to be stopped.

Short Term Effects on FX and Stock Markets

When the US Government ends up in a position where its lending approaches the debt ceiling, it can only roll over existing debt – it cannot issue new Treasury bills.  What happens next is usually that the demand for these bills exceeds supply, causing interest rates on them to drop.  

As government expenditure comes closer to the debt ceiling, and fears of an impasse start to grow more intense, the stock markets are often negatively affected – unless there are of course other factors working in mitigation of this.

Such a situation also puts downward pressure on the US dollar, which could once again be mitigated by other factors.

Relief

Once the politicians agree on increasing the debt ceiling, the stock markets and USD FX markets normally react favourably – even though this might be short-lived.  Interest rates on Treasury bills usually start increasing again.

Exploiting the Situation

An astute trader could cash in on this situation by going long on the USD or a stock index such as the S&P 500 before an agreement on the debt ceiling is reached.  There are, however, risks involved: A prolonged stalemate could have unforeseen consequences that might send markets into a downward spiral from which they could only emerge after a prolonged period of time.

Spread betting and CFD trading carry a high level of risk and you can lose more than your initial deposit so you should ensure these trading products meet your investment objectives and if necessary seek independent advice.

Decision time with Greece

Dean Peters-Wright

Senior Analyst

                                 

fxKnight.com

                                                               

There is a species of shark that distinguishes itself from the rest known as obligate ram ventilators. The distinguishing feature of these sharks is very interesting. Through evolution, they have lost their ability to pump oxygen through their gills as they have evolved a more efficient way of taking in the oxygenated water through their mouths and flowing through their gills just by moving through the water. However, this means that if they encounter an obstacle, they must head in a different direction to avoid asphyxiation. In short, if they stop swimming, they die.

Have I too much time on my hands? Well sometimes yes; there are only so many documentaries about, well …you can guess. However, the parallel should be obvious as we head out of the worst recession to hit the global markets, into the week that should see a decision being made regarding the austerity measures for Greece; if Greece stops swimming it will share the same fate.

Greece needs money. However, we have all known a ‘friend’ who we have a lot of sympathy for, who has gone through a bad time, made a few wrong decisions and we have said “I feel so sorry for you, I’m here if you ever need to talk”, knowing full well that the one thing he is really hoping for is that you put your hand in your pocket to help him get through the week. Only we won’t, because we are concerned that we’ll never see that money again.

So what do we have here? In order to bail out Greece, that money has to come from somewhere, in this instance the ECB. Governments need money and so interest rates will rise. The reason interest rates will rise is because they will have to borrow money at a higher risk premium because no one will feel as secure in buying government bonds. In order to pay for these higher premiums, governments will have to raise the money by doing what they do best…raising tax revenue. In the face of slow economic growth, the ripple effect will reach out to everyone as wages are rising more slowly and disposable income is dwindling. Without that income being pumped into the economy we find ourselves in a vicious circle which will not be helped by increasing taxes. However, governments cannot print any more money because that would reduce the value of their bonds further and hence not be able to raise money by selling them which leaves them little choice.

So why lend to Greece? Why do we care?

We care because it will affect the very foundations of the EU and if Greece is bailed out, then there is only one place that money is coming from and that is the tax revenue by every member nation.

If Greece is allowed to default then the results could be catastrophic. Not least because the euro would fall in value, strengthening the value of other currencies against it which would have an effect on imports into the euro zone as they would become more unaffordable to buy. This would also then have the knock on effect of stifling growth by exporting nations into the European zone.

In order to secure the necessary funding for a bailout, Greece has to provide the necessary budget deficit and this will only be provided with an increase in tax revenue. To further complicate this, if investors pull their capital out of Greek banks, this could cause a bank run leading to a collapse in credit and hence another credit crunch and as we have seen, credit crunches have an uncanny way of spreading, in this case, to other vulnerable European nations. In short this is everyone’s problem.

We shall see what will be decided, however if there is one sure thing on the table it’s that if the Euro has any hope of securing a credible future on the world stage, it has to survive.

Keeping swimming!

CFD trading and spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary. These products are only intended for people who are over 18.

Equities Trading Strategy - The Ichimoku Kinko Hyo

Equities Trading Strategy

Introduction

The Ichimoku Kinko Hyo is a highly versatile trading indicator. In fact it is a set of indicators that gives traders a complete overview of the market. It was developed in the previous century by a Japanese journalist by the name of Goichi Hosada. He worked on it for more than two decades to further refine it and later published his findings in a 1959 book.

It is still not widely known in the West, although its popularity is on the rise. In Japan it’s hard to find a trading room without an Ichimoku Kinko Hyo chart somewhere on a screen or against a wall.

The trading strategy for equities we set out below uses the Ichimoku chart in Fig. 5.17. The reason for this is that the strategy is very much based on trend following, which is what the Ichimoku was developed for in the first place.

Strategy

In Fig. 5.17 you will see a graph depicting the daily price of the DAX from April 2010 until May 2011. During this period the price moved gradually upwards, then went through a major correction but still closed more than 1 000 points above its closing price on the 19^th of April last year.

If we followed the simple trading strategy below, we would have captured most of the upswing and made a very nice profit.

First requirement – The price must be above the Ichimoku Kinko Hyo cloud before a bull market is indicated.

Requirement B – The green Chinkou Span line must be above the price 26 periods ago. The Chinkou Span is the current price plotted 26 days in the past. Since the Ichimoku is in the first instance a trend indicator, this is simply a visual way of immediately showing us that the current price is higher than the price 26 days ago, indicating a bull market.

Requirement C – The price must be above the red Tenkan-Sen line. The Tenkan-Sen depicts the average of the high and low prices for the past 9 periods and, as such, is similar to a short-term average. If the price moves above this line, it simply indicates that the longer term bull run is confirmed by a short-term upturn in the price.

Requirement D – The red Tenkan-Sen line must be above the blue Kijun-Sen line. The Kijun-Sen is the average of the highest high and the lowest low for the past 26 periods. It is therefore a longer term average. When the shorter term Tenkan-Sen moves above the longer-term Kijun-Sen it therefore acts as short-term confirmation of the longer term bull market.

For a short position, the requirements should of course be reversed: the price has to be below the cloud, the Chinkou Span must be below the price 26 periods ago, the price must be below the red Tenkan-Sen, and the Tenkan-Sen must be below the Kijun-Sen.

Practical Application

Returning to Fig. 5.17 we see that at point A1 the first three requirements are met. The price has just moved out of the cloud, the green Chinkou Span line is above the price 26 periods ago and the price is also above the red Tenkan-Sen short-term average.

The last requirement, that the red Tenkan-Sen line must be above the blue Kijun-Sen, has not been met yet. In this particular case it would have been worked out well if you did not wait for this to happen, but it might also have been otherwise.

When the red Tenkan-Sen lines moves above the blue Kijun-Sen at point A2 in Fig. 5.17, we have received another short-term confirmation of the longer term bull market. Going long at this point would have given us a nice profit of several hundred points, depending on what we used as a stop loss point.

Stop Loss

Using the red Tenkan-Sen Line as a stop loss is very conservative and would have kicked you out of an otherwise profitable trade several times. The blue Kijun-Sen would have been a better option. It would have kicked you out of the trade on the 30^th of November and again on the 10^th of January, only to enter again when the price returned above the level of the Tenkan-Sen. Eventually this strategy would have become erratic towards the end of February/beginning of March, with several false exits and entries before the price finally dropped back into the cloud.

The best option would have been to use the cloud itself as an exit strategy – in other words exit the trade the moment the price drops back into the cloud. This would have given us the biggest profit and the lowest number of false entries/exits.

Conclusion

At Point B all four requirements above were again met – this time for a short trade, but there wasn’t much profit in that particular trade. An early exit, e.g. the red Tenkan-Sen, would have worked best in this instance.

At point C all four requirements for a bull market were once again met. The price subsequently moved up just over 200 points, but has now retracted to a level below both the Kijun-Sen and the Tenkan-Sen.

A cautious trader will wait for a continuation signal, such as the price moving above the red Tenkan-Sen again, before entering a long position. If the price moves down further and enters the cloud, wait for the requirements for a short position set out above to be met.

Fig 5.17

Don't forget to register for our Trading the News webinar 19/05/2011

This Thursday we will be hosting the InterTrader.com Trading the News webinar at 8pm BST.

Register at https://intertrader.omnovia.com/webcasts

Using the news and economic events to make trading decisions is just as important

as trading from charts.  In this session you will learn:

- Introduction to economic calendar events

- Understanding the different events and their potential impact on the market

- Planning your trade

- Review different the 3 different techniques

- Summary

- Q&A

CFD trading and spread betting carries a high level of risk to your capital with the possibility of losing more than your initial investment and may not be suitable for all investors. Ensure you fully understand the risks involved and seek independent advice if necessary. These products are only intended for people who are over 18.

Upcoming webinars from InterTrader.com

InterTrader are happy to announce the dates of their upcoming webinars which cover all facets of online trading from the basics of financial markets to in depth technical analysis.

Dates for the webinars are:

Thursday 12^th May -        Introduction to Financial spread betting

Tuesday 17^th May -          Introduction to Technical analysis

Thursday 19^th May -        Trading the news

Tuesday 24^th May -          Channel trading

Thursday 26^th May -        Introduction to the energy markets – special focus on oil

More dates will be released in due course and places must be booked on https://intertrader.omnovia.com/webcasts

The webinars will be hosted by Steve Ruffley who is a career trader with over 7 years experience within the trading arena. He began his career with PWC on their IFA graduate scheme. He then went on to become a professional Intra-day trader with Marex and then a self backed trader at Schneider’s, he  also has experience with risk managing a large floor of traders at Refco.

Introduction to Financial spread betting

12/05/2011 8pm BST

This session will cover the following topics

- Why Spread betting

- Spread betting Vs traditional trading

- Type of bets

-  Spread betting example

- Introduction to financial markets to include:

  Equities, Indices, Forex and Commodities

- Q&A, giving you an opportunity to ask Steve about any of the points he has covered.

Introduction  to Technical analysis

17/05/2011 8pm BST

Part I

- What is Technical analysis

- Charts

- Trends

- Support & resistance

Part II

Trading central provide techncial analysis and signals for a large varitaty of instruments. In this session we will teach you how to operate the terminal and customize it to your own needs. Trading central is a great decision support system if used correctly. This session is for advanced traders who are experiened in technical analysis and are looking to complement and benchmark their own analysis.

Trading the news

19/05/2011 8pm BST

Using the news and economic events to make trading decisions is just as important

as trading from charts.  In this session you will learn:

- Introduction to economic calendar events

- Understanding the different events and their potential impact on the market

- Planning your trade

- Review different the 3 different techniques

- Summary

- Q&A

Channel trading

24/05/2011 8pm BST

In this session we will learn how to identify and trade price channels. The seminar will cover:

- Type of channels

- How to plot a channel

- building your own channel strategy

- Capital management

- Advanced stops and limit orders

- Summary

- Q&A

Introduction to the energy markets - special focus on Oil

26/05/2011 8pm BST

In the seminar you will learn about:

- Oil production and consumption

- Types of oil, where and how it's traded

- How the real world affects oil prices

We will also be reviewing the following trading strategies :

   - Economic calendar trading

   - WTI-BRENT arb

   - Brent crack

Medium to Long Term Technical Analysis of Gold

Gold has technically been in a bull run ever since it broke free of the Ichimoku Kinko Hyo (see fig 5.11) in mid-February. There was a relatively large correction at the beginning of March – enough to send the price below the blue Kijun Sen medium term average. The price subsequently recovered and ended at a new high of 1562.05 on the 29^th of April.

On the 2^nd of May it briefly touched a high of 1574.95 before starting to decline. It dropped as low as 1462.25 on the 5^th of May before recovering somewhat. At the time of writing, the price is hovering around 1498.

If we look at Fig. 5.11, gold is still technically in a bull market. The green Chinkou Span line is still well above the price 26 periods ago and the price is also still trading above the cloud.

The fact that the price has dropped below the blue Kijun-Sen medium term average, however, shows us that a price correction is on the way. A return above the red Tenkan-Sen line could indicate that the bull market is intact and that we can expect new highs.

Should the price increase above the recent high of 1574.95 again, traders will have even more confidence that the bull market is intact.

Except for day traders, who trade in shorter term movements, it’s too early to look at short trades right now. The price must first at least enter the Ichimoku Cloud, or preferably break out downwards.

The forces driving the gold price are still in place: uncertain economic times, a decline in the dollar, political unrest in the MENA region and uncertainty over the credit worthiness of some emerging economies. Everything else remaining the same, it is unlikely that we will soon witness a major downturn in the gold price.

Fig 5.11

The contents of this report are for information purposes only. It is not intended as a recommendation to trade.  InterTrader  do not accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

InterTrader.com launch the first ever Spread Betting app for iPad

InterTrader.com has launched the first ever financial spread betting app for the iPad, along with an app for the iPhone, both of which enable traders to keep on top of market movements, news and events on the move. The unique feature rich app for the iPad can be downloaded directly from the App Store - http://itunes.apple.com/gb/app/intertrader/id416981265

InterTrader’s purpose-built app for the iPad exploits the larger screen offered by the iPad. It enables users to switch easily between both landscape and portrait views and supports high resolution graphics, fast and easy to use navigation and one-click trading functionality.

Shai Heffetz, Head of Financial Spread Betting and CFD at InterTrader, commented:
“We work from the premise that ‘time is money’ and our app® for the iPad makes it easier and quicker for InterTrader customers to react to breaking news and events when on the move. This is from InterTrader following the recent launch of TradeBack™, a cash back loyalty programme for spread betting. With low margin rates, tight spreads and Tradeback™ our customers can now use the apps for both the iPad and iPhones to make the most of their capital in the global markets.”  

Using InterTrader’s iPad / iPhone app:
Traders can access the InterTrader Markets menu from the main navigation panel at the bottom of the screen. This will bring up quick links to the markets offered, grouped into each specific type of market: indices, shares, foreign exchange, commodities and bonds/interest rates.

There is also a quick link to the list of the most popular markets. Users can browse through any of these groups of markets by scrolling through the list.
The Search facility will help find markets that are not listed in these groups. To open the search screen users tap the magnifying glass icon at the top of the screen, then enter the name of the market they’re looking for.

Trading Patterns webinar with Tom Hougaard, 5th May 2011

In this 90min webinar professional trader Tom Hougaard from WhichWayToday.com and TraderTom.com will explain in great details the trading patterns he wrote about in the 16 articles published on CityAm newspaper. He will go through each of the patterns he described in his popular articles and show chart examples and describe the setups in great detail.
Tom Hougaard spent 8 years in the City, where he became an extremely familiar and popular guest on Bloomberg, CNBC, CNN and BBC. Since 2009 he has traded solely for himself and is running a live trading room where people interested in learning to trade in a live environment can hear where Tom is buying and shorting in real-time.
Join Tom on the live webinar on Thursday 5th May at 19.00 London time.  Webinar lasts 90 minutes.
Register here https://intertrader.omnovia.com/webcasts

All’s well that ends well – Europe Interest rates and the US Job numbers

Dean Peters-Wright

Senior Analyst

fxKnight.com

The European central bank is expected to raise interest rates this week in an effort to fight the rising inflation causing panic within governments. It is expected to be raised by 25 basis points, the first time the ECB has changed the rates since May 2009. In an attempt to curb the rocketing prices which has caused global inflation, the effects will be felt in different ways across different countries. Pressure on Portugal, Spain, Greece and Ireland as they struggle with liquidity issues may result in further complications in the regions financial systems. Spanish banks are exposed to Portugal’s banking system and liquidity problems in Portugal could inadvertently cause a credit run on the Spanish markets. This in itself would not cause the case for Portugal to accept a bailout, but it will make it harder not to.

An interest rate hike will most likely cause further strengthening of the euro against most other currencies. Whilst this is good for production that use overseas materials and suppliers, this will also will put pressure on exporters and those economies that gain a substantial percentage of their GDP through tourism from visitors outside the single currency zone. If however the perceived danger to the smaller weaker economies outweighs the benefits of fighting inflation, there could be a sell off the euro as confidence decreases in the regions stability.

The US had a surge in the dollar when the non farm payroll figures were disclosed and the unemployment rate fell to 8.8%. Whilst the most powerful economy in the world celebrated along with all of its trading partners that have generally relied on the US being the engine driving world economic growth, it did highlight just how far the recovery has to go as prior to 2008 the US unemployment rate was under 5%.

The EUR/ USD has once again reached a key resistant point at 1.4234 where the euro sold off heavily before. If however the buying pressure breaks through this key level then we could be seeing new highs gained against the dollar with an ultimate target of 1.4790. Further long targets to watch for are 1.4427 and 1.4680 where key buying and selling levels have taken place through 2009.

IF the EUR/ USD retreats then 1.4037, 1.3887 and 1.3725 are significant support levels from before. 

The contents of this report are for information purposes only. It is not intended as a recommendation to trade.  InterTrader  do not accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

Technical Analysis of the FTSE100

For readers who are not familiar with the term FTSE100 – it is simply an index of the 100 largest companies on the London Stock Exchange.  The index is maintained and owned jointly by the Financial Times and the London Stock Exchange.

The index came into being on the 1^st of January 1984 with a base value of 1,000.  It reached a record level of 6950.6 on the 30^th of December 1999.  The financial crisis of 2007 – 2010 saw it drop dramatically to 3,500.  Since then it has recovered to a large extent, reaching a high of 6,091.33 on the 8th February 2011.

Analysis

If one looks at the price of the FTSE100 in relation to the Ichimoku Kinko Hyo cloud in Fig. 3.29, it clearly shows that the market is currently in a declining phase.  The price is well below the cloud, which indicates that a long position at the present moment cannot be recommended.

The green Chinkou Span line is also well below the price, which supports the signal given by the Ichimoku cloud.

The Index started trading below the cloud after the earthquake/tsunami disaster in Japan and closed at a low of 5552.50 on the 16^th of March.  Since then it has recovered significantly, but during the last few days it has started drifting sideways with no clear direction being evident.

If the market should recover and break through the upper level Senkou Span A line of the cloud, this could indicate that the previous bull market has been restored and that we can expect further price increases.

A drop below the blue Kijun Sen line will, however, be a signal that the downward movement has gained momentum and in that case traders should look at a short position to cash in on a potentially significant price drop.

The contents of this report are for information purposes only. It is not intended as a recommendation to trade.  InterTrader  do not accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

How to Trade Oil Profitably in the Current World Situation

At the moment, the oil market appears to be in something of a state of turmoil.  There are certain forces at play that will push prices up for the foreseeable future; yet recent events have created a situation that could have a dampening effect on prices, at least in the short to medium term.

Market Analysis

On the demand side, large economies, such as India and China, are still growing strongly.  If this trend continues, it will ensure constant growth in the demand for oil in the short to medium term.  On the other hand, economic activity in many important Western economies is still lacklustre.  Despite several predictions of an imminent upturn, the US and UK economies have not lived up to expectations, which will, to a large extent, keep demand for oil in check.  The upcoming summer months in the northern hemisphere will also act to keep demand for oil within reasonable limits during that period.

A number of countries have suffered crippling natural disasters in the past few months.  The earthquake and subsequent tsunami in Japan was no doubt the worst of these and has now raised fears of a recession in one of the world’s biggest economies.  Once the focus shifts from immediate need to rebuilding, the construction industry in Japan will no doubt receive a huge boost.  This will, in turn, lead to stronger demand for various imported commodities and stimulate economic activity, and the demand for oil will increase.

The latest unrest in various oil producing countries of the Middle East/North Africa (MENA) region has created fear of disruption to the oil supplies.  This situation has been exacerbated by recent developments in Libya, where a civil war could potentially break out after military intervention by Western powers.  This will lead to further upward pressure on the price of oil.

Something else that has to be taken into account is that the threat of a nuclear disaster in Japan has made many nuclear powers rethink their approach towards this form of energy.  Germany, for example, has already decided to close several of its older nuclear power stations.

Since nuclear energy is an alternative to oil, any development that curtails the supply of this alternative energy source will, in the long run, act to stimulate the demand for oil and push the price up even further.

What we will probably see in the short to medium term therefore, is a temporary lull in the demand for oil.  In the medium to long term, everything points to higher oil prices and it would not be surprising to see new record prices within the next two years.

Technical Analysis

Technical analysis of the situation seems to confirm the foregoing conclusions.  The market was in a strong bull run before the earthquake in Japan on 11^th March 2011, but since then there has been a significant price correction, because many traders feared an imminent recession in Japan.  The market reached a low on the 15^th of March, with Brent Oil closing at 108.28 – see fig. 3.21.

At its lowest level, the price moved marginally below the Kijun Sen (the blue line) on the Ichimoku Kinko Hyo, but rebounded sharply from there and right now it is trading above both the blue line (Kijun Sen) and the shorter-term average, the Tenkan Sen (the red line).

Trading the Current Oil Market

The Ichimoku Kinko Hyo currently indicates a clear bull market.  The Chinkou Span (the green line) is above the price of 21 days ago; the price is well above the cloud and also above both the blue and red lines of the Kijun Sen and Tenkan Sen.

A possible trading strategy is therefore to buy Brent with a stop loss placed at the red Tenkan Sen line.  Along with the Ichimoku Kinko Hyo, this line always acts as your first level of support.  Once the price breaks through the blue Kijun Sen, a long position is no longer advised.

The first resistance level is at 118.47, which was reached on 7^th March.  Once the price breaks through that level, watch out for 119.40, a previous high that was reached on 24^th February.  If the price breaks through this level, new highs are very possible.

As long as the price is above the cloud of the Ichimoku Hyo, medium term short trades cannot be advised.  This does not mean, however, that an astute day trader cannot make money from short-term corrections in the price.  In this instance, figure 3.21 should be redrawn using an hourly or even shorter-term chart.  The same rule applies when the price is trading above the cloud; take in a long-term position.  When it is in the cloud, stay out of the market and when it trades below the cloud, it is time to go short. 

The contents of this report are for information purposes only. It is not intended as a recommendation to trade.  InterTrader  do not accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

Technical analysis GBP/USD

GBP/USD made a valid attempt at rebound in the final week of January, yet the limit stayed well below 1.6057 resistance and eventually weakened.  Initial bias remains neutral for the upcoming week and more consolidations could still be achieved below 1.6057.  Nevertheless, even if there was another drop the pair is expected to remain bullish in the short term.  This depends on how well 1.5664 resistance turned support holds and whether the rise from 1.5343 is allowed to continue.  Above 1.6057 should resume the rise to 1.6298 first.  Still, break of 1.5664 will be proof that a rebound from 1.5343 is completed and focus should shift back to support.

Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives. 

The contents of this report are for information purposes only. It is not intended as a recommendation to trade.  InterTrader  do not accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

Technical analysis EUR/USD

EUR/USD jumped as high as 1.3757 in the final week of January.  The pair stayed at that level for a short while on bearish divergence conditions in four hours MACD.  However, strong support above 1.3245 is anticipated to bring a rally in the coming weeks.  The pair’s total decline from 1.4281 should have ended in three waves down to 1.2873 already; above 1.3757 should lift the pair closer to 1.4 to test 1.4281 resistance first.

Overall, the question that remains is whether mid-range correction from 1.6039 has finished its three waves down to 1.1875.  The hard break above 1.35 again affirms that the fall from 1.4281 was simply a correction and the general rise from 1.1875 is ongoing.  Also, insiders are quick to note that break of 1.4281 will give new life to the argument that mid-range term correction from 1.6039 was completed in three phases down to 1.1875 and that a long-term uptrend could be resuming.  On the other hand, below 1.2873 is likely to turn the focus back to the 1.1875 low.

Over the long term, considering the five wave structure of the long uptrend from 2000’s low of 0.8223 to 2008’s high of 1.6093, price actions from 1.6039 are considered merely correction.  Thus, watchers first anticipate strong support between 61.8% retracement of 0.8223 to 1.6039 at 1.1209 and that 1.1639 will contain downside.  Second, another high above 1.6039 is expected eventually, once correction from 1.6039 has been confirmed as completed.

Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives. 

The contents of this report are for information purposes only. It is not intended as a recommendation to trade.  InterTrader  do not accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.

Guide to swing trading

Swing trading represents a middle ground between fast-paced day trading and long-term trend trading.  Those who follow a swing trading strategy typically hold a stock for a period of time, usually no longer than a few days or weeks and trade shares based on the stock’s weekly or monthly fluctuations.

Keys to Successful Swing Trading

Choosing the right stock:  The most favourable candidates are the large-cap stocks that are most actively traded on the major exchanges, for example Cisco, Intel, Microsoft, etc.  In an active market, these stocks typically move broadly between high and low extremes.  The swing trader follows the trend in one direction for a period of several days or week and then switches to the opposite side of the trade when it reverses.

Choosing the right market:  Swing trading presents some unique challenges in both a bear and bull market.  In these extremes, even the most active stocks fail to exhibit the normal oscillations that occur when indexes remain relatively stable for weeks or months at a time.  In a bear market or a bull market, stocks are carried by momentum in a single direction for long periods of time and may exhibit only subtle shifts that can be difficult to catch.  Therefore, the best strategy during periods of market extremes is to trade along with the long-term trend.

A stagnant market is best suited for swing trading.  When stocks and indexes are stable, there is a greater opportunity to take advantage of short-term movements.  For the swing trader, these short-term ups and downs generate the most significant profits.

Setting the baseline:  Historical analysis has proven that a market favourable to swing trading is one in which liquid stocks tend to trade above and below a shared baseline value.  This value is often shown on a chart with an exponential moving average (EMA).  Once the swing trader has used the EMA to identify a desired stock’s typical baseline, the trader can then adjust the swing strategy to the long or short, depending on the direction of the trend.  Conventional swing trading strategy dictates going long at the baseline when the stock is trending up and short at the baseline when the stock is trending down.

The most important consideration here is that swing traders are not looking to cash in on a single trade; there’s no real incentive to allowing oneself to become preoccupied with precise timing, to buy at a stock’s rock bottom and sell at its ultimate high or vice versa.  Instead, successful swing traders wait for a stock to hit its baseline value and reveal its direction before making a move.

When a stronger trend in either direction is evident, the trader may choose to go long when the stock falls below its EMA and wait for an uptrend or may short a stock that has jumped its EMA and wait for the drop.

Taking profits:  The object of swing trading is to exit each trade as close as possible to the upper or lower limit without being overly meticulous.  Of course, this also increases the trader’s risk of missing the most lucrative opportunities.  In a strong market, when stocks are exhibiting definitive and certain directional trends, swing traders are likely to wait for the stock to reach the channel line before claiming their profits.  In a weak market, when trends are harder to predict, traders may take a profit before that limit is reached in anticipation of a sudden directional shift that forces the stock to miss the channel line.

Conclusion

Swing trading is historically one of the best strategies for novice traders, but still offers substantial profits for more experienced and even advanced players.  Swing traders are able to receive feedback on the trades in a short amount of time, which goes a long way to build motivation for those new to stock trading.  However, the long and short positions that are typical to stock trading last several days; this is generally sufficient enough to stave off distraction.  Trend trading may promise greater profit potential if the trader can catch a major market trend over weeks or months, but few traders actually have the discipline to hold a position for that long without succumbing to distraction.  On the other hand, while day trading may be more intense and exciting, buying and selling dozens of stocks each day usually proves overwhelming for the majority of traders who employ the strategy.  Thus, swing trading is a happy medium between these two extremes.

Spread betting carries a high level of risk and you can lose more than your initial deposit, so you should ensure spread betting meets your investment objectives. 

The contents of this report are for information purposes only. It is not intended as a recommendation to trade.  InterTrader  do not accept any responsibility for any use that may be made of the above or for the correctness or accuracy of the information provided.