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The U.S. dollar posted its sharpest decline versus the euro today despite a gross domestic product report published today showed growth in the North American economy for last year’s final quarter. Existing home sales slid much beyond forecasts, allowing the euro to pare a good amount of this week’s losses. EUR/USD currently trades at 1.3674.

Preliminary GDP report for last year’s fourth quarter showed a growth of 5.9%, from the previous advance report that showed showed an increase of 5.7%. Forecasts expected a decline to 5.6%, being the GDP numbers an optimistic sign of recovery in the U.S. economy.

Existing home sales declined to a seasonally adjusted annual rate of 5.05 million units in January from a previous revised reading of 5.44 million units in December. The actual figures came considerably below forecasts that expected 5.51 million units sold.

Michigan Consumer Sentiment index declined to 73.6 in February from a previous reading of 73.7 in January. Forecasts expected this important confidence index to be at 74.0.

Chicago PMI rose to 62.6 in February from a previous reading of 61.5 in January. Forecasts missed out once again expecting a decline to 59.6 for this business barometer index.
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EUR/USD trend: sell.
GBP/USD trend: sell.
USD/JPY trend: buy.
EUR/JPY trend: hold.
GBP/JPY trend: hold.

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Read the rest of Forex Technical Analysis for 02/22—02/26 Week (14 words)

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The dollar outperformed virtually all of the 16 main traded currencies as domestic reports ranging from manufacturing to housing showed better than expected numbers for the U.S. economy, boosting attractiveness for assets in the country as the economic growth accelerates. The euro erased yesterday’s gains as the EU is unlikely to fund a bailout for Greece to solve its budget deficit issues. EUR/USD is near the lowest level in 2010 and trades at 1.3608.

Building permits were at seasonally adjusted annual rate of 621k in January, showing figures below forecasts that expected 630k permits approved and from a previous reading of 653k (revised) in December. Housing starts for January were at a seasonally adjusted level of 591k from a previous revised rate of 575k in December. Forecasts expected housing starts to be at 580k.

Import and export prices published today showed an increase of 1.4% in import prices last month from a previous advance of 0.2% in December. Export prices rose 0.8 percent in January after advancing 0.6 percent in December.

Industrial production and capacity utilization rate rose in January. As industrial production increased 0.9% from a previous revised reading of 0.7% in December, utilization rate was at 72.6% from a previous revised reading of 71.6%. Forecasts were exact for the capacity utilization rate and expected industrial production to increase 0.7%.

Treasury budget report showed a deficit of $42.6 billion in January, compared to $63.5 billion in January 2009. This report came with better than expect figures as forecasts suggested the Federal budget balance to show a deficit of $44.2 billion.
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Today I’ve added another e-book on the psychology of trading to my site. It’s The 7 Deadly Sins of Forex (and How to Avoid Them) by Marc Low. The e-book is rather short, only 24 real pages, but it’s an advantages as it says only that what should be said about its subject. The author described the 7 popular emotional problems that may become the deadly sins of every Forex trader. They include:

1. Impatience.
2. Lack of Clear Vision (Flip-Flopping).
3. Sleep Deprivation.
4. Over-Trading.
5. Reliance on Outside Sources.
6. Superficial Research.
7. Over-Leveraging.

But each of the mentioned problems is not only described, it’s provided with a detailed solution. I recommend this book to every trader (especially newbie). It has an advertisement in the end, but it’s not a problem. You can download it now:

• The 7 Deadly Sins of Forex

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EUR/USD trend: hold.
GBP/USD trend: buy.
USD/JPY trend: sell.
EUR/JPY trend: sell.
GBP/JPY trend: buy.

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Read the rest of Forex Technical Analysis for 02/15—02/19 Week (14 words)

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The U.S. dollar pared losses versus the euro today despite the negative numbers brought by a trade balance report published today, since the Greek crisis is still the factor defining market sentiment. The dollar fell yesterday on speculations that an EU summit to be held tomorrow would include a proposal to rescue Greece, but today, as these expectation faded out, the dollar returned to its bullish pattern. EUR/USD currently trades at 1.3734.

U.S. trade balance figures published today showed another monthly decrease in December with a deficit of $40.2 billion, from a previous report showing a deficit of $36.4 billion in November. Forecasts expected the trade balance to rebound with a deficit of $35.8 billion.

Wholesale inventories published yesterday decreased by -0.8% in December from a previous revised increase of 1.6% in November. Actual figures surprised traders positively since forecasts expected this report to post another increase of 0.5%.
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Today I’ve updated the Pattern Recognition Master indicator with a new version that works properly in MetaTrader 5. The indicator was rather poorly written in MT4 so I’ve got a lot of room for improvements in the new MT5 version. This indicator will come to use for any Forex trader that utilizes the Japanese candlestick patterns for chart analysis. The functionality of the MT4 and MT5 versions is pretty same but there are certain improvements:

• Moved pattern definitions in the initialization function from the calculation function — this should makes the indicator work faster.
• Better structure of code — it will be much easier to add new things to this EA.
• Proper deinitialization of the indicator.

You can get the code of the MT5 version or read more info about this pattern recognition indicator.
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The last time I’ve written about the gold bubble was almost a year ago when the commodity has been trading near its all-time high at $941/ounce. Since then, the gold managed to reach a new historical maximum at $1,226/ounce and retrace to near $1,050/ounce. So, what’s the current situation with it? Is it still a bubble? Is it already bursting? Is gold going to go up even higher? When will the gold bubble burst?

Unfortunately, there are no simple answers to these questions. Ask a gold bull or an average Joe and they will say that the gold is going to go up as the economy is tumbling and the paper money is worthless, while the gold has always been a real measure of value. Ask a dollar bull or a gold pessimist and they will say that the commodity has no future as the economy is going to recover soon, that the inflation is nonexistent and the gold is useless as a commodity. But today I’ll try to look at gold from the technical point of view.

The chart below shows the daily chart of the spot gold from August 2009 until now. It includes the head-and-shoulders pattern that has started forming since October 6 and has ended its formation on January 20, 2010. The ”shoulders” are marked with the letter “S” and the head is marked with letter “H”. The neckline is sloped because this “head-and-shoulders” pattern is bullish. The pattern broke out down on January 21. The gold continued to form a sloped resistance line, which now contains three price spikes. The probable target for this pattern breakout lies at the basement of the first shoulder:

The key level on the chart is the pattern breakout target that is located at $1,023/ounce. That lne can be reached during the next 7 weeks even if the gold is going to continue retracing to the resistance slope from time to time.

From the technical point of view this is a perfect pattern breakout, but what does a retracement to ~$1,023 means for gold in a long-term perspective? Is it a bubble burst? Definitely not. Of course, it may serve as a first step in a serious trend change or even may end in a steep drop to some years’ lows, but the pattern itself doesn’t mean a lot in a long-term perspective. I suggest watching closely for what happens next after the pattern is played out and the new technical data becomes available.
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EUR/USD trend: sell.
GBP/USD trend: sell.
USD/JPY trend: buy.
EUR/JPY trend: sell.
GBP/JPY trend: sell.

(…)
Read the rest of Forex Technical Analysis for 02/08—02/12 Week (14 words)

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After rising since the beginning of this week, the EUR/USD currency pair dropped today as risk aversion returned to markets, making investors to opt for the safety provided by the greenback once again. Positive employment data published today in the U.S. also reiterated the hypothesis that the North American economy is currently more solid than the Eurozone. EUR/USD erased yesterday’s advance totally and currently trades at 1.3918.

ADP employment report showed a decline of 22k workplaces in January, indicating better figures than what forecasts expected, at -31k positions. This report has been showing several consecutive monthly improvements, this time from the revised reading of -61k in December.

ISM non-manufacturing index rose to 50.5 in January from a previous revised reading of 49.8. The actual figures came slightly below forecasts that expected this index to be at 51.1.

U.S. crude oil inventories increased by 2.3 million barrels from the previous week. Total motor gasoline inventories decreased by 1.3 million barrels last week. Both inventories remained at above the upper limit of the average range.

Pending home sales published yesterday increased to 96.6 in December from a previous reading of 95.6 in November, an increase of 1.0% that came beyond forecasts that expected this number to rise just 0.4%.
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