 |
||||
 |
 |
 |
 |
 |
|
Recent Articles
Free Newsletter
|
 Has the Fed Lost Control of the Dollar?March 14, 2008
Sign up today for currency research from MF Global and receive fundamental and technical analysis, price forecasts and trade recommendations on multiple forex markets. You’ll also receive a CD-ROM on the fundamentals of the CME FXmarkets. Click here to start your currency research trial and receive your CD-ROM. Market prices hitting once thought unbelievable levels are now becoming commonplace. A price of 15600 for the EURO/USD and a USD/JPY at parity is here, leaving traders rubbing their foreheads. Commodity prices like Crude Oil hitting $111.00 per barrel and gold topping $1000.00 has to have Bernanke shifting his weight uncomfortably in his chair. Food prices with beans hitting well in the teens is remarkable as well. We are hitting these record marks, because of past actions by the Fed along with the recent artificial rate cut they implemented this past week. This consisted of cheapening borrowing rates offered to banks. Market players are signaling that they have lost confidence in Fed’s actions and the status of the US economy. Bernanke is in a tough situation; create inflation with deeper rate cuts in order to try and bail out banks that wrote unhealthy loans or sit back and keep rates steady and watch the stock market weather out the crisis. With the Fed’s recent action players have taken out the chance of a 75 basis point rate cut but still feel a 50 basis point cut on March 18th is in the cards.
** Bullish scenario: EURO/USD prices currently sit at record highs. If the ECB continues to stand at ease and the US Fed continues to cut, further upside is expected. Prices do near term face a resistance test at 15700 (up 7.5% YTD). If we continue to see a weakening US economy this spring 16000 is not a wild idea (up 10% YTD). Trouble for the Bulls lurks at the 16000 mark as prices typically have a tough time holding the first test of +10% on the year. Signs of an economic recovery will need to be in the mix to see prices get shaken off this unhealthy climb. The rise is a little too steep for you Gann angle followers, as a 45-degree ascent would look much better. ** Bearish scenario: An ailing global marketplace might save the dollar this spring. If slowdown filters into Europe, Trichet might then be forced off the fence and put the ECB on the rate cut train. Speculators will begin to shift their thoughts and start viewing the Fed as ahead of the curve, which can give rise to a much needed shake out to the key 50% support mark set at 15000. Initially a near term correction to the 15300 (up 5% YTD) first support is likely before we see an assault on 16000. The March 18th FOMC meeting will be the key factor.  In order to get a feel for my technical views without a bunch of lines smeared over a chart like a heart-attack EKG monitor, I use a NFL football field analogy. Each opposing end zone is equivalent to the high and low of a trading market range. The gauge in football for momentum holders is the team that controls the ball on their opponent’s side of the field. The 50-yard line (flip point) in football sets equilibrium and its equivalent counterpart is the mid-point in trading. As we cross our opponent’s 50-yard line, we start to get excited and have the ability to use any play in our playbook. If we were sitting back near our own end zone we would be cautious and conservative. Trading participants actions are fueled by these same emotions of fear and greed throughout the trading range. We begin to get a sense of what team is favored the “Bulls” (buyers) or the “Bears” (sellers). This helps define who is making money and who is losing money. If we are on the top half of the field, which we have been for the past 2 years with the Euro, the buyers are making more money and have strength. The sellers continue to lose money and lose strength. In hindsight you know which side you should have been on, now let’s work on some foresight… The best part of trading is that you can change to the winning side as the market flips the field. I play with the money side and get off the train when technicals and fundamentals begin to shift. The trick is to keep a balance of fundamental news along with a balance of key technical flip points. I favor daily, five day and yearly flip points. Try it (high + low /2 = 50% or the flip)… Below you will find my notes for the other markets that I analyze…  **About the Author: I want to introduce Michael Radkay (NFA Broker/Commodity Trading Advisor #0250761) and let you know how he can mentor and prepare electronic traders. After receiving his BA in Economics from Lake Forest College in May of 1989, Mike has since then dedicated the last 18 years of his life to the futures industry. The depth of his experience and skills as a futures trader, broker, coach and CBOT member dates back to 1993. The level of students that he has taught range from novice to professional… His knowledge is vast as he has traded through 3 presidential changes, 2 fed chairmen raising and cutting the fed funds rate to the extremes, the gulf war, 9/11, and the current Afghanistan / Iraq war. Today he is trading through the current housing collapse and credit crunch. Students are thoroughly trained from this knowledge base and can access Mike’s daily analysis during the sessions. The materials consist of the comprehensive RDS Home-Study Guide (Learning the Game), RDS Daily Service (Pre-Game Routine) and RDS Interact (Game-Day Adjustments) that were specifically developed with the needs of a trader in mind. These tools will complement what you have learned during the coaching sessions. Sign up today for currency research from MF Global and receive fundamental and technical analysis, price forecasts and trade recommendations on multiple forex markets. You’ll also receive a CD-ROM on the fundamentals of the CME FXmarkets. Click here to start your currency research trial and receive your CD-ROM. About the Author Michael Radkay (NFA Broker/Commodity Trading Adviser #02500761) mentors and prepares electronic traders. After receiving his BA in Economics from Lake Forest College in May of 1989, Mike has since then dedicated the last 18 years of his life to the futures industry. The depth of his experience and skills as a futures trader, broker, coach and CBOT member dates back to 1993. The level of students that he has taught range from novice to professional. His knowledge is vast as he has traded through 3 presidential changes, 2 fed chairmen raising and cutting the fed funds rate to the extremes, the gulf war, 9/11, and the current Afghanistan / Iraq war. Today he is trading through the current housing collapse and credit crunch. Students are thoroughly trained from this knowledge base and can access Mike’s daily analysis during the sessions. The materials consist of the comprehensive RDS Home-Study Guide (Learning the Game), RDS Daily Service (Pre-Game Routine) and RDS Interact (Game-Day Adjustments) that were specifically developed with the needs of a trader in mind. These tools will complement what you have learned during the coaching sessions. E-Mail: mradkay@rdstrader.com / Website: www.rdstrader.com |
