eToro Weekly Market Review, Oct 18, 2010

8/8/2019 eToro Weekly Market Review, Oct 18, 2010

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Trading in the Foreign Exchange market might carry potential rewards, but also potential risks. You must be aware of the risks and be willing to accept

them in order to trade in the foreign exchange market. Don't trade withmoney you can't afford to lose.

Weekly Review

Currency Tentions EaseCurrency tension between the US and China reached a new climax this week as Chinas foreign reserves reached a

staggering record $2.65trln.The $194Bln spike in foreign reserves was attributed to the strong rebound in exports butalso to massive inflows of investment into China. Although Chinas trade balance slide from its $20Bln last month to

16.9Bln as Chinas importsjumped. The continuing rise in Chinas foreign reserves has awaken tension between the US

and China over the undervalued Yuan. The US accuses China of violating rules in international trade by manipulating its

currency. China holds the Yuan in a so called undervalued rate against the Dollar to maintain low cost manufacturing in

the country and protect growth. However as China continues to grow in double digit figures while the US and Europe are

stagnate brings a lot of heat towards China and its Yuan policy. The US China tension reached its new levels last week as

the US administration threatened to label China as a formal currency manipulator. Such as political move would bring

tough levees on imports from China to the US and would weight significantly on Chinas export industry. The threat which

usually seems more hung in the air was suddenly perceived as probable with the US elections on the horizon.

Nevertheless the tension between the two super powers eventually eased as both sides silently agreed to back downfrom their tough stance. China allowed the Yuan to rise 2.4% and raised reserve requirements for the countrys biggest

banks, a move that is expected to ease investment inflows to the country and reduce Chinas ballooning foreign reserves.

The move apparently was received well by Washington as the administration eventually agreed to postpone the decision

on labeling China as a currency manipulator until after the US election. Long term as US unemployment continues to be

above 9.5% and growth is subdued, the internal political pressure on the Administration to act against China is likely to

continue. Investors will be following closely on any developments in the long lasting tango between the worlds largest

consumer and the worlds largest manufacture

Will QE be different this time?Although current fundamentals support the broad Dollar selloff with the Fed expected to execute $1Trln QE. However

one should ask wither the Dol lar weakness in sustainable for the long-term? After all Dollar pricing gaps created by the

first QE where eventually closed, and Euro collapsed very close to parity after several months. Why in fact this time

should the s QE have a permanent effect on the Dollar weakness? Another case study which supports the fact that the

long term dollar weakness might not be sustainably is the Japanese credit crisis. The Japanese economy experienced a

very similar credit crisis and Japanese policy makers used very similar measures. However the government and the BoJ

were eventually exhausted reaching the edge of their ability to lower funding cost. Now after 20years of constant easing,

Japan is still stagnant and the Yen still trades close to record highs. Can the US really avoid the same fate?

Monday, October 18, 2010


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Weekly Review

So who traded better?

The week was dominated with Dollar weakness with currencies such as the Aussieand the CAD reaching parity with the Dollar. The Euro traded above the 1.4

threshold and the Sterling above the 1.6$.OpenBook traders were able to use this

Dollar weakness well focusing mainly on long EUR/USD and long AUD/USD.

Traders 1971guo and merv456798 where especially effective in using Dollar

weakness reaching place 5th and 4th

for the week in the Open Book ranking.

Trader 1971guo opened a long trade on the EUR/USD at around 1.387-1.389

recognizing the pair is aiming towards the 1.4 threshold. Trader 1971guo closed

his trade after just one day with the Euro reaching his target and trading at

1.4$.The fact that trader 1971guo was able to recognize the move towards 1.4

opening just a day before, indicates good trading senses and most importantlygood timing. The trader was able to gain a total of 522 pips in 5 parallel trades on

EUR/USD with a return on investment of87.1% for the week.

The Critical error- Trader merv456798 was also very good in using dollar

weakness trading long on the AUD/USD recognizing the Aussie is well in place for

a strong run to parity with the Greenback. Trader merv456798 opened a long

AUD/USD position around 0.987 and closed his positions around 0.998 very close

to parity. The trader was able to gain around 200Pips in 3 parallel AUD/USD

trades. However the trader later made a critical error. After gaining well from the

Aussie rise, trader merv456798 decided to bet once again on long AUD/USD. The

trader opened 3 parallel positions and failed to realize that the AUD/USD is

heading for a correction after a rally to parity with the Dollar. Instead of finishing

among the first 3, trader merv456798 was pushed to 4th place with a 91.7% gain

on investment for the week.

- Open Book Performance


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Weekly Review

The winner - ChidoriTrader Chidori and trader qing88 reached the first places for the week exceling in short term highly leveraged trades. In fact both

traders were quick to indentify the upcoming correction in the EUR/USD and in the GBP/USD opening short positions on the

EUR/USD and the GBP/USD at around 1.41 and 1.6$ respectively. Both closed the week with a high gain with very close results.

Trader qing88 closed the week with a 96.7% gain while trader Chidori closed the week with a 109%.In fact when examining both

closely in terms of win ratio it was qing88 with the best result with a win ratio of 8 out of 8 for the week. However since Chidori used

a leverage ofX400 andqing88 used a 100X Chidori was able to gain 12% more and move the first spot.

The Winning Trade-Trader Chidori moved to a EUR/USD short around 1.398 with a 100Pips gain closing at 1.388 gaining most of the

EUR/USD bearish correction. The EUR/USD later edged higher surpassing the 1.4 threshold however Chidori was very quick to react

and close his trade before the Euro rebounded again to the 1.4 level.

EUR/USD, Hourly Chart Source: eToro webtrader

- O en Book Performance


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Weekly Review

Instrument Trend Support II Support I Spot Resistance I Resistance II

EUR/USD 1.378 1.393 1.3976 1.416 1.42

GBP/USD 1.586 1.566 1.599 1.605 1.61

EUR/GBP 0.862 0.872 0.8744 0.881 0.90

USD/CHF 0.94 0.948 0.958 0.973 0.984

USD/JPY 80 80.8 81.43 83.3 86.5

USD/CAD 0.997 1.0 1.0098 1.014 1.0164

EUR/JPY 113 113.5 113.86 115 115.66

Oil 80 80.5 81.25 83.5 84.4

Gold 1,340 1,362 1,368 1,385 1,387

- Exchan e Rates


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Weekly Review

USD/JPY Weekly

Direction:BullishScenario:After sliding to new lows for the year and reaching very close to the80 threshold the pair could be heading for short-Term technical rebound.

Notice-A weekly close below 80 would invalidate our scenario.

Key Figures

1st 2nd

Targets 83.1 85.5

Support 80.8 80

Pivots Description

83.28 EMA 28 days

86.51 EMA 120 Days

89.87 SMA 320 Days

52 week range: 80.88-94.98

Bollinger Bands: 80.8-84.18

Source: Thomson Reuters

- Technical Zone


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Weekly Review

EUR/CHF Daily

Direction: BearishScenario:The long Term remains bearish cycle is yet to be shaken with theshort term gains of the pair still failing to edge above the 1.35 resistance. The

pairs failure to breach the 1.35 suggests a consolidation to the 1.32-1.33 area.

Notice-A weekly close above 1.35 would invalidate our scenario.

Key Figures

1st 2ndTargets 1.333 1.317

Resistance 1.35 1.357

Pivots Description

1.3299

1.356

EMA 28 Days

EMA 120 Days

1.3949 SMA 200 Days

52 week range: 1.276-1.517

Bollinger Bands: 1.3237-1.3462

Source: Thomson Reuters

- Technical Zone


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Weekly Review

Currency Time (GMT) Release Month Consensus Prior

NZD S 21:45 NZD CPI Q3 1% 0.3%

GBP S 23:01 Rightmove House Price Index Sep -1.1%

JPY S 23:50 Tertiary Index Aug -0.5% 1.6%

USD M 13:00 US Total Net TIC Flows Aug $63.7Bln

USD M 13:15 US Industrial Production Sep 0.2% 0.2%

USD M 13:15 US Capacity Utilization Sep 74.9% 74.7%

AUD T 01:30 RBA Meeting Minutes Oct

EUR T 08:00 Current Account Aug -3.8B

EUR T 9:00 German ZEW Survey Oct 63.5 59.9

USD T 12:30 US Housing Starts Sep 0.58M 0.569M

CAD T 13:00 BoC Rate Decision 1% 1%

JPY W 05:00 Leading Economic Index Aug 100

EUR W 06:00 German PPI (YoY) Sep 3.8% 3.2%

- FINANCIAL CALENDAR
http://www.fxstreet.com/fundamental/economic-calendar/http://www.fxstreet.com/fundamental/economic-calendar/


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Weekly Review

GBP W 08:30 BoE Meeting Minutes

GBP W 08:30 Public Sector Net Barrowing Sep 14.6Bln 15.3Bln

Oil W 14:30 EIA Crude Oil Inventories Oct15 -0.3M

USD W 20:00 Feds Beige Book

JPY Thu 04:30 All Industry Activity (MoM) Aug -0.4% 1%

CHF Thu 06:15 Swiss Trade Balance Sep 1.2Bln 0.568Bln

EUR Thu 07:30 German PMI Oct 54.6 55.1

EUR Thu 08:00 EMU PMI Oct 53.7 54.1

GBP Thu 08:30 UK Retail Sales (MoM) Sep 0.3% -0.5%

CHF Thu 09:00 ZEW Survey Oct -5.1

USD Thu 12:30 Intial Jobless Claims Oct16 453K 462K

CAD Thu 12:30 Leading Indicators Sep 0.2% 0.3%

USD Thu 14:30 Philadelphia Fed Manufacturing Oct 0.5 -0.7

EUR F 08:00 German IFO business climate Oct 106.5 106.8


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Weekly Review

CAD F 11:00 BoC CPI (MoM) Sep 0.1% -0.1%

CAD F 12:30 Retail Sales Sep -0.1% -0.1%

eToro Weekly Market Review, Oct 18, 2010

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Transcript of eToro Weekly Market Review, Oct 18, 2010