Guest Commentary: Weekly Outlook April 18 - 22

Weekly outlook for April 18-22

Here is a weekly outlook for April 18th to 22nd presenting the main
news items and reports related to US, Canada, Australia and Europe.

(all times GMT):

* Monday 18th of April 2.30 – Monetary Policy meeting Australia's
Bank :The minutes of the monetary policy meeting of the reserve
bank of Australia, in which the board discusses the domestic and
international economic conditions and decides on the Bank's basic
interest rate which is currently at 4.75%. The meeting was held
back in April 5th, however the minutes are published only two
weeks after the meeting;

* Friday 19th of April 13.00 –Canadian Core CPI:This monthly
report presents the main changes in the core consumer price index
which excludes the most volatile components such as energy, fruit
and vegetables. According to the previousCanadian statistics
reportforFebruary 2011, the CPI rose by 2.2% in 12 month up to
Februarycompared to a 2.3% increase up to January 2011. The main
reason for the rise is related to the energy prices that increased
by 10.6% during the 12 months up to February 2011;

* Wednesday 20th of April 9.30 Bank of England MPC meeting: This
will shows the minutes of the last Bank meeting in which it was
decided to maintain the basic interest rate at 0.5% and the asset
purchase program at 200 billion pounds, as GB's inflation rate
declined from 4.4% (Y2Y) on February to 4.0% on March 2011;

* Wednesday 20th of April 15.30 – EIA report about Crude oil
inventories: The EIA (Energy Information Administration) will
present its weekly report on the recent newsrelated to
U.SPetroleum and oil stocks declined by 4.9 million barrels, which
is a 0.28% drop compared to the previous week. The stocks reached
by April 8th 1,763.9 million barrels. This was the largest
withdraw since mid March. (see here my recent review on crude oil
stocks);

* Thursday 21stof April 13.30 – Department of Labor report - US
unemployment claims: For the week ending on April 9th, initial
claimsincreased by 27,000, to reach 412,000 claims; the insured
unemployment rate declined by 0.1 percent points and reached 2.9%
for the week ending on April 2nd; and the number of insured
unemployment was 3.680 million, a decrease of 58,000 compare to
the previous week's number (see here my review on the recent US
Labor report);

* Thursday 21st of April 15.30 – EIA report about Natural gas
storage:the EIA will also issue a weekly report about the recent
changes in natural gas storage, production and consumption in the
US. In the recent EIA report natural gas storageincreased by 1.8%,
i.e. an injection of 28 Bcf, as the total storage reached 1,607
billion cubic feet for all lower 48 states; the natural gas
storage was 10 Bcf above the 5-year average. (see here my recent
natural gas storage review).

By: Lior Cohen, Energy Analyst for Trading Energy

DailyFX provides forex news on the economic reports and political
events that influence the currency market.

Learn currency trading with a free practice account and charts from
FXCM.

Source: Dailyfx.com

READ MORE - Guest Commentary: Weekly Outlook April 18 - 22

U.S. Initial Jobless Claims Fall in the Latest Week

Initial unemployment insurance claims fell 6,000 to 388,000 for the
week ending March 26, 2011, more than reversing the previous week's
4,000 increase to an upwardly revised 394,000 level (initially
reported as 382,000). The level of claims in the latest week came in
slightly above market expectations for a 380,000 level. Upward
revisions to previous weeks largely reflected revisions to
seasonal-adjustment factors back to 2006. The four-week moving average
of initial claims, which normally provides a better indication of the
underlying trend in labour markets, rose to 394,250 from 391,000 the
previous week but remained below the 400,000 level for a fifth
consecutive week. Continuing claims (for the week ending March 19,
2011) fell 51,000 to 3,714,000 from 3,765,000 last week.

Despite the tick up in the four-week moving average of initial claims
in the latest week, the measure remained below the 400,000 level for a
fifth consecutive week, leaving the encouraging downward trend that
has been evident in the data in recent months broadly intact.
Today's report will likely have a limited effect on expectations
ahead of tomorrow's March employment report given that the payroll
employment survey was conducted earlier in the month (the payroll
survey is conducted in the week containing the twelfth day of the
month); however, the drop in the four-week moving average of initial
claims from 388,500 in the March survey week from 419,500 in February
is consistent with our expectation for employment to continue to
increase in the month. We expect tomorrow's payroll employment
report will show a 180,000 gain in private employment in March
although continued weakness in hiring by state and local governments
will limit the gain in overall payrolls to 168,000. This represents a
slight moderation from the 222,000 and 192,000 gains in private and
public employment, respectively, in February, reflecting the view that
the February employment report was boosted by a weather-related
rebound from depressed January levels that we do not expect to be
repeated in March.

Source: ActionForex.Com

READ MORE - U.S. Initial Jobless Claims Fall in the Latest Week

Guest Commentary: Upcoming Week for the USD/CAD – March 27 2011

Upcoming Week for the USD/CAD – March 27 2011

Places to put limit orders this week

Buying USD:

0.9800, 0.9780, 0.9750 (aggressive), 0.9720 (aggressive)

Selling USD:

0.9815, 0.9830-40, 0.9910, 0.9940 (aggressive)

Why:

The tabling and vote of non-confidence by the opposition in the
Canadian government spurred a late day rally on Friday, erasing losses
from Thursday. Last week the rate was contained within a range - a low
of 0.9730 (support) and a high of 0.9844.

The longer-term price trend continues to point lower, but indicators
such as the MACD are showing a bullish divergence. As the USD has made
lower lows versus the CAD the MACD has been making higher lows,
showing a lack of momentum and conviction in the downward moves.

A rally above the 0.9973 would be an indication of a turning point in
the pair, but a daily close above 1.00 would tell the real tale. The
last close we had above parity was on January 28 where the pair closed
at 1.0011 only to fall over the next two sessions.

Figure 1. USD/CAD Daily Chart

Source: Freestockcharts.com

The MACD on the hourly chart did not confirm the drop to 0.9730 last
week, and is signalling momentum in the USD. A rally above 0.9840 is
likely to see continued buying into the higher resistance levels (see
Selling USD levels).

The pair continues to trade in a choppy fashion, with momentum failing
to be sustained in either direction. This should be remembered when
placing trades, as currently this is not a strongly trending pair.

Volatility has broken out and reversed course on the legs of the
earthquake in Japan. The daily average (14) range which reached a
miniscule 52 pips/day on March 13, has since climbed to 90 pips/day.
The breakout in volatility, if it can be sustained, is likely to push
the pair beyond the range it has been contained in. Indicators such as
the MACD indicate the breakout will be to upside.

High impact news this week:

USD Consumer confidence:Tuesday@ 10 AM EST

CAD Gross Domestic Product:Thursday@ 8:30 AM EST

USD Non-Farm Payrolls & Unemployment:Friday@ 8:30 AM EST

USD ISM Manufacturing:Friday@ 10 AM EST

Have a great trading day!

Written by Cory Mitchell, CMT

Cory Mitchell is an independent trader specializing in short- to
medium-term technical strategies. He is the founder
ofhttp://vantagepointtrading.com/, a website dedicated to free trader
education and discussion. After graduating with a business degree,
Mitchell has spent the last six years trading multiple markets and
educating traders. He has been widely published and is a member of the
Canadian Society of Technical Analysts and the Market Technicians
Association.

Source: Dailyfx.com

READ MORE - Guest Commentary: Upcoming Week for the USD/CAD – March 27 2011

Commentary by Central Bank Policymakers Could Overshadow Data Next Week

The flow of data next week is particularly heavy, as it marks the end
of March and the beginning of April, meaning growth figures will be
released from major economies, as well as labor market data from the
U.S. However, following the European Union Summit, the markets will be
looking towards commentary by central bank policymakers around the
globe to figure out how to wind down stimulus, withdraw liquidity, and
raise rates. U.S. Treasuries saw their yields jump late in the North
American session on Friday following commentary by Federal Reserve
Governor Charles Plosser that he would support action to end the
FOMC's mandate of quantitative easing. With many FOMC policymakers
scheduled to speak next across the globe, markets will be listening
eagerly to try and pinpoint a time if and when the Federal Reserve
will raise rates. Further hawkish commentary will assuredly boost
interest rate expectations, sending the Greenback higher against other
major currencies.

* German Consumer Price Index (YoY) (MAR P): March 29 – --:-- GMT

Inflation is expected to continue its creep higher in Europe, with
Germany's consumer price index expected to have gained by 2.2
percent in March, on a year-over-year basis. Calls by European
Central Bank policymakers remain high; in fact, the OIS shows a
124.2 percent chance of the European Central Bank raising interest
rates by 25-bps at their meeting in a few weeks. Consumer prices
have been accelerating an increasingly accelerating rate since
August, and the year-over-year inflation rate has been positive
every month since November 2009. A reading over 2.0 percent would
mark the second consecutive month in which the index had gained at
such a pace, and another jump in German consumer prices would
likely be the final nail in the coffin for an ECB rate hike with
purchasing power being siphoned from European consumers.

* U.S. Consumer Confidence (MAR): March 29 – 14:00 GMT

Consumer confidence is forecasted to fall back below 70.0, after
holding above said level for only one month. A reading of 65.0
would roughly equate to the reading in January, which was 64.8. The
reading in February was the highest rate in three years. A turn
lower in the housing market will likely be one of the leading
causes of the decline in confidence, as evidenced by a record low
in new housing starts this week. A poor housing market, in
conjunction with rising inflationary pressures, the crisis in the
Middle East and North Africa, and a deteriorating nuclear situation
in Japan area also to have been factors that could have weighed on
confidence. The latter two events could just be a temporary drag on
confidence if the situations are resolved without too much
collateral damage to human life and the environment. A
steeper-than-expected drop will almost definitely weigh down the
U.S. Dollar, as one would expect a deteriorating outlook for the
economy to be followed by less consumption, and depressed growth
figures down the road. Join a DailyFX analyst for live coverage of
event!

* Canada Gross Domestic Product (YoY) (JAN): March 31 – 12:30 GMT

Canadian gross domestic product data surprised the market in the 4Q
of 2010, as exports expanded at their fastest rate since 2004 and
the pace of spending by consumers quickened. However, facing steep
debt issues coming into 2011, as well as a strong Canadian dollar
relative to its U.S. counterpart, figures, though expected to show
continued growth at a 3.1 percent clip, could miss expectations.
Clearly, the Canadian people are not pleased with the direction the
country is moving in, given that the House of Commons voted today
to remove the current conservative government from its position,
with new elections expected to be held in May. Similarly, economic
conditions in the first few months of the new year were likely to
have been significantly worse than they were in the preceding
months, leading one to believe that the GDP figure could be slimmer
than anticipated. However, considering the components of growth are
well-documented before the release of the aggregate number, the
price action sparked onto Loonie-crosses could be limited. Join a
DailyFX analyst for live coverage of event!

* U.S. Change in Non-farm Payrolls (FEB): April 1 – 12:30 GMT

Payroll figures beat forecasts last month, expanding by 192,000
jobs, versus the 190,000 expansion expected. Job growth in December
was particularly weak, but the markets seemed to accept the higher
figure in January as a result of more moderate weather conditions
relative to how they were in December, and an improving overall
economy. True, another round of payrolls at or above expectations
will certainly support Federal Reserve Chairman Ben Bernanke's
postulation that there are "grounds for optimism" about
improvements in the labor market, although it has been projected
that there needs to be at least 125,000 jobs added every month for
the labor market to keep up with population growth. Also featured
on Friday will be the Unemployment Rate, which after falling to its
lowest level since April 2009, is expected to hold at 8.9 percent.
Join a DailyFX analyst for live coverage of event!

* U.S. ISM Manufacturing (MAR): April 1 – 14:00 GMT

The ISM manufacturing gauge has risen every month since July,
reaching its highest level since May 2004 when it reached 61.4 in
February. The index is expected to show continued expansion in the
manufacturing sector, which is indicated by a reading above 50.0. A
weaker Greenback across the major currencies has certainly helped
increase demand for American goods, ultimately boosting exports and
keeping growth running. Another strong number will boost hawkish
rhetoric within the Federal Reserve, as rate hike proponents will
cite the gauge as a reason to withdraw quantitative easing in order
to prevent the economy from overheating. On the contrary, if the
figure slides more than expected, it could lead to a weaker U.S.
Dollar, as adversaries of a rate hike will cite unstable footing
the U.S. economy finds itself on, and another reason to extend
quantitative easing or introduce a whole new round of liquidity
injections.

See the DailyFX Calendar for a full list, timetable, and consensus
forecasts for upcoming economic indicators.

Written by Christopher Vecchio, DailyFX Research

Source: Dailyfx.com

READ MORE - Commentary by Central Bank Policymakers Could Overshadow Data Next Week

G-7 Intervention, The Week in Review

The Group of Seven may have launched their first concerted currency
intervention in over ten years, but its chance of success, while
perhaps better than even, is by no means assured. Dollar purchases by
the central banks, in the Tokyo, European and American markets on
Friday lifted the currency by more than three figures against the yen,
from 78.82 as high as 82.00, a third of which had been lost by the
close.

The timing chosen by the central banks, almost immediately after a
punishing stop loss run from 79.80 to 76.25 the day before, had good
market rationale. Sell stops tend to act like quicksand on a market,
drawing traders and the market to their execution.

If the banks had intervened before the stops were executed and then
over time the levels drifted lower toward the area below 80.00, the
orders would have been executed despite the bank's prior intervention.
Then intervention, always risky, would then have looked like a
failure. It is as certain as possible without actually knowing, and
the banks will not inform, that the central bank decision makers and
their execution desks were aware of the stop loss sell orders below
79.80 and that knowledge informed their decision.

Currency markets will have a hard time returning to comparative
economic logic until central banks resume normal interest rate
policies. As long as the Federal Reserve has a zero rate, and that is
an apt description even if it is not technically accurate, and a
negative real Fed Funds rate counting inflation, the dollar will not
be able to gain permanent traction no matter the performance of the US
economy.

Despite much talk of the safe haven trade since the Japanese
earthquake, there has been no general move into the dollar or really
anywhere else in volume due to the Asian events.

Fear of capital loss is the driving force behind the safe haven trade.
During the acute phase of the financial crisis investors briefly
accepted negative returns on Treasuries for the perceived safety of US
government bills. Current fear of capital loss in the financial market
is muted, in the background due to recent history but not manifest.
Gold is lower post Japan; if there were any generalized safe haven you
would see it in gold

The one possible safe haven move has been to the Swiss Franc which
reached a new historical record post the Japanese event. That is
probably more a vote for safety and discretion of funds in Swiss banks
than a vote of confidence in the Swiss economy. But the Swiss Franc is
a relatively minor currency compared to the volumes of true safe has
flows that entered the US dollar and dollar assets during the fall off
2008, or from the euro when the dissolution of the single currency was
feared in the first blush of the debt crisis last year.

The main impact from the Japanese event, aside from the very emotional
reactions from to the threat of a nuclear cloud, has been the prospect
for slower world economic growth.

Different currencies are responding differently to the events in Asia.
It is not the dollar or dollar related considerations that are driving
the markets. The dollar is the other side of most currency trades so
what is actually Australian Dollar weakness shows up and can be
mistakenly interpreted as US Dollar gains

Yen strength prior to intervention had more to do with repatriation,
though amounts are difficult to quantify, existing market positions
and large stops below 79.80 executed Wednesday evening New York time,
(Thursday morning in the Antipodes), in typically thin Sydney/Auckland
liquidity. The move was entirely typical of trading in that market.
The beginning position of the yen well below 90 to the dollar owed
most to the residual of the collapse of the carry trade two years ago
which had originally carried the yen to its position below 100

Euro strength is due to several factors: recalculation of the euro/yen
crosses with a stronger yen (weaker dollar yen); the recent ECB rate
statements and promise of an April hike and the generally better
European debt picture.

Australian, New Zealand and Canadian Dollar weakness has been due to
their commodity currency status and the potentially slower world
economic growth from the Japanese events. In addition all three
currencies had been at or close to historical highs versus the dollar
so almost any major event whose outcome is unknown is a good reason to
take profit. There had also been renewed questions on China's ability
to maintain growth

The dollar is not putting up any much resistance to these developments
because it has an overhang of quantitative easing. Without the benefit
of the safe haven trade monetization is the fear stalking the dollar.
Even though US statistics are better the frozen Fed rate policy and
continuing QE will continue to negate any positive effects on the
dollar from US economic expansion.

Source: ActionForex.Com

READ MORE - G-7 Intervention, The Week in Review

The Trading Week: Mar. 21 - Mar. 25

Mar.
19, 2011
(Allthingsforex.com)
–
Economic
growth,
consumer and
housing market
data from the
world's
largest
economy,
coupled with
the EU summit,
the U.K.
inflation gauge
and the Bank of
England meeting
minutes, will
place the U.S.
dollar, the
euro, and the
pound in the
spotlight
throughout the
busy week
ahead.

In
preparation for
the new trading
week, here is
the outlook for
the Top 10
economic events
that will move
the markets
around the
globe.

1. USD-
U.S. Existing
Home
Sales,
the main gauge
of the
condition of
the U.S.
housing market
measuring the
number of
closed sales of
previously
constructed
homes,
condominiums
and co-ops,
Mon., Mar. 21,
10:00 am,
ET.

In
light of the
worst-than-expected
housing starts
report, the
sales of
existing homes
could also
confirm the
weakness in the
U.S. housing
market with a
monthly sales
decline to 5.15
M in February
from 5.36 M in
January.

2. GBP-
U.K.
CPI-Consumer
Price
Index,
the main
measure of
inflation
preferred by
the Bank of
England, Tues.,
Mar. 22, 5:30
am, ET.

Inflation in
the U.K. is
forecast to
remain
stubbornly high
with a reading
of 4.2% y/y in
February, up
from 4.0% in
January and
well above the
Bank of
England's
3.0% ceiling.

3. GBP-
Bank of England
Monetary Policy
Committee
Meeting
Minutes,
a comprehensive
report of the
central
bank's
meeting that
could provide
an outlook on
the economy,
interest rates
and future
monetary
policy, Wed.,
Mar. 23, 5:30
am, ET.

The
minutes are
expected to
show that the
Monetary Policy
Committee was
not in any
hurry to hike
interest rates
as the majority
of policy
makers voted
against a rate
hike. However,
rising
inflationary
pressures could
continue to put
pressure on the
Bank of England
to consider a
rate hike
sooner rather
than later. If
at upcoming
meetings more
committee
members were to
decide to join
the camp of the
three
"rate
hawks"
Andrew
Sentence,
Spencer Dale
and Martin
Weale, the
market could
continue to
price
expectations
for an interest
rate increase
in the near
future.

4. JPY-
Japan Trade
Balance
of the
difference
between imports
and exports,
Wed., Mar. 23,
7:50 pm,
ET.

The
Japanese export
growth is
expected to
make up for the
deficit
reported last
month with a
trade surplus
reading of up
to 895 B yen in
February,
compared with
the 471 B yen
deficit in
January.

5. GBP-
U.K. Retail
Sales,
an important
gauge of
consumer
spending
measuring sales
at retail
establishments,
Thurs., Mar.
24, 5:30 am,
ET.

Rising
fuel and food
costs could
weigh on the
U.K. consumer
sentiment and
spending with
retail sales
dropping by
0.5% m/m in
February from
the 1.9% m/m
increase in the
previous month.

6. USD-
U.S. Durable
Goods
Orders,
a leading
indicator of
economic
activity
measuring
durable goods
orders placed
with domestic
manufacturers,
and U.S.
Jobless Claims,
an important
gauge of
employment
trends and
labor market
conditions,
Thurs., Mar.
24, 8:30 am,
ET.

After a
sharp 3.2% m/m
bounce in
January, the
U.S. orders for
durable goods
are expected to
pull back with
a reading of
1.6% m/m in
February.
First-time
applications
for
unemployment
benefits are
forecast to
reach 492K,
slightly higher
that the
reading of 385K
in the previous
week. To
indicate a
significant
decline in
unemployment,
economists
estimate that
jobless
applications
would need to
fall to 375K or
below.

7. JPY-
Japan CPI-
Consumer Price
Index,
the main
measure of
inflation
preferred by
the Bank of
Japan, Thurs.,
Mar. 24, 7:30
pm, ET.

Deflationary
pressures in
Japan could
continue to
push the
inflation gauge
below 0% for
another month
with the CPI
registering a
-0.3% y/y
reading in
February from
-0.2% y/y in
January.

8. EUR-
Germany IFO
Institute
Business
Climate and
Expectations
Index,
a leading
indicator of
economic
conditions and
business
expectations in
the
Euro-zone's
largest
economy, Fri.,
Mar. 25, 5:00
am, ET.

The
German IFO
index is
forecast to
show a small
shift lower in
the optimistic
outlook for the
largest economy
in the
Euro-zone with
a reading of
110.5 in March,
compared with
111.2 in the
previous
month.

9. USD-
U.S. GDP- Gross
Domestic
Product,
the main
measure of
economic
activity and
growth in the
world's
largest
economy, Fri.,
Mar. 25, 8:30
am,
ET.

The
main spotlight
economic event
of the week
will bring the
third and final
reading for the
U.S. Q4 GDP
which is
forecast to
revise the U.S.
economic growth
higher by 3.0%
in the fourth
quarter of
2010, up from
the revised
estimate of
2.8% and faster
than the 2.5%
growth in the
third quarter.

10. EUR-
European Union
Summit,
a meeting of EU
leaders to
discuss
solutions to
the debt crisis
and other
economic
issues, Fri.,
Mar. 25, All
Day
Event.

The
final day of
the March 24th
and 25th EU
Summit would be
the deadline by
which EU
leaders have
promised to
deliver
concrete
measures and
"comprehensive
solutions"
to contain the
debt crisis,
including
possible
expansion of
the European
Financial
Stability
Facility fund.
With some
alarming trends
re-emerging
from the
European debt
markets and
debt
obligations
coming due for
Spain and
Portugal,
should the EU
leaders fail to
deliver on
their promise,
a massive
investor
disappointment
could weigh on
the euro.

Source: Fxstreet.com

READ MORE - The Trading Week: Mar. 21 - Mar. 25

Forex Strategy Outlook: Volatility Expectations Favor Breakout Trading

Market Conditions Summary

A noteworthy bounce in forex options markets' volatility
expectations raise the risks of sharp US Dollar moves against the
Euro, making breakout-style trading systems attractive in the week
ahead.

DailyFX+ System Trading Signals – An early-week reversal in the US
Dollar sparked initial losses in trend-following Momentum1 and
Momentum2 systems, but the later pullback in the USD left Momentum1
higher on the week while the latter saw more modest losses.
Performance in Breakout2 was similarly mixed amidst sharply choppy
moves, but a subsequent pickup in volatility expectations bodes well
for the frequent outperformer. Said system looks particularly
attractive in Japanese Yen pairs amidst sharp jumps in volatility
expectations.

To gain a greater understanding of all six trading systems, view my
recent presentation on SSI and the trading signals on our FXCM Digital
Expo page.

DailyFX Individual Currency Pair Conditions Summary

Recent market moves have sparked noteworthy bounces in FX Options
market volatility expectations, visible through our 1-week, 1-month,
and 3-month DailyFX Volatility indices. Yet those same implied
volatility levels remain well within their overall downtrend, limiting
our longer-term bullishness for breakout systems. In the shorter-term
watch for sharp currency moves, but we'll need to see a sustained
breakout in our volatility indices to call for a more substantive
shift in market conditions.

Benchmark Trading Systems

Data and Backtest Results Generated using FXCM Strategy Trader

Our range trading strategy continues to outperform amidst the
downtrend in market volatility expectations. The recent jump in
volatility expectations notwithstanding, our outlook remains bullish
for our RSI range trading system.

Written by David Rodríguez, Quantitative Strategist for DailyFX.com,
drodriguez@dailyfx.com

To be added to this author's distribution list, send an e-mail
subject line "Distribution list" to drodriguez@dailyfx.com

Definitions

Range Strategy – The benchmark range trading system shows the
hypothetical performance of a simple Relative Strength Index strategy
on 60-minute EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, AUDUSD, and
NZDUSD pairs. It sells when the 14-period RSI falls below 70 and buys
when it crosses above 30. No other trading rules are used.
Hypothetical results are generated using FXCM Strategy Trader.

Trend Strategy – The benchmark trend trading system shows the
hypothetical performance of a simple Moving Average Crossover strategy
on 60-minute EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, AUDUSD, and
NZDUSD pairs. It buys the currency pair when the 50-period Simple
Moving Average crosses above the 100-period and 200-period averages.
It sells when the 50-period crosses below the 100-period and
200-period averages. No other trading rules are used.

Breakout Strategy – The benchmark breakout trading system shows the
hypothetical performance of a simple Channel Breakout strategy on
60-minute EURUSD, GBPUSD, USDJPY, USDCHF, USDCAD, AUDUSD, and NZDUSD
pairs. It will set a buy order at the highest high of the previous 20
bars plus one pip and a sell order at the lowest low of the previous
20 bars minus one pip. No other trading rules are used.

Volatility Percentile – The higher the number, the more likely we
are to see strong movements in price. This number tells us where
current implied volatility levels stand in relation to the past 90
days of trading. We have found that implied volatilities tend to
remain very high or very low for extended periods of time. As such, it
is helpful to know where the current implied volatility level stands
in relation to its medium-term range.

Trend – This indicator measures trend intensity by telling us where
price stands in relation to its 90 trading-day range. A very low
number tells us that price is currently at or near monthly lows, while
a higher number tells us that we are near the highs. A value at or
near 50 percent tells us that we are at the middle of the currency
pair's monthly range.

Range High – 90-day closing high.

Range Low – 90-day closing low.

Last – Current market price.

Bias – Based on the above criteria, we assign the more likely
profitable strategy for any given currency pair. A highly volatile
currency pair (Volatility Percentile very high) suggests that we
should look to use Breakout strategies. More moderate volatility
levels and strong Trend values make Momentum trades more attractive,
while the lowest Vol Percentile and Trend indicator figures make Range
Trading the more attractive strategy.

HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME
OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY
ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO
THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN
HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY
ACHIEVED BY ANY PARTICULAR TRADING PROGRAM.

ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT
THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN
ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO
HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF
FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO
WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE
OF TRADING LOSSES IS MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT
ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO
THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION.

OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN
THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH
CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. Any opinions, news,
research, analyses, prices, or other information contained on this
website is provided as general market commentary, and does not
constitute investment advice. The FXCM group will not accept liability
for any loss or damage, including without limitation to, any loss of
profit, which may arise directly or indirectly from use of or reliance
contained in the trading signals, or in any accompanying chart
analyses.

Source: Dailyfx.com

READ MORE - Forex Strategy Outlook: Volatility Expectations Favor Breakout Trading