USD/MXN Price Forecast: US Dollar Takes Aim at Major Resistance

The US Dollar has posted a string of gains in recent weeks as rising Treasury yields have threatened risk assets and currencies. USD/MXN may face consolidation as USD strength wanes and resistance ...

from DailyFX - Market News https://www.dailyfx.com/forex/market_alert/2021/03/01/USDMXN-Price-Forecast-US-Dollar-Takes-Aim-at-Major-Resistance.html
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Oil Price Outlook Mired by RSI Sell Signal Ahead of OPEC JMMC Meeting

The Relative Strength Index (RSI) indicates a further decline in the price of oil as the oscillator slips below 70 to offer a textbook sell signal.

from DailyFX - Market News https://www.dailyfx.com/forex/fundamental/us_dollar_index/daily_dollar/2021/03/01/Oil-Price-Outlook-Mired-by-RSI-Sell-Signal-Ahead-of-OPEC-JMMC-Meeting.html
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How to Read a Candlestick Chart

Learn how to read and interpret candlestick charts for day trading, with top strategies and tips.

from DailyFX - Market News https://www.dailyfx.com/forex/fundamental/article/special_report/2020/12/07/how-to-read-a-candlestick-chart.html
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British Pound Technical Analysis: GBP/USD Pullback Grinds Support

The British Pound has been consistently strong so far in 2021 trade, but last week brought a pullback. Can buyers continue the trend?

from DailyFX - Market News https://www.dailyfx.com/forex/fundamental/daily_briefing/session_briefing/daily_fundamentals/2021/03/01/British-Pound-Technical-Analysis-GBPUSD-GBP-USD-Pullback-Grinds-Support.html
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4 Effective Trading Indicators Every Trader Should Know

Discover the best forex indicators for a simple strategy: Moving Average, MACD, Stochastic and RSI.

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Gold Price Rebound Vulnerable as RSI Flirts with Oversold Territory

Looming developments in the RSI may indicate a further decline in the price of gold as the indicator flirts with oversold territory for the first time since November.

from DailyFX - Market News https://www.dailyfx.com/forex/fundamental/us_dollar_index/daily_dollar/2021/03/01/Gold-Price-Rebound-Vulnerable-as-RSI-Flirts-with-Oversold-Territory.html
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February ISM Manufacturing PMI Hits a Pandemic High, USD Firm Above 91.00

The ISM Manufacturing PMI Report for February rose to its highest level of the pandemic, showing strength from the manufacturing sector as the economic recovery continues.

from DailyFX - Market News https://www.dailyfx.com/forex/market_alert/2021/03/01/February-ISM-Manufacturing-PMI-Hits-a-Pandemic-High-USD-Firm-Above-91.00.html
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US Market Open Live Analysis – March 1

A year since the markets plummeted on the pandemic’s global spread.
Join Andria for a preview of the markets prior to the US open today.

 

Click here to access the our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Germany to escape a technical recession – But what about Europe?

German state inflation data today have been mixed, with some states reporting an acceleration in the headline rate, others a slight decline. On the whole there may be a slight downside risk to preliminary pan Germany numbers, due this afternoon. Expectations are for a steady HICP rate of 1.6% and even if the headline comes in a tad lower, PMI readings this morning highlighted once again that cost pressures are building in the manufacturing sector, which together with higher energy prices could push up consumer prices once consumption demand rebounds.

Germany has had a stricter lockdown than France, Italy or Spain, but individual states have started to re-open activity today, even though overall numbers are not where the government would like them to be. However, German inflation numbers are likely to remain above the Eurozone average for a while and the ECB clearly is not expecting headline rates to top targets any time soon. Even if they eventually do, the shift towards a more symmetric target would require letting inflation run hot for a while following the current period of underinflation.

Overall, Germany’s economy not only weathered the first wave of the pandemic better than other major EU countries, it also expanded in the last quarter of 2020, despite the return of a relatively strict lockdown. Activity is still likely to contract in Q1, but Germany is set to escape a technical recession. At the same time, underlying price pressures are starting to pick up. With the ECB focused on the Eurozone average, Germany is likely to post above average inflation and risks fresh bubbles in house prices down the line.

German GDP growth was unexpectedly revised up to 0.3% q/q in the final reading for Q4 2020 – from 0.1% q/q reported initially. This left the annual rate at -3.7% y/y (working day adjusted). Still a sizeable contraction, but a much better result than developments in the EU as a whole. Not surprisingly consumption was severely hit by virus developments and the return of stay-home-orders at the end of last year. The rebound in machinery investment also came to a halt, even as construction investment continued to expand.  Exports, however, lifted a further 4.5% q/q, while imports jumped 3.7%, and together with a marked rise in stock building that suggests companies prepared for Brexit with pre-emptive orders and a build up of stock levels.

Manufacturing PMIs are at the highest level in 37 months across Germany, France and Italy, highlighting that despite ongoing virus restrictions, the manufacturing sector is looking very strong. Markit reported that “producers are benefitting from resurgent demand for goods in both domestic and export markets, linked to post-Covid recovery hopes” and “renewed stock building and investment in business equipment and machinery”, is adding to improved consumption. Good news for overall economic activity ahead, but also highlighting that inflation pressures are building, and that reflation trades are not totally unfounded.

This is also reflected in other survey data for February. The overall Ifo reading lifted to 92.4, the highest since October last year, driven not just by an improvement in the expectations index, but also a strengthening in the current conditions indicator. Not surprisingly, manufacturing sentiment turned even more positive, but even the services sector and retail trade are less pessimistic, despite ongoing restrictions. Vaccination programs and the sharp decline in active cases in Germany have boosted hopes for a re-opening of the economy and indeed, many German states have started to open schools this week starting with Kindergartens and primary schools. Others are set to follow in coming weeks.

 

The improvements suggested by the Ifo and PMI readings confirm that the jump in the ZEW earlier in the month was not just a reflection of buoyant investor confidence, but actually reflects improvement at company level. At the same time, the PMI in particular flagged supply chain shortages and a marked rise in costs and subsequently prices charged. German headline inflation already jumped markedly at the start of the year, as the temporary cut to the VAT rate fell out of the equation and developments at factory level suggest a further build up of underlying price pressures.

Markit reported that average charges for goods and services rose at the fastest rate since August 2019 – mainly driven by manufacturing output price, which rose at the fastest pace in nearly two-and-a-half years. Input costs have seen the sharpest increases in nearly a decade, reflecting not just higher raw material prices, but also upward pressure on transportation costs. Input price inflation across both manufacturing and services reached a 27-month high in February and the numbers suggest a further increase in price pressures down the line. The fact that companies are able to pass on costs highlights that there is no shortage of demand, despite rising prices, and as long as consumption bounces back once lockdowns are lifted, that could quickly lead to a sharp rise in consumer price inflation down the line.

What is pretty evident is the fact that the manufacturing sector clearly is pretty unfazed by latest lockdowns and that Germany’s export oriented economy is benefiting the storm better than others. Indeed, countries such as Spain, which rely heavily on services and tourism, will see a much larger boom bust cycle, but also a bigger share of income that is permanently lost. For Germany that means that the ECB’s one-size-fits-all monetary policy will be too expansionary for the domestic economy for a while to come. Traditional savings will remain unattractive and stock market and property investment look attractive by comparison. For national regulators that also means they need to keep a close eye on potential bubbles and insufficient risk management as money remains cheap.

Click here to access the our Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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How to Manage the Emotions of Trading

Controlling emotions while trading can prove to be the difference between success and failure.

from DailyFX - Market News https://www.dailyfx.com/forex/fundamental/article/special_report/2020/11/25/manage-the-emotions-of-trading.html
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DAX 30 Forecast: New Attempt to Break 14,000 as Positive Momentum Returns

It’s a positive start to March for equity markets as bond yields stabilize

from DailyFX - Market News https://www.dailyfx.com/forex/market_alert/2021/03/01/DAX-30-Forecast-New-Attempt-to-Break-14000-as-Positive-Momentum-Returns--.html
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South African Rand Outlook: USD/ZAR Timid Following Ratings Warning

USD/ZAR remains in the confines of a rectangle pattern which could be pushed for a breakout over the next few weeks as fundamental drivers begin to stack up.

from DailyFX - Market News https://www.dailyfx.com/forex/market_alert/2021/03/01/South-African-Rand-Outlook-USDZAR-Timid-Following-Ratings-Warning-ZAR-LiveEdu-WV.html
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Market Update – March 1 – Yields correct sharply!

Bond as well as stock markets rallied across Asia, with yields correcting sharply. The big swings in the markets of late, and especially Thursday’s wild ride intensified an increasingly nervous tone on Wall Street which is still just off of record highs. The long end continued to lead the move in yields lower just as it paced the surge on Thursday. While the rally picked up some steam in late trading on index buying which erased most of Thursday’s rout, the move pales in comparison to the run up for the month. Indeed it was the largest since the Trump victory in November 2016.

Headlines:

• RBA doubled its regular purchase volume at its bond-buying operation. – Australia’s 10-year rate dropped back nearly. opposition to higher rates in the market
• New Zealand’s 10-year rate still declined 17 bp, JGB yields are down -0.8 bp and the U.S. 10-year rate has dropped back -0.2% to 1.40%.
• The China’s official manufacturing PMI came in below expectations and at 50.6 was at a 9-month low, but Japan’s reading lifted into expansion territory again in and markets seem to have scaled back inflation worries somewhat, although clearly the sharp swings over the recent weeks remain worrying.
• JPN225 closed with a gain of 2.4%, the ASX was up 1.7% at the close and Hang Seng and CSI 300 are currently up 1.3% and 1.2% respectively. GER30 and UK100 are currently up 0.8%, while U.S. futures are posting gains of 0.7-1.1%
• Tech-heavy USA100 futures, that previously benefited from stay-home orders, outperforming again.
• The U.S. approved a new single shot vaccine by Johnson & Johnson, which is hoped to speed up the vaccination process and investors are in spending mood.
• British finance minister Rishi Sunak is set to announce an extra 1.65 billion pounds ($2.30 billion) to fund the country’s vaccination roll-out as part of his annual budget statement on Wednesday. – He would not rush to fix the public finances as he readied a budget plan which will pile more borrowing on top of almost 300 billion pounds of COVID-19 spending and tax cuts.
• The US passed a $1.9 bln stimulus package.
• Largely weaker dollar.
• Iran rejected a European Union offer to hold direct nuclear talks with the U.S. in the coming days, risking renewed tension between Tehran and Western capitals. Link

Forex Market

EUR – below 1.2100 under its 20-day moving average.
GBP– supported at 1.3968
JPY –  at 106,50 after 6-month high.
AUD – reversed nearly  70% of February’s gains – Currently between 20-and 50-DMA
CAD –  jumped to 1.2700 from 1.2600 as risk aversion returned.
GOLD – recovers some of Friday’s losses but remains at mid 1700.
USOil – retests 63 again with more than $1 appreciation after US stimulus news

 Today: Data releases today focus on final manufacturing PMI readings for the UK and the Eurozone as well as preliminary German inflation data for February. Eye are on the RBA is set to announce its policy tomorrow and markets will look ahead to comments from Fed Chair Powell on Thursday and the OPEC+ meeting on output on the same day.

Biggest mover – AUDJPY (+0.69% as of 09:30 GMT)

Click here to access the HotForex Economic Calendar

Andria Pichidi

Market Analyst

Disclaimer: This material is provided as a general marketing communication for information purposes only and does not constitute an independent investment research. Nothing in this communication contains, or should be considered as containing, an investment advice or an investment recommendation or a solicitation for the purpose of buying or selling of any financial instrument. All information provided is gathered from reputable sources and any information containing an indication of past performance is not a guarantee or reliable indicator of future performance. Users acknowledge that any investment in Leveraged Products is characterized by a certain degree of uncertainty and that any investment of this nature involves a high level of risk for which the users are solely responsible and liable. We assume no liability for any loss arising from any investment made based on the information provided in this communication. This communication must not be reproduced or further distributed without our prior written permission.

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Should You Use Automated Day Trading Software (EAs)?

Following on from the previous post by Frank Breinling about trading robots we thought this article from the balance By Cory Mitchell provides some food for thought around the pros and cons of using this type of robot trading software...

Many people are lured to the markets by promises of easy money via day trading robots or expert advisors (EAs). An EA, or trading robot, is an automated trading program that runs on your computer and trades for you in your account. Selling robots and EAs online has become a huge business, but before you take you plunge there are things to consider.

There are certainly some benefits to automating a strategy, but there are also some drawbacks. The thing to keep in mind is that rarely is making a ​boatload of money easy. The promise of easy money is the oldest trading scam in the book. There is money to be made with trading robots and learning to automate strategies. Unfortunately, to this do effectively could actually take longer than simply learning how to trade manually, since a person needs to learn how to trade first, and then still learn how to automate the strategies via a programming language. And buying a program comes with loads of pitfalls, which will be discussed shortly.

Below, we look at all of this, and more, exploring the pros and cons of robotic trading and EAs.

01 What Is Automated or EA Software?

Automated trading software goes by a few different names, such as Expert Advisors (EAs), robotic trading, program trading, automated trading or black box trading.

Automated software is a program that runs on a computer and trades for the person running the program. Since it is a program, it will only take trades with parameters that align with what is written in the program. Creating a trading program requires extensive trading knowledge, as well as programming skills.

EAs are based on a trading strategy, so the strategy needs to be simple enough to be broken down into a series of rules that can be programmed. The more complex a strategy, the harder it will be to effectively program.

For people who buy trading software, they are completely dependent on the trading skills and programming skills of the person who wrote the program. This is a vulnerable position to be in.

Like most software, it will require an update from time to time. Market conditions change, and the trading software needs to be updated with it. If the software is not updated by someone who knows what they are doing, then it is quite likely the software will have a very short shelf life of profitability (if it was profitable, to begin with). EAs that are written by and maintained by experienced traders and programmers have the best chance at maintaining profitability over the long-term.

02 Beware the Sales Push

While a few EAs will work, and produce good returns, most will not. Less than 5 percent of people who attempt trading are successful at it, and that includes people who create and buy EAs. The odds of success are still very small even when using a trading robot.

The people who are successful with EAs constantly watch how their EA is performing, make adjustments as market conditions change and intervene when uncommon events occur (random events can occur that affect the programming in unexpected ways). Successful robotic traders, just like successful manual traders, put in the work required to create and maintain profitability.​

This is quite different than the EAs sold online that describes a life of easy money and no work... all for $79.95! Once you buy an EA, rarely is there support and updates after the fact. Even if the creator of the EA is successful, that doesn't mean someone who buys the EA will be. The creator may occasionally intervene, or turn the program off (during major news events, for example). Slight changes to when the program is run can change results dramatically. Unless the creator of the program is coaching you on how to do this or providing long-term updates and monitoring as market conditions change, it's best to avoid getting sucked into the sales pitch.

03 Rarely Is Automated FULLY Automated

As alluded to above, successful robotic traders put in a lot of work to creating and maintaining their programs. The real work is maintaining the program. Someone can not simply flick a switch and watch the money roll in while doing nothing. This may work for a time, but ​market conditions change and unexpected events occur, which require intervention on the part of the trader.

If a person buys an EA, it is unlikely they will have the expertise to know when to intervene and when not to. Intervening, when not required, could turn a winning strategy into a losing one, just as not intervening when required could drain the trading account in a hurry.

In the Market Wizards book series by Jack Schwager, several successful automated traders are interviewed. All these traders were highly engaged with their strategies, and not just sitting back doing nothing. It is highly unlikely that a person can buy an EA and just leave it running while they sleep and work at another job. This approach may work, but only if they stay on top of the EAs performance, have the know-how to alter the program if market conditions change and know how and when to manually intervene when required.

Some people think that robotic trading takes the emotion out of trading. Unfortunately, this is not true. While the program doesn't feel emotion, the person running the program does. People may feel tempted to intervene when they see the program losing money, but the program may still be functioning well (losing trades happen). Or they may intervene to take profits prematurely, manually overriding a trade when the person sees a profit they like. All these emotionally-driven actions could destroy an EAs profitable edge in the market.

Automated traded is rarely auto-pilot trading. It takes a lot of knowledge to be able to maintain an EA, and trading skills/psychological skills are still required to intervene when necessary, but not too much.

04 Pros of Automated (Robotic or EA) Trading

Some of the pros of automated trading have already been discussed but let's go through more, in bullet form.

• EAs remove some of the psychological pressures of trading. Although, people using an EA still need to know when to intervene and when not too, which is still a psychological pressure/skill.
• EAs react quicker than humans can. When a trade signal appears (to enter or exit), there is no hesitation on the part of the EA. Humans, on the other hand, may freeze or question the trade. The lightning-fast reaction time of the EA is beneficial in fast moving market conditions.​
• Automated software can monitor far more markets than a human can. At any moment a human can only effectively monitor a few markets, but an EA can monitor hundreds. Once let loose, an EA can find opportunities in all the markets it is programmed to monitor. EAs can take advantage of more opportunities than a human can.
• Will take trades that suit a strategy, even if the trader feels otherwise. if the strategy has proven itself profitable, this is a good thing.
• Forces the trader to simplify a strategy down to a level where it can be programmed. This process gives traders an in-depth look at their strategy. People who buy EAs don't receive this benefit, and often don't know what is "under the hood."
• While some intervention is required, once a trading program is created, it may require minimal maintenance for long periods of time. This means that for certain periods of time an automated trading program may be less work than trading manually. When a program needs work though, it may require a lot of time.
• Automated trading is the truest test of whether a strategy is viable or not. Manual trading has too many variables, whereas a program just does what it is told. Automating and testing a strategy is a good way to see if a strategy is viable under current market conditions.
• Once a strategy is automated, it can be easily tested in different market conditions (using current or past price data). This will reveal weakness and strengths of the program. For example, it may perform well in trending markets, but poorly in ranging markets. This data can then be used to alter the program or to show the trader when it is appropriate to intervene and turn the program off or on.

05 Cons of Automated Trading

Some of the drawbacks of automated trading have already been discussed but let's go through some more, in bullet form.

• It still requires a lot of work to create and/or maintain the program.
• Manual intervention is occasionally required, meaning automated trading is not fully hands-off. For example, if volatility increases much more than normal then position size may need to be manually altered.
• Some programming skills are definitely desired. Even if buying a program, most don't come with long-term support or updates as market conditions change. If you don't know how to alter the program, the program will eventually be useless (unprofitable).
• Buying a program means not knowing what is under the hood. One of the benefits of automating a strategy is that it forces the user to really know the ins and outs of the strategy. That benefit is lost when buying someone else's program.
• The user will still face psychological pressures, such as wanting to intervene when the program is going well (protect profits) or doing poorly (protect capital). There is also the psychological pressure of deciding when it is the right time to intervene.
• It's unlikely that buying an EA online will produce positive long-term results. It may work for a short period of time, but ultimately the person using it needs to maintain it, and know when to intervene and when not too.
• To create your own EAs, trading, and programming skills are both required. The trading skills are required to create the strategy that will be programmed.
• Since automated strategies can be easily tested, that leaves them open to over-optimization. Over-optimization is when a program is fine-tuned to create the highest profit on past price movements. While this may make the program look very profitable in the past, optimization often leads to poor performance in the future. Also, since tests can be easily run, EA salespeople will often only show the periods in which the program performed very well. A test of the strategy can be performed for any period in history, so it leaves it open to a lot of tinkering with the statistics. Keep this in mind when viewing automated trading statistics. Ideally, statistics should be based on live trading and not run on simulated or backtested data.

06 Final Word on Using Automated Trading Software (EAs)

Automated trading can be a beneficial and profitable skill to have, but typically this skill can't be purchased for a few dollars on the internet. Automated trading takes a lot of work and skill. To effectively create and maintain an EA, a trader needs both trading and programming knowledge. Robotic trading also requires time. It is not something to set and forget. It needs to be routinely checked and manual intervention may be required when random events occur or market conditions change.

Learning to automate strategies is a worthwhile endeavor though. Automating a strategy requires in-depth knowledge of the strategy, and makes testing the strategy very easy. If a simple strategy can be programmed, seeing how that program performed recently may provide insights into how it will perform in the future. EAs can monitor more markets for trading opportunities than humans can, and can react quicker when trade signals occur.

Don't get lured into sales pitches that promise easy money if you buy an EA. Time is better spent learning how to trade, and then acquiring some programming skills if you want to automate your strategies.

Article Source: https://www.thebalance.com/automated-day-trading-software-eas-4142824