Tag: Relative Strength Index (RSI)

Is The Dollar Overvalued?

Posted on by Lior Alkalay

Lior Alkalay - INO.com Contributor - Forex


The US economy just seems to get better and better; better than robust retail sales, knockout earnings in payrolls and confident consumers raring and ready to spend more and more. Yet, after a rally that stretched all the way from early May, the last few days have been rather mixed for the Dollar, turning its monthly return against peer currencies into a virtual flat line. What might be the reason for that and should it affect your FX strategy? The answer to those questions is our focus for today.

The Growth Gap

If the outlook for the US economy and the US Dollar are so positive, what then could make investors question their Dollar bullish bets? Continue reading "Is The Dollar Overvalued?" →

They Do Ring A Bell At The Top Of The Market

Posted on by The INO.com Team

Hello traders and MarketClub members everywhere! Just this morning I was thinking of an essay I had read many, many years ago. The intriguing feature to me was the headline which read, "They Do Ring A Bell At The Top Of The Market."

Well, I have to say it was an intriguing headline which got me to read the article, perhaps like you're reading this post now. The essence of the article was when interest rates go up, they usually signal a top in the market. As we all know, we have had unusually low interest rates for a prolonged length of time with one QE after another. All of which has boosted the stock market, but I believe the jury is still out on the economy.

With the end of quantitative easing, it's only going to be a matter of time before the Fed begins to raise interest rates. So the question is, how is that going to affect the markets? On one side of the coin, you can argue that it is only going to be good for people that have fixed incomes and rely on bonds and interest-bearing instruments. On the other side of the coin, will investors be willing to risk hanging in the market if they can get a return elsewhere with little or no risk? Continue reading "They Do Ring A Bell At The Top Of The Market" →

Growing Profits in Forex Trading By Using Indicators

Posted on by The INO.com Team

The guy sitting next to you at work making all that money trading currency does not have a special Forex crystal ball. What he is doing to ensure continued profits in his trades is reading indicators and then basing his currency trading moves on them. Once you adopt this practice, how to increase your Forex trading account will no longer seem like such a mystery.

What are Indicators?

Trading currency requires knowing when to buy and when to sell and the sooner the better. This requires studying charts to see how the pair you are trading moves under current circumstances. These movements are known as indicators, and once you master them you will become that same Forex fortune teller as the guy in the next cubicle.

Identifying the Type of Market

When looking at a chart, the first thing you are going to want to pick out is the type of market you are dealing with. This will help you in determining the type of indicator you are going to use. A trending market is when the price of the currency is moving steadily, either higher or lower. These can be seen by long lines heading in one direction. Ranging markets are noted by strong resistance and support levels, where even with sharp fluctuations the currency is not breaking through.

Moving Averages

Continue reading "Growing Profits in Forex Trading By Using Indicators" →

A Closer Look at the US Dollar

Posted on by The INO.com Team

Using the standard weekly currency chart we followed along for months as the Euro found resistance at the long-term downtrend line as expected, the commodity currencies long ago lost major support and non-confirmed the commodity complex and the US dollar moved from a hold of critical support, to a trend line breakout, to its current impulsive and over bought status.  It is time now for a closer look at Uncle Buck since this reserve currency is key to so many asset markets the world over.

As the charts below show, USD is over bought on both daily and weekly time frames.  But the monthly is interesting because its big picture view is that of a basing/bottoming pattern, and it is bullish.  That is a long-term director, so regardless of what happens in the short-term, a process of unwinding the hyper-inflationist ‘Dollar Collapse’ cult is ongoing.  Signs point to disinflation toward deflation.

We’ll start with a daily chart and then ascend right through the weekly and then the monthly to take the pulse of USD.

As noted, the daily chart below is very over bought.  It is currently consolidating the big jerk upward that has come against Euro-negative policy from the ECB and an increasing drum beat about an eventual rise in the Fed Funds rate in the US.  People are finally catching on to the fact that the US economy has been strengthening since early 2013 and that the Fed is looking out of touch holding ZIRP despite this strength.

So the dollar is getting bid up.  The question the chart asks is whether the current consolidation will work-off of another over bought situation, or is a prelude to a reversal?  The answer is going to be key to the bounce potential in many asset markets, but especially commodities, which are generally tanking and precious metals, with gold eventually due to firm after it finishes its bear market and its fundamentals come in line.

usd.daily

You will recognize the weekly chart as it is the top panel of our long-running multi-currency chart.  RSI has been added to this view to show the over bought level.  Note that the weekly has joined the daily in over bought status on this most recent drive, whereas it was merely healthy – and not over bought – the last time the daily registered an over bought reading in July. Continue reading "A Closer Look at the US Dollar" →

Three Reasons You Should Buy Amazon.com Inc. (NASDAQ:AMZN)

Posted on by The INO.com Team

Today I'll be looking at Amazon.com Inc. (NASDAQ:AMZN). At this point in time, the name Amazon is synonymous with online shopping, but Amazon does quite a bit more than just that. Amazon also runs a huge cloud infrastructure hosting service that has revenues in the billions of dollars. Amazon is constantly rolling out new services that are all designed to help sell more products. They are even coming out with a payment service for merchants that can be used on a smart phone.

Jeff Bezos, the genius behind Amazon, recently purchased the Washington Post. I'm not sure that this paper is going to make Jeff any money, but it is going to win him a lot of friends in Washington DC. Why would Bezos care about a newspaper? I don't think he cares about the newspaper itself, but rather the power the Washington Post has with politicians. What he cares about most is not having regulators come in and create problems by making more regulations than are necessary.

All that aside, here are three good reasons why I believe Amazon is going to have a very good fourth quarter.

1. Technically the stock looks good after pulling back from recent highs it made in July around the $360 area. The stock found support right around $280 and an important Fibonacci retracement level at $310.

2. Yesterday, Monday the 18th, the stock of Amazon flashed a weekly Trade Triangle. This action reaffirmed that the longer-term trend has resumed and should now be moving higher.

3. The stock is now in very strong hands with all the Trade Triangles green, indicating a strong upward trend.

CHART LEGEND
1. Monthly red Trade Triangle indicates the upward trend had reversed.
2. All Trade Triangles are now green indicating a strong upward trend.
3. Green weekly Trade Triangle indicates to cover any short positions.
4. Monthly Trade Triangle turns green.
5. A red weekly Trade Triangle indicates exit long positions.
6. New weekly green Trade Triangle kicks in at $335.
7. The RSI indicator is trading above the 50 line indicating a strong trend.
8. The MACD indicator is showing the trend is now positive.

I still believe that Amazon.com Inc. (NASDAQ:AMZN) is a powerhouse to be reckoned with. Amazon's only real challenge will be regulations coming in to squash what is a shining success in entrepreneurial-ism and capitalism.

Today, I'm seeing some profit taking coming into the market and I believe that this presents an opportunity to pick up the stock of Amazon. Currently Amazon is trading just below our original Trade Triangle buy ($335) signal.

Every success with Amazon and MarketClub,
Adam Hewison
President, INO.com
Co-Creator, MarketClub