Mark Yagalla's Blog

Market Update for July 6

I hope everyone had a nice 4th of July holiday weekend. Mine was uneventful as I just rested. While Americans were enjoying their holiday, Greeks finally stood up for themselves. They basically gave a giant middle finger to Angela Merkel and the EU Commission. It's been a long time coming as the austerity measures put in place by the EU have basically crippled Greece's economy. The funny part is that all of the money received in the bailout went to bail out European banks that were holding Greece's debt. Now it's the problem of the IMF, the EU and the ECB. I love how public officials always come to the rescue of private banks. I'm thinking I need to make a career change.

So far today, the market's reaction has been to dump stocks and buy the dip in the euro. The 1.0950 support level held in the euro and buyers have come into the market. I personally think it's too early. There are too many moving parts and it's a tough bet for me to make either way. I think traders are anticipating that some type of deal will be made this week between Greece and its creditors. I'm doubtful that will happen.

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As far as today, the only time worth trading is 10:00 EDT. This is when the US ISM Services PMI is released as well as Canada's Ivey PMI. The market is expecting a reading of 56.2 for the ISM, up from 55.7. For Ivey PMI, we're looking for a reading of 54.0, down from 62.3.

In the currency markets, the Loonie is the one currency in a defined trend and that's down. The Loonie has weakened against the US dollar after a negative GDP print and weakness in crude oil prices and other commodities. If the Ivey PMI number is weak, I'll look to go long the USD/CAD.

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I'll be watching for the latest on Greece. It should be an interesting week to say the least. As always, best of luck and happy trading!

Market Update for July 2

Yesterday we saw more euro weakness for most of the day. The only exception was at 10:00 to 11:00. This is the final hour of London trading and I've been noticing extreme moves during this time period. There's a lot of position squaring going on and the market is quite active. I have yet to try and take advantage of this time frame. It's something new that I've noticed. I will certainly be watching it more closely going forward and look to capitalize. I will be adding this to my daily game plans.

In regards to yesterday's game plan, I traded the game plan that I had for yesterday. I traded the UK Manufacturing PMI data, the ADP report, and the ISM numbers. All three reports were US dollar bullish and I traded accordingly. Here on this hourly chart you can see how the euro has almost retraced all of Monday's move. If today's US employment report comes in strong, look to test the 1.0950 lows again.

The British pound has weakened as well and is testing the 1.56 support level.

The USD/JPY is moving higher as the 122 support level held.

The Loonie continues to weaken against the Greenback after this weak's negative GDP print.

The Swissy continues to weaken against the US dollar to the relief of the Swiss National Bank. The Bank intervened earlier this week to prevent the Swissy from strengthening too much.

For today, here's what I'll be looking at.

04:30 UK Construction PMI - expectation is for a reading of 56.5, up from 55.9 last month.

07:30 ECB Minutes

08:30 US Employment Report - expectations are for the US economy to have created 230k new jobs. Last month the number was 280k.

10:00 US Factory Orders - expectations are for a reading of -0.5%, down from the previous reading of -0.4%.

It'll be a busy day ahead of the long US holiday weekend. As always, best of luck and happy trading!

Market Update for July 1

I really love trading. For me it's more than just the money, but also the mental exercise. Each day brings new challenges and new occurrences. What Monday gave to the euro bulls and took away from the bears reversed yesterday. On Monday you had to be long all day while yesterday you had to be short all day. The problem yesterday was that it took all damn day for the trade to work out. Just before 11:00 EDT, the euro took a crap as London was set to close. Here's the euro daily chart first.

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Now here's the hourly chart and you can see the move that occurred just after 10:00.

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The best trade yesterday (which I missed!!) was the Loonie. Canadian GDP came in at -0.1% and the greenback crushed the Loonie. It was a no brainer trade. Negative GDP is bad news for any currency, especially when the market was expecting a positive read. This is what happened.

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For today, here's what I'm looking at. Right now the charts aren't telling me anything. I'm not getting a read or a bias. I think the markets will mostly trade sideways ahead of Thursday's US employment report, but these reports could move the market.

03:55 German Manufacturing PMI is expected to be unchanged at 51.9.

04:30 UK Manufacturing PMI is expected to increase from 52.0 to 52.5.

**08:15 ADP Employment Report is expected to show the US economy added 218K jobs, up from 201K last month. This is the single most important report of the day.

10:00 US ISM Manufacturing PMI is forecast to come in at 53.1, up from 52.8.

If these two reports out of the US are strong, expect US dollar strength in the crosses. As always, best of luck and happy trading!

Market Update for June 30

I have to admit. Yesterday was a tough day for me. Last night was even worse. I couldn't sleep. It shouldn't have been the case. I executed my trade in the euro perfectly. I bought at 1.0980. I had my defined risk of 30 pips. I then set my limit order for a 100 pip profit. I followed the news. The EU Commission said centimeters away from a deal. I entered my order, finished yesterday's blog post, and watched the market work in my favor. I felt good. Then I went to the bathroom and did a few other things. I came back to my screen and I was already out of my position as the euro hit 1.11. I made money, but I was out of the market.

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I was paralyzed. I should have been elated as I accomplished my goal. Instead I spent the next 10 hours watching the euro climb higher. I felt like Steve Wozniak and the other guy that founded Apple with Steve Jobs. Geniuses for getting in early. Dumb asses for selling too soon.

The reasons behind the rally were numerous. First, the initial sell off was a knee jerk reaction to the Greek referendum. Second, the headlines coming out of Europe were headlines of EU leaders speaking conciliatory towards Greece. The Greek leaders made a brilliant chess move and put the EU and their stuffy noses up against the wall. Third, almost everyone is bearish the euro. They all kept saying on Twitter that it couldn't keep rallying. "We're not seeing 1.12 today," said one. Well we got 1.12 and then some. I hate to see anyone lose money, but short sellers got killed yesterday trying to top pick the euro. Their short covering further fueled yesterday's rally.

Well, what's in store for today? I think it's going to be another tough day. Can make arguments either way for which direction the euro will head next. I trade off of facts and current facts at that. Until something definitive presents itself, I'm on the sidelines.

On today's agenda, we have German unemployment figures, UK GDP at 04:30 EDT, RBA Governor Stevens speaks at 04:40, euro zone inflation and unemployment data, Canadian GDP, S&P Case-Schiller Housing, Chicago PMI, and at 18:00 Fed Member Bullard speaks. There's a lot of data, so I won't bore you today with the expectations. Needless to say, I expect a busy day and will be glued to be screen for the entire time.

As always, good luck and happy trading!

Market Update for June 29

Well today is already starting out to be interesting. News emerged over the weekend that Greece is going to hold a referendum on July 5 on whether to stay in the euro or not. Then Greece issued a bank holiday and closed the Athens stock market. When a government issues capital controls, they almost always never work. This news caused a panic in the euro crosses and as soon as forex markets opened in Australia, liquidation went into effect.

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Then headlines came across from the EU Commission that a deal with Greece was likely and traders bought the dip. I being one of them. Like I've said before, fundamentals will trump the technicals all the time. Elliott Wave can't compete with the facts and the data. I'll follow the data over Elliott Wave any way.

For today the only market moving data on tap is US pending home sales for May due to be released at 10:00 EDT. Expectations are for a month-over-month increase of 1.2%. However, I think this data will only impact about 10 minutes worth of trading. The rest of the time the market will be focused on Greece. I've also said before that I wish Greece would exit the euro, but then again, trading the euro would be no fun anymore. Greece certainly keeps euro trading alive and me in business, so for that I thank the Greeks.

Hope everyone has a great week. As always, good luck and happy trading!

Market Update for June 26

I didn't trade at all yesterday. There wasn't much in the way of market moving data and in respect to what I was watching, the market's reaction was muted. As you can see in this hourly chart of the EUR/USD, the market has been in a tight range for over 2 days now. This is not the type of market I like to trade. I'm looking for a trending market and one that is breaking out or breaking down.

 

It's important to understand that there is no rule that says you have to trade every day. In my younger and stupider days, I needed to be in the markets all the time. Back then I was a gunslinger and what I'd call a "trade junkie." As I've grown older and wiser (hopefully), I'm more focused on prudent money management. I'm more worried about my risk than my reward. I guess that's what happens after one loses several fortunes.

Today looks to be much of the same as yesterday. I'm not expecting a whole lot to happen. The only data release worth watching will be the Michigan Consumer survey. The market is expecting the report to be in-line with last month. The consumer expectations reading should come in at 86.9 and the consumer sentiment reading at 94.6. We'll see what the reading is and wait our customary 5 minutes before doing anything.

After that, the Bank of England's Mark Carney speaks at 11:15 EDT. The pound like the euro has been range bound for over 2 days now. Maybe Carney will say something to get the pound moving one way or another.

I hope everyone had a good week and has a nice weekend. As always, best of luck and happy trading!

Market Update for June 25

Yesterday was a choppy trading day in the euro. I traded twice yesterday. Both times after the reports I told you about in yesterday's report - German Ifo Business Climate Index at 04:00 EDT and US Q1 GDP at 08:30 EDT. As you can see from this 5 minute chart, it pays to wait 5 minutes after the data is released.

[image error] While I didn't catch huge moves, they add up. I'd rather hit a lot of singles and have a high batting average than hit a home run and strike out a lot. With a 50 to 1 leveraged account and trading 1,000,000 units, which requires $25,000 in margin, 10 pips generates $1000, 20 pips $2000, and so on. Do the math and you can see how much money there is to be made in the forex markets. All you need is the EUR/USD to go from 1.1200 to 1.1210 and there's your $1000.

On tap for today, we'll have more nonsense from Greece and a few news items. First up will be Swiss National Bank's Thomas Jordan speaking at 04:00 EDT. At 08:30 EDT, we have US inflation data, jobless claims, and personal income and spending data. Not quite sure which item will move the markets the most. I'll be waiting my customary 5 minutes before I decide what to do. The last item on the agenda will be US Services PMI at 09:45 EDT. Expectations are for a reading of 56.7 in June, up from 56.2 in May.

We'll see how today plays out. The euro has really been on a roller coaster this week. I honestly have no clue were it's heading next and neither does anyone else. I'll stick to my game plan and monitor the data. That's the best bet for a forex trader in these markets. As always, good luck and happy trading!

Market Update for June 24

Yesterday was an interesting trading day to say the least. The euro was in sell off mode all day. Even better PMI numbers out of Germany and Europe couldn't give the euro a lift. At 08:30 EDT there was a brief bounce in the euro after US durable goods orders came in weaker than expected. This rally lasted all of three minutes until the news hit that Fed member Powell expects the first interest rate hike to occur in September and then another one in December. This killed any hopes for the euro bulls.

The cross that sold off the hardest on the news was the British pound. The pound has had quite a rally the past week and Powell's statements made the Sterling bulls think twice and book profits.

Yesterday was a decided risk off day. We saw money coming out of the euro, the pound, and flowing into the US dollar. Even the Swiss franc was weak against the dollar.

I didn't trade yesterday because I couldn't make sense of the situation. I didn't have my "why" to trade. It's gotten to the point that reporters are looking to interview the pizza delivery guy to see if Greece and its creditors are meeting or not. Thanos Vamvakidis best summed it up when he told CNBC:

"It is very difficult to trade Greece. You get random headlines; false positives…The market rallied following the proposals by the Greek government, but the truth remains that we did not achieve any progress – everything has been postponed until later in the week."

Even though I preach to watch the headlines, yesterday there were positive headlines and the euro couldn't rally. A market that can't rally on bullish news is a bear market. I just didn't have the confidence to short the euro out of fear that a deal would be announced and I'd be caught on the wrong end of the trade. What was happening was that the euro ship was sinking and everyone was on one side of the trade (short). If a deal was announced, everyone would be caught on the wrong side and rush to cover. I've seen powerful short covering rallies and I like to catch them. However, that did not happen yesterday.

Today, we have a couple of important items on the agenda. First up at 04:00 EDT will be the German Ifo Business Climate Index. Expectations are for 108.1, down from 108.5 last month. At 04:30 we have UK BBA mortgage approvals. Expectations are for 43.1K, up from 42.1K. At 08:30 we get the biggest item of the day - US Q1 GDP. Expectations are for this reading to come in better at -0.2% from the prior reading of -0.7%.

As far as numbers, the EUR/USD has support at 1.1150 and the GBP/USD at 1.57. I'll be waiting for today's data and will trade off that, if at all. If you have any specific questions, you can always email me at markyagalla@gmail.com As always, best of luck and happy trading!

Market Update for June 23

Yesterday was a volatile day in the forex markets as participants got bounced around by the latest headlines out of the EU. Will there be a deal with Greece this week or not? By looking at this hourly chart of the EUR/USD cross, you can see that traders just don't have a fucking clue.

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I got banged around early yesterday as I was reading the headlines instead of watching the markets reaction. I was initially down quite a bit of money and then I turned things around. I was able to turn a losing day into a winning day and that's what successful trading is all about. I just wish it wasn't so stressful. I'd like to have my nails back after all the nail biting I did yesterday.

What ended up happening was that I read the headline that a deal with Greece was likely today. I took that as good news and went long the euro. Slowly, but surely, the trade went against me. I regrouped and realized I was wrong. What I did next many don't have the stomach for. I reversed and went short the euro. I made back all my losses and then some. I can't really explain why, but I just knew to do it. My trader's reflexes kicked in and that's what I did. I'm now on a 6 day trading win streak and I hope it continues.

Today we have a lot of data on tap to drive the markets. First up is German Manufacturing PMI at 03:30 EDT. Expectations are for a reading of 51.3, up from 51.1 the prior month. At 04:00 EDT we have Euro Zone Manufacturing and Services PMI as well as Markit Composite PMI. Expectations are to be in-line with the prior month.

In the US, we have FOMC member Powell speaking at 08:00 EDT. At 08:30 EDT we have durable goods orders. At 09:00 EDT we have housing price index followed at 10:00 EDT new home sales. Expectations are for 525K new homes sold in May, up from 517K in April. After that we have the Richmond Fed Manufacturing data. The last item of the day will the Bank of Japan's monetary policy meeting minutes at 19:50 EDT.

It should be an interesting day to say the least. Hopefully I get in the trade correctly to start my day and not have to work my way out of it like yesterday. As always, best of luck to everyone and happy trading!

Market Update for June 22

Hello everyone!

Sorry for having no update on Friday, but when I'm not trading, I won't be posting any updates. It's usually because I decided to not trade that day because of other commitments or just because I took the day off. In terms of last Friday, there were no news items on deck that I wanted to trade and I had made money for the week. I hate nothing more than making money every day and then go in and give money back on a Friday. It ruins my weekend! Needless to say, I had a nice weekend and was happy with my trading for the week.

To start the new week, we're looking at a quiet day in terms of data. All eyes and ears will be on the Greek situation. I'll be monitoring my Twitter and Dow Jones feed all day looking for any clues as to what's going to happen. This is what will drive the EUR/USD trade. In terms of the GBP/USD, Bank of England member Cunliffe speaks at 03:45 EDT today. At 10:00 EDT we have the one big data release out of the US and that is existing home sales data. Expectations are for 5.26 million for the month of May, up from 5.04 million in April.

In terms of technical numbers, there are no trade setups that I'm seeing that I really like. I'm more focused on the fundamentals, the headlines and the data. We'll see what today will bring. Right now the major currency pairs are just treading water waiting for something to happen. Hopefully I'll be in front of my screen to catch it!

As always, best of luck and happy trading!