Mark Yagalla's Blog, page 2

Market Update for June 18

Yesterday was all about the Fed, the FOMC statement, and remarks by Fed Chairman Janet Yellen. All didn't disappoint. This is why I trade for a living and what I look forward to. The EUR/USD initially sold off on the statement and then caught a bid. I didn't enter the market right away because the volatility was so extreme that there was at times a  7 to 10 pip spread between the bid and the ask. I don't touch those kind of markets. When the spread tightened to 2 pips, I got long at 1.1290. While I didn't catch the majority of the move, I made money and went to bed because it was 1:30 AM here in Thailand.

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Today we have quite a few items on the agenda. First up will be the SNB's interest rate decision and then Chairman Thomas speaks. I'll be watching the USD/CHF and EUR/CHF crosses for movement. This all happens at 03:30 EDT.

After that we have UK retail sales at 04:30 EDT, wage growth in the euro zone at 05:00 EDT, US inflation data and initial jobless claims at 08:30 EDT, and the Philly Fed Manufacturing Index at 10:00 EDT. At 10:30 EDT we have natural gas storage data for those that trade natural gas.

It will be another exciting trading. As always, best of luck and happy trading!

Market Update for June 17

The two big events yesterday were UK inflation and US housing data. Both were big market movers. First up we had UK inflation data at 04:30 EDT. Initially the pound sold off on the data and then find a bid around support at 1.5540. From there, the pound rallied 100 pips to 1.5640. I didn't trade this event because there was massive volatility in the pound and the bid/ask spread was 3 pips. I don't like doing trades where I'm down 3 pips as soon as I put on a trade. The spread later tightened after the volatility had died down, but by that time, I wasn't willing to enter the market. Oh well, can't win them all as they say.

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I did, however, win trading the euro yesterday. I entered the market twice. First the euro spiked above 1.13 on absolutely no news whatsoever. I knew this was worth a short. I got short at an average of 1.1315. I traded the euro again a second time after US housing data came out. While the data was initially bullish the US dollar and the EUR/USD sold off, within seconds the euro found support at 1.12 and reversed. What can't go lower, must go higher. Furthermore, a market that doesn't sell off on bearish data is a buy. I went long the EUR/USD cross at an average of 1.1215. While both were great entries and I called the market perfectly, I got out too early on both. While I made money, I could have made a lot more, but I tend to not be a greedy trader and I take my winnings when I can.

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I'm also using this opportunity to build my own confidence up before I start giving out real-time trade alerts. I'm still thinking of how to do the logistics. I want others to profit off my trades, but at the same time, I don't want to get bogged down in alerting others and miss the trade for myself. I think probably the best way will be with Skype and have a group session and I can put the trade on for myself and alert subscribers at the same time. I'm also still thinking of the pricing on such a service. It will be launching soon. I just don't have a date yet. It will coincide with the relaunch of markyagalla.com.

Today is quite a busy day. First up we have the UK Average Earnings Index + Bonus, UK Claimant Count Change, and the Bank of England Meeting Minutes. All of this is happening at 04:30 EDT. There's a lot to digest here and I won't put too much emphasis on any one item. I'll wait for the data to be released and then watch the pound's reaction and trade accordingly if at all.

After that we have euro zone inflation data at 05:00 EDT. Expectations are for CPI to be remain unchanged (YoY) at 0.3% and (MoM) at 0.2%. Inflation has been rather muted in the euro zone, so I'm not expecting this event to move the market much.

What all traders will be waiting for is the FOMC Statement at 14:00 EDT. Then at 14:30 Fed Chair Janet Yellen will be speaking. This is the single biggest event of the month. Matter of fact, I'll stop watching the markets today at 05:00 EDT and wait for the FOMC announcement. Before that, it will just be position squaring ahead of the announcement and for others it will be amateur hour. I'm trading for a living and I don't need to be dealing with amateurs. I'm much better off in a bar with a few girls than being in the market at those hours.

As always, best of luck to everyone and happy trading!

Market Update for June 16

Yesterday it was quiet early in the trading day and then things really picked up after the New York Empire State Manufacturing Index came in weaker than expected. Then things really kicked into gear when US Industrial Production came in at -0.2%. This data was bearish for the dollar and I went long the euro as a result.

As you can see from the above chart, the US Industrial Production numbers hit the tape at 9:15 EDT. From there, the EUR/USD trended higher for the rest of the session. I made money, but I got out a little too early. Oh well, at least I made money and that's all that matters at the end of the day.

For my followers, I can't stress this enough - you need a reason to trade. Why are you in a trade? For this trade I went long because the data was bad for the US. Weak data signals that the Fed may hold off on raising interest rates. This is bearish for the US dollar and why I did the trade. News, headlines and data drive the global currency markets. Combine that with the technicals and market sentiment, and you'll come out a winner most of the time.

On today's agenda we have UK CPI data coming out at 04:30 EDT. Expectations are for May CPI (YoY) to come in at 1.0%, up from 0.8%. PPI Input (MoM) is forecast to be unchanged from the prior reading of 0.4%. Inflation data is critical for currencies because if it comes in hot and higher than expected, that means the Bank of England has to consider a rate increase to tame inflation. Rate increases are bullish for a currency. If the data is cooler than expected, then the Bank of England can hold off on raising interest rates and that's bearish for the pound.

At 0:500 EDT we have the German ZEW Economic Sentiment for June. Expectations are for 37.1, down from 41.9 in the previous month. Since Germany is the economic engine of the euro zone, this data is important in trading the euro.

At 08:30 we have Building Permits and Housing Starts in the US being released. Since housing is such a big component of the US economy, this news is critical for the US dollar. There's a lot to digest here so I recommend waiting 5 minutes for all the data to sink in before putting on a trade.

For today, I don't have any specific levels that I'm looking at. I'll look to digest the data and then trade accordingly. As always, best of luck to everyone and happy trading!

Market Update for June 15

Hope everyone had a nice weekend. We have a lot of data on tap for today so it should be a busy start to the new week. First up will be the German Bundesbank President Weidmann speaking at 03:00 EDT. He moved German bunds last week when he said that the recent Bund selloff was just a normal market correction. I'll be playing close attention to what he has to say and will be watching Bund prices and the EUR/USD.

After that we have the RBA's Assistant Governor Kent speaking. The AUD/USD cross has been stuck between the .76 and .78 levels. Hopefully, he'll say something to break the cross out of this range.

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We also have retail sales and inflation data coming out of Switzerland. I'm not a big fan of trading Swiss data. Money flows into the Swissy as a safe haven. The data in my opinion doesn't mean much, so I won't be trading it.

At 05:00 EDT we have European trade balance figures for April. After that we have New York Empire State Manufacturing Data at 08:30 EDT for June. Expectations are for a reading of 6 compared to the previous month's 3.09 reading. Canada will also release manufacturing sales at 08:30 EDT. The forecast is for data to come in light at -0.5% compared to the previous month's 2.9% gain. At 9:15 EDT we have US Industrial Production. Forecast is for a 0.3% increase compared to a 0.3% decrease the previous month.

The big event of the day will be ECB President Mario Draghi speaking at 09:00 EDT. Every word he says is critical and I'll be watching the headlines and the EUR/USD and Bund prices.

The last item on the agenda today will be the RBA's Monetary Policy Meeting Minutes. These will be released at 21:30 EDT. But before that at 17:55, RBA's Assistant Governnor Debelle will be speaking as well. The AUD/USD cross should be active today. The 5 day high on the Aussie is .77922. Above there and we'll have an upside breakout on the charts.

In terms of the euro, all eyes will be on the 5 day low of 1.11508. A lot of traders are looking at this area as critical support for the euro. If Weidmann or Draghi say anything bearish about the euro, look at below. We'll most likely test the 1.10 area next.

Hope everyone make a pile of money this week. I know that's my goal. But I have too many girlfriends, so I need to make a pile. As always, best of luck and happy trading!

Market Update for June 12

As I said in my commentary yesterday, US retail sales and initial jobless claims were going to drive price action. Initially, the US dollar rallied against the euro and then reversed and weakened against the euro. One of my trading techniques that I use is to wait 5 minutes after the data has been released and then trade off that 5 minute bar. Above the 5 minute bar, I'm long and below I'm short. Here you can see what I'm talking about:

Once the report was released at 08:30, the low on the 5 minute bar was 1.1182 and the high was 1.1224. I went long at 1.1225 and got out at 1.1265 for a 40 pip gain. In a few short minutes, I was in and out and done for the day.

This trade was a textbook example of one of my favorite trades - the reversal. What happened was that traders interpreted the data as being bullish the US Dollar and they immediately sold the euro. In a less than 5 minutes the trade reversed and all the Dollar bulls and euro bears were scratching their heads. From there, they were caught and scrambled to reverse their trades. All I did was jump on the winning side.

For today, we have a few items on the agenda.

05:00 EDT EU Industrial Production (YoY) (APRIL) Forecast 1.1% Prior 1.8%
05:00 EDT EU Industrial Production (MoM) (APRIL) Forecast 0.3% Prior (0.3%)
08:30 EDT US Core PPI (MoM) (MAY) Forecast 0.1% Prior (0.2%)
08:30 EDT US Core PPI (YoY) (MAY) Forecast 0.7% Prior 0.8%
08:30 EDT US PPI (YoY) (MAY) Forecast (1.1%) Prior (1.3%)
08:30 EDT US PPI (MoM) (MAY) Forecast 0.4% Prior (0.4%)
10:00 EDT Michigan Consumer Expectations (JUNE) Forecast 85.0 Prior 84.2
10:00 EDT Michigan Consumer Sentiment (JUNE) Forecast 91.5 Prior 90.7

In terms of other markets, German Bunds and US Treasury Bonds staged a massive recovery yesterday.

It seems many traders got the feeling that the sell off had been overdone. I'll be watching the bond markets closely, but right now my preference is to trade the EUR/USD cross. The volatility is there and I'm comfortable with the pair. For a trader, that's what's most important. Stick to your comfort zone and you'll make plenty of money.

As always, best of luck and happy trading!

Market Update for June 11

Today is all about US  and Canada data. Here's what we have on deck:

08:30 EDT Core Retail Sales. Forecast is for an increase of 0.7% month-over-month.
08:30 EDT Retail Sales. Forecast is for an increase of 1.1% month-over-month.
08:30 EDT Initial Jobless Claims. Forecast is for 277k.
08:30 EDT Canada New Housing Price Index. Forecast is for an 0.1% increase month-over-month.
10:00 EDT US Business Inventories. Forecast is for an increase of 0.2% month-over-month.
10:30 EDT Natural Gas inventory data. Forecast is for a storage build of 112B.
11:15 EDT Bank of Canada Gov Poloz speaks.
13:00 EDT US 30-year Treasury Bond auction

In the forex markets, trading in the EUR/USD cross remains a bull/bear battle. It seems that no matter which side of the trade you take, as long as you stay in, the trade will make you money. For the past 3 days the cross has been stuck between 1.12 and 1.1350. US retail sales data could be the catalyst that the cross needs. This week traders have been watching the Greek headlines and yields on German Bunds for direction.

In terms of the Japanese Yen, the comments from Kuroda lead me to believe that the great bear run in the Japanese Yen is over. I'll be looking for trade setups to go long the yen against the dollar.

That's all for now. I'll be waiting until 08:30 EDT when retail sales data comes out to trade. Most likely I'll be trading the EUR/USD unless I see a trade setup in another cross.

As always, good luck and happy trading!

Market Update for June 10

I know I said I wasn't seeing anything yesterday, but I ended up trading the GBP/USD after UK trade balance data came out at 04:30 EDT.  The data was stronger than expected and that was bullish for the British Pound.

It took a while for the trade to work out, but I was confident that the trade data would propel the GBP/USD cross higher. I always use my 5% risk rule and was able to add to my position on dips. I was buying between 04:40 EDT and 06:00 EDT. My average price was 1.5290. I exited just after 09:00 at 1.5325. However, I did miss the big move higher after 10:00. The market got excited about an upcoming speech from BOE Governor Carney. While I wasn't in for that move, I'm happy that I had a winning trade for the day.

This does happen quite often. I'll do my morning commentary then as I'm watching the markets, I'll see something and put on a trade. That's why I'll be offering a trade alert package soon and subscribers will get a real-time alert when I put on a trade for my own account.

Today the big news is that Bank of Japan Governor Kuroda said the yen has fallen about as much as it should. This sent the USD/JPY cross tumbling.

This was another move I missed and I'm kicking myself. It was such a blatant call that it's one of those trades you bet the farm on. However, I didn't know he was speaking and was out for my daily swim. It just goes to show you that there's no such thing as free exercise. This time it cost me big time.

Oh well as they say in love and trading, you can't win them all. For the rest of the day, I'll be watching the GBP/USD cross. We have UK Industrial Production and Manufacturing Production coming out at 04:30 EDT. At 10:00 EDT we get the NIESR GDP estimate for the UK and then at 16:00 Governor Carney speaks. It will be an interesting day in the GBP/USD cross to say the least.

I'm going to end today's commentary with a little bit on why I trade forex. What I like most about forex is that it doesn't take much money to get started. You can get started with as little as $1000 and open an account. If you're selective with your trades, you can leverage your account 50:1 and be playing with $50,000. If you stick to the 5% risk limit, you won't blow up and will live to trade another day. A series of winning trades will grow your account and get you on the right path. The key to remember is that the principles remain the same whether you're trading $1000, $10k, $100k, $1 million or more. And that my friends, you can take to the bank.

As always, good luck and happy trading!

Market Update for June 9

Well so much for the euro stuck in a range early yesterday. I even tweeted that there was a bull/bear battle going on.

What a choppy trade in the EUR/USD today. A real bull/bear battle. #forex

— Mark Yagalla (@markyagalla) June 8, 2015

As soon as I tweeted that, the euro took off higher. I just didn't see a reason to buy the EUR/USD or go short for that matter. When I don't have a fundamental reason why I should do something, I don't do it. Yes I missed out on a good trade, but you can't catch them all.

On today's agenda, we have a few things going on. However, overall it's a very light day in terms of data.

04:30 EDT UK Trade data
05:00 EDT Euro Zone GDP
20:30 EDT Australia Westpac Consumer Sentiment
22:50 EDT RBA Governor Stevens speaks

I'll be listening to Governor Stevens' remarks closely. The Aussie is looking for direction and it's unclear as to what the next move will be from the RBA. Hopefully, Governor Stevens will shed some light on this.

For today, I'm not seeing any trades that I like. When that's the case, I like to be on the sidelines, watch and wait. It's the safest place to be in these markets when one is unsure. A good trader knows that it's okay not to trade.

As always, best of luck to everyone and happy trading!

Market Update for June 8

I hope everyone had a nice weekend. In my Friday update, I told everyone that I was looking to play the USD/JPY cross on a strong non-farm payrolls report. I entered the USD/JPY cross just above 125 after the report was released. The cross reached 125.85 before backing off.

It was a great trade to finish the week off. As we start the new week, here's what's on today's agenda. The euro gotten taken to the woodshed after the US employment report. However, today we're seeing a stronger euro on the back of stronger German economic data. Here on the 5 minute chart you can see the sell off after the employment report and then today's rebound on German data. Germany's trade surplus surged to its highest level ever. German industrial output rose 0.9% compared to expectations of a 0.5% gain.

A stronger German economy is bullish for the euro and explains the euro's rise after the news was released. As I stress, once you understand the fundamentals, it makes trading that much easier. The other thing I stress is reading the headlines, or the tea leaves as we like to call them. Just an hour after the German data was released, we had the ECB's Nowotny and President Obama making headlines. A source quoted Obama as saying that a stronger Dollar was not a problem for the US economy. This was Dollar bullish and the euro came back down.

I didn't get a trade off either time. The market spiked and then dropped. I didn't have an entry point in mind and that's why I didn't do a trade. To be a good trader, you always need a point of reference. For instance, I'm a buyer at 1.XXXX and a seller at 1.XXXX. I don't just jump in because I feel like it. I don't react to the market. Many traders do that and end up losing $$$ as a result.

Today my eyes will be glued to the screen at 8:15 AM EDT and 8:30 AM EDT when Canadian housing starts and building permits are released. This will drive the price action on the USD/CAD cross. We have a double top at 1.25619 and 1.25623 that I'll be watching.

Another market I'm looking at right now is the AUD/USD. Actually not right now because it's a holiday in Australia for the Queen's Birthday. Later on tonight in the US (tomorrow in Australia), we'll get some economic data to drive the AUD/USD cross. At 21:30 EDT, we have Australia Home Loans and the NAB Business Confidence Survey. We're nearing multi-week lows for the Aussie Dollar and it has been bouncing off this area.  There's a double bottom at .7599 and .7598 that I'll be watching closely.

As always, good luck and happy trading!

Market Update for June 5

All eyes will be on the Non-Farm Payrolls Report in the US today. The market is expecting a gain of 225k jobs and the unemployment rate to remain at 5.4%. If the report is over 225k jobs, that's dollar bullish and look for the other currencies to weaken against the greenback. A print under 225k and market participants will think the Fed will hold off on raising interest rates, which is dollar bearish.

Greece continues to dominate the headlines for the euro. I've been saying for quite awhile that I wish Greece would just leave the euro. However, that would hit my pocket book as every headline out of Greece moves the euro and creates great trading opportunities. There was quite a bit of movement in the EUR/USD cross yesterday as the headlines first reported that a deal with Greece and its creditors was a done deal. The euro rallied on that news and then sold off later in the trading day as news emerged that Greece would not be making its payment to the IMF today.

In terms of trades, post-non-farm payrolls, I'll look to trade the USD/JPY and the EUR/JPY. A break above 125 will be new multi-year lows for the embattled Yen against the dollar. I like above 141 in the EUR/JPY cross as well.

In terms of the EUR/USD and the GBP/USD, I'm not seeing any trade setups that I really like. In trading, I like to know my entry points in going long or short and I'm not seeing numbers I like for these crosses. As a result, I'll be on the sidelines. I've had a good week with the EUR/USD and don't need to trade it every day. A smart trader knows not to push his luck. I'm not looking to create a trade if there isn't one to be had.

My new website will be launching later this month with new packages and learning materials for all new traders. Looking forward to working with some of you and making some money together in the forex markets.

As always, good luck and happy trading!