Bollinger Bands are one of the most popular technical indicators for traders in any financial market, whether investors are trading stocks, bonds or foreign exchange (FX). Many traders use Bollinger Bands to determine overbought and oversold levels, selling when a price touches the upper Bollinger Band and buying when it hits the lower Bollinger Band. In range-bound markets, this technique works well, as prices travel between the two bands like balls bouncing off the walls of a racquetball court. However, Bollinger Bands don’t always give accurate buy and sell signals. This is where the more specific Bollinger Band “bands” come in. Let’s take a look.
As John Bollinger was first to acknowledge: “tags of the bands are just that – tags, not signals. A tag of the upper Bollinger Band is not in and of itself a sell signal. A tag of the lower Bollinger Band is not in and of itself a buy signal.” Price often can and does “walk the band.” In those markets, traders who continuously try to “sell the top” or “buy the bottom” are faced with an excruciating series of stop-outs or worse, an ever-mounting floating loss as price moves further and further away from the original entry.
Perhaps a more useful way to trade with Bollinger Bands is to use them to gauge trends. To understand why Bollinger Bands may be a good tool for this task we first need to ask – what is a trend?
Oil Prices Fundamental Report: Biggest Weekly Drop In A Month
Oil traded steady on Friday, though it was set for its biggest weekly drop in about a month over doubts that an OPEC-led production cut will restore balance to a market that has been dogged by oversupply for more than two years.
Brent crude futures (LCOc1) were at $52.99 per barrel at 0323 GMT (11:23 p.m. EDT), flat from their last close. Brent futures are set for a 5.2 percent weekly drop, the most since the week of March 10.
U.S. West Texas Intermediate (WTI) crude futures (CLc1) were also almost unchanged, at $50.74 a barrel. WTI is set for a 4.6 percent weekly decline, also the most since March 10.
Reuters' technical analyst Wang Tao said that WTI had support just above $50 per barrel, while Brent had support around $52.55.
The stable prices on Friday followed a more-than-3.5 percent fall in both benchmarks earlier this week as doubts emerged over the effect of an effort led by the Organization of the Petroleum Exporting Countries (OPEC) to cut production by almost 1.8 million barrels per day (bpd) during the first half of the year.
Thomson Reuters Eikon data shows that a record 48 million bpd of crude is being shipped across ocean waters in April, up 5.8 percent since December, before cuts were implemented.
How to do Fundamental Analysis & Fundamentals Trading Strategies
In the equities market, fundamental analysis looks to measure a company’s true value and to base investments upon this type of calculation. To some extent, the same is done in the retail forex market, where forex fundamental traders evaluate currencies, and their countries, like companies and use economic announcements to gain an idea of the currency’s true value.
All of the news reports, economic data and political events that come out about a country are similar to news that comes out about a stock in that it is used by investors to gain an idea of value. This value changes over time due to many factors, including economic growth and financial strength. Fundamental traders look at all of this information to evaluate a country’s currency.
Given that there are practically unlimited forex fundamentals trading strategies based on fundamental data, one could write a book on this subject. To give you a better idea of a tangible trading opportunity, let’s go over one of the most well-known situations, the forex carry trade. (To read some frequently asked questions about currency trading,
The Dollar Index (DXY) gapped lower overnight as the outcome of the French election underpinned the euro, which makes up a big portion of the index. Despite the DXY’s weakness, the USD/JPY gapped higher as the news also undermined perceived safe haven assets such as gold and yen. But the gains for the USD/JPY were short-lived and the daily chart of the USD/JPY is currently displaying a bearish price pattern, which suggests that the gap may well be ‘filled’ completely in due course and there may even be a possibility for a deeper pullback.
As can be seen from the chart, the USD/JPY is in the process of potentially forming an inverted hammer candlestick formation after the gap up. This price pattern is typically bearish as it highlights a lack of willingness from the buyers to hold onto their positions. Thus, we may see some weakness follow-through in the upcoming Asian session.
USD/JPY analysis: positive, but 112.00 caps for now
USD/JPY analysis: positive, but 112.00 caps for now
USD/JPY Current price: 111.38
Support levels: 111.05 | 110.65 | 110.20
Resistance levels: 112.00 | 112.45 | 112.85
The USD/JPY pair surged to its highest for this April, printing 111.77, before giving up some its daily gains, still closing in the green. The pair got a boost from a recovery in US Treasury yields, although they later give up after the US government announcement on the tax reform. The 10-year yield benchmark traded as high as 2.33% intraday, but pulled back to 2.31% after ahead of the close, weighing on the pair by the end of the US afternoon. The Bank of Japan will have its monthly monetary policy meeting during the upcoming Asian session, but is expected to maintain the status quo unchanged, with the pair’s traders more focused on Thursday’s US Durable Goods Orders for March. The positive tone of US equities, helped the pair to hold on to gains by the end of the day, although it’s not enough to guarantee a similar advance in Asian equities. From a technical point of view, the 4 hours chart shows that the price held above its moving averages, with buying interest aligned around the 200 SMA, currently around 111.00, whilst technical indicators retreated modestly from extreme overbought readings, but are far from turning lower. Still, the pair needs to regain the 112.00 threshold to be able to extend its advance towards the 113.00 region.
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