2014 ends tomorrow. It was a long year full with both good and bad things, but either way, it’s almost over now. I hope you’ll take a break from trading - I certainly intend to - celebrate the New Year and then start fresh in January.

Have fun, everyone!

Happy Holidays!

2014 Is Almost Over

2014 is almost over. In the past twelve months we witnessed a number of interesting and occasionally very dramatic events on the market. The EUR, RUB and LCrude crashed, or should I say tumbled on their way down for months on end.The situation remains quite dramatic to this day. On the other hand, such clear movements on the market are a blessing for the ordinary trader, who can make quite the profit if he or she knows how to use them. I certainly made an effort to do so, I hope you did as well.

Savings Rate in Japan Turns Negative For the First Time

For the first time since records were collected in 1955, Japan's population is drawing down its savings and the savings rate, calculated as savings divided by disposable income plus pension payments, was negative 1.3%.

It's a dramatic change from when the Japanese saved nearly a quarter of their income (23.1%) when the savings rate peaked in 1975.
Japan had the highest household saving rate in the OECD in the 1960s until it fell to the lowest. After all, an aging population draws down savings and Japan is the fastest-aging country in the world; its population has been shrinking for a decade.
It's another blow to the Japanese Prime Minister Shinzo Abe, who just won another term to try and implement his policies dubbed Abenomics. On the campaign trail, he said that Abenomics aimed to raise wages and employment to revive the economy and defeat deflation or price falls.
Yet, earnings (adjusted for inflation) dropped 4.3% from a year earlier in November. It's the steepest decline since the 2009 global crisis and marks the 17th month of falls.
Indebted country Unsurprisingly, households are spending less. The average spend has dropped by 2.5%, which is the eighth consecutive drop - a trend that won't help boost domestic demand and prices.
Indeed, inflation has clocked in at a 14 month low. There's no price pressure on nominal yields on government bonds. The 10 year bond yield has fallen to a record low of below 0.3%.
Such low borrowing costs will help the highly indebted country, but it also reflects an expectation that the economy and inflation won't be getting going, and ultimately lead to rate rises.
In sum, it's a tough slew of data for Abenomics.

Reevaluation Of The Past Year

The past year was certainly quite eventful for me as a trader. I grew bolder in my trading, I learned quite a bit and, admittedly, made some unfortunate mistakes. But then again, it is important for a trader not only to avoid making mistakes, but also to learn from the mistakes they do make. Those are inevitable – we are all human after all. Repeating the same mistake over and over again, on the other hand, is unacceptable.

That said, I hope that the next year will bring less mistakes and more successes. With that thought in mind, I wish you all a Merry Christmas and a Happy New Year!

EUR/USD Continues Its Descent

Even though the winter holidays are almost here, the market does not sleep. The EUR/USD pair continues its descent, breaking below the 1.2200 level and heading for 1.2100. At this point I am actually starting to believe we might see it reach 1.2000 in the next few weeks. I also starting to consider the idea that the price will drop to 1.0000 more seriously than before. Either way, I shorted yet again and I intend to keep those short positions open at least until the pair reaches 1.2100.

The Oil Price Drop Is Not Opec's fault Say Gulf Ministers

Oil-rich Gulf states have vowed not to cut crude production, blaming speculators and producers outside the Opec group for tumbling prices.

Saudi Arabia's Oil Minister Ali al-Naimi said "the spread of misleading information and speculation" had contributed to the 40% price fall.
Speaking in Abu Dhabi, he also dismissed claims of a Saudi plot to push prices down for political goals.
Ministers from Kuwait and the UAE also said there were no plans to cut output.
Mr Naimi said that if producer countries outside Opec wanted to restrict output, "they are welcome".
"We are not going to cut, certainly Saudi Arabia is not going to cut."
Kuwait's Oil Minister, Ali al-Omair, said Opec did not need to cut production and would not consider an emergency meeting.
"I don't think we need to cut. We gave a chance to others [and] they were not willing to do so," he said during the conference in Abu Dhabi on Sunday.
In November, Opec decided to keep its target output of 30 million barrels per day unchanged, leaving the market to balance itself without the group taking action.

Price rise?

In the past, Saudi Arabia, the world's largest producer, has acted to reinin output to support prices.

The Bearish Trend Continues

Despite my doubts and my suspicions that range would continue, EUR/USD broke below the support level at 1.2250 before January. I am feeling quite pleased with myself at the moment because I managed to sell again. I think now that the pair has broken below that support the way to 1.2200 should be clear, but then again, everything is possible. Still, I believe the current target is 1.2200, and as I have mentioned before, the pair will probably reach 1.2000 as well. Time will tell whether or not EUR/USD will reach 1.0000.

Range Continues?

Yesterday EUR/USD failed to break above the resistance at 1.2570 and began descending again, clearly in an attempt to test the support around 1.2250. Personally, I am uncertain whether there is enough volatility in the market for it to break below that support. I think that we might see continuation of the range that has lasted for several weeks now, and the situation might drag on at least until the beginning of January. Of course, if the pair does break below that support, I expect it will continue on its way down to 1.2200, perhaps even lower.

UK Inflation Rate Is at 12 Year Low as Price of Oil Falls

Lower fuel prices have pushed the UK's rate of inflation down to a 12-year low, official statistics show.

The Consumer Prices Index inflation measure - which assesses the cost of basic household goods - fell to a rate of 1% in November from 1.3% in October.

The fall is being dubbed an "early Christmas present" for consumers.

But some investors are concerned that it could slow the UK's economy, as people delay purchases, expecting prices to fall even further.

Inflation as measured by the Retail Prices Index fell to a five-year low of 2%, down from 2.3%.

 The Office for National Statistics said falling fuel prices, caused by the decline in global oil prices, have brought the costs of both road and air travel down, with petrol prices down 5.9% in November.

Additionally, food prices fell by 1.7%, helped by supermarket price wars, while recreation and culture prices fell by 0.3%.

Both food and fuel account for a large part of the ONS' inflation calculations.

In the first few months of 2014, UK inflation generally rose, reaching 1.9% in June.

But the recent low rate of inflation means that earnings are finally rising faster than prices, after years of failing to keep up.

The latest report on the rate at which average wages in the UK are growing is due on Wednesday.

EUR/USD Reached Strong Resistance

Despite the marubozu candlestick on the daily filter chart the EUR/USD pair continued on its way up, proving that the correction is not even remotely over yet, eventually reaching the strong resistance level at 1.2570. At this point we will have to either wait for a signal that it is about to start falling again or wait for it to test and then break above the aforementioned resistance. In case it does break above the 1.2570 level I think it will reach target 1.2730, although I am assuming that will happen in January.

Marubozu Candlestick on the EUR/USD Daily Filter Chart

The EUR/USD pair formed a marubozu candlestick pattern on the daily filter chart and, as expected, began descending again. Time will tell whether this new descent is part of the overall bearish trend or just part of the correction that has been dragging on quite a while now. To be perfectly honest, considering the time of the year – the approaching Christmas and New Year holidays – I expect the market to move exceedingly sluggishly and we might have to wait until January for any big changes to happen.

Gold Movement to the Upside

I admit, I rarely pay attention to the Gold trading chart, and by rarely I mean once every few weeks – usually when someone reminds me to do it. And that is a mistake, because had I paid more attention I would have seen that incredibly telling reversal signal visible in the monthly filter chart – a doji candlestick. Considering that it is on the monthly filter chart the signal has been there for quite a while, but I am seeing it just now. Am I annoyed with myself at the moment? Very much so. Still, it is not too late, perhaps, to start buying, even though I will have to be much more cautious than I would have been had I seen the signal earlier.

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Inflation in China Hits Five Year Low

Consumer prices in China eased to a five-year low in November, suggesting continued weakness in the Asian economic giant.

The inflation rate fell to 1.4% in November from 1.6% in October, which is the lowest since November 2009.
The reading was also below market expectations of a 1.6% rise.
Producer prices also fell more than forecast, down 2.7% from a year ago - marking a 33rd consecutive monthly decline.
Economists had predicted a fall of 2.4% after a drop of 2.2% in the previous month as a cooling property market led to slowing demand for industrial goods.
The figures are the latest in a string of government data that showed a deeper-than-expected slowdown in the Chinese economy.
Dariusz Kowalczyk, an economist at Credit Agricole, said the data partly reflected low commodity and food prices but also confirmed softness in domestic demand.
"It will likely convince policymakers to ease their policy stance further and we continue to expect a RRR [bank reserve requirement ratio] cut in the near term, most likely this month," he told Reuters.
Last month, the country's central bank unexpectedly cut interest rates for the first time in more than two years to spur activity.

I Was Wrong

Unfortunately for me, it appears that I was wrong yesterday when I said that EUR/USD will continue falling until it reaches target 1.2200, because the pair bounced to the upside. I admit that I was quite surprised when that happened. That said, the pair reached a pretty strong resistance level at 1.2440, so the question is what will follow next. If it breaks above the resistance it is likely to continue on its way to 1.2590 – 1.2600. If it fails to break above the resistance, it will likely to continue on its way down to 1.2200 sooner or later. I suppose time will tell.

EUR/USD Continues Its Descent

After the USD non-farm payrolls on Friday EUR/USD continued its descent. Today is no different – the pair broke below the support around 1.2270 and is slowly headed for target 1.2200. I know I have been saying time and again that the pair will reach 1.2200 sooner or later (and right now it appears it will be sooner), but now that we’re almost there, I wonder what follows next. Will it really reach 1.2000 as I thought earlier or is a more long-term correction about to begin? I admit I have quite a few short positions opened at various levels and I am definitely considering closing at least some of them once the pair reaches 1.2200.

The EUR/USD Bearish Trend Continues

As I suspected yesterday the bearish trend of EUR/USD is not even remotely over and today’s US non-farm payrolls just pushed the pair even lower. It is about to break below the support at 1.2270 and after that there will be nothing stopping it from reaching 1.2200. Once it reaches 1.2200 we will watch it for signals that it is heading for 1.2000, or even 1.000, although at this point I am still wondering whether that is not too generous a prediction. Either way, the euro is in a freefall and Draghi’s efforts yesterday apparently had an only temporary result.

The ECB Rate Decision Certainly Had an Effect

The ECB rate decision and Mario Draghi’s press conference certainly had an effect on EUR/USD, but it was not the effect I was hoping for. It is a good thing that I tend not to trade during such major events, because a market that volatile really is not to my taste.

That said, despite the movement to the upside, I think it is unlikely that the downward trend is over. It just means that we might have to wait a little longer before the pair reaches 1.2200. I think that this movement to the upside just means that we will have the opportunity to sell again.

EUR/USD Broke Below The Support

It looks like my prediction from yesterday that the EUR/USD range might continue until the USD non-farm payrolls was wrong, because the pair broke below the support at 1.2350. Under these circumstances, and unless something surprising happens after the USD non-farm payrolls and the ECB rate decision, the bearish trend will continue and the pair will head for target 1.2200, perhaps even to 1.2000. I have even heard some talk of reaching parity - 1.000 – and I am starting to wonder whether that is actually possible, although it’s likely too early to tell.

The EUR/USD Consolidation Continues

The EUR/USD consolidation continues and has dragged on for three weeks now. Under such circumstances almost nothing seems certain and trading the pair is inadvisable, unless one feels confident trading range. That said, later this week  the ECB rate decision will come out and Mario Draghi will have a press-conference, not to mention that the USD change in the non-farm payrolls is on Friday. These events always provoke a lot of volatility on the market and I think it is likely that they will end the EUR/USD consolidation.

Double Top on USD/JPY

USD/JPY formed a double top on the daily filter chart as well as a marubozu candlestick and, naturally, started falling. Thankfully I managed to close my latest long positions and started selling before that happened. Personally, I think the target is around 117.50 at best, because I am not sure whether the bullish trend is over yet. This could be simply be a correction before the pair starts climbing again. I would certainly watch for signals for the beginning of such a new movement to the upside.