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Old 13-12-2011, 08:42 PM
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Mound Currency Signals for December 12, 2011

A Brief Overview of Mound Currency Signals

MCS is comprised of three parts:

Part 1 - Trend analysis

This will cover two time periods:

The weekly outlook is my answer to the question of where the currency will be at the end of the week relative to where it started the week.

The long term outlook looks at the price trend over time. How long is long term? Well, that depends on the trend - it is as long as the longest trend in the market which could be a few months or ten years - it just depends on the market, but it lets you know my main directional forecast of the market over time. Both time periods will be addressed with a simple BUY, SELL, SIDEWAYS forecast, since markets should fall into one of those three trends.

Part 2 - Market outlook

A simple market assessment for the week that covers important trends and trend changes along with critical fundamental events affecting currencies.

Part 3 - Global economic calendar

Currency trading is based on fundamental events all around the world, so the economic calendar should be global to match. While it is hard to find every single economic event all over the world, this section will strive to cover the critical events affecting currencies on a weekly basis.

The goal of MCS is to give you a directional forecast and fundamental market awareness in an efficient report - this is not a research report but rather a reference point for making your currency investment decisions. This report can be used as a guide for both futures and FOREX traders, along with anyone trying to hedge their currency risk.


TREND ANALYSIS

Buy or Sell indicators reference the currency against the U.S. dollar. That means if the Japanese yen is listed as a buy then it is considered a buy against the dollar. The US Dollar indicator is the dollar versus the basket of currencies that comprise the index. If you want to look at alternate pairs like the yen versus the euro currency please reference the weekly market outlook for relevant comments about comparative strength or weakness to gauge pair dominance. The currencies listed in the "Currencies" section will be reviewed week after week, but the "Other Currencies" section will change as necessary to highlight the vast alternative currency opportunities that arise.


MARKET OUTLOOK

Week of 12/12

A slightly bullish ending to the week for the U.S. Dollar on Friday's bounce helps spark this week's anticipated breakout bull run for the dollar. The core catalyst will likely be the Fed meeting on Tuesday and a bearish turn in the stock market. Nearly all the outlooks for foreign currency have turned bearish this week as the dollar goes to test the highs at 79.87 and eventually 80.43. Even the Japanese Yen lacks a bullish bias this week as the dollar's strength is unlikely to allow any foreign currency the power to be independently bullish this week. The Mexican Peso might take a brief reprieve from its selloff, but I suspect it is either over with or short-lived. I continue to look for the Vietnamese Dong to reverse a long term bear market, but this will be a tough week, although seeing the market hold up to a dollar rally will be an interesting test in this obscure market.

Two major points from last week's EU summit. First, the idea that there is a tightening unity among the participants and that strict fiscal policy changes would work is ludicrous to me. It is ironic that merging varying economies of scale together into a unified currency is going to ultimately meet its demise because the powers that be decided that the remedy to fix it was to tighten the connection amongst those involved. The bottom line is that the monetary policy of Germany cannot be the same as the monetary policy of Greece, and that core issue with these new 'progressive' steps should backfire rather quickly. As the world begins to wrap their heads around the impracticality of this new solidarity they will likely look to leave the euro currency in droves. What happens to the strength of these new brothers in battle when the euro tanks on a panic selloff? What happens when Germany truly sees the impact of a failing euro on its economy?

The second big wow from last week was Britain's bailing on the EU. Britain's Guardian newspaper made a good point by raising the question "Will it be Splendid Isolation, or Miserable?" The reality is Britain saw what the world will soon have to accept which is no single collaboration can make effective monetary decisions for all of Europe. It feels almost like an idea before its time meeting its demise and Britain may suffer in the near term from doubt about its political decision, but ultimately the pound is likely going to be saved from this impending nightmare, and it makes the pound a long term buy against the euro. In the near term it is difficult to see the pound emerging with so many unknowns and an anticipated U.S. dollar rally.


Disclaimer: There is risk of loss in all commodities trading. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Fundamental factors, seasonal and weather trends, daily news, and other current events may have already been factored into the markets. It is important to note that options and futures markets are separate and distinct and do not necessarily respond in the same way to similar market conditions. Option prices do not move in lockstep with changes in the underlying futures market price. Strategies using combinations of positions such as spreads and straddles are no less risky than taking straight long or short futures or options positions. Total cost, or cost/credit of trade DO NOT include commissions and fees unless otherwise specified. These costs should be factored into any trade design in determining its breakeven point, profit and/or loss scenarios, and in the upfront cost factor of the trade. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.moundreport.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.
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