INTRODUCTION
GAVAN DUNNE
Over 15 Years Trading Experience
Own Account Trading Proprietary Trading Institutional Brokerage Electronic Brokerage
2009 Own Account FX Trading
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
WHAT FACTORS AFFECT FOREIGN EXCHANGE
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
COMMODITIES • INTEREST RATES % • INFLATION • GROWTH • LEVERAGE
• USD: Rising Commodities Prices ‘Devalue’ the US Dollar. • EUR & GBP: Rising Commodity Prices ‘Support’ Euro & Pound. • CHF & JPY: Risking Commodity Prices Supports Long End of Yield Curve ‘Softening’ Safe-Haven Ccy. • AUD; CAD, & NZD: Rising Commodity Prices Have ‘Positive Demand’ for Commodity CCYs. • EMG CCY: Rising Commodity Prices Have ‘Positive Demand’ for Commodity CCYs. ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
INTEREST RATES • LONG END • SHORT END • REAL RATES • 2 YEAR RATES
• USD: Ability to attract foreign capital. • EUR & GBP: Sensitive to % Interest Rates, in particular GBP. • CHF & JPY: Important implications going forward, in particular JPY as “funding currency”. • AUD; CAD, & NZD: Sensitive to % Rate Changes, including affect on Commodities. • EMG CCY: % Interest Rate changes and their impact on Global Economy / Affect on Commodities ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
EQUITY INDICES • RISK ‘ON’ • RISK ‘OFF’
• USD: Underperforms during “Risk-On” Environment. • EUR & GBP: Benefits from “Risk-On” Environment. • CHF & JPY: Underperforms during “Risk-On” Environment. • AUD; CAD, & NZD: Benefits during “Risk-On” Environment. • EMG CCY: Benefits during “Risk-On” Environment. ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
‘CURRENT MARKET STATUS’ Lower Commodities Lower Interest Rates Lower Stock Markets
‘Lower Risk’
Currencies to Benefit USD JPY CHF Currencies at Risk AUD EUR GBP ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
GLOBAL MACRO PORTFOLIO
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
Market Event
Currencies to Buy
Global Market Support
Higher Inflation
AUD / CAD / GBP / EUR
Long End / Comm.
Lower Inflation
USD / JPY / CHF
Stocks / Comm.
Higher Growth
AUD / CAD / GBP / EUR
Comm./ EMG / Stocks
Lower Growth
USD / JPY / CHF
Short End / Stocks / Comm.
Liquidity Addition
AUD / CAD / GBP / EUR
Comm. / Stocks / 2 Year %
LiquidityWithdrawal
USD / JPY / CHF
Comm. / Stocks / 2 Year %
Credit Event
USD / JPY / CHF
Comm/ Stocks / Bonds
Global Event
USD / JPY / CHF
Comm / Stocks / Bonds
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
PRICE BEHAVIOUR OF CURRENCIES
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
Currency Pair
Price Definition
How to Trade
EUR
Corrective
Fade Breaks / Fixed Stops
GBP
Break
Breaks / Book Intraday
JPY
Grind
Trade False Breaks / Trailing Stops
EURGBP
Corrective / Grind
Breaks / Book Intraday
EURJPY
Corrective
Fade Breaks / Book Intraday
CHF
Break / Corrective
Breaks / Book Intraday
AUD
Break
Break / Fixed Stops
CAD
Break
Break / Trailing Stops
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
EUR/USD • FADE BREAKS Corrective Pullback
• FIXED STOPS
False Break
Corrective Pullback
False Break
• Break Trading Strategy Difficult in the EUR/USD. • Higher Value Trading ‘Corrections’, operating ‘Fixed Stops’. • Cross Market Activity / Too Many Options / Asian Central Bank Participation & Reserve Managers ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
GBP/USD • BREAKS • BOOK INTRADAY Sharp Corrections / Book Profits
Sharp Corrections / Book Profits Profitable Break Profitable Breaks Profitable Breaks
• Higher Value Booking Intraday Profits if employing Break Strategy in GBP. • Reserve and Corporate Flows can Affect Rates. ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
USD/JPY • FALSE BREAKS • TRAILING STOPS
False Breaks Within Trend
False Breaks Within Trend
• Higher Return Margins by Trading False Breaks against the Primary Trend in USDJPY. Employ Trailing Stops. • Option Protection Key Reason for False Breaks. ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
KEY DAILY EVENTS
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
Time
Market Activities
Ccy
7:00 am
Reserve & Central Bank Activity
EUR; AUD; GBP
9:00 am
European Data
EUR; EURGBP; EURJPY.
9:30 am
UK Data
GBP; EURGBP; GBPJPY.
11:00 am
Option & CCY Fixes
EUR; GBP; EURJPY.
12:30 pm
NewYork ‘Stop-Hunting’
EUR; AUD; GBP; EURGBP.
1:30 pm
US Data
US Dollar Index
3:00 pm
New York Option Expirations
EUR; GBP; JPY
4:00 pm
London CCY Fixes
EUR; GBP; EURJPY.
6:00 pm
NewYork ‘Stop-Hunting’
EUR; GBP; JPY; EURGBP; EURJPY; AUD; CAD.
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
CHARTING ‘THINGS TO WATCH FOR’
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
TREND LINES ON DAILY CHARTS
False Breaks / Does not confirm Bull Trend – only after event. Day Trend Line 3
Day Trend Line 2 Day Trend Line 1
• Not a ‘Fan’ of Daily Trend Lines – Be Careful. • Do Not Be Afraid to Trade Into “Stops” below or above Trend Line Support ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
FRACTAL LINES ON DAILY CHARTS
Fractal Support Fractal Support Fractal Support
Fractal Support Fractal Support
Fractal Support confirms the underlying trend and offers better entry level signals.
• Stronger Support & Resistance Points versus Daily Trend Lines. • Indicates Primary Trend – Continuation & Pause. Improved Entry Strategy v Trend Lines ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
CORRECTIVE TREND LINES: INTRADAY
Corrective Trend Line 1
Better at indicating Market Corrections
Corrective Trend Line 2
• Trend Lines Charting Intraday Corrective Moves – More Value. • Trend Lines Charing Intraday Corrective Move with Fractals –Very Valuable. ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
MOMENTUM INDICATORS: BE CAREFULL!
Corrective Trend Line 1
Better at indicating Market Corrections Bad Signal
Corrective Trend Line 2 Bad Signal
Good Signal
• Momentum Indicators can be loss making tool if incorrectly interpreted – especially during strong trends. • Key to success in reading Momentum Indicators is the “Level of Price Divergence” ____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
PUTTING IT ALL TOGETHER
Corrective Trend Line 1 Day Trading Axis or Trend Line Fractal Resistance
Fractal Resistance
Intraday / 60 Minutes CorrectiveBetter at indicating Trend Line Market Corrections
Corrective Trend Line 2 Fractal Resistance
Fractal Support
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
MORE INFORMATION
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar
Market Sector
Website
Subject
Foreign Exchange
www.actionforex.com
FX & Rates
Foreign Exchange
www.bloomberg.com
FX & Rates
Global Macro
www.johnmauldron.com
Global Macro
Foreign Exchange
www.elliottwaveforex.com
Elliot Wave
Global Markets
www.caldaro.worldpress.com
Elliot Wave
Technical Analysis
www.youtube.com
Fractals
____________________________________________________________________________________ Gavan Dunne Delta Index Trading Seminar