Chinese monetary authorities had induced a spike in interbank rates for the offshore yuan last week that made it prohibitively expensive to short the Chinese currency. As the short-sellers rushed to cover, the offshore yuan jumped 1. But broader concerns have not gone away. Speculators, who borrowed funds in these markets to bet against the yuan, had to scramble to cover their positions.
He said investors had mostly been long the U. Despite the sharp drop in HIBOR rates, market watchers believe the funding costs are likely to stay elevated ahead of the Chinese New Year break at the end of the month. Foreign Exchange Analysis Updated. G7 nations - Britain, the United States, Japan, Germany, France, Italy and Canada - said fiscal and monetary policies must be directed at domestic economies and not at targeting exchange rates.
Japan quickly said the statement - released by Britain which chairs the G8 grouping G7 plus Russia this year - gave it a green light to continue efforts to reflate its economy. But a G7 official responded by saying it was aimed squarely at Tokyo, a comment that prompt the yen to surge on a volatile foreign exchange market. Bank Governor Mervyn King said the statement should be taken at face value.
Russia, chair of the Group of 20 nations, said it was important that Japan had not intervened on currency markets to weaken the yen. Related Coverage. See more stories. Germany said the statement should draw a line under debate for now.
As a result, discussion at a G20 meeting of finance ministers and central bankers in Moscow at the end of the week may be more heated than previously expected with some concern about the pace at which the yen has fallen.
Please read our separate dedicated guide on Awesome Oscillator trading strategies. The Accelerator Oscillator is based on the Awesome Oscillator. The indicator measures the difference between the Awesome Oscillator and its 5-period simple moving average. This means that it shows how the Awesome Oscillator accelerates or decelerates.
By getting information on how the rate of price momentum in the underlying market changes, traders can determine when to take advantage of trade opportunities in the market as well as when to avoid potential false movements. Functionally, the Accelerator Oscillator will change direction before the price changes, acting as an early warning sign for momentum acceleration or deceleration. The Accelerator Oscillator is also plotted as a histogram that prints green and red bars, and also swings above and below a zero line.
A green bar implies increasing acceleration, whereas a red bar implies increasing deceleration. When the indicator is a zero, it means that momentum and acceleration are balanced. The Accelerator Oscillator is essentially a leading indicator that helps traders to eliminate poor entries. Other types of leading indicators include On-balance Volume and Donchian Channels. Unlike the Awesome Oscillator, when trading with the Accelerator Oscillator, a cross above or below does not signify a change of market sentiment bullish or bearish.
Still, traders should place buy orders when there are two consecutive green bars above the zero line. If you wish to go long below the zero line, you should wait for a third consecutive green bar because you will not be trading with momentum on your side. Similarly, you should place a sell order after two consecutive red bars are printed below the zero line. Sell orders above the zero line can only be placed after three consecutive red bars are printed.
The Alligator indicator is composed of three smoothed moving averages projected into the future by several periods. The indicator is specifically purposed to ensure that traders only place their trades in optimal trending markets. The longer the alligator sleeps, the hungrier it will wake up; prolonged consolidation will imply a massive breakout.
An upward movement implies an uptrend might be forming, whereas a downward movement implies that a potential downtrend is starting. This will be the signal to buy in a confirmed uptrend or to sell in a confirmed downtrend. The signal to book profits will come when the lines start to converge again, which will mean that the alligator is now about to repeat the sleep cycle.
The Gator Oscillator is based on the Alligator indicator. It is designed to show the degree of convergence or divergence of the Alligator lines. The indicator is plotted as a double histogram. Like the Alligator, the Gator Oscillator is ideal for trading trending markets, and the two indicators can be used together to complement each other.
The Gator Oscillator is particularly visually appealing and can help traders identify trading opportunities in trending markets quickly and easily. It is important to note that every time period is represented by two bars on the histogram, one above, and the other below. A green bar implies that a trend is becoming stronger than the previous period, whereas a red bar indicates that the trend is becoming weaker than the previous price action.
The Gator Oscillator delivers trading signals using the same logic as the Alligator Indicator. The trading signals come in 4 phases as follows:. The logic behind Fractals is that price action is inherently repetitive, and the indicator can help traders decipher the price patterns in play.
A fractal formation in the market is made up of 5 bars, in which the third bar middle one represents either the highest high or the lowest low. The Fractal indicator prints arrows on these highs and lows. An arrow above a price bar is a buy fractal, whereas an arrow below a bar is a sell fractal. A buy fractal serves as resistance, but a break above it triggers a buy signal. Similarly, a sell fractal serves as support, but a break below it triggers a sell signal. The Fractal indicator has many applications in trading.
To start with, it can pinpoint the areas where traders can place their stop losses and take profit orders. It also identifies the action zones where traders should watch price action keenly. Furthermore, the general wisdom with the Fractal indicator is to trade in the direction of the fractal start, but only when the market comes back and looks to break beyond the initial price point. But in all fairness, it is not a comprehensive indicator, and it works best when combined with the Alligator indicator.
Bill Williams outlined specific conditions that must be met when combining the two indicators. The Fractal indicator can also be combined with the Fibonacci tool that also provides solid retracement and extension targets for price action. It is basically an assessment of how market prices react to new volume in the market. By assessing price change and tick volume, the BW MFI can give a comprehensive assessment of market behaviour and prevailing sentiment.
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“If intervention does not appear sustainable, a currency crisis will erupt well before reserves are exhausted,” Mark Williams, chief China. Currency markets were thrown in to turmoil on Tuesday after a day of mixed messages about exchange rates, prompted by Japan's new government. trialized countries, and that mean reversion in real exchange rates The purchasing power parity (PPP) exchange rate is the exchange rate between.