The word on the street last Friday was that the federal funds futures market was pricing in a 100% chance of a rate cut by September. But the price of the fed funds futures contract represents a weighted-average of all the potential outcomes in the months ahead, it is not a point forecast.
As a result, suggesting the market was 100% certain the federal funds rate would be 5% in September was a misinterpretation. The 5% federal funds rate expected was a combination of a variety of different forecasts. Some investors thought the economy was crashing and expected many rate cuts in the months ahead, while others (like First Trust) believed the economy would remain in good shape and the Fed would not cut rates at all.
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Although traditional trendlines are notoriously subjective, it is possible to develop trendline-drawing rules and trading guidelines that can be applied consistently and objectively.
Technicians use trendlines to identify trends and determine when they end or reverse. The only problem with traditional trendlines is they are subjective — 10 traders could look at a chart and draw 10 different trendlines. Proper trendline application and analysis require consistent, objective rules.
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Lincoln (a.k.a. lwoo034 at Forexfactory.com forums)
This tutorial focuses on more advanced pin bar setups. It should only be read after the introductory tutorial as it continues the same themes and assumes some knowledge of pin bars. The source of this material consists of numerous posts by James16 (www.james16group.com) at forexfactory.com and several other members who have experimented with pin bars.
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Lincoln (a.k.a. lwoo034 at Forexfactory.com forums)
Introduction
Jim (a.k.a James16 at the Forexfactory.com forums) has taught many forexfactory.com members how to play pin bars. This instruction has been through demonstration over dozens of posts. This makes it difficult for a learner to quickly pick up key concepts and terminology. This tutorial on how to play the pin bars has been designed as a good first lesson and introduction to pin bars. It provides an explanation of the pin bars and familiarises the reader with terms used by James16 in the examples (such as ‘eyes’ for the pin bar). The Advanced Tutorial covers some higher-risk setups that may appeal to some traders. For further instruction please see the James16 Chart Thread at Forexfactory.com or the James16 private forum (www.james16group.com).
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In the midst of a stock market correction, a serious reassessment of the price of risk in world bond markets, and a seizing up of the high-risk mortgage market, the Bernanke Fed voted unanimously yesterday to stay patient and remain calm.
By keeping interest rates unchanged, and continuing to argue that inflation was the predominant risk for the economy, the Fed has officially told the market that the Greenspan Put is dead, or at least has a substantially lower “strike price.” Unless the Fed foresees financial market problems seriously affecting economic growth, it is unlikely to cut rates.
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