| money supply figure, which showes a sharp reduction over the previous year. M3 did put on speed in the middle of the year, but then ran put of steam, and it was this slowdown which prompted the Buba to make its move. Predicted M3 growth targets of 4 — 6% were not met. mainlv due to a slowdown in economic activity. The Buba statement maintained that the latest interest rate policy was intended to put money supply and the economy on a similar oath. Other contributory factors were low inflation | ju: 'due to to drift into recession a: to enhance л to under pin | — из-за - скатываться к снижению деловой активности - стимулировать подпирать |
| and low potential for steep price rises and the continuing strength of the mark, whose protection is one of the Buba's main aims. The bank also painted a more optimistic picture of German economic potential than has been fashionable recently. and the president pointedly stated that he sees no grounds for the fear that Germany is drifting into recession. This rate cut served to underline his, and the bank's, view that economic frowth would be enhanced, not underpinned, by the cut. Analysts soeculate that a weakening of the economy or a collapse of the French currency, could force the Buba to act again and lower rates. |
Comprehension Questions
1. What does the dealer have to study and select for forecasting?
2. What are chart patterns for?
3. Why did the greenback make forecasters shy for 1995?
4. What were the predictions for the end of 1995?
5. Was the continual downward trend over in 1995?
6. What brought dollar yields well above DM rates in December 1994?
7. When did the dollar break 1.42 DM on the upside?
8. How much did the US-Japanese trade deficit widen in June 1995? i 9. Did the dollar find the floor in August 1995?
| Has the starting rise in the Yen finally run its course? Doubts rise over yen hausse in Feb. 96 In the space of 4 1/2 years the Yen has appreciated more than 60% against the US dollar. It is starting to look like this is coming to an end. This is mainly because the Japanese economy is having trouble keeping up with the international economic upswing and maintaining its competitiveness with the strong Yen. Exports suffer The rise in the Yen has dealt a blow to Japan's export orientated economy. Partial relief to exporters has come from rationalisation and moving production to cheaper countries. Even the famous trade surplus has shown signs that the tide is turning. Although the surplus reached 121 bn USD, this was just 0.8% higher than 1993. Motor vehicle production, the vanguard of Japan's economic might, decreased by 6%. to 10.55 mio vehicles. Car production suffered most, falling by 8%. Monetary policy Rumours also surfaced that Japanese interest rates will fall. At 1.75% for the Discount rate and 3% for the Prime rate, they are by far the lowest in any of the industrialised nations. Altogether more positive is the consumer price inflation, which rose by 0.2%. and the producers index which dropped by 1.3% Unemolovment. at 2.9%. is low in comoarison to other countries, even if the figures tend to be massaged. Dollar -Yen: Recovery or Correction Gul. 94) The USD recovery is impressive on a short term basis. A major trendline support level at 97.00 last month is forging ahead through many levels of resistance. The dollar buyers were attracted by the rally effort through an old trendline off the 1993/94 lows at 100.40—100.50. The long term technical analysis still views USA strength as corrective to the long bear market. A large coiling down trend pattern since 1988 is still evident on the monthly chart. The dollar tested and bounced off the low end of the formation at 97.00. The upper boundary at 106.50—106.90 should be watched. A monthly close over here points to the end to the bear market and the start of a major USD base. An uptrend cannot be expected until the early 1994 high at 113.65 is removed. The weekly chart also reveals the large coiling pattern. Near the 103.90—104.40 area a falling 40 week moving average trend indicator can be seen. The market condition could be | Vocabulary to deal a blow — нанести удар tide is turning — положение меняется bn (billion) — миллиард mio (million) — миллион S3: to surface — возникать by far — значительно ju: consumer price — потребительская цена ju: producers index — индекс промышленных цен |
| о: to massage — массировать, обрабатывать л | |
| upside — повышательное движение цены о: target — плановая, ожидаемая цена е exceptable — составляющий исключение test — приближение цены к точке сопротивления (поддержки coil — спираль au to bounce off — отскакивать au boundary — граница ou slope — наклон,скат ai sideways — цикл с горизонтальным движением цен л | |
| recovery — подъем рыночной конъюнктуры о: to forge — медленно двигаться вперед ае rally — повышение |
| called a corrective situation within a bear market if price is rising toward a still falling trend indicator. The weekly oscillator is also rising from a bearish level. The short-term picture for dollar-yen should stay mildly favorable for the USD as long as values hold over a support zone set by a rising 40-day moving average at 100.30 and the rising trendline off the July lost at 98.80—98.70. Dips should be supported until that area is broken. Near-term upside targets are 102.10—20 and 103.20. These values represent 62 to 75% retracements to the June/July downleg in the dollar. If a larger bear phase is still in progress, those are exceptable retracement parameters for bear market corrections. Closing action under 98.70 should indicate the start of a new, and probably final, downleg for the dollar against the yen. The target for a new downleg will be 95.50-94.50. Secondary technical aspects are somewhat mixed. Market sentiment indicators are neutral. There are no important cycles working for price right now. The seasonal tendancy for the yen versus the dollar is to rally from August into October. If new topping signs show in the dollar as the seasonals, one more low later this fall is possible. | ou | |
| close | — курс (цена) при закрытии | |
| торгов | ||
| ou | ||
| low | — низкое значение(цены) | |
| ai | ||
| high | — высокое значение(цены) | |
| э | ||
| bottom | — самый низкий уровень | |
| fisher | — ловец | |
| e | ||
| correction | — движение цены в | |
| направлении, обратном | ||
| тренду(коррекция) | ||
| ai | ||
| to 'highlight | — высвечивать |
Compresension Questions
1. How much has the yen appreciated against the US dollar for 4'/^ years?
2. Why is this appreciation coming to an end?
3. What was the result of the yen rise?
4. What was the trade surplus?
5. What do rumours say about Japanese interest rates?
6. Is unemployment in Japan high or low?
Exercises
Ex. 1. Put question to the underlined words.
Ex. 2. Read and translate the text.
Ex. 3. Using the chart and the various technical studies and trendlines describe USD/DEM price movements from
May 93 to Jan 94 and USD/JPY from 85 to 93. Ex. 4. Translate the dialogue from English into Russian in writing and from Russian into English orally.
Dialogue
Client: What is your medium term outlook for dollar/DM in 1996?
Broker: Dollar/DM broke above 1.4435 in December 95 But the impetus was weak.
CL: Resistance at 1.4580 was too dense for it. Wasn't it?
Br: Yes, you are right. But the subsequent retracement from this area has allowed the market to build strength for
another assault on the upside. Cl: What could be a possible target area of the assault?
Br: A break above the 1.4545/80 zone is likely over the coming month, it may trigger a rally to 1.5045 initially. Cl.: Thus the medium term objective remains 1.56/1.58. Br.: That's right. Dips should continue to find good support in the 1.4280/65 band. Cl.: What can you recommend?
Br: I would advise you to hold longs, adding on dips to 1.4340/00, keeping the stop/reverse below 1.4265/60. CL: Shall I cover longs?
Br.: Cover longs on rallies to 1.4545/80, reinstating on a break. Cl.: Is there any danger of a correction? Br.: Loss of 1.4265 will signal a deeper correction towards the 1.40/1.38 area. My advice is: reinstate longs here, stop/reverse below 1.37.
MEDIUM AND SHORT TERM TECHNICAL ANALYSIS
| The Dynamic Trading Approach Economic Days While common sense would lead us to use only empirical results, i.e. business day observations, can we assume that volatility is the same day in and day out? Obviously not. On some days markets move more than on other days. We will call these days «Economic Days», where a corporate buyout or natural disaster fundamentally impacts the price of an asset. On most davs. market volatility will be low since substantial «Economic Days» do not occur that often. The overall price movement (volatility) that will occur in any market will simply be the summation of all price movements both subdued and ex treme. When the analvst is forecasting volatility, he cannot do so blindly. He must adjust his projections based on the number of «Economic Days» that have already occurred over his sample period. After counting the «Economic Days» that have already occurred, he will have a better feel for the remaining number of expected «Economic Days». While we can never be certain of what may occur, applying simple principles of probability can provide insights. | Vocabulary |
| common sense — здравый смысл, | |
| day in day out — изо дня в день, | |
| ai | |
| buyout —выкуп, приобретение | |
| контрольного пакета акций, | |
| i | |
| to impact —влиять, | |
| It's all about PROFITS Reiving only on chart support and resistance is not very effective, as these levels can be penetrated easily in strong trending markets and often leave the analyst feeling 'lost' when the price enters uncharted territory. Most intra-day players do not care whether the greenback closes higher or lower in the US, as they only trade between 8:00am and 5:00pm during their own time zone. Projected targets that are 150—300 points away from the current rate are therefore of no practical interest to them. While the direction of major trend is important. what an intra-dav trader needs is an approach that will enable him to profit continuously on normal trading days. In an uptrend, for example, a 50 to 80 point rise may be followed by a 20—30 point pullback and then another rise of 60—80 points. The secret is to develop a method by which one can buy on such pullbacks, get the profit and exit in time. I sincerely believe that the Dynamic Trading Approach does just that by capturing the ups and downs of intra-day as well as day to day moves. It has worked for us in forecasting the market moves with 65—70 per cent accuracy (3 to 5 intra-day and 1 —2 daily forecasts every trading day over the last 8 years). | л to subdue —ослаблять, a: sample —образец, i ' insight — проникновение во что-либо, интуиция е projected targets —проецируемые цели |
| At the beginning of December 1995 dollar/DM broke above 1.4435. But the resistance at 1.4580 proved to be too strong. The subsequent retracement from this area helped to build uptrend pressure. Another assault on the upside is possible. In January a break above the 1.4545/80 zone is likely to trigger a rally to 1.5045 with the medium term objective of 1.56/1.58. Dips will find support in the 1.428/65 band. Recommendation Hold longs and add on dips to 1.4340/00. Keep the stop/ reverse below 1.4265/60. Cover longs on rallies to 1.4545/1.48. Loss of 1.4265 will indicate a correction towards the 1.40/1.38 area. Reinstate longs here, stop/reverse below 1.37—for 1.3455. USD/DEM technical commentary (31 JAN—01 MAR 96) 31 Jan 96 Dollar/DM keeps entrenched within the recent con solidation range. Immediate upside pressure is intact. Further consolidation within the range is not out of the question. Near term support for dips is centered on the 1.4850 pivot. A test of the 1.4935/40 peak may be triggered by a break above 1.4915. 01 Feb. 96 Pressure is preserved on the upside. If good support | ei | |
| to retrace | — возвращаться | |
| 0: | ||
| assault | — атака, штурм | |
| i: ei | ||
| to reinstate | — восстанавливать | |
| e | ||
| to entrench | — закрепиться | |
| ou | ||
| to provoke | — вызвать | |
| ei | ||
| to sustain | — поддержать | |
| л | ||
| vulnerable | — уязвимый |
v
| in the 1.4785/65 zone is held, immediate upside po tential will be intact. A break above 1.4915 will pro voke a test of the 1.4935/40 peak and sustain acceleration to 1.4990, the 1.5045. 05 Feb. 96 A test of the 1.4735/15 support band is possible. It is a result of sharp reversal from the 1.4915 area. To ease corrective pressure, a break back above the 1.4835/50 band is needed. The market will be left vulnerable to a deeper correction if the 1.4835/15 band is not held. 06 Feb. 96 A deeper sell off may be prevented if the USD/DEM correction holds over 1.4580/1.4605 area. Immediate downward pressure will be alleviated by a break back above 1.4740/50. A rally through 1.4785 will confirm a resumption of the uptrend towards 1.4850,1.4915. 07 Feb. 96 USD/DEM sustains the end of the corrective phase and the resumption of the uptrend towards 1.4850, 1.4915. 1.4605 has been held. There is a potential for failure at 1.4785. 08 Feb. 96 USD/DEM broke above the 1.4755/85 band and continues its stady advance. Near term support is now at 1.4745/35. The end of the corrective phase is confirmed with 1.4910/15 initial target. | i: | |
| to alleviate | — ослаблять | |
| i | ||
| 'interim | — временный | |
| 12 Feb. 96 There is a risk of another downside leg towards pivotal support in the 1.4605/1.4580 band. A break below 1.4710 may trigger such a drop. There will be light resistance for rallies at 1.4785. A recovery beyond 1.4825 will indicate a resumption of the uptrend to 1.4955. Now USD/DEM is still entrenched in its consolidation range. 19 Feb. 96 The market is vulnerable to a much deeper retracement towards 1.4280/65. Interim support is centred on the 1.4385/75 band. 22 Feb. 96 USD/DEM remains under short term downward pressure as long as the 1.4610/35 band caps. Some consolidation within a 1.4605-1.4405 range is possible ahead of a retest of the downside. 26 Feb. 96 USD/DEM is pinned within its consolidation range as long as the 1.4605/35 zone caps. Overall pressure is on the downside. 27 Feb. 96 USD/DEM has held well on the downside in the 1.4430/05 area over the last few days and continues to oscillate within its narrowing range with parameters to day of 1.4575 — 1.4430. With a break above 1.4575/85 there is now room for a test of upper resistance levels. 01 Mar. 96 USD/DEM has achieved the initial target area of 1.4745/75 and maintained upward pressure. A break of this zone will lead to some consolidation with 1.4825 the next objective. The pivotal 1.4650/95 band will give good support to dips. | ||
| о to oscillate | — колебаться | |
| 0: | ||
| to balk | — задерживать | |
Dollar—yen Jan. 1996)
Medium Term Outlook.
The end of the four-month old consolidation phase indicates the start of the uptrend towards the 120 long term objective. Overall pressure to the top side may trigger a break above the 1995 peak of 104.70 followed by an acceleration to 106.60/65 then to the medium term target area of 111/113.60 Dips will find now support at 103, 101,50.
Recommendation
Hold longs, add on dips to 103/ 101.50, stop/reverse below 100.50. Add to longs on a break above 104.70, looking for 105.50, then to 106.60/65 area. Cover all longs on rallies to this target.
USD/JPY technical commentary (06—11 Mar. 1996)
06 Mar. 96 USD/JPY is entrenched in a consolidation range above good support at 104.85. Abreak above 105.30 may trigger an upward move towards 105.85/106. A deeper retracement to 104.65/40 is a possibility with the loss of 104.85.
07 Mar. 96 Break above 105.30 has prompted upward move. A test of the 105.85/106 band is likely, triggering a rally to the significant pivotal area of 106.45/60. An eventual break will confirm a rally to 106.95, then to 107.55.
08 Mar. 96 USD/JPY remained pinned down within a tight consolidation range and failed to sustain upside move as far as the 105.85/106 area. Pivotal support is intact at 104.85. A break above 105.85 may confirm a resumption of the uptrend towards 106.45/60.
11 Mar. 96 USD/JPY has balked on initial test of the 106.40/80 band. A sharp pullback into the previous range was triggered by dense resistance. Pivotal short term support in the 105.05/104.85 band needs to hold to prevent a sell-off towards 103.65 pressure is building for a resumption of the up-trend towards 111/113 target.
Sterling-Dollar Jan 1996) Medium Term Outlook
Sterling long term uptrend is now complete, confirming the start of a consolidation phase. The market will be under overall pressure as long as the 1.5685/1.5715 area continues to cap. The medium term objective is 1.46/1.45. A downtrend may be triggered by a break back below 1.52.
Recommendation
Hold short, add on any rallies to 1.5610, 1.5685, stop/reverse over 1.5715. Cover shorts on dips to 1.52/ 5180, reinstating on a break, looking for 1.46/1.45 to cover. A break above 1.5685/1.5705 may provoke a resumption of neutral consolidation below 1.5855/80. Reinstate shorts in this zone, stop/reverse above for 1.6240/50.
Exercises
Ex. 1. Put questions to the underlined words.
Ex. 2. Read and translate the articles.
Ex. 3. Learn the noun and verb collocations of the technical commentary. Make your own commentary of the
USD/DEM moves of the missing dates of the chart (08—27 FEB 96). Ex. 4. Translate from Russian into English in writing and then from English into Russian orally.
| ПАДЕНИЕ ДОЛЛАРА (МАРТ 95) | |
| Западные рынки на прошлой неделе перенесли самый большой шок — 8 марта были побиты все рекорды по слевоенного времени — доллар рухнул до уровня 1,3450 по отношению к немецкой марке и до 88,65 по отношению к японской иене. На фоне истерических продаж доллара единственными покупателями выступали центральные банки. Дилеры использовали эти возможности для дальнейших продаж. Последовавшие за этим заявки на покупку долларов за иены сдвинули немецкую марку, которая перешла в коридор 1,3700-50. Затем представитель Бундесбанка, заявил, что "им Есть куда опускать ставку немецкой марки". Это подтолкнуло доллар к 1,3850 и дальше к 1,4000. Это движение потянуло за собой и курс японской иены, которая отошла от опасного уровня 90,50. В ближайшее время можно предложить два сценария развития событий. Первый предполагает, что, если доллару удастся удержаться выше отметки 1,3850, то давление марки будет исчерпано, и доллар может начать расти. Второй сценарий предусматривает резкий откат к уровням 1,4220-50 или даже к 1,4340, которые приведут к росту спекулятивных настроений. Курс может вновь рухнуть к 1,3660. А если рынку помогут какие-нибудь слухи, то и "дальше — к 1,3500 и 1,3250. Другими словами, взлет доллара неминуем. Естественно, что и наличные марка с иеной на прошлой неделе сильно подорожали в западных банках. Курсы покупки/продажи за неделю изменились по марке с 1,415/1,525 до 1,350/1,460, по иене с 93,60 до 87,45/93,45. | Vocabulary |
| Q11 dU. падение — downfall | |
| э: побить рекорд — to surpass a record | |
| л | |
| рухнуть — to plummet | |
| е | |
| истерический — hysterical | |
| i: | |
| отходить — to retreat | |
| о: | |
| сценарий — scenario | |
| NOUN | VERB |
| Support, resistance, | to hold over the area |
| (price line, point) | to challenge |
| minor S/R | to breach support |
| major S/R | to break resistance |
| light ~ | to trigger correction |
| strong ~ | to provoke acceleration |
| key- | to signal consolidation |
| good- | to balk at resistance |
| pivotal - | to center on |
| initial ~ | to remain under pressure |
| immediate ~ | to keep intact (potential) |
| attempted - | to confirm a test |
| term- | to sustain the break |
| near term - | to reverse longs |
| interim ~ | to remain entrenched |
| watched price | to prevent a sell off |
| to reinstate shorts | |
| to give room for recovery | |
| S/R area | to find support |
| to ease pressure | |
| dollar (rate) | retained its strength |
| (dollar) prices | to sank to the day's low |
| opened at... down... | |
| was quoted at... down... from... | |
| gained back | |
| closed at... | |
| rose to... | |
| finished... lower at... | |
| steadied against the yen | |
| drifted lower VS... | |
| pressure | |
| selling ~ |
| buying ~ | |
| immediate ~ | |
| downside ~ | |
| upside ~ | |
| eased- | |
| increased ~ | |
| preserved ~ | • |
| kept- | |
| uptrend / downtrend | to resume |
| bearish momentum | to renew |
| upward momentum | to foige ahead |
| upward pattern | |
| upmove | |
| upleg in the dollar | |
| upside potential | |
| upside target | |
| target (objective) | to target 1.55 |
| next- | to maintain |
| down side - | to attain |
| up side ~ | |
| initial ~ | |
| projected ~ | |
| overall ~ | |
| major ~ | |
| strength/weakness | to trigger |
| recent ~ | |
| corrective ~ | |
| short term ~ | |
| zone/base | to maintain scope |
| area/scope | to hold area |
| range/band | to break area |
| trading | to keep the range intact |
| consolidation | |
| support zone |