The Fed has cut the Discount rate by
25 bps in an emergency market to primarily "Reduce the spread between Fed
Funds rate and Discount rate".
The Fed is still likely to cut the headline Fed funds rate by 75 bps on
Tuesday, its scheduled meeting.
ForexGen provides its clients with a full
explained market analysis, fundamental or technical. ForexGen news centre could
be your guide in making your calculations and forecasts for the coming period,
and helps in analyzing fundamentals.
The Federal Reserve on Sunday announced two initiatives designed to bolster
market liquidity and promote orderly market functioning. Liquid,
well-functioning markets are essential for the promotion of economic growth.
First, the Federal Reserve Board voted unanimously to authorize the Federal
Reserve Bank of New York to create a lending facility to improve the ability of
primary dealers to provide financing to participants in securitization markets.
This facility will be available for business on Monday, March 17. It will be in
place for at least six months and may be extended as conditions warrant. Credit
extended to primary dealers under this facility may be collateralized by a
broad range of investment-grade debt securities. The interest rate charged on
such credit will be the same as the primary credit rate, or discount rate, at
the Federal Reserve Bank of New York.
Second, the Federal Reserve Board unanimously approved a request by the Federal
Reserve Bank of New York to decrease the primary credit rate from 3-1/2 percent
to 3-1/4 percent, effective immediately. This step lowers the spread of the
primary credit rate over the Federal Open Market Committee’s target federal
funds rate to 1/4 percentage point. The Board also approved an increase in
the maximum maturity of primary credit loans to 90 days from 30 days.
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ForexGen studies past
price and volume changes in order to build up simulations on future price
movements. ForexGen analysts mainly make use of charts and financial formulas
to gather enough information used in technical price speculations.
Leonardo of Pisa was an
Italian mathematician who lived between 1170 – 1250, also known as Fibonacc
i.
In his Book of Calculation (Liber Abaci) he presented a modern number sequence
named after him known as the Fibonacci numbers. The Fibonacci numbers looks
like this:
0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, etc
a number being the sum of the preceding two numbers. The Fibonacci sequence can
also be found in natu
re, in leaf buds, spiral seeds, sunflowers, and scales on
pineapples, petals on artichokes, daisy petals, fruits, pears, pine cones, pine
needles, and many more natural objects. The sequence is also found in musical
theory; there are 13 notes in an octave with 8 white keys, 13 follows right
after 8 in the sequence.
If we divide one number in the series by the number that follows it, we will
find out that each number is 1.618 times greater than the preceding number. For
example:
The Fibonacci key points used for trading are being calculated as follows:
First ratio: 8/13 = 0.6153 - 61.8% ratio
Second ratio: to obtain it we divide one number by the number found two places
after it.
8/21 = 0.380 - 38.2% ratio
The third ratio: we divide one number by the number found three places after
it.
8/34 = 0.2352 - 23.6% ratio
For unknown reasons, these numbers represents the support and resistance
points, as you can see from the above chart:
There is no logic behind this market behavior, as there is no logic behind the
appearance of the sequence in natural patterns, but most of the times is
happens, that's why traders are using the Fibonacci indicator. I have found one
logical explanation though. Like any other prophecy, we make it happen by
trading according to its prediction. For example if the trend reaches one of
Fibonacci retracement point, everyone will sell/buy thus making the prophecy
happen.
Fibonacci is being also used for identifying Elliot waves, because most of the times
the waves are formed around Fibonacci retracement point.
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