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Ex. 1. Put questions to the underlined words.
Ex. 2. Find verbals and state their syntactical function in the sentence.
Ex. 3. Select sentences which are difficult to translate and make a syntactical analysis of them.
Ex. 4. Analyse noun collocations according to the models given in the Reference Grammar.
Ex. 5. Read and translate the text.

TRANSLATION PRACTICE
MOMENTUM CROSSOVER ANALYSIS
The Momentum Crossover analysis, which can be created in the User defined analysis modules of Reuters Technical Analysis and Reuters Technical Analysis for Unix, combines the trend direction characteristics of the simple moving average and the trend strength capabilities of the momentum analysis. Two of these analyses used together can produce effective buy and sell signals.
Vocabulary
ou crossover

trend direction -

trend strength -

пересечение (трендов) - направление тренда -
сила тренда












The formula parameters are as follows and need to be filled in at the time of charting: vl -timeseries (instrument), nl - observation period for momentum (lag period), n2 - averaging period for moving average. The diagram shows a short and long momentum crossover analysis giving clear buy and sell signals. The momentum crossover analysis is simply a smoothed version of the standard momentum analysis. Two of these analysis on the same chart, one with a long, the other with a short averaging period can be used in the same way as two standard simple movine averages, (i.e. crossover indicates buy and sell signals) except that the lines will oscillate around zero. Uptrends are indicated bv price action below the momentum crossover lines. The momentum crossover line cutting through price after a trend has been established (up or down) indicates trend reversal. The analysis should not be used in a sudeways market as it tends to be choppy in the same manner as ordinary moving averages. To create the Momentum crossover analysis, simply add the following formula into the UDA editor of either RTA or RTAu. Then graph the momentum crossover twice with differing length averaging and observation periods overlaid with a price chart. The momentum and moving average oeriod parameters
should be the same as those used for short and long moving average crossovers for the instrument you are trading.
Exercises
Ex. 1. Put questions to the underlined words. Ex. 2. Find verbals and state their syntactical function in th Ex. 3. Analyse noun collocations.
e momentum - скорость изменения цены
moving average - скользящая средняя lag - отставание во времени
и: 'smoothed - сглаженный
о to'oscillate - колебаться
ou ei to overlay - наложить
e sentence.



OSCILLATORS (continued)

Relative Strength Index (RSI)
The formula for the RSI is:
RSI = 100- 100/[(Up Average/Down Average) + I].
Where:
Up Average = The average of closes in a given amount of
time that are higher than the previous close.
Down = The average of closes in a given amount of time
that are lower than the previous close.
The RSI is a momentum indicator based upon price
movement over a specified period of time created by Welles Wilder. Some of the Droblems that are apparent in other momentum oscillators are eliminated in the RSI. Namely, by taking the up average and down average instead of the difference of prices, a smoother oscillator is created. For example, in a 14-day RSI the up average of the last 14 days is derived, as is the down average of the last 14 days. A constant band is created as well (from 0 to 100) which facilitates analysis of different securities.
The RSI is used as any momentum oscillator. Directional
movement, peaks, troughs. Divergence and crossing between short term and long term RSI's are looked for in the chart.
Overbought/oversold signals are given by crossing the 70 and 30 lines according to Welles Wilder. Instead of focusing only on the crossing of the overbought/oversold line, peaks and troughs of the oscillator should be examined for signals, with peaks expected to be at higher levels in a bull market than in a bear market, troughs occurring at lower levels in a bear market than a bull market. A peak in the RSI would suggest a price turn around to lower levels could be ahead, while a trough in the RSI suggests the opposite. Longer term RSI's will have less vitality than shorter term RSI's, if many overbought/oversold signals are desired, use of a shorter term RSI would generate them, but these will not have the same weight as the less sensitive RSI in terms of medium to long term trends.
Vocabulary
e
momentum - скорость движения










i
to eliminate - уничтожать, снимать












u:
smooth - гладкий, ровный














ai
to derive - получать














э:
raw - грубый


The stochastic recognizes that in an uptrending market the close tends to be near high, while in a downtrending market, the





close is near the lows of the time period. Using the above formula, a "raw" stochastic is found.
A three-day moving average of the "raw" stochastic is used by MMS, as the "raw" stochastic is very volatile, giving false signals. The three-day moving average is called the %K stochastic. A three-day moving average of the %K stochastic is called the %D, which gives a smoother momentum oscillator. This indicator will range between 100 (when the close is equal to the highest high of the last "x" periods) and 0 (when the close is equal to the lowest low of the last "x" periods).
The stochastic is used as any momentum oscillator, with directional movement, peaks, troughs, divergence, crossing between short term and long term stochastics, and crossing between %K and %D stochastics looked for in the chart.
Bollinger Bands-BB
Bollinger Bands are lines charted above and below the moving average of the closing prices. This analysis varies from other percentage band analysis because the distance of each band from the moving average is not fixed. Instead, the price channel these bands form around the moving average is flexible and determined by the user specifying a number of standard deviations.
The standard deviation is the method used to set the band width about the moving average. Bollinger used a 2% standard deviation to capture 95% of prices within the band. However a 1.5 standard deviation is commonly used for futures.
Bollinger Bands automatically narrow and widen in response to volatility - narrow in calm markets, and widen in volatile markets, making them an effective trend indicator.
Bollinger Bands are used with a simple price graph:
Prices near the lower band may signal an overbought market.
Prices near the upper band may signal an oversold market.
The bands often narrow before a sharp move in price. A narrowing of the bands indicates the start of a new trend, which is confirmed when prices break and close out of the band.
A price that breaks above the top band, followed by another that closes within, may signal a reversal and a good time to sell.
A price that breaks below the bottom band, followed by another that closes within, may signal a reversal and a good time to buy.
Example
If prices are moving in a downtrend and hit the bottom of the band, but close back in the bands, indicates that the trend will not continue to go down but sideways and then probably back up.
Bollinger Bands form an area of Support and Resistance and are used to take profits. If prices break above or below the Bands, it results in a changed Support and Resistance. Bollinger Bands do not indicate trading stops.













Directional Movement Index - DMI
The Directional Movement Index (DMI) determines the strength of any upward or downward trends present in the market. It consists of the following four lines:
+DM measures upward movement in price over time. - DM measures downward movement in price over time. DX measures the overall direction of movement
(whether up/down) in price over time. ADX measures the average direction of movement (up/
down) in price over time. In effect it is the average
of the DX.
ADX measures the strength of the trend in the market. The higher the ADX, the stronger the trend present. This index does not measure the direction of the trend. In other words, it is quite common for the ADX to be rising while prices are falling - this indicates an increasing strength in the down trend.
All four lines are plotted on a scale from 0 to 100.
COMPREHENSION QUESTIONS
1. Where are Bollinger Bands charted?
2. What does the band width show?
3. What do Bollinger Bands signal?
4. What does the Directional Movement Index show?
EXERCISES
Ex. 1. Translate from English into Russian and vice versa
1. What are the momentum oscillators?
Momentum oscillators are technical indicators which measure the change in price over a given time period.
2. Where are M.O's used?
They are useful in trendless or sideways trending market, and significant when they reach extreme value:
overbought + 70/80%, oversold - 30/20%.
3. What signals do they give?
M.O's give market signals. Turn divergence between prices and momentum.
4. What is a Relative Strength Index?
Relative Strength Index (RSI) is a smoother oscillator created by taking the up average and down average instead of the difference in prices.
5. What is the formula for RSI?

6. What does a stochastic oscillator measure? A stochastic oscillator measures where closing price is in relation to total price range.





















7. Where are closing prices in uptrend?
Uptrend closing prices are in the upper end of the range.
8. What lines does a stochastic oscillator use? Two lines are used: %K line, more solid and sensitive and %D line, smoothed version of the %K line.
9. What is the formula for a stochastic oscillator?
The Formula is %K = 100 C-Lx/Hx-Lx],
Lx - Lowest low of last x period,
Hx - Highest high of last x period,
%D = Moving average of %K 3 day smoothed is used
with 5 day. An example of the stochastic oscillator is shown below:


Ex. 2. Put questions to the underlined words.
Ex. 3. Find verbals and state their syntactical function in the sentence.
Ex. 4. Make a syntactical analysis of the sentences difficult for translation.
Ex. 5. Read and translate the text.
















TRASLATION PRACTICE

A QUICK LOOK AT BOLLINGER BANDS
Bollinger bands is a popular band analysis similar to the
Alpha Beta trend. It can be used as a system in itself or with Oscillators such as the Relative Strength Index (RSI). The analysis is standard in both Reuters Technical Analysis (RTA) and Reuters Technical Analysis for Unix (RTAu).
Bollinger Bands consist of 3 lines. 2 charted ones above
and the other below the moving average of closing prices, which makes up the third line. The moving average of close data needs to be created seoaratelv to complete the bollineer bands analysis.
This analysis varies from other percentage band analyses
because the distance of each band from the moving average is not fixed. Instead, the price channel these bands form around the moving average is flexible, being determined by specifying a number of standard deviations from it.
John Bollineer. who created Bollineer Bands and used
them in stock tradine. Used a standard deviation of 2 which captures about 95% of price action within the bands. A different number of standard deviations can be selected dependina on the market traded for example, 1.8 standard deviations would be more appropriate for futures trading.
The length of the moving average which is used to
calculate the bands is usually 20 days or less. Care should be taken here as these sample sizes are small and statistical error Quite possible. The only statistical inference that should be drawn from this analysis is that most (approx. 95%) of the price action will be contained.
A useful feature of Bollinger Bands is automatic narrowing
and widening in response to volatility - narrow in calm markets and wide in volatile markets. This makes them an effective trend indicator, especially when used in conjunction with another trend following tool.
TRADING RULES
Use Bollinger Bands with a price chart and simple moving
average (the same length as the Bollinger Bands) then keep a look out for the following signals:
Fig 1 Bollinger Bands(top) used with an RSI(bottom).
Trendlines show divergence between the RSI and Price which confirms the Bollinger Bands.
Prices near the lower band may signal an oversold market.
Prices near the upper band may signal an overbought
market.
The bands often narrow before a sharp move in price,
either UD or down. A narrowing of the bands often indicates the start of a new trend, which is confirmed when prices break and close out of the band.
An interval that closes above the top band, followed by
another that closes within, may signal a reversal and a good time to sell.
VOCABULARY
i: ei
deviation - отклонение




ae
to'capture - охватывать




э
appropriate - подходящий






to take care - позаботиться




a:
sample - образец






i
'inference - вывод




ei
to contain - содержать




to keep a
lockout - следить


trend reversal - смена тренда






э:
to confirm - подтверждать




э:
divergence - отклонение







A
to comfort - успокаивать




An interval that closes below the bottom band, followed by another that closes within, may signal a reversal and a good time to buy.
If prices are in a downtrend and back in the bands, this is interpreted as a signal the existing down trend will not continue and that the market will move sideways and then probably back up.
Bollinger Bands form an area of Support and Resistance. Use them to take profits. If prices break above or below the Bands, it results in a changed Support and Resistance.
Trend reversals can be confirmed when used with an Oscillator, such as the Relative Strenght Index (RSI). Signals such as:
Price being close to the lower band with the RSI confirming a trend reversal should be a safe buy signal.
Price divergence with an RSI can confirm the bottom or top of a band (see Fig. 1).
A final point - like any other technical analysis technique, the trader must incorporate their own personality and comfort levels to the trading rules of Bollinger Bands. Good luck!
EXERCISES
Ex. 1. Put questions to the underlined words.
Ex. 2. Analyse noun collocations.
Ex. 3. Translate the article.














THE ELLIOTT WAVE


According to Elliott a rising stock market unfolds in five-wave/three-wave pattern and forms one complete bull market /bear market cycle of eight waves (1-3-5-B). The five-wave upward movement is called an impulse wave and the counter trend movement - a corrective wave. Waves 1, 3, 5 can subdivide into five waves of smaller scale. Corrective waves 2 and 4 can form three smaller waves each too. Impulse subwaves are numbered (1-2-3-4-5). Corrective subwaves are lettered (A,B,C). Thus waves in any series can be subdivided and resubdivided into waves of smaller degree or expanded into waves of larger degree.
THE LARGER SCALE PATTERN
Vocabulary
ou to unfold - развертываться
i impulse - импульс, побуждение
ei scale - масштаб
se to expand - расширять




The analyst should take into consideration that in an uptrend market, the low of the second wave never goes below the beginning of the first wave. The third wave is never the shortest. The forth wave does not penetrate the price range of a first wave. Market movements are essentially the same but they may differ in the size or duration. Large scale movements incorporate smaller scale subdivisions which are similar to them in their "fractal" geometry. One of the three impulse subwaves (W-1, W-3, W-5) can have extensions i.e. elongated movements. These subdivisions increase the number of waves to nine for the main sequence. The increased number of movements does not change the technical significance of price pattern.
e to penetrate - проникать
э:
to incorporate - объединять
ae fractal "geometry" - "геометрия частей" фрактальная геометрия

TRANSLATION PRACTICE
ELLIOTT WAVE THEORY
According to Elliott, markets move in cyclical waves, with
a kind ofself-similaritv within the waves. The big waves consist
of smaller waves which themselves contain smaller waves and so on. The names of the waves according to their size are as follows, with increasing length in time and amount:
sub-minuette
minuette [mmjuet]
minute [minit]
minor
intermediate
primary
cycle
super cycle
grand supercycle
The time frame starts with minutes and even single trades
and ends in movements lasting for several hundred years from
beginning to end. A complete cycle on one stage of observation consists of several movements, of which some are in the direction of the wave and some are in the opposite.
Now let us listen to Elliott himself:
"The rules to be derived... are:
1) Waves in the direction of the main movement, or the
odd numbered waves, are made up of five lesser waves.
2) Corrective waves, or waves against the main movement
(even numbered waves) are made up of three lesser waves."
The basic concept states that this structure is repeated at
the next level of waves again, like the movement of (2) to (3),
while consisting of five waves itself, is part of the next-state
movement towards (1). The system is thus valid on all possible
levels of observation and the only problem the analyst has to
solve is correct wave countine.


odd numbered - нечетные (числа)










even numbered - четные (числа)






to stretch - растягивать








i:
to proceed - проходить








э:
distortion - искажение








e
irregular - неправильный,
нерегулярный











Since markets do not move in the ideal way. some correction might fail to close above the previous correction's low, (in an upward trend like above), some of the odd moves might fail in closing above the previous odd-waves top and so on. These distortions make wave-detecting and wave-counting quite difficult and subject to personal opinion, which is the main problem when one tries to computerize the system. The main interest of the investor is always the fifth wave since it indicates a turnaround of the trend. "Sometimes the fifth wave will 'stretch', that is, deploy or spread out. The fifth wave. instead of proceeding in the normal one-wave pattern of the same degree as the movement as a whole, simply stretches or sub-divides into five waves of lower degree... Such spreading out is a characteristic of markets that are unusually strong (or weak, if a down movement.)"
invalidity
long run

bet
неправомерность - большой срок

- пари



For distortions of the ideal structure. Elliott formed a consistent system of triangles, diagonals, irregular corrections and wave extensions. Since distorted waves can follow each other, their detection becomes extremely difficult-to-read. And

to inhere - подразумевать
ae self-similarity - самоподобие
э: ei interpritation - интерпретация
i: to delete - стирать, удалять


this is the reason why Elliott could make surprising and extremely accurate predictions on the one hand at times. whereas he failed at others. Distorted waves are known ex post. but not in advance. But correct detection of distorted waves as such helps to predict the next waves ending. If this wave is distorted again, reasoned by whatsoever, prediction failed again to some extent. This offers opportunity to critics to claim invalidity of results, which is to some extent true, but which does not necessarily mark the whole system as nonsense, since the next forecast might be extremely correct. Thus the system can be right in the long-run, but the investor might suffer from distortions in the short run. Actually, only comouter-testina
could prove if it is possuble to make money with the system. (Hence that todays knowledge about pattern recognition often refers to similar ideas, yet named differently and more modern). Moreover the critics should be aware, that even the best traders are right three to four out often bets, and never know why they were wrong. Elliott Waves can make you know why you failed, which includes a kind of element of self learning. Now after having introduced the basic structure it might be interesting to conclude similarities to modern theories. First of

all, the system inheres self-similarity, which is in the meanwhile well-introduced by chaos-theory approaches to financial markets.
Secondly there are similarities to modem pattern recogntion. since a five wave structure simply is-a pattern.
Thirdly, Fibonacci time series are quite modern as well and Elliott himself found the similarities astonishing:
"From my experience I have learned that 144 is the highest number of practical value. In a complete cycle of the shock market, the number of Minor waves is 144, as shown in the following table.


All are Fibonacci numbers and the entire series is employed. The length of waves may vary but not the number".
According to Elliott, the wave structure is including all activities of man. A.J. Frost and R.R. Prechtergo even further by claiming that the wave structure and its mathematical expression, the Fibonacci series, is a basic principle of the world as a whole.
The great variety of different interpretations of one wave and its meaning for the overall stmcture makes it rather impossible to computerize Elliott Wave without deleting some essential parts. Glenn Neelv tried to form a system which follows Elliott and works with full computer support, but he is often criticized for oversimplifying in order to computerize.
COMPRESENSION QUESTIONS
1. How does a rising stock market infold?
2. What is an impulse wave?
3. What can corrective waves form?
4. Does the increased number of movements change the technical significance of price pattern?







5. How do markets move according to Elliott?
6. What is the main problem which the analyst has to solve?
7. What makes wave - counting difficult?
8. Which wave is the most important for the investor and why?
9. Why is distorted wave detection extremely difficult?
EXERCISES
Ex. 1. Put questions to the underlined words.
Ex. 2. Draw up a plan of the article.
Ex. 3. Discuss the pros and cons of the Elliott wave theory. Ex. 4. Read and translate the text and the article.





















































FOREX FORECASTING

KEY INTEREST RATES
U.S. - Key Interest Rates. The rates to watch are: Federal (Fed) funds rate - sets the tone for money market rates.
Discount rate - usually sets the floor for the Fed funds
rate.
The Fed funds and discount rates are the two key interest
rates. Deoositorv institutions hold non-interest bearine reserve accounts at the Fed to meet reserve requirements and handle interbank transactions. Deposits above the minimum required are traded overnight and the Fed funds rate is what banks charge each other for these overnight loans. The Fed has an objective for the funds rate which is never formallv published. However.
so-called Fed watchers can usually tell what the target is by observing where the funds rate trades in conjunction with the Fed's money market operations.
The first time the Fed announced a rise in interest rates at
The time it took place was on February 4, 1994 when it issued a statement saving that the Federal Open Market Committee had decided to increase slightly the degree of pressure on reserve positions. However, a series of rate rises in early 1994 were accompanied by formal Fed statements which the markets believe were designed to make its intentions clear. What is not clear is whether this will become the standard method by which rate changes are signalled. Traditionally. Fed watchers had to wait
until the release of the minutes of the regular Federal Open Market Committee meetings, which are published six weeks after wards, for confirmation of any perceived change in monetary policy.
All institutions with reservable deposits can borrow at the
Discount rate from the Fed's discount window for short term adjustment purposes and limited other uses. The Fed funds rate is usually above the discount rate. When the funds rate is at, or be low, the discount rate there is little use of the discount window by healthy banks which have access to the funds market.
(There is no U.S. equivalent of the lombard rate which
other central banks use to penalise institutions requiring emergency funds. However, there are circumstances when the Fed may charge a market rate above the basic discount rate. For example, borrowing under the seasonal programme is at a market rate average of Fed funds and certificates of deposit (CDs). Extended credit borrowing by banks in difficulty can also be at an above market rate.)
Open market ooerations are conducted with a eroup of pri
mary dealers in government securities (about 40) which are mainly subsidiaries of bank holding companies and securities houses. Eligible paper includes Treasury bills, notes, bonds and, for repos, government agency securities.
VOCABULARY
to set the tone - задавать тон




i
non-interest
bearing - беспроцентный




о: target - планируемая цифра, установленный курс





л
in conjunction - в связи с, связанный с...




ai to be designed - предполагаться



i
minutes - протоколы




i:
perceived - предполагаемый




л
for adjustment purposes - для целей урегулирования


ае
to have ' access - иметь доступ к...




i:
to'penalise - наказывать




to change a rate - менять курс




e
'eligible papers - ценные бумаги, отвечающие
требованиям



Basically, the Fed controls U.S. monetary policy. It is often described as independent and in a narrow sense this is true: the Fed is self-financed and does not require presidential approval to change interest rates. However, the Fed can be abolished or have its terms of reference changed by Congress. The chairman is appointed by the President for a four year term only and is conventionally a political appointee. In practical terms therefore, it is virtually impossible for the Fed to follow an interest rate policy significantly at odds with that desired by the U.S. Administration.
Japan - Key Interest Rates. The rates to watch are: Uncollateralised (unsecured) overnight call rate - sets the
tone for money market rates. Official discount rate (ODR) - lagging rate of psychological significance. Japan is nearing the end of a decade long period in which most interest rates have been deregulated. These changes mean the Bank of Japan (BOJ) now sets only its official discount rate. at which it lends to commercial banks, and the liquidity deposit rate. Other interest rates are set in the open market and the BOJ aims to influence them. indirectly, through its market operations. The most important short term interbank money market rate is the uncollateralised overnight call rate. The BOJ closely
monitors call rate movements and puts most emphasis on them when managing the market. The BOJ appears to have an unpublished target zone for the call rate but the market usually gets an idea of the BOJ's target range and credit stance by interpreting the signals in its daily operations. For the past several years, the market has focused more on the amount and timing of BOJ operations. Rates set by the BOJ have rarely ruffled any market feathers, as they have been largely in line with prevailing market rates. The weekly average call rate. and its level at intervention time, can provide signals on the BOJ's policy stance. Since the BOJ prefers to signal monetary policy changes through the uncollateralised overnight call rate. the official discount rate (ODR) is now typically a lagging indicator of monetary policy. Nevertheless, the ODR still has an impact. The ODR applies to the rediscounting of commercial bills and official loans secured with Japanese government bonds (JOBs), specially designed securities and bills corresponding to commercial bills as collateral. If the ODR is increased, financial institutions find that the cost of raising funds is affected directly, via the higher cost of acquiring discount window loans from the BOJ and. indirectly. through the increased money market rates that usually precede, and often trigger an ODR change. The opposite is true for a reduction in the ODR. Under the Bank of Japan Law (1942) the Bank's policy board has the authority to formulate, direct and carry out monetary policy. While ultimate control of monetary policy rests with the Ministry of Finance, the Bank of Japan Law gives the central bank sole responsibility for changing the official discount rate. There is no hard and fast rule.
terms of reference - круг ведения, мандат, компетенция
to be at odds - противоречить
ее lagging rate - запаздывающий курс
e deregulated - разрегулированный
call rate - онкольная ставка, процентная ставка по ссудам до востребования
о to monitor - отслеживать
ае stance - поза, позиция
л to rume - взъерошить, беспокоить, волновать
to be in line - соответствовать
ei prevailing - господствующий
to have impact - влиять
e to affect - влиять
i to trigger - вызывать sole - полный
CL
hard and fast - строго обозначенные



There are seven members of the policy board, four of
whom are appointed by the cabinet and approved by both houses of the Diet (Japanese Parliament). There are four representatives from private industry, one from the Bank of Japan and two from the government. The government members, taken from the Ministry of Finance and the Economic Planning Agency, do not have voting rights.
Germany - Key Interest Rates. The rates to watch are:
Repo rate - sets the tone for money market rates.
Discount rate - sets the floor for money market rates. Lombard rate - sets the ceiling for money market rates. The repo rate is now the main tool for guiding the over
night money market rate. Repos enable the Bundesbank to adjust monetary policy without changing its headline rates. A change from a fixed to a variable rate repo (or vice versa) may indicate a policy change. But while higher rates at a variable rate repo reflect higher bids for funds by banks, they do not necessarily point to tighter policy in the short term (and vice versa).
The discount rate normally sets the floor for money market
rates while the lombard rate usually sets the ceiling. Thus, the discount rate is more important when interest rates are falling while the lombard rate is the kev rate when interest rates are rising.
The Bundesbank's main instruments are either desiened
for long mn major policy changes or to fine tune the money
market.
The Bundesbank sets monetary oolicv and is the most in
dependent of the Group of Seven central banks. It has a legal obligation to protect the external value of the mark. Without prejudice to the performance of its functions, the Bundesbank is required to support the general economic policy of the federal government. In using its powers under the Bundesbank Act, the central bank is independent of instructions from the federal government.
u
Bundesbank - Центральный банк Германии








о
Lombard rate - официальная ставка
центрального банка по
кредитам коммерческим банкам, обеспеченным ценными бумагами (ФРГ)








еэ
variable - меняющийся








to fine tune - осуществить "тонкую"
настройку








е
prejudice - предрассудок











COMPREHENSION QUESTIONS
1. What are the key interest rates in the USA, Japan and Germany?
2. Which of them is a better instrument for guiding the money market rate?
3. Why didn't the Fed publish the fund rates?
4. How does BOJ influence interest rates?
5. What do Discount and Lombard rates set in Germany?
6. Which of the two rates is more important when interest rates are falling?
7. Which central bank of the Group of Seven is more independent?
8. When did the Fed announce a rise in interest rates for the first time?
9. When do financial institutions borrow from the Fed's discount window?
10. Does the Fed require presidential approval to change interest rates?
Exercises
Ex. 1. Learn the vocabulary.
Ex. 2. Put questions to the underlined words.
Ex. 3. Make a syntactical analysis of the subordinate clauses (state what kind they are).
Ex. 4. Choose verbals and state their syntactical function in the sentence.
Ex. 5. Translate the texts.





LONG TERM TECHNICAL ANALYSIS
THE CHARTIST'S TRADING PLAN AND FOREX FORECASTING
Before drawing up the chartist's trading plan the dealer studies historical data for forecasting and selects a traditional or modem chart for study or a combination of both.
He must choose chart patterns of note to identify a potential continuation/reversal or neutral trend with trigger level and extension target, pay special attention to moving averages and oscillators signals for an indication and confirmation of the trend, and anticipate its turns.
For in-depth analysis dealers usually use the Elliott wave count.
Generally most forex dealings are based on the dollar. And it is the movement of the dollar which is moving the financial market. The basic idea of making a profit is to buy dollars low and sell high.












The dealer can never be certain of what may occur. Unfortunately forecasting is not a science but an art and anything can happen.
By January 1994 hardly anybody thought that the dollar could fail to cross 1.80 to the Deutsch Mark. The greenback did and made forecasters shy for 1995. In fact most studies see the dollar rising but, burned by experience in 1994, predict only modest rates. Right now (02/95), as levels of about 1.50 can be seen, predictions range from 1.65 to 1.75 for the end of 1995.
Long Term Technical Analysis
Dollar/DM Forex Rate Moves in 1995.
In December. 1994 the greenback started an upward correction which was followed by a retracement in March. Mid of May 1995 the dollar remained in the 1.36 / 1.39 consolidation range. In August the US dollar drifted around between 1.35 and 1.42 of the German Mark. By the end of the year dollar/DM broke above 1.44. The continual downward trend since the start of 1994 seemed to be finally over. All the moves of the USD/ GEM are plotted on the Chart (Jan. 1996) and analysed in the articles below.

DOLLAR CONSOLIDATES (DEC. 94)
VOCABULARY


hike - повышение
At the FOMC meeting of the FED on the 14th of Novem


ber. the long expected interest rate hike became reality. The


FED increased both the discount and the fund rates by 0.75 each


to 4.75% and 5.5% respectively. Even before the summit, the
FED(FRS) - Федеральная резервная
greenback started an upward correction, which was continued
Federal Reserve система США (ФРС)
by the interest rate hikes, which were slightly above expecta
System
tions. The international interest rate scenario has changed dra


matically over the last months. Contrary to the situation at the beginning of the year, where the dollar rates were around 2% below the DM rates, now the dollar rates for all maturities show a premium above the DM yields of 0.5% to 1%, this factor has to influence forex trade as well.
As the bearish sentiment will not be forgotten for a while,
we expect a Range trading between 1.53DMand 1.75DM till the end of the year. but at least the lows should be behind us.

IMPROVING CHARTS

After an extend test of the lows at 1.50 DM, the market re
turned into the consolidation pattern between 1.53 and 1.58,
which developed in the summer.




FOMC - Комитет по операциям на
Federal открытом рынке (ФРС) США
Open Market
Commettee






ju: maturity - ценные бумаги со сроком
погашения








range trading - торговля в канале (коридоре)











Dollar breaks 1.42 DM on the upside Dollar crisis seems to be over June, 95)
Mid of May the dollar broke the heavy resistance around 1.42 DM and left the 1.36-1.39 consolidation range on the upside. As this break-out was followed by several tests on the downside, at least from the technical viewpoint the cyclical lows should be behind us. Another bullish item is that this scenario occured without any intervention by any central bank. Obviously the market found a balance and finally heavy fund buying pushed the greenback higher. Fundamentally this action was backed by the announce
ment of stringent American trade sanctions against Japan. How important these punitive measures have already proved to be was shown by the last trade balance report. The US - Japanese trade deficit widened bv30%. despite the recent Yen surge and a lot of rancour between Mikey Kantor and his Japanese counterpart. Having tested the 80 Yen support twice, the dollar bounced back by 10% within two weeks.
The dollar finds a floor (Aug. 95)
The US dollar has been drifting around between 1.35 and 1.42 to the German mark for several months now, but at least the continual downward trend since the start of 1994 seems to be fmalv over. At the start of May a breakout to 1.45 was quickly brought to a halt. Many analysts believe though, that the dollar is between 10-20% undervalued, even if the recent data emerging from the US economy has altered that relationship slightly. The most recent interest rate cut by the FED was clearly seen as being their response to the negative economic data. It was the first cut in one and a half year, a period which has seen seven rises. Many experts predict that it will not be the last.
Buba lowers rates, but not to spur growth German interest rate cut (Jan. 96)
The Bundesbank (Buba) in Frakfurt cut the discount and Lombard rates by half a percent last month, taking them to 3 and 5% respectively. The long-awaited, but little hoped for, announcement took the markets bv surprise, following a series of rather mixed signals corning out of the Buba. Hans Tietmever. president of the bank, denied that there had been any ambiguity about the bank's intentions when he made the decision public. This brings German interest rates to their lowest level since mid-1988. and is the third such reduction within a year. It appears that the Buba was persuaded to make the decision after reviewing the progress of M3. the broad
funds - деньги, ссужаемые банкам федеральным резервным фондом
i stringent - строгий ^
Ju: | punitive - карательный
ае rancour - вражда
э: to emerge - появляться
е respectively - соответственно
to take by - удивить surprise
эе ju ambiguity - двусмысленность
to make public - обнародовать



агрегат МЗ плюс банковские депозиты частного сектора в инвалюте (Великобритания)
to run out - выдохнуться of steam
62



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
01
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
64






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

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