Out of all the financial terms being tossed around these days, one of the least understood is deflation.

Most people have at least a basic understanding of inflation and how it affects them. But what is deflation? And what affect does it have on the market and individuals?

In simplistic terms, deflation is when prices drop. Deflation can also be defined as negative inflation. It doesn’t sound too bad, does it?

Well, it can be. According to a recent Fox News article, deflation is actually worse for the economy than inflation. Why? Because deflation causes prices to drop in certain markets, not just in the entire marketplace.

Take the housing market, for instance. Buyers disappeared as lending dried up and house prices took a dive. For some buyers, that sounds like a good thing: buying the home they want at a really great price. However, many buyers look at the falling prices and hold off in hopes of even lower prices.

This can cause a spiral effect, much like spiralling inflation (remember paying $4-$5 per gallon for gas not long ago?), which is a really bad thing for the economy. Let’s break deflation down a bit further:

• Consumers cut spending as lending evaporates
• Companies slow production and cut jobs as consumers spend less
• Consumers spend even less as employment fears take hold

This pattern can continually repeat until an eventual depression hits. But deflation is rare in the U.S. The United States has not experienced a true deflationary period in about 60 years. There have been times of what is known as “disinflation,” or an inflationary slowdown, but not actual deflation.

What does deflation mean to the average person? Well, it could mean anything from losing your job to seeing the price of your home tank to eventually sending the country into another depression. Sounds pretty scary, huh?

Can anything be done to prevent deflation? The Federal Reserve Bank (the Fed), which is the central bank for the U.S., has already cut interest rates down to almost zero (currently, between 0 percent and 0.25 percent). This encourages borrowing, as lending rates are lower.

With lower lending rates, consumers may apply for more credit and begin to spend more. This will discourage deflation. Unfortunately, the credit markets are still sluggish, which means consumers aren’t applying for credit.

No new credit means no new spending, and no new spending can further drive down prices. Since the Fed has already cut rates to nearly nothing, they don’t have any room to cut them further. Some analysts believe that monetary policy becomes impotent when the Fed has the inability to further cut interest rates during times of slow inflation.

There is disagreement regarding this stance. In 2003, the Joint Economic Committee in the U.S. Congress published a paper, “Monetary Policy in Low Inflation/Deflation Environments,” regarding this very topic.

According to the paper, interest rates can be “misleading policy guides in low inflation and deflationary conditions.” The paper also states that it is a much easier thing to prevent deflation than to fix it.

Furthermore, when interest rates are at or near 0 percent (as they are currently), then people are apt to make inaccurate assumptions about the credit and financial markets. Most of the time, when interest rates are this low, they really don’t “say” a whole lot about any given market.

Apparently, outstanding government debt means that the Fed has the ability to purchase various assets and use these assets to incur inflation. These assets can include long-term securities, foreign exchange and even private debt.

The Fed can also commit to keeping rates low for an extended period of time (known as a “precommitment strategy”). Further, the Fed can begin lending directly to financial institutions.

Interestingly enough, the U.S. government is already implementing many of these strategies. Under the Troubled Assets Relief Program (TARP), $700 billion is being used to buy up private debt. Also, the Fed is already lending to individual financial institutions.

The Fed is already discussing buying long-term Treasury securities. Yet it has not committed to doing so.

Not mentioned in the Congressional paper is a program that the Fed has already unveiled. As a condition of the bailout, participating financial institutions are now required to modify the terms of many of their mortgages. So, in addition to using all of the policy instruments the Joint Economic Committee believes imperative to preventing deflation, the Fed is taking even greater steps to provide relief to consumers.

Even though deflation is something to be avoided and current conditions could tip into deflation, there are signs that it isn’t on the horizon. The Fed, in conjunction with the Treasury and the Congress, is using all the monetary policy instruments available to prevent deflation.

TARP, in addition to the current stimulus bill (the American Recovery and Reinvestment Plan), is doing a lot to slow the slide into deflation. With credit becoming more available and consumers getting the help they need (and not just in the form of trickling down from bailed-out corporations), spending should pick up. Then we can return to the good old inflationary days of old.

Many homeowners are stuck with houses that are virtually impossible to unload. With their interest-only loans about to convert to conventional payments, some homeowners are facing mortgage payments too big to pay.

They are saddled with homes they purchased before the house-price crash. Most analysts actually see the recession as a result of the housing market crash.

To begin with, the subprime lending industry began utilizing interest-only loans. Subprime loans are typically given to buyers seen as a poor credit risk by banks. This could be due to many factors, not just delinquencies or bankruptcies, as those with little credit history are in this group as well.

In the past, subprime loans typically meant higher monthly payments due to the higher interest rates charged as a result of the buyer being a poor credit risk. Also, the buyer was usually expected to have some form of down payment. A down payment lowers the interest rate and repayments because the banks see a buyer having their own money in a home as a slight insurance against default.

Most high-risk borrowers were not able to afford a big enough down payment to lower the rate or monthly payments significantly. So only those who could either afford to put up some of their own money or those who could afford high monthly payments would borrow in the subprime market. The advent of the interest-only loan changed that.

Subprime lending, in and of itself, is not a bad thing. But when high-risk borrowers get loans for houses they technically can’t afford, it turns into a powder keg waiting for a match. The interest-only loans that allowed these borrowers to buy houses at inflated prices turned into conventional loans with much higher payments that their owners could not make.

The anatomy of an interest-only loan is something like this:

• There is usually little or no down payment, which means the buyer has little of their own money invested in the loan and is more likely to default when things go south.
• The monthly payments are initially low as they are only for the interest on the loan. This time period of interest-only payments can last for one to five years.
• Once that time period is up, the loan converts to a conventional loan, with higher rates depending on if the loan is attached to the U.S. treasuries or the London Interbank Offered Rate (LIBOR, the rate at which banks lend to each other). If it is based on U.S. treasury rates, then the payments are lower than if based on the LIBOR.

With the way the housing market seemed to be going up and up and up, many buyers believed that they could sell their homes at a higher price before the interest-only term of the loan ended. Unfortunately, the housing market crashed and with it house prices.

How did the housing market crash bring about the recession? It can be broken down as follows:

• Subprime, interest-only loans are given to poor credit risks with little to no down payment, opening the door for future defaults.
• Banks bundled these loans into packages known as mortgage-backed securities and sold them globally.
• When defaults piled up and foreclosures began to abound, investors who purchased mortgage-backed securities lost money.
• These investors stopped purchasing this type of securities, so banks were now on the hook for the bad loans.
• Banks knew that other banks were also carrying the dead weight of bad loans; consequently, they would not lend to each other.
• Credit markets froze as lending ceased and recession hit.

Since homeowners couldn’t afford their payments and subsequently defaulted, banks and investors lost money. Those same banks and investors stopped putting money into the credit markets, and people had trouble refinancing, purchasing new homes and getting regular credit.

This, in turn, led to lowered consumer spending. As consumers weren’t spending, many businesses lost money. When businesses lost money, they didn’t borrow money to expand their business. No expansion and lack of money led to layoffs and cutbacks on hours and production, which led to more defaults and less spending.

Once the economy began to slide and jobs were lost and businesses went bust, many began to lose faith in the market. More investors were holding onto their money and the recession worsened.

As the economic downturn became more pronounced, house prices fell further. Few people could borrow the necessary funds to purchase homes as lending dried up. With more sellers than buyers, many homes are being sold at “fire-house sale” prices.

Also, many people were worried about losing their jobs due to problems their employers were facing. This, of course, meant that spending decreased further.

It is a vicious cycle that occasionally begs the “chicken or the egg” question. Which came first: the house-price crash or the recession? In this case, the crash of the housing market led to the initial economic downturn. But the recession may further push down the price of homes.

During the presidential election of 2008, Barack Obama enjoyed the backing of just about his entire party (excluding some disappointed Clinton supporters). Now that he has taken office and has proposed his economic stimulus package, the American Recovery and Reinvestment Plan, many moderate Democrats aren’t as supportive.

The American Recovery and Reinvestment Plan is an encompassing plan to create new jobs; enhance technology and energy efficiency; and upgrade/improve roads, bridges and schools. Many economists believe this plan is one of the best ways to pull our economy out of recession. So what’s the problem?

More liberal Congressional Democrats do not believe the plan goes far enough. Unfortunately, many Republicans think the plan goes too far in the direction of social welfare and less in the direction of helping small businesses and allowing the effects to trickle down to consumers. Hence, there’s the problem of trying to please his own party and the opposition party in order to ensure quick passage of a much-needed bill.

The Democrats believe the program should focus more on job creation and infrastructure improvements (particularly in the energy sector) versus tax cuts (which are included in the bill). Senate Democrats also want to include a provision for bankruptcy courts to have the ability to change the terms of home loans - which is opposed by Republicans.

President Obama has stated that quick passage of the bill is necessary to help the economy begin to improve. Unfortunately, it is impossible to please everybody. Conservative Democrats and Republicans are concerned with the amount of spending in the bill leading to an increased deficit. But more liberal Democrats are chiefly concerned that not enough money is spent on social programs and improvements in infrastructure.

Despite opposition from conservative members of the Democratic Party as well as the Republicans, President Obama has some pretty powerful friends. Speaker of the House and fellow Democrat Nancy Pelosi has called for passage of the bill by President’s Day. As a staunch proponent of this bill, Speaker Pelosi has also stated that if the bill is not passed by President’s Day, then the House will not recess for the day.

By and large, though, Democrats view this bill and President Obama favorably. After all, Obama’s economic plan is a far cry from the Emergency Economic Stabilization Act of 2008, which introduced the Troubled Assets Relief Program (TARP), a $700 billion financial market bailout.

TARP got off to a rocky start when former Treasury Secretary Henry Paulson went against the clear intent of the bill (buying up “troubled assets” such as bad loans from banks and other financial institutions) to invest the initial $350 billion directly in the beleaguered institutions. More oversight has been called for, but ultimately, TARP will do virtually nothing to help the average American.

The American Recovery and Reinvestment Plan, on the other hand, adheres to the Democratic ideas of spending federal funds to improve the state of the nation. Democrats are pleased with the infrastructure, electricity (including alternative power sources), education and other means of creating jobs.

Recently, Rep. Barney Frank (Democrat – MA), chairman of the House Financial Services Committee, appeared on Larry King Live to defend the economic package. He pointed out that the plan created jobs in ways many Republicans and conservative Democrats were decrying as adding pork, such as providing money to fight sexually transmitted diseases. Rep. Frank asked pointedly, “[D]o you think people fight sexually transmitted diseases as volunteers?”

His point is valid. Many on the conservative side tend to view those parts of the stimulus package that promote improvements in infrastructure as the only ones that create jobs. However, manual labor is not the only job option out there.

Rep. Frank also pointed out that many Democrats believe the initial $350 billion from TARP was mishandled by the Bush administration. He further supported President Obama by categorically stating the second $350 billion provided by TARP would be spent in better ways.

Later in the same Larry King segment, Paul Begala, a Democratic strategist, also talked up the plan. Begala stated he believes Obama’s plan can be trusted, as many American people, especially many Democrats, trust Obama himself. He also compared President Obama’s plan to FDR’s New Deal in that it calls for greater transparency and oversight of the money being spent.

Transparency from the Obama Administration is reassuring to many Americans. As the Bush Administration was exiting, no one had any real idea how the money was getting spent or where Secretary Paulson was spending it.

The majority of the Democratic Party is standing firmly behind President Obama. Those Democratic detractors of the American Recovery and Reinvestment Plan are mainly opposed to one of two things: tax cuts added to garner Republican votes or too much spending that could lead to a greater deficit. But no matter what compromises he makes in order to engender support, President Obama should not hold out for universal popularity, in either the Democratic or Republican parties.

A good deal of President Barack Obama’s campaign support was generated by his roughly 500 campaign promises (see www.politifact.com). But history has shown that politicians are not always the best at keeping their promises.

President Obama will face a certain amount of opposition from Congressional Republicans, especially when it comes to one of his biggest promises: the passage of an economic stimulus package, the American Recovery and Reinvestment Plan.

Many on the right, through words and actions, echo the sentiments of right-wing political pundit Rush Limbaugh: “I hope he fails.” But Limbaugh is more of an extreme example of Republican principles, and the echoes are more from other pundits versus conservative politicians.

In the same vein as Limbaugh, columnist Michelle Malkin (www.michellemalkin.com) refers on her blog to the proposed economic plan as the “Generational Theft Act of 2009.”

Mainstream Republicans are more than willing to work hand-in-hand with President Obama and the Congressional Democrats for the benefit of the country; they would not dream of stating a wish for the failure of the administration and/or its economic plan. The majority of Republican politicians will not come right out and say they hope President Obama and/or his economic plan will fail.

The main problem Republicans have with the American Recovery and Reinvestment Plan is that pet projects of Congressmen/Congresswomen are being attached to the bill, or, in politispeak: Pork is piling on. In an attempt to return to fiscal conservative policy, some Republicans are threatening to oppose the bill if the pork is not eliminated.

For example, House Minority Leader John Boehner of Ohio stated in a recent interview (see below) with NBC’s “Meet the Press,” “Right now, given the concerns we have over the size of this package and all of the spending in this package, we don’t think it’s going to work … put me down in the ‘no’ column.” However, he made the point for bipartisan cooperation, noting that failure to pass a stimulus package would do nothing to help the ailing economy.

That admirable sentiment aside, on January 28, 2009, the House passed the American Recovery and Reinvestment Plan. None of the 178 House Republicans voted in favor of it. They did propose their own bill - one that utilized tax credits and tax cuts versus additional government spending - which was soundly defeated in a roll call vote, according to reports in the Miami Herald.

Wanting a fresh perspective on the Republican view of President Obama and his economic stimulus package, we interviewed the local Republican Party chairman, John Salak. His views echoed Republican pundits and politicians alike.

Salak expressed his doubt that government in general can influence something as complex as the American economy. Likening the economy to an ecosystem, he believes there are far too many components to single out any one, or even several, to fix. And, like Phil Gramm, the co-chair of the McCain-Palin campaign, Salak thinks the country is suffering from more of a “mental” recession than an actual one.

Pointing out that 5 percent unemployment is typically considered full employment, Salak stated that allowing the markets to cycle through the downturn with no interference (including bailouts) from the government is a better solution and would allow the economy to recover sooner. Also, allowing supply and demand to dictate who stays in business means a more solid economic future.

Salak isn’t the only one who believes that tax cuts and allowing the American people to “vote with dollars” is the way to salvage the economy.

Rich Lowry, syndicated columnist and editor of the National Review, a conservative news magazine, recently wrote an article on this exact topic. In addition to tax cuts for the American people - which Lowry estimates will allow the average married couple filing taxes jointly to keep an additional $3,400 per year from their salaries - tax cuts for small businesses should figure heavily into Republican proposals.

Salak is in Rush Limbaugh’s camp on one thing: He hopes not only that the American Recovery and Reinvestment Plan will fail, but that the Obama Administration will fail, too. Why? His answer: to prevent the American people from piling on additional debt to pay back debt, to prevent out-of-control spending by Democrats, and to prevent liberals from completely upending the Constitution.

He also pointed to Barack Obama’s record as one of the most liberal members of the U.S. Senate as proof that President Obama and the Congressional Democrats are intent on making America more socialist. Programs such as universal healthcare and giving tax rebate checks to those not paying income taxes are considered entirely socialist by Republicans, who believe that personal responsibility goes hand-in-hand with the preservation of liberty.

Those 500-plus campaign promises are another worry to the Republican Party. If President Obama makes good on most of them, more Americans would pay more taxes and the government would spend every dime of those tax dollars.

We asked Salak what he thought President Obama’s biggest challenge would be. He answered that he believes that the president’s biggest challenge would be convincing the American people that he is doing something to keep his promises. He also thinks that even if President Obama doesn’t make good on all of the promises, the media and the Democratic Party will make it seem as though he did.

Republicans may differ in their expression of what the Obama Administration holds for the country, but they all agree, through word and deed, that the economic recovery plan will do nothing but increase the federal deficit. Even though the House Republicans did not come out and say, “We hope he fails,” their voting said as much.

Many Republicans, like Salak, believe President Obama has no chance of turning around the economy, even if he succeeds in getting his American Recovery and Reinvestment Plan through Congress. And as far as succeeding in all of those 500-plus campaign promises, for the good of the country, they hope he fails.

President Barack Obama delivered his first weekly address to the nation on January 24 2009, just four short days after taking office. The topic? The US economy.

President Obama’s American Recovery and Reinvestment Plan is designed to “immediately jumpstart job creation as well as long-term economic growth.” But what does that really mean to you and me?

Obama, A Republican's View – Obama, A Democrat’s View

According to President Obama’s address (check it out below), the American Recovery and Reinvestment Plan breaks down like this:

• Energy:

1. Build a whole new electricity grid using “clean” electricity like solar and wind
2. Make “75 percent of federal buildings more energy efficient”
3. 2.5 million homes will be weatherized (thereby increasing energy efficiency and the protection against the elements)

• Health care:

1. Over the next five years, computerize health records
2. Protect individual and family health plans from being cut or cancelled

• Education:

1. Upgrade schools (new computers, improve classrooms, labs and libraries)
2. Make college more affordable (increased investment in Pell Grants, a tax credit for 4 million students and triple science fellowships)

• Infrastructure:

1. Improve/rebuild roads and bridges
2. Increase mass transit
3. Improve the communication system for local police and public safety officials
4. Expand broadband access across the nation

Again, what does all of this mean to you and me? A lot, actually. President Obama’s economic plan will affect everyone. The new electrical grid, the upgraded schools and the infrastructure improvements mean new jobs created. New jobs mean that more people have more money.

More money means that those people can pay bills, like their mortgage. The housing and banking markets will improve as mortgages get paid and foreclosures drop. Also, the economy in general will upswing as the newly re-employed spend their money, not just for necessities, but for meals out, clothing, shoes, books and so on.

Read the full address here: American Recovery and Reinvestment

Expanded broadband not only increases jobs for installing and troubleshooting, but also provides for a larger audience to which small-business owners can market and sell their products. In fact, through Obama’s plan, not only will we see immediate results, but long-term gains as well.

As far as the individual goes, let’s put it this way:

• You’ll pay less for energy (maybe not tomorrow, but within three years, according to Obama’s address) - especially if your home is one of the 2.5 million to be weatherized - as clean energy is cheap energy, and energy-efficient federal buildings mean fewer tax dollars going to government electricity bills.
• Computerized health records can save your life. Say, if you are in an accident and knocked unconscious, the hospital can access your records quickly and let the staff know about any health conditions you have (including allergies to medicine).
• A protected health plan - well, that one is pretty obvious. Health coverage means less out of pocket for medical bills.
• For those students out there, improved classrooms, a Pell Grant, a tax credit and a fellowship can mean your future is that much more accessible.
• Mass transit means you can get places faster, cheaper and more efficiently.

President Obama even has a leading economist on his side. Mark Zandi of moodyseconomy.com, formerly of the McCain-Palin campaign, believes this plan is the best chance for economic recovery.

Speaker of the House Nancy Pelosi wants Congress to act on the American Recovery and Reinvestment Plan by President’s Day (February 16, 2009); she stated, “The time is now to act on the legislation Mr. Zandi estimates will create and save more than 4 million American jobs by the end of 2010” (source: Office of the Speaker of the House). Needless to say, if you are one of those 4 million people, this plan will impact you in a positive way.

Speaker Pelosi pointed out that this plan will help everyone from blue-collar workers to small-business owners to white-collar workers. Also, America will become more energy-independent in the future.

Not only will this energy efficiency impact the American economy in the short term, but it will also improve the future for our country. More fellowships in science mean that the next generation of great scientists will have the necessary education and experience to bring about the next great wave of technological and scientific advancements. Also, the additional Pell Grants and the tax credit will help students who wouldn’t be able to afford college actually get the chance to go. This may provide us with an American educational and intellectual revolution.

According to a recent New York Times article referencing Mr. Zandi, the stimulus package will have a bigger impact on the economy than the bailouts given to the bank and auto industries. Since business bailouts only affect individual markets, it “has little direct impact on economic growth or job creation.” Also, packages using tax cuts or tax rebates don’t positively impact the economy as most people either save the money or pay bills with it.

In fact, the only type of stimulus plan that will positively impact the current economy is one like the American Recovery and Reinvestment Plan. With this type of plan, each dollar spent for the plan “generates a $1.50 or more in economic activity” (source: above-referenced New York Times article).

In short, President Obama’s economic stimulus plan will do what it says. It will stimulate the economy and positively impact each and every one of us.

Pivot Points Home - Pivot Point Calculator

Pivot points are used as a way of determining support and resistance on a price chart. They can be used for the stock and forex markets and are easy to calculate. You can work out today’s pivot points in a few seconds using our pivot point calculator or a few minutes with some simple calculations.

You can watch the video on this page, watch the high resolution version of Pivot Points - An Introduction to Pivot Point Trading or read the article which continues below.

Definition: A technical indicator calculated using a financial instrument’s high, low and close values. N.B. These values are usually taken from the previous day’s trading range.

Originally used by floor traders, this method of plotting areas of support and resistance has become very popular with retail traders. Pivot points are popular because they can be an extremely accurate technical tool. Once these points are plotted onto a price chart they can act as a guide for the price action for the day ahead.

Why are they known as ‘pivot’ points? Because they identify areas of support and resistance. Support and resistance are areas where major price movements can occur and they can determine market direction.

Pivot Points, How are They Different?
By their very nature most technical indicators are lagging. They use previous market data to try and assign a value to current conditions. However, pivot points use a previous trading periods price range to make a projection or a prediction of where price is likely to be.

How to Calculate Pivot Points
There are several ways to calculate pivot points, including Camarilla, DeMark and Woodies. The most common method, and the method used by our calculator, is known as the five-point system. (NB our pivot calculator has added two extra levels of support and resistance so it is actually a nine-point system).

The five points are represented by:

• R2 - Resistance 2, upper resistance for the extreme trading range
• R1 - Resistance 1, first resistance for the normal trading range
• P - Pivot Point, used to determine upward or downward momentum
• S1 - Support 1, first area of support for the normal trading range
• S2 - Support 2, lower support for the extreme trading range

Here are the points again with the relevant calculations:
R2 = P + (R1 – S1)
R1 = (P * 2) – L
P = (H + L + C) / 3
S1 = (P * 2) – H
S2 = P – (R1 – S1)

Where H = yesterday’s high, L = yesterday’s low and C = yesterday’s close.

A further modification for calculating the Pivot includes today’s Open (or O) price:
P = (O + (H + L + C)) / 4

Please note that O always represents the current trading period’s open while H, L and C all refer to the previous trading period.

The Pivot Point
The actual pivot point, or P in the calculations above, is regarded as the main area of support/ resistance. Significant breaks of this level are, in theory, the catalyst for strong price moves.

The direction in which the pivot point is broken can be used to determine the direction of a trend. So, if price breaks below the pivot this would indicate a short or bear trend. If price breaks above the pivot level then the bias is long (a bull trend).

Using the Pivot Point for Entries and Exits
If the pivot level can be used to determine the trend then it stands to reason that it can be used as a potential entry or exit level. For traders looking to enter the market, a break of the pivot level can serve as an entry marker, confirmation of trend direction if you like. Let us imagine that the pivot point for stock XYZ is at 45.90. The current price of stock XYZ is 46.32. Trader A expects that a price swing to the short side is about to develop. He or she may decide to place a stop order to go short at the pivot level of 45.90, this price serves as his or her confirmation that the down move has begun.

On the other hand, Trader B is long of stock XYZ. He or she expects that prices can move higher, but if the pivot level at 47.00 is broken it will represent a good opportunity to take profits as the up trend may be coming to an end. This trader may place a stop loss order at 47.00 to close out their position. In this example the pivot point has become an exit.

Trader B was right to set a protective stop at the Pivot Point. Notice how price breaks much lower once the pivot is broken. But Trader B's profits are safe.

R and S Levels and Zones
Depending on the trader, he or she can use the S1, S2, R1 and R2 levels as entry or exit strike prices as discussed above. Alternatively they may be more inclined to use them as ‘zones’.

A price zone would be, for example, between pivot levels R1 and R2. This area can be considered a resistance ‘zone’. The idea would be to look for shorting opportunities within this zone for the bears, or an opportunity to take profits if already long. Of course the opposite would be true for the zone between pivots S1 and S2.

The above method would be particularly attractive to reversal traders. On the other hand, trend or momentum traders can use the zones in a different fashion. There is a theory that if a support or resistance zone is broken with enough momentum or volume then it indicates a very strong trend is underway. In this case, if the zone between R1 and R2 is penetrated, and the R2 pivot is broken then a momentum trader would look to buy into this strength and go long. The momentum trader may have bought into a trend that could last for days. However, pivot points would need to be recalculated everyday using the most up to date data.

Conclusion
Like all technical indicators the use of pivot points is open to interpretation. Every trader has the opportunity to work with pivots in their unique way and the exciting thing is that they can be combined with any combination of technical tools.

The true challenge is being able to use this tool in a way that makes sense to the individual in question. The key here is to look for the relationship between price movement and pivot points rather than to look for the pivot points to tell you which direction the market is going to move.

US Dollar Rates - US Currency Charts - Currency Symbols

The United States Dollar ($, USD, numeric code 840, US$) is the official unit of currency of the United States of America. It has also been adopted by the British Indian Ocean Territory, the British Virgin Islands, Cambodia, East Timor, Ecuador, El Salvador, the Marshall Islands, Micronesia, Palau, Panama, and the Turks and Caicos Islands.

It is a decimal currency which means that each dollar is divided into 100 equal value cents. Throughout the World the USD is seen as a key currency, largely because the USA is regarded as one of the planet’s largest economies and because it is the official denomination of the oil and precious metals (gold and silver etc) markets.

US Dollar History
The currency was officially adopted by the United States on July 6th, 1785 as appointed by the Congress of the Confederation/ the United States Congress Assembled. Initially it was specified (by the Coinage Act, 1792) that the Dollar was assigned value when compared to the amount of gold or silver it measured out. This value was then used to facilitate the sale and purchase of goods and services. This is very different to the way we see the US Dollar today; rather than the Dollar being assigned a value by precious metals we now assign a value to precious metals, goods and services based on their cost in Dollars.

As you would expect, the value of the US$ was mainly influenced by the flow of gold and silver into and out of the United States. For this reason its value remained relatively stable until 1913 (evaluation of data from the US Department of Treasury) over 100 years since its official adoption. It was estimated that in 2006 the USD only had one twenty-fifth of the buying power of the pre 1913 ‘Buck’.

Common Nicknames:

• Buck(s), Greenback(s)
• Washington(s) = $1 bill
• Jefferson(s) = $2 bill
• Lincoln(s) = $5 bill
• Hamilton(s) = $10 bill
• Benjamin(s) = $100 bill