FXstreet.com (Barcelona) - EUR/USD attempt to recovery was not strong enough, and the Euro has turned downwards after testing 1.3035 resistance level. After yesterday's 150 pip decline, the Euro continues consolidating in the area between 12985 and 1.3035.
Support levels stand at 12985, and below here next support levels could lie 1.2950/45 and 1.2920. On the upside, next resistance level lies at the 1.3035/50 area, and once above here, the Euro might find resistance at 1.3085 and 1.3160.
EUR/GBP has found resistance at the 0.8980 area (24 April low) on its recovery move from 0.8880 low yesterday. At the moment, the Euro trades 0.55% above its opening price on its way to test 0.8980 again. Above here, the Euro might find resistance at 0.9020 and 0.9080. On the downside, support levels lie at 0.8890 and 0.8845.
For more information, read our latest forex news.
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Tuesday, May 5, 2009
3 Technical Tools To Improve Your Trading
Technical analysis is the study of stock prices and pricing patterns that can help investors determine whether a stock is overbought (expensive) or oversold (cheap). By using various technical indicators together, called correlation, traders can bring the "big picture" about a stock into clearer focus.
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Here we'll look at volume, the Aroon indicator and Fibonacci numbers, three technical analysis tools that can be used to help facilitate more profitable trades. In fact, investors can use them in conjunction with each other to spot emerging trends and stay ahead of the crowd. Read on to find out how.Turn Up the VolumeVolume is defined as the number of shares that trade during a period of time such as an hour, a day, a week or a month. This shows the strength of an upward or downward price move. Generally, low volume occurs when prices move sideways or stay within a trading range, or during market bottoms. Conversely, high volume signals the beginning of a new trend (two or more high or low points) in the stock. High volume also occurs at market tops when there is strong conviction that prices will be moving higher, and can be used to confirm an upward or downward trend. If the stock is moving upward it should have higher volume on the upward moves and less volume on the downward side. Conversely, heavy volume on the downward moves and lower volume on the upward moves points to a downturn. By using volume in conjunction with movements in the stock you can spot the right areas to get into a trade. (For background reading, see Volume Oscillator Confirms Price Movements.)
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Tune in to AroonThe Aroon indicator can help pinpoint the strength of a trend and the chances that it will continue. Generally investors look for a move above or below zero (the no-trend, or neutral zone) to determine whether a new trend is emerging. A cross above zero indicates an upward trend (an "Aroon up"), while a cross below zero indicates a downward trend (an "Aroon down"). An indication near the zero line with no solid crossovers up or down indicates that the stock could continue to consolidate for a while until a direction is confirmed. The Aroon indicator can help uncover an emerging trend and enable you to take profits or protect yourself from losses. (Finding The Trend With Aroon explains how to use this tool in greater detail.)Fibonacci RetracementFibonacci numbers or studies are a series of numbers in which the following number is the sum of the two previous numbers, such as 1,1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 and 233. You can use these numbers in trading in conjunction with support (the price where the stock has stopped falling in the past) and resistance levels (the price where prices have stopped rising previously). (For background reading, see Taking The Magic Out Of Fibonacci Numbers.)After a significant move up or down, the stock will usually retrace its movement by a certain percentage. During these movements, investors can use the Fibonacci number to see if a stock is going to touch a support or resistance level and bounce off. If it does, this signals that the stock is going to resume its original direction, either up or down. If the stock breaks that level, the investor looks to the next area of resistance or support to see if that is the point where the stock will resume its original move. (To learn more, read Retracement Or Reversal: Know The Difference.)As general rule, Fibonacci numbers should be used in conjunction with support and resistance levels to confirm whether the stock has bottomed out or stopped rising at these points. Putting It All TogetherUsing volume, Aroon and Fibonacci indicators together can help investors pinpoint whether a stock is likely to move up or down. Volume signals enthusiasm or fear, and whether the stock will continue to move higher, trend lower, top out or hit bottom. The Aroon indicator shows whether a stock is beginning a new trend or staying in a trading range, while the Fibonacci number will signal whether the stock has hit areas of strong support or resistance. While no one indicator is more important than the other, using the combination of all three can provide clues about a stock's overall directions
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Here we'll look at volume, the Aroon indicator and Fibonacci numbers, three technical analysis tools that can be used to help facilitate more profitable trades. In fact, investors can use them in conjunction with each other to spot emerging trends and stay ahead of the crowd. Read on to find out how.Turn Up the VolumeVolume is defined as the number of shares that trade during a period of time such as an hour, a day, a week or a month. This shows the strength of an upward or downward price move. Generally, low volume occurs when prices move sideways or stay within a trading range, or during market bottoms. Conversely, high volume signals the beginning of a new trend (two or more high or low points) in the stock. High volume also occurs at market tops when there is strong conviction that prices will be moving higher, and can be used to confirm an upward or downward trend. If the stock is moving upward it should have higher volume on the upward moves and less volume on the downward side. Conversely, heavy volume on the downward moves and lower volume on the upward moves points to a downturn. By using volume in conjunction with movements in the stock you can spot the right areas to get into a trade. (For background reading, see Volume Oscillator Confirms Price Movements.)
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Tune in to AroonThe Aroon indicator can help pinpoint the strength of a trend and the chances that it will continue. Generally investors look for a move above or below zero (the no-trend, or neutral zone) to determine whether a new trend is emerging. A cross above zero indicates an upward trend (an "Aroon up"), while a cross below zero indicates a downward trend (an "Aroon down"). An indication near the zero line with no solid crossovers up or down indicates that the stock could continue to consolidate for a while until a direction is confirmed. The Aroon indicator can help uncover an emerging trend and enable you to take profits or protect yourself from losses. (Finding The Trend With Aroon explains how to use this tool in greater detail.)Fibonacci RetracementFibonacci numbers or studies are a series of numbers in which the following number is the sum of the two previous numbers, such as 1,1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144 and 233. You can use these numbers in trading in conjunction with support (the price where the stock has stopped falling in the past) and resistance levels (the price where prices have stopped rising previously). (For background reading, see Taking The Magic Out Of Fibonacci Numbers.)After a significant move up or down, the stock will usually retrace its movement by a certain percentage. During these movements, investors can use the Fibonacci number to see if a stock is going to touch a support or resistance level and bounce off. If it does, this signals that the stock is going to resume its original direction, either up or down. If the stock breaks that level, the investor looks to the next area of resistance or support to see if that is the point where the stock will resume its original move. (To learn more, read Retracement Or Reversal: Know The Difference.)As general rule, Fibonacci numbers should be used in conjunction with support and resistance levels to confirm whether the stock has bottomed out or stopped rising at these points. Putting It All TogetherUsing volume, Aroon and Fibonacci indicators together can help investors pinpoint whether a stock is likely to move up or down. Volume signals enthusiasm or fear, and whether the stock will continue to move higher, trend lower, top out or hit bottom. The Aroon indicator shows whether a stock is beginning a new trend or staying in a trading range, while the Fibonacci number will signal whether the stock has hit areas of strong support or resistance. While no one indicator is more important than the other, using the combination of all three can provide clues about a stock's overall directions
The Great Unraveling of the Yen Carry Trade
The Great Unraveling of the Yen Carry TradeThe yen carry trade became all the rage among investors and speculators, but by 2006, some experts began warning of the dangers that could arise if and when these carry trades were reversed or "unwound." These warnings went unheeded. The global credit crunch that developed from August 2007 led to the gradual unraveling of the yen carry trade. A little over a year later, as the collapse of Lehman Brothers and the U.S. government rescue of AIG sent shockwaves through the global financial system, the unwinding of the yen carry trade commenced in earnest. (For more insight, see How does a credit crunch occur?)Speculators began to be hit with margin calls as prices of practically every asset began sliding. To meet these margin calls, assets had to be sold, putting even more downward pressure on their prices. As credit conditions tightened dramatically, banks began calling in the loans, many of which were yen-denominated. Speculators not only had to sell their investments at fire-sale prices, but also had to repay their yen loans even as the yen was surging. Repatriation of yen made the currency even stronger. In addition, the interest rate advantage enjoyed by higher-yielding currencies began to dwindle as a number of countries slashed interest rates to stimulate their economies. (For more on this concept, check out the Margin Call section of our Margin Trading Tutorial.)The unwinding of the gigantic yen carry trade caused the Japanese currency to surge against major currencies. The yen rose as much as 29% against the euro in 2008. By February 2009, it had gained 19% against the U.S. dollar since September, rising to a 13-year high of about 90.
Why the Carry Trade Works
As noted earlier, during the boom years of 2003-2007, there was large-scale borrowing of Japanese yen by investors and speculators. The borrowed yen was then sold and invested in a variety of assets, ranging from higher-yielding currencies, such as the euro, to U.S. subprime mortgages and real estate, and including volatile assets such as commodities and emerging market stocks and bonds. In order to get more bang for their buck, large investors such as hedge funds used a substantial degree of leverage in order to magnify returns. But leverage is a double-edged sword – just as it can enhance returns when markets are booming, it can also amplify losses when asset prices are sliding. (For more on how leverage hurt the hedge funds during this period, read Hedge Fund Failures Illuminate Leverage Pitfalls.)As the carry trade gained momentum, a virtuous circle developed, whereby borrowed currencies such as the yen steadily depreciated, while the demand for risky assets pushed their prices higher. It is important to note that currency risk in a carry trade is seldom, if ever, hedged. This meant that the carry trade worked like a charm as long as the yen was depreciating, and mortgage and commodity portfolios were providing double-digit returns. Scant attention was paid to early warning signs such as the looming slowdown in the U.S. housing market, which peaked in the summer of 2006 and then commenced its long multiyear slide. (For more on this, see Why Housing Market Bubbles Pop.)
Example - Leverage Cuts Both Ways in Yen Carry TradeLet's run through an example of a yen carry trade to see what can happen when the market is booming and when it goes bust.
Borrow 100 million yen for one year at 0.50% per annum
Sell the borrowed amount and buy U.S. dollars at an exchange rate of 115 yen per dollar
Use this amount (approximately US$870,000) as 10% margin to acquire a portfolio of mortgage bonds paying 15%
The size of the mortgage bond portfolio is therefore $8.7 million (i.e. $870,000 is used as 10% margin, and the remaining 90%, or $7.83 million, is borrowed at 5%). After one year, assume the entire portfolio is liquidated and the yen loan is repaid. In this case, one of two things might occur:Scenario 1 (Boom Times) Assume the yen has depreciated to 120, and that the mortgage bond portfolio has appreciated by 20%.Total Proceeds = Interest on Bond Portfolio + Proceeds on Sale of Bond Portfolio = $1,305,000 + $10,440,000 = $11,745,000Total Outflows = Margin Loan ($7.83 million principal + 5% interest) + Yen Loan (principal + 0.50% interest) = $8,221,500 + 100,500,000 yen = $8,221,500 + $837,500 = $9,059,000 Overall Profit = $2,686,000 Return on Investment = $2,686,000 / $870,000 = 310%
Scenario 2 (Boom Turns to Bust)Assume the yen has appreciated to 100, and that the mortgage bond portfolio has depreciated by 20%.Total Proceeds = Interest on Bond Portfolio + Proceeds on Sale of Bond Portfolio = $1,305,000 + $6,960,000 = $8,265,000Total Outflows = Margin Loan ($7.83 million principal + 5% interest)+ Yen Loan (principal + 0.50% interest) = $8,221,500 + 100,500,000 yen = $8,221,500 + $1,005,000 = $9,226,500 Overall Loss = $961,500 Return on Investment = -$961,500 / $870,000 = -110%
Example - Leverage Cuts Both Ways in Yen Carry TradeLet's run through an example of a yen carry trade to see what can happen when the market is booming and when it goes bust.
Borrow 100 million yen for one year at 0.50% per annum
Sell the borrowed amount and buy U.S. dollars at an exchange rate of 115 yen per dollar
Use this amount (approximately US$870,000) as 10% margin to acquire a portfolio of mortgage bonds paying 15%
The size of the mortgage bond portfolio is therefore $8.7 million (i.e. $870,000 is used as 10% margin, and the remaining 90%, or $7.83 million, is borrowed at 5%). After one year, assume the entire portfolio is liquidated and the yen loan is repaid. In this case, one of two things might occur:Scenario 1 (Boom Times) Assume the yen has depreciated to 120, and that the mortgage bond portfolio has appreciated by 20%.Total Proceeds = Interest on Bond Portfolio + Proceeds on Sale of Bond Portfolio = $1,305,000 + $10,440,000 = $11,745,000Total Outflows = Margin Loan ($7.83 million principal + 5% interest) + Yen Loan (principal + 0.50% interest) = $8,221,500 + 100,500,000 yen = $8,221,500 + $837,500 = $9,059,000 Overall Profit = $2,686,000 Return on Investment = $2,686,000 / $870,000 = 310%
Scenario 2 (Boom Turns to Bust)Assume the yen has appreciated to 100, and that the mortgage bond portfolio has depreciated by 20%.Total Proceeds = Interest on Bond Portfolio + Proceeds on Sale of Bond Portfolio = $1,305,000 + $6,960,000 = $8,265,000Total Outflows = Margin Loan ($7.83 million principal + 5% interest)+ Yen Loan (principal + 0.50% interest) = $8,221,500 + 100,500,000 yen = $8,221,500 + $1,005,000 = $9,226,500 Overall Loss = $961,500 Return on Investment = -$961,500 / $870,000 = -110%
The Credit Crisis And The Carry Trade
Broadly speaking, the term "carry trade" means borrowing at a low interest rate and investing in an asset that provides a higher rate of return. For example, assume that you can borrow $20,000 at an interest rate of 3% for one year; further assume that you invest the borrowed proceeds in a certificate of deposit that pays 6% for one year. After a year, your carry trade has earned you $600, or the difference between the return on your investment and the interest paid times the amount borrowed.
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Of course, in the real world, opportunities like these rarely exist because the cost of borrowing funds is usually significantly higher than interest earned on deposits. But what if an investor wishes to invest low-cost funds in an asset that promises spectacular returns, albeit with a much greater degree of risk? In this case, we are referring to the currency, or forex, markets, where carry quickly became one of the most important strategies. These trades allowed some traders to rake in big profits, but they also played a part in the credit crisis that struck world economic systems in 2008. Read on to find out how to execute these trades. (To learn more about currency carry trades, such as the yen carry trade, read Currency Carry Trades Deliver.)
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Of course, in the real world, opportunities like these rarely exist because the cost of borrowing funds is usually significantly higher than interest earned on deposits. But what if an investor wishes to invest low-cost funds in an asset that promises spectacular returns, albeit with a much greater degree of risk? In this case, we are referring to the currency, or forex, markets, where carry quickly became one of the most important strategies. These trades allowed some traders to rake in big profits, but they also played a part in the credit crisis that struck world economic systems in 2008. Read on to find out how to execute these trades. (To learn more about currency carry trades, such as the yen carry trade, read Currency Carry Trades Deliver.)
A New Millennium for Carry Trades
A New Millennium for Carry TradesIn the 2000s, the term "carry trade" became synonymous with the "yen carry trade", which involved borrowing in the Japanese yen and investing the proceeds in virtually any asset class that promised a higher rate of return. The Japanese yen became a favored currency for the borrowing part of the carry trade because of the near-zero interest rates in Japan for much of this period. By early 2007, it was estimated that about US $1 trillion had been invested in the yen carry trade. (For more on yen carry trades, see Profiting From Carry Trade Candidates.)Carry trades involving riskier assets are successful when interest rates are low and there is ample global appetite for risky assets. This was the case in the period from 2003 until the summer of 2007, when interest rates in a number of nations were at their lowest levels in decades, while demand surged for relatively risky assets such as commodities and emerging markets. The unusual appetite for risk during this period could be gauged by the abnormally low level of volatility in the U.S. stock market (as measured by the CBOE Volatility Index or VIX), as well as by the low risk premiums that investors were willing to accept (one measure of which was the historically low spreads of high-yield bonds and emerging market debt to U.S. government Treasuries). Carry trades work on the premise that changes in the financial environment will occur gradually, allowing the investor or speculator ample time to close out the trade and lock in profits. But if the environment changes abruptly, investors and speculators could be forced to close their carry trades as expeditiously as possible. Unfortunately, such a reversal of innumerable carry trades can have unexpected and potentially devastating consequences for the global economy.
Forex Live rates, Forex Recommendations, Forex Levels, Forex News, Forex Investments, Forex Managed Accounts
FOREX is the world’s largest and most liquid trading market. In our opinion ,FOREX is one of the best home business you can ever venture in. Even though regular people have had the opportunity to take part in trading foreign currencies for speculations (in the same way banks and large corporations do) since 1998, it is just now becoming the cool, hip, new "thing" to talk about at parties, business events, and other social gatherings.
Even though it has been somewhat of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of FOREX trading because of what they perceive as its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.
But, still, whenever something seems new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information.
So, in this article, it is my attempt to give you some solid, but not over-detailed, information on just what the heck "FX" (FOREX) means, what it is, and why it exists.
Here's an explanation (one I feel you'll appreciate) of what FOREX is and how a bunch of traders, operate in this market
The Foreign Exchange Market, also referred to the "FOREX" or "FX" market, is the spot (cash) market for currency.
But, don't mistake FX as trading the futures market, where you buy a contract to purchase a particular currency at a future price in time.
So, you're probably wondering where it's at ... or ... how to access the FX market?
The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.
Yes, if that's the first time you've heard about an all-electronic market, I know this may sound somewhat intriguing to you.
Here's what you are actually trading when you participate in the Foreign Exchange (FOREX) market:
Essentially, like the large banks who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what a FX trader is doing is simultaneously exchanging one countries currency for another. So, in actuality, they're electronically trading a currency-pair and the price that is quoted to us is the exchange rate between the two currencies.
In other words, simply the quoted price is how many of the one currency is worth 1 of the other currency.
Example:
EUR/USD last trade 1.3680 - One Euro is worth $1.3680 US dollars.The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency.
The FOREX has a DAILY trading volume of around $1.5 trillion dollars - 30 times larger than the combined volume of all U.S. equity markets.
The FOREX plays a vital role in the world economy and there will always be a tremendous need for the FOREX. International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist so a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for US Dollar.
There's plenty of opportunities using FOREX for plenty of traders that use the right trading techniques / tactics that will allow them enter this market.
MANAGE YOUR FOREX ACCOUNT
Forex2Earn has specialized team in providing professional Forex investment management account on a discretionary basis wide variety of markets including the worldwide inter-bank foreign exchange (Forex) market. Its programs are technical, trend-following, support & resistance, volatility systems and are speculative in nature. In managed Account you don't need to send money to us its very simple you just have to open an account with your bank nearest to your locality . We will only open your account with FXCM on your request with your name. Managed Account investors are advised to carefully check your account statement weekly, fortnightly and monthly basis. Invest in your future and Trade FOREX with a managed account. Forex2Earn team is always ready and vigilant to manage you accounts.
Managed Account's Goal
The goal of Forex2Earn team is to provide Maximum exposure and Maximum Trading Oportimotoes in the Currency Market to our investor through opening individual accounts traded by professional of Forex2Earn team's managers. We will only get 50% profit which we earn in your account on monthly basis. You can open an account from our web site to click Individual Account or Mini Accounts. We are ready to serve our investor/client in best manner.
Forex2earn is Giving Effecient & Different Services
Forex2Earn has very trained and experienced team members. They are doing Currencies business since last 10 years and have gained a lot of experience. Here is a little difference which our Client gain during the previous month on little investment.So Become a Member and get more services to improve your Trading.
Even though it has been somewhat of a loosely guarded secret, every day more and more investors are turning to the all-electronic world of FOREX trading because of what they perceive as its numerous benefits & advantages over traditional trading vehicles, like stocks, bonds and commodities.
But, still, whenever something seems new or is just becoming a part of social conversation, news articles, and water cooler gossip, misconceptions have to be overcome, the mind has to be open and the slate has to be clear for starting out fresh with the CORRECT information.
So, in this article, it is my attempt to give you some solid, but not over-detailed, information on just what the heck "FX" (FOREX) means, what it is, and why it exists.
Here's an explanation (one I feel you'll appreciate) of what FOREX is and how a bunch of traders, operate in this market
The Foreign Exchange Market, also referred to the "FOREX" or "FX" market, is the spot (cash) market for currency.
But, don't mistake FX as trading the futures market, where you buy a contract to purchase a particular currency at a future price in time.
So, you're probably wondering where it's at ... or ... how to access the FX market?
The answer is: FX Trading is not bound to any one trading floor and is not centralized on an exchange, as with the stock and futures markets. The FX market is considered an Over-the-Counter (OTC) or 'Interbank' market, due to the fact that the entire market is run electronically, within a network of banks, continuously over a 24-hour period.
Yes, if that's the first time you've heard about an all-electronic market, I know this may sound somewhat intriguing to you.
Here's what you are actually trading when you participate in the Foreign Exchange (FOREX) market:
Essentially, like the large banks who use the FX market to protect themselves from the fluctuating exchange rate of different currencies, as an investor, what a FX trader is doing is simultaneously exchanging one countries currency for another. So, in actuality, they're electronically trading a currency-pair and the price that is quoted to us is the exchange rate between the two currencies.
In other words, simply the quoted price is how many of the one currency is worth 1 of the other currency.
Example:
EUR/USD last trade 1.3680 - One Euro is worth $1.3680 US dollars.The first currency (in this example, the EURO) is referred to as the base currency and the second (/USD) as the counter or quote currency.
The FOREX has a DAILY trading volume of around $1.5 trillion dollars - 30 times larger than the combined volume of all U.S. equity markets.
The FOREX plays a vital role in the world economy and there will always be a tremendous need for the FOREX. International trade increases as technology and communication increases. As long as there is international trade, there will be a FOREX market. The FX market has to exist so a country like Japan can sell products in the United States and be able to receive Japanese Yen in exchange for US Dollar.
There's plenty of opportunities using FOREX for plenty of traders that use the right trading techniques / tactics that will allow them enter this market.
MANAGE YOUR FOREX ACCOUNT
Forex2Earn has specialized team in providing professional Forex investment management account on a discretionary basis wide variety of markets including the worldwide inter-bank foreign exchange (Forex) market. Its programs are technical, trend-following, support & resistance, volatility systems and are speculative in nature. In managed Account you don't need to send money to us its very simple you just have to open an account with your bank nearest to your locality . We will only open your account with FXCM on your request with your name. Managed Account investors are advised to carefully check your account statement weekly, fortnightly and monthly basis. Invest in your future and Trade FOREX with a managed account. Forex2Earn team is always ready and vigilant to manage you accounts.
Managed Account's Goal
The goal of Forex2Earn team is to provide Maximum exposure and Maximum Trading Oportimotoes in the Currency Market to our investor through opening individual accounts traded by professional of Forex2Earn team's managers. We will only get 50% profit which we earn in your account on monthly basis. You can open an account from our web site to click Individual Account or Mini Accounts. We are ready to serve our investor/client in best manner.
Forex2earn is Giving Effecient & Different Services
Forex2Earn has very trained and experienced team members. They are doing Currencies business since last 10 years and have gained a lot of experience. Here is a little difference which our Client gain during the previous month on little investment.So Become a Member and get more services to improve your Trading.
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