Marc Walton on December 9, 2012 with no comments
I explained in last weeks update how I suspected that we would see price going sideways, sideways, sideways, explosive (news) move, sideways. I showed you one way to trade these markets from simple bounces or to be patient and wait for the news to come out THEN take trades. Either method gave you the chance to make profitable trades and Pierre and myself went into great detail explaining how we use fibs, double tops, trend lines, support & resistance, candle sticks + Pierre’s pivot points to keep us out of losing trades. Learning to spot trouble and avoid it is one of the key steps to your success.
What happened? Price bounced around on many pairs, price then raced after news and in many cases bounced, to the pip off the areas we were looking for. So the message is that although most pairs are not trending there are trades to be made and 2 weeks patience on the Euro/Gbp even paid off for a 100+ pips!
There was a lot of news last week and price raced after ECB President Draghi hinted at an interest rate cut next month and the Euro which had drifted higher promptly dropped over a 100 pips -this is why I warn you that the speeches can cause more volatility than the actual figures. The week ahead sees a Fed press conference, the Governors of the Bank of England & Australia are speaking & there is a Euro summit, to make matters worse “sometime” on Monday there should be an announcement of the results of the Greek debt auction so lots of opportunities for some wild rides once more.
The Forex Week Ahead
I will wait until London opens before trading on Monday (except the Aud). There was better than expected NFP & US unemployment statistics & I need to see how London & European traders react. All of the above could mean we see $US strength BUT before Congress breaks up for Christmas in 10 days time the fiscal cliff needs to be addressed, so that could see price swing back the other way. All good fun
Be extra careful with the Aud at market open, there has been mixed Chinese news today & there is more around the market open as well as Aud home loans, both of which could rock the Aud, however if it tumbles as a result of the news then watch that weekly trend line around 1.0400 for a possible long entry. If it races up then 1.0580 is MAJOR resistance of multiple reversals and 78.6% weekly fib, so a swing trade back down will also have me interested. the 78.6% fib has been hugely important on this pair going back to July, therefore probability says its more likely to reject than break. This being forex anything can happen, BUT we are looking for repeatable patterns. All explained in the video.
Yens: Concern me. there is a major roadblock on the controlling $/Yen pair and clues that all are stalling or even turning back down. Bounce trades are still a possibility but I prefer bigger pullbacks.
In general I recommend you only take one trade at a time, until you have your stop to entry. Personally I continue to zoom out and concentrate on longer time frames.
M1: I recommend that under no circumstances should you trade this method at the moment. It needs clearly trending markets, we have the exact opposite, leave it alone.
Euro/$: 1.3000 is still key but I prefer the Chf which has multiple reasons why I want to trade it whereas the Euro is a bit wishy washy. If you are going to trade it then these are the areas to watch. 1.2875 has held for 3 weeks and did so to the pip on Friday so look for possible bounces up from there and down from 1.3000. If it breaks 1.2875 then the next area to consider a long is 1.2800 but be ultra cautious until the Greek news is out.
Chf: I am interested to short once more at 0.9400. This has been major support & resistance in recent months, its a whole number, there is the 61.8% fib immediately above, in other words there are multiple reasons. If that breaks as a result of Euro news then I will be interested to long but only at a close of a daily candle
Gbp/$:Fridays drop stopped to the pip at 1.6000 where the daily 55ema is sat as well as 50% fib of the overall move. There was negative Gbp news last week so I will watch 1.6000 carefully on 4 hour charts after London opens for potential longs. My concern here is that the 5/8 has almost crossed and stochastics are rolling over. If price breaks this area then you could consider an M2 short but I prefer a long and 1.5900 has multiple reasons to be the place, daily 200ema, weekly trend line, weekly 55ema, previous support & resistance, whole number.If price does bounce back up the 1.6100 is the likely target and possible swing trade back down. Look at the daily chart and see how despite repeated attempts last week price failed to break this daily 78.6% fib.
Euro/Gbp: Last weeks suggested counter trend, swing short worked well and for once NFP took it in my favour ( I had stops past entry so it was a no risk trade). If you missed teh short then 80.00 is key once more for, you guessed it, multiple reasons. You need to spot these for yourself, but we have whole/psych number, previous major support & resistance and 78.6% fib as well as the daily bollinger at the moment.
Aud: I explained in detail above and in the video
Cad: I said last week that we have a possible 600 Pip weekly triangle trade brewing & price finally broke out below 0.9900, though only slightly. Some of you caught Wednesdays suggested more aggressive entry at 0.9930 so are currently 40+ pips in profit, well done. If I had missed the entry I would now look to short but split the trade in half, half at 0.9900 and half at 0.9930 – the Cad is very prone to spikes and 0.9900 might not hold but 0.9930 has multiple reasons why it could, explained in the video.
Euro/Yen: I said earlier all yen pairs concern me Price bounced off 106.00 again last week so you could look for range trades from there, but we have daily macd divergence, stochs rolling over and a 5/8 cross almost formed which make me nervous. I would much prefer a bigger pullback and 103.50 is the area for me.
Aud/Yen: Last weeks candle is a bullish engulfing suggesting further moves up but I don’t like it. Intra day look for clues to long at another bounce at 85.50, I prefer a bigger move back to 84.70
$/Yen:82.00 is still a valid bounce trade and there is a major road block around 82.80 so possible swings back down. I would only trade this from 4 hour closed candles be extra careful with news on this pair, the BoJ have been manipulating price for weeks but previous attempts stalled at 83.00 – I cant explain it any better, but it just doesn’t feel right and there are better opportunities elsewhere.
New members please note: If I am looking to take a trade long, at for example 1.6000 , I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.
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