Hi,
another week where zooming out and trading from longer time frames was
rewarding. Last weeks Gbp/$ long at 1.5700 eventually went over 150 pips
all from analysis done on a Sunday, order placed and walk away. On
Wednesday I explained how I moved my stops to entry after 25 pips
profit, took off some of the profit off the trade and left the balance
to run in the hope price would continue upwards, which fortunately it
did.Price on many pairs is now at MAJOR areas/trend lines that go back years and these are highly significant as traders all over the world are watching the same areas. Logic does not always apply in forex trading BUT these lines do. For example where did the Gbp/$ stop after the big NFP drop? Back at the trend line.
Usually I prefer M2 trades where price breaks out of an area and then pullbacks and I did miss a beauty on the Euro/Yen last week, but in general I am having to be more flexible and continue to look for “bounce trades” as well. With this type of trade often being counter to the short term trend it is important to get stops to entry or as near as possible as soon as possible. We are all hoping to catch a big move and often the best way is to not move stops too quickly as price pulls back, takes you out and then goes 100′s of pips, BUT especially if you are counter trend it is a more conservative method.
I do have variations on this. For example imagine you enter a trade with a 50 pip stop and want to move to entry but there is a whole number 15 pips below the entry OR a big ema. then I will move just behind them. I will cover this subject in more detail in Wednesdays update.
Forex Week Ahead
As I said earlier price is at extremes and the Euro continues its race upwards. Logic and common sense say that this is nonsense. The Eurozones problems didn’t suddenly go away, its simply that sentiment has shifted to the belief that the $USA is in a worst state. Here in Spain, the smoke and mirrors strategy of the government has thus far staved off a bail out, but those of us who live here and have any grasp of economics, know that its all complete BS.
Spanish politicians, honesty and accurate accounting are words that can not possibly be used in the same sentence
One of the ruling parties top dogs recently took advantage of a tax
amnesty to reveal €11 MILLION in a Swiss account (at one point the
account had 22 million in it) and the ex President of my own little
Island is currently on his 4th Jail stretch for corruption. He was
recently caught running one of his corruption rings from within the
jail!There are also many ex mayors and 60 + politicians who are currently on bail for similar offences and 100′s throughout the rest of Spain. Italy is also famous for the calibre and integrity of its politicians so the whole thing is a nonsense, BUT we need to eat so if the world says teh Euro is going up we best look to buy it!
Once again there is a lot of news this week including interest rate news. Last month ECB President Draghi sparked the Euro run up from the press conference after the interest rate news. He may well decide to cool things down this time, so do not enter Euro trades on Thursday until after he speaks.
Gbp/$: Worked perfectly last week from a bounce off the 1.5700 monthly trend line. This area is now crucial on this pair. Price did close fractionally below BUT I will look to long there once again just after the market open. If price subsequently breaks and CLOSES clearly below the recent low of 1.5675 then I will short. This could be the start of a 3000 pip triangle break out so if a long loses it will not stop me shorting shortly afterwards. Forex is a % game so losing is part of it.
If price does race up then 1.5900 will be my overall target and I will then look for clues to short.
Aud: Price again bounced off the 61.8% weekly fib and this now seems to be holding better than the trend line. I will look to long at 1.0380 and shorts at 1.0570 as its worked dozens of times in recent month.s No guarantees of course. If it does break down then I will look to short after a break and close below 1.0340
As ever watch gold and silver. For those interested in buying the physical metals I show in the video the areas I am looking at to buy more.
Euro/$: I don’t like it and it doesn’t seem logical BUT a pull back to 1.3500 will see me take a long. Be ultra careful around Thursdays news conference.
Chf: Mainly use for correlation, however if I am not in a Euro trade at the time I will be interested to short at 0.9300
Euro/Gbp: Big move up. To long I need a pull back to 0.8520, but a swing trade is tempting as well. I show in the video how there is a 4 year old trend line just below 0.8800 so that will be a good place to consider. Intra day/market open a short from its current position will also be worth considering.
Euro/Yen: I am still in from the week before at + 800 pips but kicking myself for nt adding to it last week with a pull back to 120.75 – thats also the area to consider this week.
Aud/Yen: 0.9500 M2 worked last week, same again.
$/Yen: I need a bigger pullback and 0.9020 is teh spot for me.
Cad: NO idea. Walking away. Its messy at the best of times and yes price closed below 1.000 but I need MULTIPLE reasons to take a trade and there simply arent any. Leaving alone
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.
We are NOT a “tipping service” our aim is to teach you how to trade for yourself. For more up to the minute updates do not forget to drop by the forum
Pierre, Vassilis (Capsmart), Raa, Omar, Mary, and other experienced members will be available in the forum to give you a more up to the minute assessment & whether they see any potential trades lining up in the next few days. Many members tell me this is the best forex forum there is (no back biting & bitchiness, nor spam, that spoils most forums) and all members are happy to help new visitors. Its a great resource, USE IT: Forex Forum