Draghi’s predecessor, Mt Trichet, only had to say the word “vigilance” for markets to go on a roller coaster ride. The week ahead sees a lot of conferences, meetings, speeches and culminates in a G20 weekend, all of which could rock the markets. Once again the best way to try avoid most of the nonsense is to zoom out to longer time frames and do not enter traders when news or press conferences are taking place.
I cautioned in Wednesdays update that I was no longer looking to long the Euro/$ at 1.3500 and explained why. Hopefully that kept you out of a losing trade. The Euro will be tricky this week. There are Lots of meetings, conferences and press releases & technically we are sat on major support so whats the plan for the week ahead?
The new Japanese government are coming under pressure from their trading partners to halt or at least slow down the weakening of the Yen. The movement has been quite extreme and although it helps Japanese exports it upsets the balance. Companies who trade with Japan will have guestimated the price for the year ahead and huge moves can wipe out their potential profits and reduce the attraction of dealing with them. There is a G20 meeting starting on Friday, I would expect the $/Yen at least to soften as the week progresses.
Similarly the Aud has broken and CLOSED below a weekly trend line and major support so lots of potential moves this week.
In recent weeks & months I have been concentrating on zooming out to longer time frames. Usually I analyze weekly charts on a Sunday to look at the bigger picture and see where I believe price is likely to react. I then trade from daily charts, but if there is not a lot happening I will go down to 4 hour to look for trades. Last week I showed you the monthly Gbp/$ potential trade at 1.5700, had I simply taken that trade and left it to run there was 60 pips profit alone. However because I and a lot of members want to trade more frequently, I then went down to daily charts and ended up being in and out on a number of occasions and scraping some pips.
Long term I would be happy to trade purely from monthly charts and if your plan is simply to use forex as an investment tool (albeit a risky one), then weekly and monthly trades is the answer. By definition you will not make many trades, but it could give you a far better return than money in the bank IF you master the craft. Having said that I would not recommend putting large amounts of your savings into a forex account unless you really know what you are doing.
The Forex Week Ahead
As I said earlier news and conferences are the major nuisance this week, to avoid as much whip sawing as possible I will again look to trade from longer time frames.
Gbp/$: Worked perfectly again last week from a bounce off the 1.5700 monthly trend line. This area is still crucial on this pair. To trade a possible break out below 1.5700 I will only do so on a daily chart, I will ignore 4 hour breaks as they could simply turn back round as was the case last week.
I am interested to short at 1.5900 and long at 1.5700.
Aud: Price again bounced off the 61.8% weekly fib and this now seems to be holding better than the trend line. I will look to long at 1.0380 and shorts at 1.0570 as its worked dozens of times in recent month.s No guarantees of course. If it does break down then I will look to short after a break and close below 1.0340
As ever watch gold and silver. For those interested in buying the physical metals I show in the video the areas I am looking at to buy more.
Euro/$: I said last week that “I don’t like it and it doesn’t seem logical BUT a pull back to 1.3500 will see me take a long.” By Wednesdays update I had cancelled that trade and thankfully avoided a loser. The reason was that there was $ strength across the board so get in the habit of looking at correlated pairs before taking trades.
This is NOT easy this week as the aforementioned news and speeches could see this bounce all over the place. First point of interest is to long in its current position. Price stopped to the pip at weekly and monthly emas so I will watch at the market open. If price continues to drop I am more interested to long around the major support line of 1.3300. If price goes up I am interested to short at 1.3500
From weekly charts a more conservative entry will be 1.3200 which is 50% fib and a trend line.
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 and long at 0.9020 as explained in the video,
Euro/Gbp: I showed in Wednesdays video the clues that 0.8700 was a good place to short last week. Huge engulfing candle last week suggests a further fall. Now price has broken the all important 0.8520 I am interested to short there.
Euro/Yen: Lots of technical clues and political reasons for the yens to pull back this week. Macd divergence, stochastics, weekly inside bar candle all suggest at least a pull back. 120.75 is my entry point if it does.
Aud/Yen: 0.9500 was the area BUT if the Japanese politicians try weaken the Yen and the possible Aud fall make me very wary here. I prefer the Euro/Yen or $//yen this week
$/Yen: I need a bigger pullback and 0.9020 is the spot for me.
Cad: Last week I NO idea and walked away, but negative Cad news and a bullish daily chart pattern means I am interested to long at 0.9975
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