Pierre DuPlessis on April 9, 2013
Big movements we had last week on some pairs! So now it is easy, we
call tops on those JPY pairs and short them and make bags full of money
isn’t it? I mean the JPY pairs are so high; surely they WILL pull back to the areas from where they have started the rallies?Let me open my cupboard door for a moment……mmmmm………O here you go, what T- shirt would you like?
Be careful mates. I know plenty of traders that burned their fingers with this one. We trade with the trend, we wait for confirmation, we are patient, we don’t follow the new traders, we follow the BIG DOGS we don’t try and lead them……..the list is endless, so please don’t go and be stupid and go and short these pairs because YOU THINK price looks to high for YOU !
We always look for MULTIPLE REASONS; we don’t trade only on `OUR FEELING` we have when price is too high or too low for OUR liking!
We are way overbought on most of the JPY pairs…..However, with this strong move we had up last week – there is no guaranties that price will drop from here. Remember the Euro/CHF last year when they Swiss Bank said they will do whatever it takes to weaken their currency how that pair just kept rallying up with no pull back……this is the same situation. The bank of Japan said they will do whatever it takes to make their currency weaker! So be careful.
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Truth saying for the week:
` Better light a candle than curse the darkness` Peter Beneson
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`Red Flag` News that can make you loses your pants:
You can use the following web site for scheduled news and times for the week: http://www.dailyfx.com/calendar
Don`t take any trades just before `Red Flag` news. If you are already in a trade, protect your entry. I don’t want to meet up with you at Little Beach, Maui, Hawaii. Did you know this is a nudist beach? For future reference, have a look at the 4th of April 2013 at all the JPY pairs what happened with price after `Red Flag` news came out. ALWAYS TRADE WITH A STOP!
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This is my current `Earth and Sky Trading Zones` – Please take note of the time frames I am looking at. Remember, if price don’t pull back on the pairs you trade and make new lows/highs follow price with your fib to get the new potential trading zones.
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1) Euro Index on the 4 hour chart:
Price is above the 200 EMA
34 EMA (sky) is above the 55 EMA (earth)
Direction: Long
Potential trading zone: 106.66 to 105.93
Potential area to look for reaction: 107.00 (38.2 fib) 106.70
MACDEE Divergence: No
Stochastic: Overbought
Did we open with a GAP? No
Notes: Be very careful this week. We broke a hell of a lot of strong EMA`S to the upside plus a bear trend line on the Daily was broken too. My preference is still too short, however – for now it looks bullish……so we need to be patient. Price is currently sitting on the weekly WR1 pivot at 107.90 with a possible railway track candle formation on my platform forming. Looking at the daily chart 108.44 was last month’s high, so this can be a possible roadblock for this Index.
Correlation: Remember that the following pairs make out the `Euro Index Basket` – The Euro/Dollar, Euro/JPY, EURO/GBP and the EURO/CHF. (They all move in the same direction) Use the `Euro Index` for extra confirmation and information to trade the basket pairs. If you don’t have the index on your platform…download a demo account with Admiral Markets @ http://www.fxservice.com/
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2) Euro/USD on the Daily chart:
Price is under/above the 200 EMA (Price is messing around here)
34 EMA (sky) is under the 55 EMA (earth)
Direction: Short
Potential trading zone: 1.2955 to 1.3059
Potential area to look for reaction: 1.3034
Stochastic: Open and trending up
MACDEE Divergence: YES ON THE 4 HOUR CHART WE HAVE.
Did we open with a GAP? No
Notes: The 4 hour chart looks messy for me. Price is above the 200 EMA BUT we have MACDEE Divergence. On the Daily, things look better. Price is finding resistance at the daily 200 and 55 EMA`S. So this level at 1.3059 will be key this week. If it holds and we get confirmation on the smaller timeframes to short, I will short it. Remember to use the Euro Index as confirmation and extra information! We are at a weekly pivot on that index remember! This gives us part of the puzzle that price might turn here on the Euro/Dollar………..HOWEVER, this is forex – if we break the 1.3059 to the upside a possible M2 trade can set up.
Correlation: This pair is positive correlated (moving in the same direction) as the Euro Index, Euro/JPY and the Euro/GBP. Be careful; don’t take the same trades on these four pairs at the same time!
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3) Euro/JPY on the 4 hour chart:
Price is above the 200 EMA
34 EMA (sky) is above the 55 EMA (earth)
Direction: Long
Potential trading zone: 124.48 to 121.75
Potential area to look for reaction: 126.00 (38.2 fib), 125.00 (Weekly main pivot) and 123.96
Stochastic: Overbought
MACDEE Divergence: YES !!!
Did we open with a GAP? No
Notes: We have big time divergence on the 4 hour chart with price on the daily ½ way between the monthly MR2 and MR3 pivot, showing us we way overbought…..However, with this strong move we had up last week – there is no guaranties that price will drop from here. Remember the Euro/CHF last year when they Swiss said they will do whatever it takes how that pair just kept rallying up……this is the same situation. The bank of Japan said they will do whatever it takes to make their currency weaker! So be careful.
Correlation: This pair is positive correlated (moving in the same direction) as the Euro Index, Euro/USD and the Euro/GBP. Be careful; don’t take the same trades on these four pairs at the same time!
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4) Euro/GBP on the Daily chart:
Price is above the 200 EMA
34 EMA (sky) is above the 55 EMA (earth)
Direction: Long….HOWEVER PRICE TRENDED DOWN LAST MONT AND WE HAVE a 34/55 EMA CLOSING UP FOR a CROSS DOWN.
Potential trading zone: 0.8599 to 0.8694
Potential area to look for reaction: 0.8543 (38.2 fib) and 0.8599
Stochastic: Open and trending up
MACDEE Divergence: No
Did we open with a GAP? No.
Notes: Be careful. We are a bit messy on the 4 hour chart. Price is currently hanging around the 4 hour mother in law at 0.8528 but hasn’t broken it yet to the downside. Looking at the daily, the chart looks better with a nice trading zone. However, we might not get there if the 38.2 fib holds! Take note of the bear trend line on the daily chart.
Correlation: This pair is positive correlated (moving in the same direction) as the Euro Index, Euro/Dollar and the Euro/JPY. Be careful; don’t take the same trades on these four pairs at the same time!
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5) GBP/USD on the 4 hour chart:
Price is above the 200 EMA
34 EMA (sky) is above the 55 EMA (earth)
Direction: Long
Potential trading zone: 1.5197 to 1.5114
Potential area to look for reaction: 1.5225 (38.2 fib, 200 EMA plus weekly main pivot)
Stochastic: Open and trending down
MACDEE Divergence: No
Did we open with a GAP? No
Notes: BE VERY CAREFUL. Things look bullish on the 4 hour chart……however on the daily chart it looks bearish if we look at an Earth and Sky Zone using Feb 2013 high, the 55 EMA is still holding price down.
On the 4 hour we have a hell of a lot of EMA`S than can give support in that 1.5225 area. IF THIS BREAKS to the downside, a possible M2 trade can set up.
Correlation: This pair is positive correlated (moving in the same direction) as the GBP/JPY pair. Be careful; don’t take the same trades on both pairs at the same time!
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6) GBP/JPY on the 4 hour chart:
Price is above the 200 EMA
34 EMA (sky) is above the 55 EMA (earth)
Direction: Long
Potential trading zone: 146.14 to 143.22
Potential area to look for reaction: 147.58 (38.2 fib plus main weekly pivot)
Stochastic: Overbought.
MACDEE Divergence: YES!!!
Did we open with a GAP? No
Notes: Looking at the monthly pivots then we ½ way between the MR2 and MR3 pivot showing us we way overbought. We have Divergence on the MACDEE! Keep eyes on the 38.2 fib area this week. REMEMBER MY NOTE WITH THE EURO/JPY PAIR!!!
Correlation: This pair is positive correlated (moving in the same direction) as the GBP/Dollar pair. Be careful; don’t take the same trades on both pairs at the same time!
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7) AUD/Dollar on the 4 hour chart:
Notes: Looking at this chart, then price is currently sitting on the 34/55 EMA`S – HOWEVER, we are trapped in a triangle. If it breaks to the downside, be careful at 1.0382 as we have Loads of EMA`S in this are that can form a roadblock!
Correlation: This pair is positive correlated (moving in the same direction) as the AUD/JPY pair. Be careful; don’t take the same trades on both pairs at the same time!
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8) AUD/JPY on the 4 hour chart:
Price is above the 200 EMA
34 EMA (sky) is above the 55 EMA (earth)
Direction: Long
Potential trading zone: 100.33 to 98.65
Potential area to look for reaction: 101.00 (38.2fib) and 100.33
Stochastic: Overbought
MACDEE Divergence: POSSIBLE
Did we open with a GAP? No
Notes: Price currently making a candle formation to short. However – remember my note on the Euro/JPY pair. This goes for ALL THE JPY PAIRS THIS WEEK! We have a weekly pivot at 103.95 that we can keep an eye on.
Correlation: This pair is positive correlated (moving in the same direction) as the AUD/USD pair. Be careful; don’t take the same trades on both pairs at the same time!
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9) USD/CHF on the 4 hour chart:
Price is under the 200 EMA
34 EMA (sky) is under the 55 EMA (earth)
Direction: Short
Potential trading zone: 0.9419 to 0.9473
Potential area to look for reaction: 0.9378/0.9400 (38.2 fib plus loads of EMA`S)
Stochastic: oversold
MACDEE Divergence: No
Did we open with a GAP? No
Notes: LOOKING AT THE DAILY CHART, WE CURRENTLUY SITTING ON THE DAILY MOTHER IN LAW 200 EMA AT 0.9348. Keep eyes open here for a possible bounce back up. But remember it can be limited to 0.9378/0.9400 where we have loads of EMA`S again.
Correlation: This pair is NEGATIVE CORRELATED (moving in the opposite direction) as the Euro Index, Euro/Dollar, Euro/JPY and Euro/GBP pairs. Be careful; DO NOT OVER EXPOSE YOUR ACCOUNT BY PLACING OPISITE TRADES ON THE ABOVE PAIRS.
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10) USD/JPY on the 4 hour chart:
Price is above the 200 EMA
34 EMA (sky) is above the 55 EMA (earth)
Direction: Long
Potential trading zone: 96.11 to 94.34
Potential area to look for reaction: 97.00 (38.2 fib plus prev. resistance now support) and 96.11
Stochastic: Overbought
MACDEE Divergence: YES!!!!!!
Did we open with a GAP? No
Notes: We are way overbought with price above a second monthly pivot at 98.75.
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11) USD/CAD on the Daily chart:
Notes: Not for me this week BUT if you want to trade it, keep your yes on the bear trend line and a possible break of all the EMA`S to the downside.
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12) USD Index on the 4 hour chart:
Price is above 200 EMA
34 EMA (sky) is under the 55 EMA (earth)
Direction: MIXED
Potential trading zone: 82.89 to 83.20
Potential area to look for reaction: 82.77 (38.2 fib plus weekly main pivot plus34/55 EMA)
Stochastic: Open and trending up
MACDEE Divergence: No
Did we open with a GAP? No
Notes: Possible trades TOP AT 82.77 as we have loads of reasons here, plus possible BOTTOM at 82.31 as we have the mother in law waiting here !
Correlation: This pair is NEGATIVE CORRELATED (moving in the opposite direction) as the Euro Index!
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Please remember we are NOT a “tipping service.” What we aim to teach you here at fxmentorpro is how to look for trades for yourself using different methods, taking your trading to the next level.
Have a good one mates