Marc Walton on July 28, 2013
Hi, last week I was wondering whether ranges had arrived yet. They
haven’t! This week is the monthly candle close and THE biggest, baddest
red flag week, culminating in NFP Friday so I suspect that we will have
one more week of lunacy before sliding into ranging markets.Last week I showed you how to “tip toe” around red flag news, but that does NOT include FOMC, NFP nor interest rate nor press conferences. For these type of announcements you do not tip toe, you RUNNNNNNNN away and live to fight another day.
As ever my plan for the big news week ahead is to be out of the markets by Wednesday before London closes. There is the FOMC statement a couple of hours later which we have seen cause MAJOR moves in recent months, followed by Thursdays Gbp & Euro interest rate news. The Euro press conference is usually even more volatile as Mr Draghi shoots the Euro in one direction one month and the opposite the next. Finally its NFP Friday (No Forex Please) day, when you should go shopping, fishing or ANYTHING but trading forex.
The bottom line is that we know in advance that these red flag releases can cause huge, often erratic swings of 100’s of pips, so why would you want to go looking for trouble. Learn to walk away.
Last week was very messy. I had more losers than winners, but by sticking to my rule about never trading Fridays I thankfully kept a poor week from becoming a bad one. I NEVER, EVER trade NFP.
I suspect that after this weeks expected volatility that things will calm down from next week. Ranges are trade-able and I will show you how to trade them in Wednesdays update.
Forex Week Ahead
I have explained my strategy, that I will be finished by Wednesday and earlier if I can make my target. Remember that Wednesday evening will also see the MONTHLY candle close and you need to check that out, especially on the Cad as explained in todays video.
Gbp/$: Broke and closed above 1.5330, I longed there last week and will look to do so again. I will split the trade in two, half to enter at 1.5330 and the other half at 1.5300. It may struggle again at 1.5390 which I have as 61.8% fib on a daily but if it can clear there it has room to go to 1.5500 and even beyond (better risk than the Euro/$ for me). Stop below 50% fib and 55ema which I have at 1.5285. Also possible short later in the week at the weekly 55ema/1.5540 which is also the daily 78.6% fib and a weekly trend line. If it breaks back down then I may short but only if it clearly closes below the 55ema on a daily candle.
Intra day we may be in a range so look for clues to long at 1.5300 anyway and possible shorts at 1.5400
Euro/$: Too much above current price for me to long at the moment. If it sets off in an upwards direction I will leave, prefer the Gbp/$ as better risk reward. I will look on 4 hour charts for a possible move back down from current price which was last weeks suggested entry for a short. I didn’t take it as it happened on Friday, but look for clues to short there, explained in video.
I will long if it drops to 1.3000 again.
Chf I said last week that “ a clear break and close below 0.9370 will see me looking for an M2 short. Daily candle close will be more conservative and might just save us from a fake out” and it worked perfectly. That is the same area for me if price pulls back to short again. Could be on for a 400 pip head and shoulders drop here so one to definitely watch.
Euro/Gbp: Some nasty spike s on this pair recently I will leave alone, except a short at 0.8700 again as that 5 year old trend line is still unbroken.
Aud: I prefer a pullback to 0.9400 to short for multiple reasons. If t drops again I will look to long at 0.9000 AND 0.9040 on a 4 hour as per last weeks analysis, see the video.
$/Yen: I still believe that this could be on for a huge move up and I want to catch it for a long term hold BUT it broke back down below major support at 98.80 so we could be on for a short term move down. Standard M2 is to short there and of the 3 yens we trade that has the fewest obstacles in the way. I am wary, I want to long, but I will watch this on a 4 hour chart for clues to short.
Euro/Yen: I will not short as there is too much in the way below current price. More interested to long if price breaks back above the monthly 200 ema at 131.15. I will wait for daily candles to close before taking that trade, followed by a pullback.
Aud Yen: Too messy to short and trend line and 90.00 too near for me. Will watch 4 hour charts for possible bounce back up once more at the major level of 90.00
Cad: Last months candle was bullish and closed above the major 55ema that has held most of the time since 2002, therefore its major resistance BUT current candle now turning back down. I will wait until after the monthly candle closes. If its still above the 55ema I will long at a a break and close above 1.04220. If it closes below I will leave alone, unless price gets back down to parity/1.000 where I will definitely long
New members please note: If I am looking to take a trade long, at for example 1.5000 , 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
To View the Video, click on the link here http://youtu.be/X9cSvg5j-uU