Marc Walton on July 7, 2013
Hi, if you behaved in a disciplined manner last week, ie avoided
trading around major news and especially the Euro interest rate news and
definitely avoided NFP Friday, there were some decent trades, with
100′s of pips to be made, from last Sundays analysis and Wednesdays
update.Last week I explained why I was looking to short the Euro/Gbp at 0.8590 which worked great for almost 100 pips eventually BUT had you taken it on the Thursday or Friday you would have lost and yet a trial member managed to email me moaning that he took the trade on Thursday and it lost. The first thing to note here is that nothing is guaranteed at forex, my analysis is spookily accurate more times than not BUT nobody gets it right all of the time. More importantly was my oft repeated comments about finishing trading by Wednesday evening: DUh “DO NOT trade any Euro pair after Wednesday”…….how much clearer can I be?….. If you are not going to follow the advice, nay order
then you have little hope of succeeding at trading.Sometimes the discipline can work against you as with my Euro/$ short @ $1.3000. I explained on Wednesday that I would move my stop to entry if it hadn’t moved 50 or 60 pips by the time of the interest rate news and press conference. The trade was taken out by these evnts and then went 200 pips, BUT I know from experience that over time sticking to my rules has won me far more money than lost.
I did on this occasion have a result on the Gbp/$ which didn’t get taken out when new Governor Carney decided to weaken the Gbp on his first day in office. A weaker Gbp is better for exports. The Euro/Yen counter trend short at 131.00 was the best trade of the week moving 260 pips and I just missed out on a 130 pip win on the Cad from my revised entry point as per Wednesday’s update.
It is yet another big week for red flag news and be especially careful with FOMC. DO NOT TRADE after the London close on Wednesday and then wait until after the FOMC news AND Bernanke’s speech a few hours later. Either event could cause major, unpredictable moves. ECB President, Mr Draghi, is speaking on Monday, don’t take Euro trades then. I use Forex Factory for news, I especially avoid trading “red flag news”, here is the link to their calendar: Forex Factory
Flexibility
There are multiple opportunities this week and for this you need to be flexible. For example on the Euro/$ I am looking for a pull back to 1.3000 but what if we don’t see that? Then 1.2800 is key. If I start to see signs that price is stalling (look at candle sticks on 4 hour charts) I may long (half stake as its counter trend, stop to entry after 20 pips as the move may be limited) if on the other hand it breaks and closes below on a 4 hour chart I will short. Learn to decide in advance what you intend to do. Write it down, now you have a plan. Next trade that plan, but if big news is due wait until it comes out and the dust settles THEN decide whether to take the trade or not.
Red Flag News (especially FOMC, interest rate news & NFP)
Money & risk management: If you are already in a trade move your stop to entry or beyond if its winning, move stops nearer to price if its losing OR if you are really unsure close it. All these types of events have the potential to whip saw AND you may even see your stop being “jumped” if you are too near to current price.
Forex Week Ahead
Gbp/$: The monthly trend line is breaking (not valid until candle closes but a big clue as to direction) now at a double bottom on the daily, so its “make your mind up time. ” New governor of the Bank of England talked it down last week and NFP news was better than expected for the $ so a short is preferred. Either a pull back to 1.5000 (If that loses I will short again at 1.5100 as that’s the monthly line I mentioned). Another option if price continues to fall is a short after a break and close below 1.4825 followed by a pullback OR final option is look for a counter trend move back up form current position (same as Euro, do not be in both at once as you could lose your shirt
Euro/$: Technically and fundamentally its dropping after breaking the major line of 1.3000. As I mentioned above there are numerous options on this one:
“Euro/$ I am looking for a pull back to 1.3000 but what if we don’t see that?
Then 1.2800 is key. If I start to see signs that price is stalling (look at candlesticks on 4 hour charts) I may long (half stake as its counter trend, stop to entry after 20 pips as the move may be limited).
If on the other hand it breaks and closes below on a 4 hour chart I will short for a possible 800 pip move as explained in the video.
Chf: I prefer the Euro this week, its correlated “partner” but price broke and closed above 0.9600 which is a weekly 200ema and a weekly trend line that goes back to Sept 2012, so significant. Normally I would be guaranteed to long it but the difficulty is that if the Euro pulls back (if its going to do it anywhere then current position/1.2800 Is the place) then this pair will go back down again. I will wait until after the London open before deciding whether to trade it or not. If it does break back down below 0.9600 we could be on for a head & shoulders move, so crucial area for sure.
Euro/Gbp: Similar to the Chf, break and close of a major resistance line and yet I am wary about longing at the moment. One to watch on 4 hour charts, it did the break and pullback later on Friday but late moves have a habit of turning back on Monday. See what happens around London open for clues to long current position or not.
I prefer a long if it drops back to 0.8500 or a short at 0.8700 which is a trend line going back to 2008 as well as a monthly 200ema.
Final option if it closes below 0.8470 on a daily I will look for a pullback to short.
Aud: Continues to drop like a stone and counter trend trading has not been good so far. 0.9000 is a major psych level so if it does bounce then that is the place but its highly risky (known as trying to catch a falling knife) If I do take it I will only do so half stake and stop to entry as soon as it goes 20 pips. Preferred entry is to short at 0.9400
Yens: Big Yen news not long after the market open, wait until that is released (unless there are any decent gaps).
$/Yen: Broke and closed above major level of 100.00 so pullback there to long for me.
Euro/Yen: Multiple options once more, you could trade just this one pair this week! : Head & shoulders pattern means we may have a 900 pip move brewing here. For that to become possible we need a break and close below the neck line as explained in the video. The line is around 127.50 at the moment, will move up later in the week of course. A more aggressive entry would be to short at a break and close of 128.00, but stop to entry quickly as the trend line held 4 or 5 times in recent weeks.
Other option is a bounce back up at 128.00 or down at 131.00. Finally what if it breaks and closes above 131.00 an M2 trade. Not one for inexperienced traders, but good one to use to learn from. Go down to 4 hour charts, look at candle stick patterns, then look at what the “parent pairs” $/yen & Euro/$ are doing. Check what the $ is doing versus other pairs,Then double check any news updates. Phew, lot to take in but there are possible moves here and a perfect example of being flexible.
Aud Yen: Drifting and going nowhere. I Might be interested to short at 93.00 but not one for a forward order for sure.
Cad: Missed it by a pip last week, VERY frustrating as this could be another BIG move for 1000+ pips. Only want to long, but I need a pullback, 1.0510 is my preferred area, I will also watch 1.0550 on 4 hour charts.
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 http://youtu.be/PiHuzLFF1nk