Fall Into Good Trading!! You Ready?? Omar’s Forex Outlook For Week Commencing September 8th, 2013

Marc Walton on September 8, 2013  

 

By popular demand, ex forexmentorpro student turned pro trader and now popular mentor, Omar Eltoukhy is back with his detailed analysis for the week ahead:
Hi Everyone!!
I can feel the changing of the seasons in the breeze outside.  Time to put the beach ball away (when was the last time you actually SAW a beach ball at the beach? I’m getting so old) and get ready for what I call “business season”.  Yes, Fall is almost here again, and I’m starting to get excited.  Not because I like cooler weather and less time in the sun, but because Fall brings great forex trading usually!  After a sometimes very frustrating Summer of ranges and moves that sputter out, we can potentially start shifting gears this week as the door opens to bigger markets and better trading.
Trading the currency market can be a remarkably seasonal venture in many respects.  Each time of year brings with it nuances that need to be recognized in order to get the most from your efforts in the market.  From my experience in forex, there are distinct “seasons” within the year that affect trading in many respect.  As we just saw, Summer usually brings with it rangy markets, limited participation with so many traders being on holiday, and many moves that die out as quickly as they began.  You see, politicians like their summers too and we often see a dearth of important news drip out throughout the hotter part of the year (for the northern hemisphere at least), which although tends to cause spikes, usually doesn’t lead to major breakouts into new trading territory.  As Fall descends on us, we see the politicians get back “on the clock” and many bigger traders get back to work.  From about the middle to the end of September, we see market participation increase back to some of the highest levels of the year.  Why is it important to us??

1. Higher Liquidity Means Potentially Better Moves:  As we get many more people actively trading the market, this gives us the momentum to finally get price on many pairs to make substantial movement rather than just sputtering out.  This can lead to extended moves which travel much further than the couple-hundred pip ranges we have seen week-in and week-out.
2. Politicians Get Active:  Holidays are over and time to start creating much more substantial “catastrophes”.  In addition to the increased participation from traders themselves, Fall usually brings with us a bigger helping of important news and decisions from the ruling class.  The spikes we see from news during the Summer, become potentially BIG moves from news during the Fall.  Politicians seem to make many important decisions after they get back from their holidays and often time, elections are held during this part of the year, which can dramatically effect the way the market views different players in the market.
3. Hooray Bigger Daily Ranges:  Fall also seems to expand daily ranges of pairs from higher participation, and more direction in the market.   It is much easier to pull 50 pips out of a 200 pip daily range than it is a 60 pip daily range.
4. Trading Style Shift:  Rather than aggressively moving our stops all the time to make sure we don’t get caught up in small-market chop, we can start thinking about being a little more conservative in our order management.  Along with bigger daily ranges, comes the necessity for patience in moving stops to ensure we capture the big moves that potentially lay ahead.  We start looking for bigger targets and breakouts instead of bounces off of the ranges.

So we have much to look forward to, but don’t get ahead of the market.  We must first see currency pairs “wake up” and shake off Summer before we go assuming Fall is in full swing.  Keep an eye on daily ranges.  We should start to see the 5-day range break upwards first, followed by the 10-day and finally the 30-day avg.  A good indication Fall is upon us will be a breakout of an area that has held strong for the last few months.  I’m sure we all have our “usual suspects” like the 1.3400 area on the Eur/Usd, the .9300 area on the Aud/Usd or the 132.50 area on the Eur/Jpy.  Patience pays my friends.  Let’s see the volumes and the movement before we get to involved in trying to catch bigger moves.  There are no guarantees we will see anything I have mentioned above, but from a probability standpoint, we have a much better chance of seeing more desirable markets very soon.

Forex Weekly Analysis for Week Beginning September 8th, 2013

September has started and we have cleared the first hurdle of the month…..NFP.  We saw some pretty big swings last week and I hope everyone took great care in trading.  The Middle East continues to be a potential powder keg, but so far all we have seen is rhetoric from the countries involved in talk of military action as we have no clear consensus from the global community other than no one can agree on anything (as usual I guess).  Be aware that any unexpected developments which have larger economic impact from this arena can rock the market at any time.  Our only protection is using good areas of s/r for stops and making sure we actually are using stops in our trading.  Stay grounded in responsibility and keep your account alive to take advantage of the big moves which are inevitable eventually.
Euro/$: Yet again, 1.3400 failed to be broken and price has slipped again.  Our triangle is still intact on the monthly basis, but that’s it.  My first area to look for trades is 1.3300 where there is A LOT of convergence of EMAs, trendline and horizontal s/r.  I am thinking short from this area.  Alternatively we can wait for a break above 1.3400 or some bounce trades from 1.3000.  Everything else seems a bit dicey and I would be patient.  1.3200 has been an important area in recent history but I am getting leery of this area at the moment.  Check video for much more detail.
Gbp/$:  At the moment is seems our trendline breakout is still intact and we should be heading higher from the weekly chart.  That being said, 1.5600 has not been convincingly broken and that is my first area of interest.  Reaction once again to this area will have me thinking long.  Alternatively, and preferably, I would like another pullback to 1.5450-1.5425 area for a long.  If this area is broken to the downside, I will consider a short.  Check Le Video for more details.
Aud: .  Oh here we are closed below .9200 AGAIN.  We are still looking at the same areas on this pair, although they have worked like clockwork throughout the summer.  I will let the market lead the way but I’m still interested in shorts from this area.  Of course the “line in the sand” is still .9300 and a breakout above this area will have me thinking bullish again, but until this point, .9300 is still a nice area to look for shorts.  .9040 for counter-trend longs, and finally a break below .9000 for further bearish shorts.  Check the video for all the details.
Euro/Gbp: We seem to have had a triangle breakout of the bearish variety and a pullback to .8500 will have me looking short for a few reasons explained in the video.  Beyond that, I will not be looking for shorts until the mess below .8300 is broken which is an area of important EMAs on different timeframes.
$/Yen: We are starting to get a little more clarity on this pair although we have not gotten to the “promised land” yet.  Look for longs from 98.50 or shorts from 100.00.  Alternatively a break above the century mark will have me looking for longs and a break below 98.50 for shorts.  Check video for details.
Euro/Yen: More deja vu.  130.70 continues to be a great area to trade from and we will look for the market to lead the way from here.  Longs above and shorts below.  Alternatively, 132.50 is a very important area and a break above this region will have me looking for a nice long setup above.  Of course, we may just bounce down from this area again, in which case a short trade is in order.  Look at smaller timeframes for clues.  To the downside, we are still watching 129.40 area for bounce trades long, or a breakout below for shorts. Check the video for more info.
Aud Yen: We have made a weekly breakout above 90.00 for the first time in many weeks.  I would look for longs from this point all the way up to 92.00.  93.00 is the line in the sand which if broken above, will have me looking for a long from this area.  That being said, it has been a particularly sticky area and we must consider short bounces from 93.00 first.  Check video out for more details.
Cad: Once again, we are dealing with the same areas.  1.0560 was a strong area which held again (almost to the pip) last week and I would continue to look to this area.  We have bounced off of 1.0400 so I would look to this area again for longs.  1.0435 becomes our intermediate area to look for a long if we don’t pull all the way back down to 1.0400.  Check out the video for all the deets.
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.
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Hope you enjoy the analysis!!  See you Wednesday for an update!!  Best wishes and happy trading to all!!!