Marc Walton on January 5, 2014
Hi All!! Hope everyone had a great holiday season spent enjoying
everything available to you during this festive time of year.
Unfortunately/fortunately (depending on how you look at this), it’s
time to get back to trading!! 2014 is upon us and we have lots to
accomplish this year!! But before you go getting too excited, keep in
mind many/most years volume does not fully return until towards the end
of January.No matter, we only look to trade when the time is right. That being said, I took a peek at the charts for the first time today since the last time which was December 20th. Yes, I have actually trained myself to not even look at a chart during my holiday!! Probably has paid for Christmas presents many times over. What I saw today shocked me and then confirmed what I always have felt about holiday markets: NOT pretty!! It seems many pairs went on “Mr. Toad’s Wild Ride” before depositing the market approximately where it began just like the famed Disney ride does.
Some pairs have just trotted off into weird places which I anticipate will be corrected when the “big boys” get back at the game. So the moral here, is be cautious getting back into the markets if you have stayed away, and understand that more trades will come soon if not this week. Many times, I see the FX market like a car in the winter. Come January, it hasn’t been driven in a while, so it takes a little bit longer to get “warmed up” and everything going again. As holds true so much in trading, patience pays and rushing leads to rubbish. Let’s have the markets prove they are worthy of our risk capital before we trade rather than throwing money away trying to take trades where there are none.
For those of you who are anxiously awaiting to get started on Project GROOM, join the club!! There has been such an overwhelming response to this that Marc, Dean and I decided to make a separate portion within Mentor Pro to cover this. Yes, that’s right, for NO EXTRA charge, there will be an entirely new section covering this project which we will be providing all GROOM-related posts, updates, material, etc…. in one easy to find place. That way, those interested don’t have to search here for updates, and those who simply want market analysis, discussion and potential areas of interest won’t have to sift past GROOM stuff to find what they are looking for. Everyone’s happy. But that requires you waiting ONE MORE DAY for the link!! Tee heeee!! Check back tomorrow for my article on scaling (a request from a GROOM participant) along with the link and a complete re-hash of what the heck is Project GROOM. After all, some of us here may have gotten a REAL vacation and may have missed some of the hubub. Please leave all questions/comments/concerns regarding “this thing of ours” till tomorrow when we officially launch PG.
Forex Weekly Analysis for Week Beginning January 5th, 2014
Well, well, well…….It’s funny to me now that I used to be so worried about missing action during the last few weeks of the year.Upon opening my charts today, I found out, although there had been some movement (large in some cases), almost every pair I track has come back into the vicinity where it was when I stopped trading in late December.
Most of the areas I was watching then are still in effect and valid now.
Keep a close eye on the Yen, especially the dollar-yen this week. Abe and the BOJ have worked very hard on devaluing their currency. The USD is at multi-year highs against it. Where we go from here could be big. I’m banking on Japan staying its course and we may have a nice ride up on both the Usd/Jpy and the Eur/Jpy if we get in at good places. This is one instance I would recommend being very relaxed with order management OR take multiple orders over the course of the move. Let’s see what else we have going:
Euro/$: Looks as if we are pretty much where we have been before. I want the market to move first and for that reason, I am being conservative and only looking to long on a break above either 1.3715 or 1.3825 the latter of the two is my more preferred break. A pullback to the trendline and 1.3550 seems likely and those of you who like a little more risk may want to play that bounce up, if there is one from the trendline. More Details Explained in the video.
Gbp/$: Even though last week’s price action was rather bearish, I really see that as holiday volatility setting up a very nice pullback to 1.6300 for a long. We have multiple reasons at this point to go long including major horizontal s/r, trendline and even a daily 55 EMA. Breaks below 1.6300 start to get messy at this point and I”m really only looking for the long. See the video for more!
Aud/$: Still looks very bearish to me. A pullback to .9000 for a short is an option, but not the safest one. The “prime” move for me would be a daily break below .8825 for a short. CT traders might want to take a stab at a bounce from this area to the long side in case we are headed up along with the other major pairs. I would not feel comfortable going long on this pair until .9040 is broken and held on the daily chart.
Euro/Gbp: Starting to look better from a trend standpoint, but I’m not fully on board yet. Downtrend seems to be what’s suggested and a close below the area of .8315 tells me this is where I would look for a short trade going into next week. The cautious among you (myself included) will wait until we see a juicier trade form at some point in the future when the pair starts looking more reliable and moving better.
$/Yen: I have been talking about 103.75 for a while now. The pair as of this moment, has cleared this hurdle. The next real area above is hundreds of pips away. I would VERY MUCH like to long from 103.75. That’s my focus. A break below and I would change my view to short, but from the same area. I was cleaning up on this pair to finish the year, so let’s see if we can’t get a big extension to the upside now that we are above this multi-year high. Video for more explanation.
Euro/Yen: Although not as clear-cut as the Usd/Jpy, the Eur/Jpy is offering a potential wallop of a big trade. If we can pullback to 139.00 and get a long from this point, like the Usd/Jpy it could run for hundreds of pips. Only problem is that we have broken a daily trendline to the downside and candle formation to finish last week is bearish. Just an express pullback to our desired area of 139.00?? Or a reversal?? I am not really going to mess with this pair until we see for sure. 139.00 is certainly my area of interest, either to take a long, or start the reversal downward from. Let’s see what the market decides to do and trade accordingly. A continued move up will have me interested in longing if prior high of 145.75 is broken. Check le video for details.
Aud Yen: Once again, NOT MESSING WITH THIS. Sideways, sideways, sideways. Let’s wait until we see a strong move in one direction or another before placing trades here huh?? (NO CHANGE HERE)
Usd/Cad: Tricky, tricky, silly. This pair finally broke above our desired 1.0680 area, only to fall back below it last week!!! Keep an eye on 1.0560 for longs, OR let’s see if we can’t grab the long from 1.0680 if price moves above this and closes on the daily with normal volume. Deja vu? Yes, let’s see if we can nail it this time though. See video for the details.
Eur/Cad: Similar situation to the Usd/Cad counterpart. Looked like we finally got the “big break” above 1.4600, only to have it reverse last week. We have stopped right above our area of interest at 1.4435 but I am hesitant to just jump into a trade there. Either a re-break above 1.4600 (my preferred) for a long, or a further pullback to 1.4350 for a long. Any break below this last area and I will be thinking short all the way down to 1.3950 which is quite a ways off. Again, we must let the market lead us in the right direction.
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
Hope you enjoy the analysis!! See you Wednesday for an update and all the juice about our GROOM Project!! Best wishes and happy trading to all!!!