Marc Walton on April 13, 2014
Hi Everyone!!
Welcome to another edition of “This Week In Forex”. Personally I am
glad that FOMC came in the second week of the month rather than the
normal place of the 3rd. This really gives us two weeks of good trading
to finish the month in my opinion. That being said, there is still
PLENTY of big news this week, but nothing with the “expected” magnitude
of either NFP or FOMC. Sure Yellen speaks on Wednesday along with the
release of the beige book, right on schedule, but the major FOMC
statement is already behind us. I seriously doubt there will be much in
terms of a tune change from her camp.
Personally, I am surprised that we are not seeing bigger moves but this environment seems to be the new norm in forex, at least for the moment. One thing I have learned over the last several years of trading FX, is that don’t get used to anything, because that’s usually when it changes. We never know when the next month will start revving up daily ranges again, and make lots of opportunities (like the M1 method which used to work so spectacularly), available again to us. The important thing is that we stay connected to what’s going on, develop skills we know work in the markets, and stay focused on good money management and account control. Summer will be here before you know it, and we may see the markets change yet again. Normally this period brings rangy, smaller markets, but maybe 2014 will be a different kind of summer altogether. We will have to wait and see. Until then, keep those trades coming, albeit responsibly!!
The Forex Week Ahead:
Euro/$: Well, we never got our monthly confirm on the triangle, but the Euro still looks like it’s plowing ahead anyway. Last week’s candle created a “perfect” bullish engulfing setup with all the trimmings I like to see in reversal signals. Check out the video for all those details. 1.3825 will be my primary area of focus to long from this week with 1.4000 my hurdle above. Will a pullback to 1.3715 AGAIN surprise me? Nope, but I really think we will see nice support from 1.3825.Gbp/$: Although we also saw a bullish candle on the weekly and it was technically an engulfing candle, I don’t believe it gives the same clear signal as the Eur/Usd. The context is different and we had the important area of 1.6730 fail to clear for the end of the week. So naturally, AGAIN 1.6730 becomes my main area of focus. Last week’s daily break and pullback to this area for a long produced around 100 pips, and I will look for the same move again. A pullback to 1.6600 is a possibility as well for a long. Looking at the bigger picture, I believe we are getting to a point with this pair that a real move is inevitable, either a bearish break below 1.6600 or finally a good liftoff above 1.6730. I don’t want to miss the move especially if it’s a long from 1.6730 since I’ve been eyeing that trade for so long!!!
Aud/$: This pair too, had a bullish week last week. Only problem was that .9400 failed to breach to finish the week. Other than that, this pair still seems solidly bullish. I like the pullback to .9300 but think now that it may only get back to .9350 so that is where I will look first. Check the video for more details on what to do if both your desired areas fail to hold as is sometimes the case even with the best analysis!
Euro/Gbp: Do I really have to tell you?? I know, it’s the same old story. Only difference is a trendline that seems to be supporting price as well. Look for shorts at .8300 or potentially .8350. Breaks below trendline could send pair down to the familiar area of .8150.
$/Yen: Interestingly enough, a big bearish engulfing candle capped the week last week. So load up the shorts?? NOT SO FAST!! Really, it’s just the bottom of the 101.50-103.75 range again. Cautious traders STAY AWAY from this pair for now, those of you a little bolder may want to long from 101.50, trade 102.50 (short or long depending on price action), and look to short 103.75 for the top of the recent range that has now stuck with us for a couple of months!
Euro/Yen: This pair is looking even worse than before. STAY AWAY!!!
Aud Yen: This pair has held the line at the 100% fib we established two weeks ago in an attempt to use the prior week’s candle to look for pullbacks. Instead, the top of that candle has just proved to be support. Still looking for pullback to 94.50 for a long. Up above we have a fib extension level of 97ish to either c/t short from or wait for a break above. Other than that, simply playing the even 100′s (97.00, 98.00, etc..) should provide a decent area to take a long once it is broken.
Usd/Cad: Last week pulled all the way back to 1.0850 and then shot away. Great trade if you got it, but what if not? I would strongly suggest waiting for a rebreak above 1.1000 for a long, or simply a pullback to 1.0850 for a long, although this second move to that area has me a little more worried that it will simply fall through so use caution if that happens. A break below that area though, and I will look to short from it.
Eur/Cad: This pair looks G-O-O-D to me! Very nice bullish engulfing weekly candle to put us back on track for the up-trend including a close above 1.5200 to finish the week. That will be the spot to look for a long since it is important horizontal s/r as well as daily 55 EMA. Need more confirmation first? Wait for 1.5300 to break and then long from there. Considering this pairs long standing uptrend and nicer daily range than other pairs, I like the look of this pair this week!
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!!!
Omar Eltoukhy