Marc Walton on April 19, 2014
Hi, tricky
week last week with unusually low daily ranges made trading very
difficult. That was before Fridays Bank Holiday when most pairs simply
dried up to almost nothing, eg 18 pips in a day on the Euro/$! Monday is
likely to be the same, although occasionally the thin markets can cause
unpredictable swings, the safest option is walk away and wait for
things to get back to some kind of normality on Tuesday.I have explained many times before that I learned to trade purely from technical analysis but in recent years (since the 2008 crash) I have had to pay a lot more attention to what is going on with fundamentals: news, speeches etc. Politicians and their economic ministers have been openly manipulating currencies and as traders its important that we spot the clues as to direction
Euro Clues:
At the moment the Euro is too high for Mr Draghi (ECB President) so last week he started to refer to the need for further stimulus to help the Eurozone. Politicans and economists are seriously worred about the Eurozone entering a deflationary period which could be very damaging and lead to an outright recession. SO be forewarned.
- Price is at a major psychological level of 1.4000
- The Ecb President has made clear he doesn’t want a Euro at that price & that and will do all in his power to weaken it
- Last week there was negative Euro news & very positive USA employment figures SO fundamentally and technically there will be a lot of pressure for the Euro to fall.
- Mr Draghi is making another speech on Thursday AND he could make comments at any time during the week.
Be careful and walk away on Monday. If in any Euro or correlated trade, only be in one at a time until the first trade is at entry or better. Do not trade the Euro around Draghi’s speech on Thursday and especially if there is the announcement of a some kind of emergency press conference. If there is Get Out Of Dodge!
Conversely, there has been a lot of positive Gbp news recently so I am expecting the Euro/Gbp to fall, perhaps steeply next week
My Rules for the week ahead
I will not trade on Monday, nor around Draghi’s speech. I will only take 1 trade at a time on correlated pairs until I have my stop to entry.
Gbp/$ Weekly: We are currently in a channel that goes back to the summer of last year, so I will continue to look only for longs. It is at a double top which will tempt swing traders but I prefer the Euro/$ for that type of trade this week.
2 options:
a) I prefer a pull back and 1.6650 is the place for me. We have continuous positive news, the monthly 200ema, a weekly trend line that has not broken since last summer and a daily 61.8% fib, in other words multiple reasons.
b) if price simply keeps going upwards then I will look for an M2 break out pullback on a daily candle close to long at 1.6850
Euro/$: Weekly:
2 options:
a) swing trade back down from 1.4000 BUT beware stop hunting. Safest way is watch for 4 hour candle rejections (closed candles) for entries to short. With swing trades I usually halve my usual stake
b) a pullback to the trend line at 1.3720 which is also the 50% fib. If price crashes through there then I will start to look for shorts but I need a close on a daily candle below 1.3660
Chf (don’t take at same time as Euro/$ as they are negatively correlated) I prefer shorting with the trend and 0.9000 Is the obvious area, once again for multiple reasons its a whole number/psych level, previous support & resistance, 50% monthly fib, 61.8% weekly fibs (some folks trade mainly from fibs so lots will be looking for entries there)- I have an order to short at 0.8980
Euro/Gbp: Fundamentally this should drop and probably sharply. The difficulty is the entry. The ideal place would be a pull back all the way to 0.8340 for me to short for multiple reasons as explained in detail in the video. However price may well not get there so I will also try to short just below 0.8300
If price simply drops like a stone then a break and close below 0.8150 will have me looking for an M2 break out, pull back entry.
Aud: Another one where the politicians want to drive the price down and it is correlated with the Euro. 0.9400 is the first area again and if that breaks I will do so again at 0.9500
My main entry area is to short at 0.9400 and if that fails 0.9500 because the Royal Bank of Australia has said that they will take measures to weaken their currency (their target is 0.8500) and those areas are key technical ones.
Intra day: Price of course has to get there first! If price pulls back down I will long at 0.9180 which has a Never in a Million Years bollinger band, 50% fib and daily 55ema
Cad: Messy but price again closed below the weekly trend line so my bias is to short. Tricky part is of course if we see $USA strength this should go up as well. I will leave alone on Monday and look for clues Tuesday morning to short from current position. I am not overly confident with this so will probably halve my stake.
S/Yen Weekly. I prefer price to make a move THEN make a trade plan BUT price has repeatedly bounced back up offf 101.27 so if you are trading intraday watch there for clues on a 4 hour chart
Aud Yen: Potential 400 pip flag pattern break out as explained in the video OR a simple bounce back up at 93.80 for multiple reasons, NIMY, 50% fib, trend line and previous support & resistance
Euro/Yen : Also messy. keeps bouncing off 140.20 but I am nervous placing a forward order. I prefer the Euro versus the $ and the Gbp over this pair
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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