Marc Walton on May 25, 2014
Hello FX Fans! When it comes to trading,
there are always those who prefer fundamental analysis, and those who
prefer technicals. Although I do have the deepest respect for those who
can make money using fundamentals in commodities, it seems far too slow
paced for me. Ironically, I always did very well using fundamentals to
invest in equities before I ever became a trading junkie. I just don’t
want to wait to find out if I’m right or wrong, I want to know right
away.I want to make it clear right now, that technical analysis does not suggest “faster” trading in an of itself. In fact, technical analysis can easily be used to trade monthly and yearly charts, I just don’t use it that way. What I love about it, is ability to “zoom in” to what’s important RIGHT THIS SECOND, TODAY. Trading has always captivated me in this way. The more I learn about “big areas” and the occasion where we get to them and the market must decide its next move, just brings something special to the pursuit.
We often get wrapped up in the myopic focus on “making money” from this trade and that trade, and forget to savor what we are really doing. We are getting our questions answered. Did we make the right decision? Can I hold myself to my own rules? Did I miss something?? There are not many other avenues in life where you can test yourself on such a regular basis, have such a challenge doing it, and reward yourself so handsomely financially when the answer to the main one is “Yes”. Enjoy the craft my friends. The more you learn, the more you will earn.
On a more current and relevant note, the markets have been alive with technicals. We are seeing most if not all pairs really respect EMAs, Trendlines, and horizontal S/R. This makes our job as technical analysists that much easier. The more conservative approach in this environment is to look for breaks of major areas, while the more experienced among you proficient in smaller-timframe trades, can trade as price meanders and bounces from area to area within the larger major range. It seems likely that when pairs finally break these major areas we are hovering around, then the moves could be more significant. With summer right around the corner though, I wouldn’t be surprised if we maintained a lot of ranges. We shall see.
Euro/$: Broke away from major area of 1.3715. We appear to be rather bearish at the moment. Unfortunately, we currently have price above a TON of different “entaglements” like EMAs of many shades and a major fib at 1.3485. A pullback to the 200 EMA and trendline at 1.3650 could be a great spot for a short. Caution should be used trading this pair until we make a move below this tricky area.
Gbp/$: Although this pair usually tracks along side the Eur/Usd very well (high correlation), at the moment, the Pound is standing tall while the Euro and Aussie falter and from a weekly chart, we can see that while the other two pairs head south, the Gbp has held above it’s rising trendline. It is currently sitting at major s/r at 1.6825 along with the trendline and this would be a place to look for a reversal candle to take a long from all the way back to 1.7000. If broken however, and confirmed, 1.6825 makes a great place to look for a short. 1.6730 would come into play as either a c/t trade for a long, or wait for a break to continue the moves short.
Aud/$: Rather confusing on the weekly. A major trendline has broken, but price was able to maintain above .9200. A break below this area would definitely have me interested in a short, but it is likely that price may head back up towards, .9400 which is the top of the current range, with .9300 and .9325 being intermediate important s/r. Intraday and even intraweek, it is possible to trade with and through these areas if the range is maintained. More conservative traders should wait for a break of either .9200 or .9400 to get involved.
Euro/Gbp: In a much more interesting situation at the moment. Decisively broke both a trendline and .8150 and looks quite bearish. A pullback to the trendline around .8120 is the first place to look for a short and if it makes it back to .8150 that would be a good place to look for a short in my opinion. Below, we really only have 2 hurdles, both quite far a part. The first at the whole number of .8000 and the second at the zone of .7800-.7750. That is really all that’s in the way from a s/r point of view before an even bigger move to the south. Of course everything depends on if the pound and euro continue their current trajectories.
$/Yen: Yet again, this pair failed to make a weekly break below 101.50 and seems to be headed, AGAIN back to 102.50. There were pips to be had last week on the break below 101.50, albeit a temporary move. We still persist in the same range and await a breakout.
Euro/Yen: Looks better than the Usd/Jpy, and quite bearish. Ironically, this pair too is locked into a set of ranges, the oldest range being the biggest, followed by smaller subsequent ranges. A break below 138.50 would send me looking for a short, while a move back to 140.00 and I think that’s a great place to look for a short too.
Aud Yen: 94.50 failed to hold to finish the week, the first time since mid-March and the first place to seek a short trade. A break below 92.75 would have me definitely interested in shorting there from a pullback.
Usd/Cad: Currently sitting at important area of 1.0850. To short, I would look for a break of 1.0825 and to long wait for a break above 1.1000 again. This pair has respected s/r and EMAs very well lately and we should use that as our guide to trade this pair.
Eur/Cad: 1.4800 is a HUGE area on this pair and here we are slammed right into it. A break below and that sends us tumbling I’m sure. A move back up and look for 1.5000 for a short, unless it breaks and then it become a place for a long. This pair has given us a great daily range lately and I think has the best potential to give us some great opportunities 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!!!