Marc Walton on May 11, 2014
Wheew!!! After SOOO many slooooww weeks, and
horrific daily ranges, we FINALLY saw some real moves towards the end of
last week. They say “all good things must come to an end”, but what
“they” forget to mention (and is actually the more positive of the two
sentiments) is that “all BAD things must come to an end” as well.In trading, our goal is to make profits, with risking less than we intend to make. With daily ranges in the low dozens, it is hard to place a protective stop, that we then look to double, triple or more in gains if we simply do not have the movement. We have seen bollinger bands squeeze the life out of most pairs, along with sideways charts to boot. Now, it seems the markets are “waking up” and bigger moves are found. It may be a little too early to get excited considering we don’t have any real breakouts yet, but I’ll take these moves over the catatonic markets any day!!
Keep in mind, that we still need important areas to break along with continued bigger daily ranges to be back in “hog heaven” again. That being said, almost every single pair we cover for analysis is creeping closer to very important areas. Once/if they break, that will give us A LOT more confidence to hold our trades longer for bigger gains. Even if they don’t break, the expanded daily ranges (assuming they continue) will provide us great trades to continue with the trends or ranges we are looking at.
Either way, bigger daily ranges will equal better opportunities. We just have to be sure we are making good decisions, not trading because we simply have been in a bit of a “dry spell”. I am happy to report that the markets look much better than before, and any good news is still good news. Be careful, and let’s all hope this is a new phase of the market!
Euro/$: Made big moves south during the last couple of days of the week, but failed to break the important area of 1.3715. On the weekly, there is evidence of a potential bearish turnaround, but it is not 100% convincing. We have confluence of trendlines and a strong horizontal s/r at 1.3715 and that will be the key area to trade from. Either we get a nice bounce from there to continue the move higher, or we make a breakout, and head lower. If we are to simply move up from where we are now, I will seek to long from the break of 1.3825 area, keeping in mind that 1.4000 will be a tough nut to crack.
Gbp/$: Also made a move down towards the end of the week and looks bearish on weekly chart by rejecting 1.7000. The only thing is that we didn’t break an area of support to finish the week and we find ourselves approaching that ever-important “play it again Sam” area of 1.6730. Interestingly enough, 6730 has the triple confluence of horizontal s/r, rising major trendline and daily 55 EMA, so this will be the area to look for a long, UNLESS it breaks which in my opinion would signal it’s time to get short on this pair.
Aud/$: Bucking the trend of the other two majors, the Aussie put on a bullish show for us this last week. We cleared not only .9300 but the 55 EMA (weekly) to finish the week. After bouncing off of .9200 the week before, this pair still very much looks bullish, although a clean break above .9400 is needed to resume the uptrend clearly. I would look for .9340 on smaller timeframes as my first area to look for a long, followed by .9300 for a long which is more conservative considering it is a stronger area. Breaks above .9400 would certainly have me looking long from there also, although c-t traders will potentially find a short there first. Finally, if this pair is to turn bearish, I would like to see a break below .9200 first.
Euro/Gbp: Well, I finally don’t really have to write “see last bazillion weeks analysis and copy it”. This pair appears to be in a downtrend, although has failed to break the falling trendline we established some time ago. This coming week it appears that we will test the ever-important area of .8150 which is the crux of the trendline and horizontal s/r. I would expect at least one bounce from this area, although more conservative traders will wait for a bearish break OR a bullish reversal signal from this area before entering a trade. Below, we have lots of room to run, and above we have .8300. Either way, this is pretty good prognosis for a pair that can be sluggish at times.
$/Yen: Here we are, at the bottom of the range. Once again, this pair has maintained its overall range and now sits at 101.50. A nice bearish break of this area will be exciting as it will signal FINALLY breaking out of this months long range between 101.50 and 103.75. Of course, it is very likely that price will simply bounce from this area and head back up, stalling or rejecting at 102.50 along the way. Looking better, but we still don’t have any sort of trend established.
Euro/Yen: Although, like the usd/jpy, we still don’t have any sort of clear trend on this pair, it WAS nice to see this pair move for more than a few dozen pips in one day. It has made the retreat to 140 area, which is the bottom of the recent range, with 142 at the top. Just like the usd/jpy, this area can either serve as a jumping off point for a nice bearish breakout, OR a place for a long to stay within the range. I would pay close attention to how the market reacts to this area, rather than simply placing a long trade here.
Aud Yen: 94.50 yet again provided a long opportunity, but the range we have been in persists. If price is to continue upward along side the Aud/Usd, 94.50 becomes our area of interest for a long, with 95.75 serving as a resistance along the way, with 96.50 serving as the top of the range. Of course if 94.50 breaks to the downside, this will provide ammunition to the bearish argument and become the area of interest for a short. At the current moment, however, this pair looks bullish.
Usd/Cad: Triangle established on last Sunday’s analysis proved to be a decent trade when it broke out, although price did find support at the area of 1.0850 and right below with the daily 200 EMA. Friday produced a bullish engulfing candle along with the rejection of the s/r area coming after a down move which makes me think: REVERSAL. I would look to long from 1.0850 at least to 1.1000. Of course, if the down move is to continue, a clean break below 850 and the 200 EMA would provide a nice short potentially down to 1.0680.
Eur/Cad: Similar-looking candle to the usd/cad did not provide the same opportunity on the daily (although smaller timeframes were potential trades) since it made the whole move in one day. We currently sit right at 1.5000 to finish the week and this will be the area to focus on from this point. A nice move below this area, and I feel that we are at least temporarily in a downtrend, breaking the huge uptrend we have seen what seems like forever. If 1.5000 holds, I see price moving back up to 1.5200. It will be important to see how the market reacts to this area.
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!! Best wishes and happy trading to all!!!
Omar Eltoukhy