Trend for 24th of September 2011

Hi trend traders and independent market analysts. Today I wanted to remind you about importance of 123 pattern in your trading. I hope you noticed that very often at the end of the move (in a range or a trend) we have some reversal patterns. In most cases they would be: head and shoulders or 123 structure. I wait for those patterns near important support and resistance levels or at the end of a swing. If the move is strong and continues for a long time you will want to search for a reversal on daily or even weekly charts. If it is a short term (one week or a few day move) you would be willing to see the pattern on 4 or 1 hour charts. 

I want you to look at eur/aud daily chart and see two 123 patterns there. Both of them formed at the end of strong moves and presented unique opportunities for those who like trading reversals to enter reversal trades and jump on to a new developing move. As eur/aud tends to develop big moves you would definitely have to watch the pair for possible reversal patterns at important support and resistance levels.

See also:

123 pattern

Resistance

Divergence

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

Market trend analysis for 8th of July 2011

Yesterday�s leaders become losers today

 

Hi, everyone. The trading week is over and let me do my market trend analysis for today. Markets had reversals after yesterday�s moves. Yesterday�s winner Euro became a pretty big loser. Currency pairs formed reversal patterns over Asian session and collapsed during European session. You can clearly see it in eur/usd and eur/jpy, the pairs that skyrocketed yesterday. If you looked at yesterday�s price action in those two pairs you might think that you are looking at one security (such great similarity in price action of both pairs!). eur/jpy even did not stop falling today. And news from US accelerated the fall even more. Let us look at some possibilities to trade currencies today. 

Learn to analyze market trends before trading them

 

Nonfarm payrolls has always been a very important event in financial markets. As far as I remember, looking back to my trading experience of 8 years, this piece of news has always created great volatility, especially in forex exchange market. I traded quite many of these events and know that it is both risky and profitable. You would have been profitable trading most pairs today. I have noticed that commodity currencies (usd/cad, nzd/usd and aud/usd) perform worst during those events, so I would not even analyze them while preparing for trading the event. You could have been profitable trading eur/usd, gbp/usd, usd/chf and usd/jpy though. 

Let me look at gbp/usd pair and see how it was possible to trade it during the event. I hope you will be able to do your own analysis for other pairs after that. I believe you have to learn analyze markets trends first before trading them. This gives you a background for profitable trades. It is good if you are able to scroll back your charts and do analysis of the whole year looking how markets reacting to this or that piece of news. Then you can create the best trading strategy with various filters to filter your trades. 

The way that you could trade gbp/usd today

 

When I look at 1 hour chart in gbp/usd I see that perfect resistance and support levels for placing your orders were 1.5985 for going long and 1.5930 for going short. The first order for placing had to be long as the price was further from the level 5 minutes before the news release (see my post about forex news trading to understand better how to trade the events) and sell stop had to be placed 1 minute before the news came out. The market was moving downwards just before the announcement. It is better if you place the order as further away from the price as it is logical (in case markets suddenly start moving upwards when news comes). I think 1.5920 level would have been good for selling the pair. 

So, news came and gbp/usd exploded upwards. You could move your stop loss order together with the market placing it under valleys of 5 minute chart. That would have gotten you out of the market at 1.6053 level. 

Hope you enjoyed the market trend analysis.

See also:

Forex news trading

EUR/AUD

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

Market trend analysis for 7th of July 2011

New page about eur/aud pair

 

Hi, everyone. Let me do a market trend analysis for today. I want to remind that I have started a few new pages that deal with specific currencies and I am intending to start a few more. Today I wrote my first post on eur/aud pair and you can find it on upper part of the page on the right. I will be updating those pages at least once a week and hope you will enjoy them and find something useful to implement in your trading. Let us go to trend analysis now. 

News from Europe strengthen Euro and weaken US dollar and Yen

 

News from Great Britain and Europe (Interest Rate Decision) created huge daily trends in financial markets today. USD and JPY were beaten really badly. Euro was the champion of the day. British pound remained pretty weak throughout the day. Eur/jpy and eur/usd were probably the best candidates for long trades. Of course, you could have taken eur/aud or eur/gbp too, but if you want some orderly pairs eur/usd and eur/jpy would have been the best choices. Eur/gbp could be difficult to trade for we had news coming from both Europe and Britain at an interval of 45 minutes and to play one currency against the other could have been problematic. 

Nice possibility to go up in eur/jpy after the release

 

Let us look how you could use the news event for trading eur/jpy. If you have been reading my posts I think you could tell by heart now the principle that I use for trading these events. I try to define support and resistance levels and place orders below and above them to trade breakouts that happen after economic news is released. In case of eur/jpy you had to place a buy stop order above 115.95 level for it was resistance with a stop loss order below 115.51 level, for it was support and wait for the market to break out upwards. You then had to move your stop following peaks and valleys principle (placing stop loss below 5 minute valleys). This would have gotten you out at 116.58 level, where your stop loss would have been taken away (in the plus zone). 

Was the upward trend true or false today?

 

If the break was not fake, we are going to see a continuation of it tomorrow. How to test it? We have to wait and watch price action around support level now. It is in the area of 116.20-116.40 area. If the pair goes down to this area and forms 123 pattern we can go long again at the break of point number 2 in the pattern. Read my post on 123 pattern to understand better what I mean by that. If the pair does not form a reversal at the area we will have to conclude that the breakout upwards was false and we are going to see a continuation of a downtrend in eur/jpy. 

Hope you enjoyed my market trend analysis. 

See also:

123 pattern

Breakout

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

Trend for 25th of June 2011

Hi, everyone. Today I want to continue my predictions regarding short term trends in financial markets. The post will be short for I am only going to speak about silver and gold. I believe I do not have to remind you how bullish I am towards precious metals. However, if we talk about short term or medium trend in these commodities I think they are about to go down a little. This is a bearish technical picture that I see for the securities. 

I expect silver to go down

 

I told you yesterday, that I see lower highs in Yen pairs and it convinced me that Yen was about to strengthen. The same I see when I look at silver charts. Even thought silver bottomed on the 12^th of May, it failed to reach previous high and formed a descending channel. Some technical would call it a flag and that would be bullish, but as you know lots of technical patterns end up being fake. So, I predict that the security will reach its� previous low at 32.30 and then possibly go 31-25 level. This would be support area. 

Possible support levels

 

I am not some market magician and cannot predict exact levels where this or that security might stop falling. However, by using support and resistance levels as well as some other technical indicators we can make some preliminary predictions. So, by looking and weekly Bollinger bands I see support at 30 level, which would be the lower part of the band. A surge that we saw in silver made the bands go apart pretty sharply. The collapse and the range that we have seen recently will make the bands to get closer. So, I think that 30 dollars per ounce is a good place for support in silver. 

Wait for reversal signals at those levels

 

I also marked 31.26 level, because it used to be a resistance and 26.37 level, which used to be support. Remember that these levels are only for forming expectations and are not some signals to buy or sell. You will have to wait for other signals for possible reversal and entry back to buy positions. When and if silver as well as gold do fall, then I will be able to talk more exactly about other technical aspects you can look for in your charts. 

See also:

Support 

Resistance

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

Trend for 24th of June 2011

My prediction for upcoming short term trends in the nearest future

 

Hello everyone. Today none of strategies that I use showed me any signals for trades, so I will simply try to deal with what I expect in terms of trends in the nearest future. These won�t be expectations for long term trends, but maybe medium, which means that I won�t expect moves that I predict to last very long. As always, I want to remind you to take my ideas just as ideas, not some kind of recommendations. This is free education and not some advice to sell or buy securities. My opinions might be very subjective. So, try to look at the thing from professional point of view and not to follow anybody�s ideas (including mine) on investing blindly. Ok, let us go to my predictions now.

Possible bullish moves in Yen

 

I have already mentioned my bullish expectations regarding Japanese Yen last week. Nothing really happened. Again, I do not have any fundamental data to back up my predictions. I simply see a pretty bullish technical picture for Japanese Yen by simply observing price action in most of Yen pairs. Some of the pairs (gbp/jpy and cad/jpy) have already started going down in waves, yet others are still in their ranges, possibly getting ready for a breakout downwards.

The best technical picture is in aud/jpy

 

The best technical picture is in aud/jpy pair (I mentioned it last week). You can see how the pair comes to the same support level, jumps off it and runs to a resistance. However, every time a resistance for the pair is lower and lower. This tells us that Yen bulls are very strong and a distribution of other currencies in regards to Yen takes place. You can see it eur/jpy and even usd/jpy too. As I think that Japanese Yen and US dollar will be the strongest currencies in the nearest future I would not think it would be wise to place a strong currency against another one. We have to choose the strongest won and buy it against the weakest one. 

Two possibilities to play up trends in Yen

 

It could be gbp/jpy pair, or cad/jpy pair. One possibility to play the situation is to sell a breakout of a range Yen pairs are in. However, this is a risky choice as we can see a lot of swings and trends developing in waves nowadays. If a breakout happens and it is pretty strong (let us say downwards) , you can very often see practically every day lower lows and lower highs. Then you add to a position when you see a rally and a reversal pattern at the end of it. 

It would be a bit different to play a downtrend, which develops in waves. Then it is better to take the initial position when a currency runs up (has a counter trend move and sell at the top of a rally). You do not sell or buy breakouts when currencies or any other securities in this fashion. The basic rule for trading these kind of moves is to buy low in an uptrend and sell high in a downtrend (when counter trend moves happen).

Hope this helped to see how to trade a possible short term downtrend in aud/jpy and other pairs. Tomorrow I will talk a little about precious metals and oil.

See also:

Range 

Triangle

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.