Hi, some major moves last week culminating in worse than expected NFP news & the $USA went up!
In last weekends update I showed you that were loads of potential triangle & flag pattern break outs, many of these moves yielded 100′s of pips. There are a few that have broken, namely the Euro/$ & the Gbp/$ as I show in todays video.
In recent weeks I also showed you the Plan B method. I use this when markets are extra volatile and we don’t get the preferred pullbacks. If you are new to forex trading and or the site I would concentrate on working your way through the forex strategies page. Start with the LMT section, even if you don’t use it & master that section before moving on to the M1 method & finally the M2.
If you try to learn too many methods at once you will simply confuse yourselves.
When you are new to forex there is a danger that you rush from one system to another and end up mastering none. So concentrate on taking things slowly and find one of the methods that suits your personality & time zone.
The reason I have a number of methods is that forex trading is my main source of income & I dont wish/can’t afford to spend weeks waiting for the set ups I prefer to develop. Also I have been doing this for 7 years now so I have had plenty of time to experiment & try out varying methods.
Having said all that the Plan B is very simple, with clear rules. You will find the rules & explanation for this method here: Plan B
I am a technical trader, I follow the charts and indicators to make my decisions. I pay attention to the news but my priority is to do what my charts tell me. However we have had a tremendous amount of news recently, most of which has hammered the Euro. Even weaker than expected $USA news and still the Euro falls. The danger is that some point the Euro will have a big pullback.
My best advice is to be only in one Euro short trade at a time OR make sure that your total exposure to this pair is no greater than your money management rules allow.
The Swiss National Bank has now agreed to stop intervening in its currency and as a result of that we are seeing correlation for these pairs weakening.
There was talk last week that Hungary was in a worst financial state than previously reported (Hungary doesn’t even use the Euro)! Now experts are starting to openly discuss the possibility of the Euro/$ hitting 1:1 parity.
Does this mean that the USA economy is any less of a mess than Europe? Probably not, but as I have explained before the forex markets are driven by sentiment. Everyone is putting the boot into the Euro & as a result we broke a 4 year low on Friday. So its going to continue to plummet next week? Probably, BUT. Huge falls are usually followed by some kind of pull-back whilst traders decide where we are going to go next. Personally I am still only interested in shorting the currency but be mindful that we could get a bounce this week.
News
Last week was a major news week followed by a week-end G20 meeting. The top financial leaders from the major currencies attended and made speeches & comments. The market open will be the 1st time that the Asian markets will have to assess both this and Fridays NFP release, so be wary of big gaps and moves at market open.
Monday is fairly light re scheduled news announcements except the Aud big news 02.30 hours London time. As the week progresses we have more, bigger releases & speeches, including Gbp & Euro interest rate reviews.
Gaps
We have had lots of “gaps” in the opening price in recent months, with any of my methods it is best to wait for these to settle down/fill before opening trades.
| M1 | I suspect there will be a lot volatility in the asian range, I could of course be wrong J, but I will not be getting up early for this one. Check tomorrow pre London open if you are around. |
| Lmt |
At the end of todays video I show you a few potential signals that are likely to fire on Alpari at market open. This can be very risky in view of all the recent gaps. Some of the candles are too big & don’t forget not to take trades too near to recent support. See the video for a detailed explanation |
| Gbp/$ | Only looking to short. If I was just trading from weekly charts then 1.4775 would be my main area to want to short. Last week this worked almost to the pip even though I had started to look for it when price was 300+ pips away. However as we are trying to find trades every day then there are smaller targets to look for. We have a flag pattern break out that means we are looking for a pullback to the 1.4530 area and for the more experienced among you, consider a Plan B move beyond. |
| Euro/$ | I only want to short. Triangle break out on the daily chart on Friday means we need a pullback. Preferred area for this is 1.2140 as it is also previous major support. Price will probably struggle to break 1.2000 which is obviously a significant psychological area, but too near for me. Plan B is also an option with this pair. |
| Chf/ | Still looking to long BUT wary with this one now. It is losing its correlation with the Euro & the Snb’s decision to stop intervening could see this fall at the same time as the Euro. 1.4570 has held for last few weeks and could do so again, but I still suspect a bigger pullback so more interested in longing at 1.3010 area which is psych and weekly 200ema. |
| $/Yen | All over the place. Not for me. |
| Aud/$ | Only interested in a short. More big news in asian session. Too near recent lows for me to consider Plan B. I need a pullback and 0.8500 has held for last couple of weeks so seems a good place again. |
| Cad | Still trapped between emas. Starting to roll up on the daily, yet still in a down trend. Good Cad news & poorer than expected $USA and still the loonie weakened. Illogical waiting for a break either way. |
| Euro/Cad | I am only interested in shorting BUT counter trend traders will be watching this like a hawk at market open. Fridays candle is a pin bar reversal one and price failed to close below the double bottom/recent low at 1.2640 area, so they will be looking to long if pulls back there. I will not/do not recommend this. As you know I am a great believer in trading with the trend. You trade less but your losses are fewer. So for a trend trader the long term target is a short at the upper trend line which will be around 1.3000 |
| Euro/Yen | Only looking to short. 114.00 has held in recent weeks and is a trend line. Another pair that counter trend trades will be looking at closely. There is some macd divergence on the daily chart to support the theory as well. They will be looking for clues anywhere between 108.85 & 109.25 to long but not for me |
| Aud/jpy | Only looking to short. Price closed above significant 75.50 on Friday. Consider a break & close below here on a daily or 4 hour chart, followed by a pullback. Weekly traders will be looking to short at 80.00 which is psychological area and has lots of emas in the area as well as 61.8% weekly fibs. In other wors LOTS of reasons. |
| Euro/Gbp | 0.8400 broke Thursday. This was a major support and resistance line that goes back to 2008. I was looking for a pullback there on Friday which we didn’t get. 0.8380 held twice on Thursday so anywhere around here would be a good place to look for a short. |
| Best of Luck, Marc |
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