Free Forex Analysis – 27th February 2011

Hi, as technical forex traders we are looking for repeatable patterns to give clues as to where price will go next. When there are extraordinary events taking place around the world then sometimes it feels safer to hide under the bed, rather than trade forex

When you look back at last weeks charts & analysis & somehow most of the areas we were looking at worked perfectly.

Forex is SO easy to analyse with the benefit of hindsight & there are a lot of so called experts who make a very good income doing just that!

I struggled last week.

I am cautious by nature & was probably too careful, BUT there is no point having an inkling that things are going to be erratic & then ignoring it, so I prefer that my money is safe rather than sorry.

Dean’s STT also did very well. You can get a trial of Forex Mentor Pro if you want to try out this method by clicking here

Many of my emas etc did hold, but this week could be even more volatile as its the 1st week of the month.

Hence we have a humungous amount of news, speeches, interest rate decisions, all building to the dreaded NFP Friday, so the message once again is be conservative.

Do not be exposed to more than one currency at a time. Only take a second trade if you have moved your stop to entry on the first one.

Strategy for The Week Ahead

Its NFP week, my goal is to make my target as early as possible & walk away. In recent months I have usually managed to do so by Tuesday evening.

The problem is the volatility increases as the week goes on. Price then usually starts to stagnate on Thursday and Friday morning, before going haywire at the news release. I will be well out of the markets by Wednesday at the lastest. Last week many of the moves seemed best plotted on 4 hour charts & I will be concentrating on those again.

Macd Divergence

In recent weeks I have shown you how MACD has been giving clues as to changes of direction on a number of pairs. As I show in todays video there is a LOT of MACD divergence on lots of pairs, both daily & weekly.

There are whole books on the subject, but the main thing you need to know is if the price of a currency pair is going up at the same time as MACD is going down, then price is may be about to turn – see the video for more details

Bollinger Bands

Bollingers have been extremely important in recent months, particularly at market open. They are another great clue as to whether price is going to carry on or reverse. The most important band at the moment is the monthly on the Cad. If that swings open tomorrow then the Cad could drop like a stone.

Support & Resistance & Emas

In recent weeks I have done many detailed posts explaining the importance of emas & once again last week, price bounced off these areas, often to the pip. Emas are mobile support & resistance.

Triangle Break Outs

Long term member, Omar from Texas, emailed me on Friday with a screenshot showing a potential triangle pattern break out on the monthly Euro/Gbp that could be worth 2000 pips. Is he correct? See the video.

Gbp/$	Daily: 1.6000 has been a major area over the last few weeks, I will be interested to long if the daily Bollinger stays shut. If the Bollinger opens and price breaks & closes below 1.6000 then you might consider a short AND it does look bearish with macd divergence and daily 5/8 cross BUT it will struggle to break 1.5950 where we have 50% fib & daily 55ema.Not for me. I am more interested to long and the next major area would be 1.5800 Counter trend traders will be interested to short around 1.6300, not for me & if you do, then usual advice, only risk 50% of your normal stake.
Euro/$	Only looking to long, Last weeks “trade of the week”.Very similar to last weeks Euro/Yen set up. We have macd divergence & just had a double top although price broke and closed above resistance at 1.3740. Watch the bollingers and the Chf for clues. I need a pullback and 1.3660 will the first area to consider Main area is still 1.3530 again. Counter trenders will be looking for clues around 1.3900 & definitely 1.400 if it gets all the way up there.
Chf/$	The $US is now at its lowest ever value against the Chf. Standard method is to now look for a pullback to short, but be aware the Chf National Bank has intervened many times in the past & will be tempted to do so again, so it could bounce back up.Pullbacks to short I will look at 0.9320 & anywhere up to 0.9370 BUT when the Bank of Japan intervened pre Christmas that pair shot up.
Aud/$	Only looking to long; but near a double top & MACD divergence. Watch bollingers at open 1.0100 support is the first area, but there is a LOT of Aud news this week so it could swing wildly in both directions. Major area if we get a big pullback is the trend line at 1.0020. which worked well once more last week.
Aud/jpy	Bouncing between emas at 82.00 & 83.20. Lots of news. If it gets back down to 82.00 I will look to long. Best traded of 4 hour & even 1 hour charts, too messy on daily
Euro/Gbp	Potential 2000 pip triangle break brewing?. I am leaving it on the daily until things become clearer.
Euro/Yen	Bouncing between 113.40 & 112.20, watch these areas again again. Next line in the sand down is 111.80. If it breaks and closes below there I will be interested to short and there is nothing below. If comes back up to 113.20 then I might counter trend short. Final option if it breaks & closes above 113.40 then possible long, BUT 114.00 will be a hard nut to crack.
$/Yen	I said last week there were clues it was rolling over. To short I need a pullback and 82.40 is the main area for me. I wont short from current position as there is a trend line around 81.30 and 81.00 is a double bottom where counter trenders will be interested, not for me.CAD: I said last week that the Canadian $ pair could benefit greatly from high oil prices so I do expect this to continue to fall this year. We are now at a low that has not been hit for 3 years. The only thing that appears to be holding this up technically is the monthly Bollinger so watch that closely tomorrow. Another one where the Central Bank is prone to intervene so always the possibility of a swing back up & there is big Cad & $US news tomorrow. I will be interested only in a short and 0.9830 to 0.9850 are the areas to look for clues. All explained in the video
	Have a great week, Marc