Is The $ About to turn? Forex Analysis for the week ahead 22nd November 2009

Hi. There are huge bullish & bearish reversal candles on lots of pairs on weekly charts which could signify a major reversal in direction for the $ against all pairs. We need to be extremely cautious for the next few days. The back end of last week was extremely profitable with pullbacks & bounces but again we face the dilema of when is a pullback a reversal. MY best advice is if you do decide to trade pullback/bounces only take one trade at a time.

A roller coaster forex trading ride last week. By Tuesday I felt like going on holiday and by Friday I had managed a months target in just a few days. I aim to make a minimum of 400 pips a month which is only 20 pips a day. One of the biggest problems new people have with forex that they are constantly aiming for hundreds of pips a day and end up losing constantly.

I mentioned in the article in the miscellaneous section that you only need to earn 15 pips a day to turn $1000 into a $million in just over 2 years. So don’t be impatient/greedy. Fear & greed rule forex. If you aim for home runs all the time you will end up taking your bat and ball home!

The other thing is a lot of you are over complicating what is a fairly simple process. Remember the mantra: K.I.S.S Keep it simple stupid! One of you was asking me some questions about last week-ends video and when you look back on it you will see that I said to look for simple bounces off trend lines and previous areas of support and resistance. I specifically said to look on the Euro for bounces of 1.4800.

On Tuesday price bounced off here for almost 200 pips and again I longed on Friday for 40 and the second lot is still running + 60 pips. A bounce off the upper psychological level of 1.500 would have earned you 200 pips. So 3 trades in a week, from analysis on a Sunday, job done! And the best part of it was they only needed very small stop losses of 20 pips. Even if they had lost it would not have broken the bank IF YOU FOLLOW THE MONEY MANAGEMENT/RISK REWARD RULES.Ie, never risk more than say 3% of your bank per trade.

If you are new or inexperienced only make one trade at a time. If you have two losses in a day STOP. If you lose again the following day, reduce your risk to 1%. If you lose more than say 15% of your account, STOP. Go back to basics. Analyse where you went wrong and rectify it before starting again.

Stick to only a few pairs (apart from LMT trades). I recommend that beginners start with Gbp/$, Euro/$, Euro/Gbp & Chf – mainly for correlation. If you do not live in a country with one of these countries then consider one that does- choose the one with lowest spread & volatility to start with.. After all you are an expert on what is going on in your own back yard. What the people and the newspapers are saying etc.

Later on you might want to expand this a bit, but I mentioned the other week, some of the pro’s only trade 1 pair. They become experts. They only need to concentrate on 2 lots of news and can do so in far greater detail

We also had a similar set up on lots of the pairs as predicted again, notably the AUd, Nzd & the Gbp/$. There were 100′s of low risk pips to be made there. I suspect that a lot of you are scared when price is racing down to say a bottom trend line. It is scary by the way But, we have analysed and planned in advance what & why we are going to do. We have calculated that we only need a small stop and have a potential often of 1 to 10 risk reward (therefore 7 out of 10 of these trades can lose and you still make a profit).

If this was a simple game of chance with no money at risk you would take it every time.So why the fear? Because some of you are risking far too much money by trying to get rich tomorrow? If you have a $1000 account and risk 3% thats $30. If you can’t afford to lose $30 right now then don’t trade forex. Practise & learn on a demo so that you will be “cool hand Luke” when you do have the money.

There is a saying that “scared money is lost money” If you have too much on a trade that you can’t sleep properly then you are risking too much. The flip side of this of course is that the gains are only small. But the important thing is that you learn how to win. Small consistant gains are the life blood of the experienced professional trader. If you can succeed at that simple target then when a situation like the end of last week arrives and pips are falling from the sky, then obviously you make the most of it.

This again is where the patience & discipline comes in. You have to learn to walk away when the markets are not in your favour. Wait for them to turn in favour of your system and when it does make the make the most of it.

The week Ahead: As always check your daily calendars before entering trades. Be careful at the market open. We have had lots of gaps lately including 100 pips on last weeks Nzd . Very risky. Be very cautious tomorrow. There are lots of large bullish & bearish reversal candles on lots of weekly charts. We are again faced with the dilema of when is a pullback a reversal. Best advice is if you take what you think is a pullback, only take one at a time. If its a break out/reversal wait for candle close confirmation on the daily charts.

Look for M1 again tomorrow. I usually concentrate on the Gbp/$, Euro/$, Chf, Aud & sometimes $/yen & Cad- but not at the moment. Look for the best opportunity and beware of correlation. If you are new just take one. Also don’t look to use it on any other pairs that are ranging.

Lmt: I can see no possible daily signals tomorrow on all platforms though some possibles in the next few days. There will be a $/Yen 4 hour signal at market open on a few I will definately not take as price is only 20 pips away from recent support.

Last week was relatively easy as price was well away from trend lines/fibs etc. As price has now hit many of these then we could be in for a few days indecision. These could be “dead cat” bounces and they carry on down or could be a pullback. Look for clues on shorter time frames.

Gbp/$: Tricky. Currently sat on the 4 hour 200ema. Weekly candle is a bearish reversal one. Signifying that price is going to fall. Daily 5/8 cross and emas rolling down confirm that theory, however price stopped just above 1.6500 on friday night which is a major psychological level and was recent strong support & resistance. This is not as clear cut as least week. Price could carry on down and not give us an opportunity or could bounce back up here and perhaps go as far as 50/61.8% of last weeks move to 1.6660/1.6770 area BUT lots of places in the way. Daily fib of Fridays candle would be 1.6560 which coincides with a recent trend line I had. Then the previous major psychological level of 1.6600. Look for clues in these area. but may be best to wait for Tuesday if any doubts.

To see all my analysis why not subscribe to our forex mentoring service?

For detailed daily analysis like this on 11 forex pairs why not join my ultra low cost forex mentoring service (Only $29.95 per month) cancel at any time. Also includes Complete video tutorials of how to trade forex. Detailed explanations of my winning strategies. Help with LMT trades and tips, advice and email support Find out more here

Have a great week, regards, marc

Want more of this? See these posts:

Tagged with: - Learn Forex • euro/$ • euro/usd • forex signals • forex tips • todays forex analysis

Filed under: Example Forex Trades

Like this post? Subscribe to my RSS feed and get loads more!