Hi, I am back from my cruise on the yacht, welcome to members new & old. Those of you who have been waiting for the master strategist to return with his spookily accurate analysis 
then its here: This could be the worst, most difficult, scary forex trading week of your life! Groan. Those of you of a nervous disposition should leave now!
As I have explained before it is just as important to know when not to trade, especially if you are relatively new to forex trading. The more experienced amongst you need to tread carefully. Remember my mantra. IF IN DOUBT. STAY OUT
Last week I was showing you how emas were going horizontal on lots of pairs & how these pairs were becoming trapped in tight ranges. This is all due to summer illiquidity (most of the big boys are on holiday). Now for the first 4 or 5 weeks of the summer holidays I showed you a simple method to trade bounces off areas of support & resistance. Lots of you grasped the concept very quickly and many of you emailed me privately to say you had your best weeks ever. Well done.
To achieve that in summer markets was incredible BUT this is the last week of the holidays, the most of the major world economies are all screwed, tomorrow is a bank holiday in the UK, there are major news releases from Tuesday onwards, its FOMC news oh and the “slight” matter of NFP friday etc etc, need I say more!
Because of the lack of liquidity & the humongous amount of news this week there is the distinct possibility that fundamentals (ie news releases) & not technical analysis will be the major factor influencing trades. We are technical traders and 95% of the year I find that to be the most successful method to trade forex. If you do decide to trade this week then have both eyes on the calendar before placing any orders.
As I mentioned Monday is a Bank Holiday in the UK so the London markets will be closed. London is a major centre for forex trading & there is hardly any important scheduled news. The most probable outcome is that markets will simply go side ways on lots of pairs, however as this is forex then as we know anything can happen, but I will go for caution first & will certainly not touch anything Gbp related.
One other thing to bear in mind is that when you have been away from the markets for a few weeks, it can take a while to get back in “the groove” & get back in tune with the movements. I have explained many times that you are best advised to concentrate on only a few pairs & you will develop a “feeling” for them. When the rhythm has been broken do not rush back in.
The Week Ahead
Now that is out of the way then lets take a look at potential trades for the coming week:
| M1 | In summer ranging markets this is not generally the best method for taking trades BUT it is great at keeping you out of losers: How to avoid losing trades http://www.forexmentorpro.com/members/edu-m1m2.php |
| Lmt
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Still waiting for summer doldrums to finish. The LMT needs a trend. No trend = No signals or unreliable ones. Leave it until after NFP Friday is likely to be the best advice. |
| Gbp/$ | Stuck in a tight range at the moment, I will wait for a break in either direction before getting involved.
I said in last Sundays update that I wouldn’t look to short due to the emas below the then price. Price went down & promptly bounced off them. The daily emas are now horizontal & close together & price is bouncing between the weekly 55ema and these daily ones. I need price to break and close outside of this tight range before I get involved. There is a potential triangle break out on the 4 hour chart as I show in the video. I need to either break below the daily 55ema which is around 1.5400 or above the weekly 55 @ 1.5560. Price to close and then pullback, standard M2 method.
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| Euro/$ | This one does interest me. There are conflicting clues on daily charts (suggests up & weekly which suggest down) but 1.2800 has been a strong area of previous support & resistance & there are 4 hour as well as daily emas in the area so I will look for clues to short here as explained in the video. I also show how we have a potential “flag pattern” on the 4 hour so loads going on here. 1.2800 is the upper area & 1.2700 the lower. Price could simply continue to bounce between these areas so take some profit early & then move stops to entry as soon as possible,
If price breaks and closes above or below these areas then look for standard M2 break out/pullback method.
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| Chf/$ | We are in a clear down trend but very near recent lows. I mainly use this pair for correlation with the Euro/$, but will be interested to short at 1.0340 & definitely 1.0380 if price gets back up there.
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| $/Yen | Not for me. I used to like this pair but it has been very messy recently. We are in a clear long term down trend so I will only consider a short if price gets back up to 0.8630 where we have 50% fib of recent move. Its major previous support & resistance as well so a number of reasons.
It does look bullish on the daily at least temporarily so counter trend traders will consider a long if price pulls back to 85.00 which is a major whole number as well as being strong previous support & resistance.
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| Aud/$ | Weekly bullish engulfing candle suggest upwards movement & price is above emas on all the longer time frames but Price is back within the range of 0.8850 & 0.9027 which has been very important here in recent months.
So either look for bounces off again or wait for these areas to break & close above or below for M2 trades. Best opportunity for me would be if price gets back down to 0.8850 area for a possible long. There is a lot of important AUD NEWS THIS WEEK SO CHECK CALENDARS CAREFULLY AS THIS COULD CAUSE VOLATILITY.
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| Euro/Aud | Weekly bearish engulfing candle & Potential M2 developing now on daily chart. Price broke and closed below the trend line and major psychological level of 1.4200. In normal markets I would not hesitate to short if price pulls back to 1.4200 but be careful here. There was a big gap at the market open last week. Wait & see what happens before diving in. |
| Euro/Yen | Not Sure, Leaving. Still watching monthly chart for possible 6500 pip triangle break out |
| Aud/jpy | Weekly pin bar reversal candle and Also moved back into previous range on Friday. 77.75 was previous upper area where price was bouncing off & the trend line which is now at 74.00 held again last week, so bounces off or break outs & pullbacks are the order of the week. Counter trend traders may consider a long at 76.00 |
| Euro/Gbp
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Another bullish weekly engulfing candle but this is still in a clear down trend. Numerous options as explained in the video, personally I am only looking to short (with the trend) 0.8320 was strong previous support & resistance so I will look for clues there after Monday.
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| Best of Luck, Marc |
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