Tag: Price Action

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Forex Market Analysis

Daily F.X. Analysis, 13th October – Top Trade Setups In Forex – U.S. Inflation in Highlights! 

Investor’s eyes will stay on the Final CPI and Final core CPI due to the U.S. Economy. The analysts are forecasting no significant changes in the inflation rate; thus, it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures and U.S. CPI m/m later today.

Investor’s eyes will stay on the Final CPI and Final core CPI due to the U.S. Economy. The analysts are forecasting no significant changes in the inflation rate; thus, it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures and U.S. CPI m/m later today.

Investor’s eyes will stay on the Final CPI and Final core CPI due to the U.S. Economy. The analysts are forecasting no significant changes in the inflation rate; thus, it may go muted. However, the Claimant Count Change and Unemployment Rate data from the U.K. is likely to drive market movements. Let’s keep an eye on U.K. labor market figures and U.S. CPI m/m later today.

Economic Events to Watch Today  

  

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.18109 after placing a high of 1.18265 and a low of 1.17865. Overall the movement of the EUR/USD pair remained flat throughout the day. The EUR/USD pair was flat on Monday, as the European Central Bank members reportedly downplayed expectations that it would adopt the Federal Reserve’s average inflation targeting measure, cooling bets on central banks allowing inflation to run above target.

Several ECB policymakers appeared reluctant to follow the Fed with an average inflation target on concerns it could lead to unrealistic expectations about future policy decisions. The European Central Bank has targeted an inflation policy of below but close to 2% for years. If ECB adopts average inflation targeting like Fed, this move will see the ECB allow inflation to run above its 2% target for some time to make up for periods of sluggish price increases. 

Recently, Eurozone inflation has remained short of the bank’s target. Following U.S. Federal Reserve on inflation targeting measure could allow inflation to rise above 2% and makeup periods of lagging price pressures.

Meanwhile, the signs that the second wave of coronavirus has started to weigh on growth have attracted the central bank’s attention and caused a sluggish move in the single currency Euro. On the data front, at 10:59 GMT, the German Wholesale Price Index dropped to 0.0% from the forecasted 0.2% and weighed on single currency Euro that ultimately weighed on EUR/USD pair.

On the U.S. front, the U.S. dollar remained strong onboard on Monday amid the rising hopes that a small coronavirus relief bill will be passed before elections as the talks over the massive stimulus bill stalled on the day. The new proposed bill by Trump of 1.8 trillion dollars faced rejection from both Republicans and Democrats. Republicans were reluctant to add more to the government debt pile, and Democrats wanted their 2.2 trillion packages.

After this, Trump Administration called on Congress for a small stimulus package to be funded from leftover funds and used for hardly-hit sectors like airline and small businesses. The hopes that a small package will be delivered before elections gave strength to the U.S. dollar that added pressure on EUR/USD, and the pair remained flat throughout the day.

Daily Technical Levels

Support Resistance

1.1791 1.1832

1.1767 1.1851

1.1749 1.1874

Pivot point: 1.1809

EUR/USD– Trading Tip

The EUR/USD pair is supported over 1.1790 level, which marks double bottom level on the 4-hour timeframe. Above this level, the EUR/USD is likely to bounce off until the 1.1811 level, and the bullish breakout of the 1.1831 level can also extend buying until the next target level of 1.1870. Conversely, the bearish breakout of the 1.1790 level can extend the selling trend until the 1.1750 level.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.30644 after placing a high of 1.30824 and a low of 1.30052. Overall the movement of the GBP/USD pair remained bullish throughout the day. The GBP/USD pair remained positive on Monday despite broad-based U.S. dollar strength. The pair traded at its four-week highest level, but the prospect remained depressed as the local country’s coronavirus situation escalated and forced to impose new restrictive measures.

The U.S. dollar was high on board after the talks for massive stimulus measures stalled again, and the Chinese yuan depreciated. The strong U.S. dollar helped cap further gains in GBP/USD pair on Monday. The latest move also weighed the gains in the GBP/USD pair from the Bank of England, who asked commercial banks earlier today about their readiness to cope with negative interest rates. On Monday, the Bank of England wrote banks to ask them how ready they were to cope with adopting negative interest rates.

This move from BoE raised concerns that it was considering cutting interest rates further to cope with the rising coronavirus cases in the U.K. The rising speculations over further rate cuts from BoE in the coming months weighed on British Pound and limited the additional gains in GBP/USD pair.

Meanwhile, the Governor of Bank of England, Andrew Bailey, said on Monday that the central bank thought Britain’s economy could struggle more than it has forecasted to recover from the coronavirus pandemic crisis. Bailey said that risk was, unfortunately, all on the downside, which added further pressure on British Pound.

Moreover, British Prime Minister Boris Johnson implemented a three-tiered system of restrictions with the closure of pubs in certain parts of England as the country was trying to deal with the rising number of coronavirus cases. These restrictive measures also exerted downside pressure on GBP/USD pair on Monday.

Furthermore, on the U.S. front, the U.S. dollar remained strong across the board after the Chinese yuan was depreciated. The Chinese city gave away 10M yuan in a lottery trial of digital currency. The latest digital currency trial was aimed at stimulating consumer spending to aid China’s economic recovery from the coronavirus pandemic.

Other than that, the U.S. dollar was also strong as the talks for a massive stimulus bill stalled again when Republicans and Democrats disagreed with passing the newly proposed bill by Trump of worth $1.8 trillion. After this, Trump Administration called on Congress to small stimulus aid for airline and small businesses. The strong U.S. dollar also kept the GBP/USD pair’s gain limited on Monday.

On the Brexit deal front, the concerns rose that negotiations could collapse as the differences between E.U. & U.K. demands were only rising. The deadline to reach a deal is just three days far, and no progress has been reported as of yet that has raised the risk sentiment in the market. The improved risk sentiment kept the GBP/USD pair higher on board.

Daily Technical Levels

Support Resistance

1.3018 1.3098

1.2971 1.3131

1.1938 1.3177

Pivot point: 1.3051

GBP/USD– Trading Tip

The GBP/USD is trading at 1.3043 level, holding right below an immediate resistance level of 1.3063. The resistance is extended by an upward channels’ trendline on the two-hourly timeframes. Below the 1.3063 resistance level, the Sterling can trigger selling until the 1.3003 level and 1.2959 level. On the higher side, a bullish breakout of 1.3063 levels can trigger buying until the 1.3127 level. The fundamental side is muted today, and the U.S. banks are closed in the observance of Columbus day; therefore, we may experience thin volatility. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 105.317 after placing a high of 105.817 and a low of 105.240. Overall the movement of the USD/JPY pair remained bearish throughout the day. The USD/JPY pair failed to cheer the Chinese Yuan depreciation and U.S. dollar strength on Monday and continued decline over the fresh hopes that the U.S. stimulus aid package will be delivered before the elections.

The people’s Bank of China removed a 20% reserve requirement ratio for yuan forward settlements that undermined the cost of shorting yuan and weighed on the Chinese currency. But investors failed to take advantage of this depreciation in yuan, and the pair USD/JPY remained depressed in the market.

The rising number of coronavirus cases worldwide and the increased restrictions to curb the coronavirus pandemic’s effect raised the safe-haven appeal and supported the Japanese Yen that weighed on the USD/JPY pair. Meanwhile, the absence of key macroeconomic events due to the U.S. and Canada celebrating Columbus Day and Thanksgiving respectively exerted more pressure on the USD/JPY pair.

On the Japan front, the Bank Lending for the year was released at 04:50 GMT that remained flat at 6.4%. The Core Machinery Orders raised to 0.2% from the forecasted -1.0% and supported the Japanese Yen that weighed on the USD/JPY pair. Whereas, the PPI for the year from Japan decreased to -0.8% against the forecasted -0.5%. At 10:58 GMT, the Prelim Machine Tool Orders for the year remained flat at -15.0%.

Furthermore, the newly proposed U.S. stimulus measure of $1.8 trillion by Trump also faced rejection from both parties. In response to this, the Trump administration asked Congress to provide Americans with a small relief fund specifically for airlines and small businesses before elections.

The hopes that a small package could be passed before elections and a massive stimulus package after elections weighed on the U.S. dollar and added further losses in the USD/JPY pair on Monday.

Moreover, the White House physician Sean Conley said that U.S. President Donald Trump was free of transmission risk to others on Saturday. On Sunday, Trump claimed that he was now immune from the coronavirus, but the chances to get infected remained again. Trump was tested positive for coronavirus on first October, and he has been getting medical assistance since then. The news that Trump was getting better and has no transmission risk raised risk sentiment and capped further losses in the USD/JPY pair by weighing on safe-haven Japanese yen.

Daily Technical Levels

105.05 105.70

104.82 106.12

104.40 106.36

Pivot point: 105.47

USD/JPY – Trading Tips

On Tuesday, the USD/JPY traded sharply bearish to drop from 105.900 level to the 105.450 mark. Most of the selling triggered after the USD/JPY violated an upward channel at 105.900 level. Currently, the USD/JPY pair is trading at 105.459 level, the support level that’s extended by double bottom level. A bearish breakout of 105.450 level may drive further selling until the 105.070 support level as the MACD, and the 50 periods EMA are in support of selling bias today. Let’s consider opening sell trade below 105.40 level today. Good luck!  

Categories
Forex Price Action

Some Moves do not Belong to the Chart that You Follow

In today’s lesson, we will demonstrate an example of a chart that makes a breakout at the last weekly low. The price then goes back within the last weekly range and makes an interesting move. We will find out what that interesting move is all about in a minute. Let us get started.

In today’s lesson, we will demonstrate an example of a chart that makes a breakout at the last weekly low. The price then goes back within the last weekly range and makes an interesting move. We will find out what that interesting move is all about in a minute. Let us get started.

In today’s lesson, we will demonstrate an example of a chart that makes a breakout at the last weekly low. The price then goes back within the last weekly range and makes an interesting move. We will find out what that interesting move is all about in a minute. Let us get started.

It is the H4 chart. The chart shows that the price makes a bearish move. It finds its support and trades around it for a while. The last candle of the week comes out as a Doji candle. The sellers may keep their eyes on the chart to get a bearish breakout and find short opportunities.

The first candle of the week comes out as a bearish candle. The price heads towards the level of support, and it produces a hammer. The price may roam around the level of support before making its next move. Let us proceed to find out what happens next.

The chart produces two bearish candles. One of the candles closes well below the level of support. The sellers may keep the chart on their watch list closely. They may wait for the price to consolidate and produce a bearish reversal candle to go short in the pair.

The chart produces four candles with a bullish body. The last candle comes out as a commanding bullish candle closing above the breakout level. If the chart still produces a bearish engulfing candle closing below the last swing low, the sellers may still go short in the pair. However, it does not look that good for the sellers.

As expected, the price heads towards the North further. One of the candles closes above the weekly opening as well. It means the H4 sellers may skip eyeing on the chart to go short. The chart does not belong to the H4 sellers anymore. The buyers may go long on the pair upon bearish retracement followed by a bullish reversal candle at the key level of support though. That is another ball game. Let us find out what the price does afterward.

What a strong bearish move that is! The price does not produce a bullish reversal candle. It makes a strong bearish move and makes a new swing low instead. However, the H4 sellers upon weekly high/low breakout may not be able to catch the move. The move belongs to other chart traders. Most probably, the sellers on the daily chart can catch such a move.

We often find such a move that may not offer entry on the chart that we follow. Do not get disappointed. Stick to your chart and trading strategies. Something must be round the corner for you.

Categories
Forex Signals

Overbought Gold Braces for Bearish Correction – Brace for a Sell! 

The yellow metal prices extended its early-day bullish rally and remained well bids around above the 1,900 level. However, the bullish sentiment around the bullion prices could be associated with the broadly weaker U.S. dollar. The risk-on market sentiment undermined that. Meanwhile, the U.S.’s prevailing political uncertainty also pushed the U.S. dollar down for the second consecutive day. Thus, the U.S. dollar losses could be considered one of the key factors that kept the gold prices higher as the price of gold is inversely related to the price of the U.S. dollar. Apart from this, the surge in the coronavirus (COVID-19) numbers in the U.K. and Europe also favoring the yellow-metal bulls. 

The yellow metal prices extended its early-day bullish rally and remained well bids around above the 1,900 level. However, the bullish sentiment around the bullion prices could be associated with the broadly weaker U.S. dollar. The risk-on market sentiment undermined that. Meanwhile, the U.S.’s prevailing political uncertainty also pushed the U.S. dollar down for the second consecutive day. Thus, the U.S. dollar losses could be considered one of the key factors that kept the gold prices higher as the price of gold is inversely related to the price of the U.S. dollar. Apart from this, the surge in the coronavirus (COVID-19) numbers in the U.K. and Europe also favoring the yellow-metal bulls. 

The yellow metal prices extended its early-day bullish rally and remained well bids around above the 1,900 level. However, the bullish sentiment around the bullion prices could be associated with the broadly weaker U.S. dollar. The risk-on market sentiment undermined that. Meanwhile, the U.S.’s prevailing political uncertainty also pushed the U.S. dollar down for the second consecutive day. Thus, the U.S. dollar losses could be considered one of the key factors that kept the gold prices higher as the price of gold is inversely related to the price of the U.S. dollar. Apart from this, the surge in the coronavirus (COVID-19) numbers in the U.K. and Europe also favoring the yellow-metal bulls. 

In the meantime, the U.S. geopolitical tension with the Middle East and China provided an additional boost to the safe-haven metal prices. On the contrary, the optimism over a potential vaccine/treatment for the highly infectious coronavirus and hopes of the further stimulus package keep the market trading sentiment bullish, which could be considered as the key factor that cap further upside momentum for the gold prices. Whereas, the Trump recovery from the COVID-19 infection also offers an additional reason for the market traders to remain hopeful. The yellow metal prices are currently trading at 1,909.87 and consolidating in the range between 1,893.78 – 1,912.96.

Despite the ongoing Sino-US tussle and worries concerning the coronavirus (COVID-19) crisis, the market trading sentiment extended its early-day positive tone and remained supportive by combining factors. As in result, the S&P 500 Futures gain over 0.40%, whereas Japan’s Nikkei slips four points to 23,643 as of writing. Hence, the basis for the risk-on market trading bias could be connected to the positive headlines implying that the discussions between House of Representative Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin over the U.S. stimulus package resumed overnight. While President Donald Trump announced that discussions with Congress have resumed despite stopped the coronavirus (COVID-19) stimulus talks until the Nov. 3 presidential election. However, this helped the market’s risk sentiment and undermined the U.S. dollar’s safe-haven demand.

Apart from this, Trump continues to recover from the COVID-19 infection. Whereas the White House physician Sean Conley said that Trump completed his therapy course, and his condition remains stable since returning to the White House on Monday.

Across the ocean, the tensions between the U.S. and China and the surge in the coronavirus (COVID-19) numbers in the U.K. and Europe keep challenging the market risk-on tone. Although the Dragon Nation has recently started facing global pressure against its treatment of Uighur Muslims, 18 Iranian banks were sanctions off-late by the U.S. State Department to curb Tehran’s financial access help further safe-haven yellow metal.

At the coronavirus front, the ongoing rise in COVID-19 cases globally continues to fuel worries concerning the global economic outlook for the foreseeable tomorrow. As per the latest report, Spanish Prime Minister (PM) Pedro Sánchez announced a state of emergency in Madrid while the calls of closing the pubs and restaurants in the U.K. have been out and clear off-late. Looking forward, the market traders will keep their eyes on updates surrounding the Sino-US tussle and stimulus headlines. Whereas China’s return and Caixin Services PMI will be key to watch. In the meantime, the 


Daily Support and Resistance

S1 1847.32

S2 1874.78

S3 1887.18

Pivot Point 1902.24

R1 1914.64

R2 1929.7

R3 1957.16

Gold has risen distinctly to trade at 1,912 marks, but the neutral candle’s closing below 1,912 levels implies mixed bias amongst traders. Hence, another formation of bearish engulfing or tweezers top pattern may begin bearish correction/retracement in gold. On the downside, gold may gain support at 1,906 and 1,899. Conversely, a bullish breakout of 1,912 stand-level may prolong the buying trend until the 1,919 level.

Entry Price – Sell 1909.74

Stop Loss – 1915.74

Take Profit – 1902.24

Risk to Reward – 1:1

Profit & Loss Per Standard Lot = -$600/ +$750

Profit & Loss Per Micro Lot = -$60/ +$75

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Categories
Forex Daily Topic Forex Price Action

Trading Within Last Weekly Range

In today’s lesson, we will demonstrate an example of a chart where the price is having a retracement within the last weekly range. The price produces a double bottom and makes a breakout at the neckline. It then consolidates but does not head towards the North as it normally does when it makes a breakout at weekly high/low. Let us proceed and find out the possible reason behind it.

In today’s lesson, we will demonstrate an example of a chart where the price is having a retracement within the last weekly range. The price produces a double bottom and makes a breakout at the neckline. It then consolidates but does not head towards the North as it normally does when it makes a breakout at weekly high/low. Let us proceed and find out the possible reason behind it.

In today’s lesson, we will demonstrate an example of a chart where the price is having a retracement within the last weekly range. The price produces a double bottom and makes a breakout at the neckline. It then consolidates but does not head towards the North as it normally does when it makes a breakout at weekly high/low. Let us proceed and find out the possible reason behind it.

The price makes a long bearish move and finds its support. Upon producing a bullish engulfing candle, it heads towards the North and comes back again. At the support zone, it produces a bullish inside bar. Let us see what happens next.

The price heads towards the North next week. It means it is trading within the last week’s range. The price is at the last swing high. If it makes a bullish breakout, the buyers may want to go long at its weakness.

The chart produces two bearish candles followed by a bullish engulfing candle closing within the last swing high. It seems that the price may consolidate more to find its way.

The price upon producing a spinning top followed by a bullish engulfing candle makes a bullish breakout at the last swing high. It is a neckline breakout of a double bottom. The buyers may keep their eyes on the chart to go long on its weakness.

The price produces a bearish inside bar followed by a spinning top with a bullish body. Then, it produces a bullish candle closing above consolidation resistance. Since it is a breakout at the resistance, it is supposed to be a buy signal. The question is whether the buyers should trigger a long entry or not. Let us see the next chart.

The price gets choppy, struggling to make a breakout towards the North. The buyers would not love to see such price action after triggering the entry. If the price makes a breakout at the last week high/low, traders wait for the price to consolidate and produce a bullish/bearish reversal candle to take entry upon a breakout. On the other hand, if the price trades within last week’s range, the price usually makes retracement (instead of consolidation) to offer entry. The Fibonacci level, such as the 38.2% and 61.8%, play a significant role in producing the reversal candle. In today’s chart, the price is in the weekly range. Thus, traders are to wait for the price to make a retracement to offer them entry. It rather consolidates, which ends up making the price choppy.

Categories
Forex Daily Topic Forex Price Action

Weekly High/Low Breakout Trading: The Chart You May Want to Avoid

In today’s lesson, we are going to demonstrate an example of a breakout at a weekly high. The price consolidates afterward but fails to make a breakout at consolidation resistance. Thus, the price does not head towards the North. Let us find out how that happens and what lesson it holds for us.

In today’s lesson, we are going to demonstrate an example of a breakout at a weekly high. The price consolidates afterward but fails to make a breakout at consolidation resistance. Thus, the price does not head towards the North. Let us find out how that happens and what lesson it holds for us.

In today’s lesson, we are going to demonstrate an example of a breakout at a weekly high. The price consolidates afterward but fails to make a breakout at consolidation resistance. Thus, the price does not head towards the North. Let us find out how that happens and what lesson it holds for us.

It is an H4 chart. The chart shows that the price makes a strong bearish move to start its trading week. Then, it gets choppy for the rest of the week. The chart closes its week, producing a bullish engulfing candle. Let us proceed to see how the next week goes.

The chart produces a bullish candle to start its trading week. However, it produces three consecutive bullish candles and makes a breakout at the last weekly high. The buyers are to wait for the price to consolidate and produce a bullish reversal candle closing above consolidation resistance to go long in the pair.

The chart produces two bearish candles closing within the breakout level. A bullish reversal candle closing above consolidation resistance is the signal for the buyers to trigger entry. They must keep their eyes on this chart.

The chart produces a bullish inside bar. It is a bullish reversal candle but not a very strong one. Since it closes within consolidation resistance, the buyers are to wait longer for the chart to produce a bullish candle closing above consolidation resistance.

The chart produces two more bullish candles. However, it has not made a breakout yet. It has been taking too long to produce the signal candle. Let us wait and see what it produces afterwards.

It produces a bearish inside bar at the consolidation resistance. It does not look good for the buyers. The price has a rejection at the level, and it produces a bearish inside bar. It means it is a double top resistance. A breakout at the last swing low may change the equation and attract the sellers instead. Let us proceed and see what happens next.

The price does not make a breakout at the last swing low, either. It produces a doji candle followed by a bullish engulfing candle at the last swing low. It means the chart keeps traders waiting for the next breakout. The bull holds the edge but weekly high/low breakout traders do not love to see such price action after a breakout. It is best to avoid taking entry on a chart like this.

 

Categories
Forex Daily Topic Forex Price Action

Weekly High/Low Breakout Trading: Count the Breakout Candle’s Attributes

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the last week’s high. However, the price does not head towards the North as it usually does. Let’s find out why that happens.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the last week’s high. However, the price does not head towards the North as it usually does. Let’s find out why that happens.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the last week’s high. However, the price does not head towards the North as it usually does. Let’s find out why that happens.

The chart shows that the price after making a strong bearish move gets choppy. The H4 traders may wait for the price to make a breakout at either side. A bullish breakout may attract the buyers to go long in the pair. On the other hand, the sellers may wait for the price to make a bearish breakout.

The price produces a bearish candle to start the next week. The price finds its support, and it heads towards the North. However, the last weekly high is still intact. The buyers must wait for the breakout at the level to go long.

The price finds its intraweek resistance. It comes down. Intraweek support holds the price and produces a bullish inside bar. It is not a strong bullish reversal candle. However, it is produced at double bottom support. Let us wait and see whether it makes a breakout at the neckline or not.

The price heads towards the North and makes a breakout at the neckline. The candle closes within the last week’s high and consolidates. It then produces a bullish candle closing above the last week’s high. However, the candle has a long upper shadow. Considering its upper shadow, traders do not usually get attracted to trade upon such a breakout candle.

As anticipated, the chart produces some bullish candles with long upper shadow after the breakout. The price heads towards the North with a sluggish pace. It then produces a bearish Pin Bar and drives the price towards the breakout level again. A bullish reversal candle closing above consolidation resistance may attract the buyers to go long in the chart again. Let us find out what happens next.

The chart produces a long bearish candle with long lower shadow. The pair is trading within the last week’s range again. The H4 buyers have lost their hope. They may skip eying on the chart to concentrate on somewhere else.

If we look back, a double bottom, along with a breakout at the last week’s high, do not push the price towards the North. Most probably, this is because of the breakout candle’s attributes. We may still keep an eye on such a chart, but it would be wise to concentrate more on those charts, which makes a breakout with a commanding candle.

 

Categories
Forex Daily Topic Forex Price Action

Breakout at Weekly High/Low, Wait for Consolidation

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the weekly low. The chart produces a strong bearish candle to make the breakout. The Bear looks good to make a strong move towards the South. However, the price does not head towards the downside. It rather gets choppy. Let us find out the reason behind it.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the weekly low. The chart produces a strong bearish candle to make the breakout. The Bear looks good to make a strong move towards the South. However, the price does not head towards the downside. It rather gets choppy. Let us find out the reason behind it.

In today’s lesson, we are going to demonstrate an example of an H4 breakout at the weekly low. The chart produces a strong bearish candle to make the breakout. The Bear looks good to make a strong move towards the South. However, the price does not head towards the downside. It rather gets choppy. Let us find out the reason behind it.

It is an H4 chart. The chart shows that the price makes a strong bearish move. It has a bounce at a level of support twice. If the price makes a breakout at the neckline, the buyers may look to go long in the pair upon bearish correction. On the other hand, the sellers may wait for the price to make a breakout at the week’s low to go short upon consolidation and getting a bearish reversal candle.

The chart produces a strong bearish candle breaching through the last week’s low. The breakout length is good as well. It means that the sellers may wait for the price to consolidate and to get a bearish reversal candle to go short in the pair. It seems that the sellers may dominate in the pair in this week as well.

The chart produces another bearish candle followed by a bullish engulfing candle. Producing a bullish engulfing candle to consolidate is not a good sign for the sellers. However, if the next candle comes out as a bearish engulfing candle closing below consolidation support, the sellers will be right on the track.

The chart does not produce a bearish engulfing candle. It rather produces another bullish candle. It seems that the price is having a bullish correction. When the H4 chart makes a breakout at the weekly low/high, the price is supposed to consolidate and produce a reversal candle to offer entry. If it makes a long bullish/bearish correction, it is assumed that the traders are not confident to take the price towards the trend. The chart shows that the price is obeying the level of support, where it has its first bounce.

The choppy price action continues. The H4 traders may wait for the price to make a breakout in the next week. The level of support becomes daily support now. Thus, weekly-H4 traders must wait to find the next direction.

We must remember when a pair trades within last week’s high and low, the price usually makes a correction. When it makes a breakout, it consolidates. If it takes too long or too many candles to make a breakout, traders may skip taking entry on that chart.

Categories
Forex Basic Strategies

Generating Profitable Forex Signals Using The ‘Indicator-Price Action’ Combo Strategy

Introduction

Introduction

Introduction

Few strategies discussed previously focussed on chart patterns and indicators. Now let us a strategy that is based on two of the most powerful indicators in technical analysis. We already know how to trade using these indicators separately. But using any technical indicator in isolation will not generate a great amount of profit.

Therefore, it becomes necessary to combine at least two indicators and use them in conjunction to produce signals. In today’s article, we not only combine two indicators but also provide a price action edge to it that will make this one of the best strategies of all time. This particular strategy gives traders an insight into both volatility and momentum in the forex market.

The two indicators we will using are Bollinger Band (BB) and MACD. Using the two indicators together can assist traders in taking high probability trades as they gauge the direction and strength of the existing trend, along with volatility. Let us find out the specifications of the strategy and how we imbibe concepts of price action here.

Time Frame

The strategy is designed for trading on longer-term price charts such as the 4 hours and ‘Daily.’ This means the strategy is suitable for the swing to long-term traders.

Indicators

As mentioned earlier, we use Bollinger Band and MACD indicators in the strategy with their default settings.

Currency Pairs

We can apply this strategy to both major and minor currency pairs. However, pairs that are not volatile should be avoided.

Strategy Concept

In this strategy, we first identify the trend of the market and see if the price is moving in a channel or not. When looking for a ‘long’ setup, the price must move in a channel below the median line of the Bollinger band. The lesser time price spends above the median line of the Bollinger band better for the strategy.

The reason behind why we chose to have the price below the Bollinger band is to verify that the price is moving into an ‘oversold’ zone. When price moves into the zone of ‘overbought’ or ‘oversold,’ it means a reversal is nearing in the market. Similarly, in a ‘short’ setup, the price should initially move in an upward channel above the median line of the Bollinger band. This indicates that the price is approaching an ‘overbought’ area.

The MACD indicator shows when a true reversal is taking place in the market. The histogram tells about the momentum and strength of the reversal. Depending on the level of the bars, we ascertain the strength of the reversal. Not only is the strength of the reversal important, but also the ’highs’ and ‘lows’ it makes. Once price crosses previous highs and lows, we enter the market at an appropriate ‘test.’ Let us understand in detail about the execution of the strategy.

Trade Setup

In order to execute the strategy, we have considered the 4-hour chart of the GBP/JPY pair, where we will be illustrating a ‘long’ trade. Here are steps to execute the strategy.

Step 1: Firstly, we have to identify the trend of the market. In a ‘long’ trade setup, we need to look for series of ‘lower lows’ and ‘lower highs’ below the median line of the Bollinger band, and in a ‘short’ trade setup, we need to look for series of ‘higher highs’ and ‘higher lows’ above the median line of Bollinger band. When this is confined in the channel, the trend becomes very clear, and reversal can easily be identified.

Step 2: We say that an upward reversal has taken place when we notice a bullish crossover in MACD along with a positive histogram. While in an uptrend, we say that a reversal has occurred when we notice a bearish crossover in MACD along with a negative histogram. Once reversal becomes eminent in the market, it is necessary to confirm that the reversal is ‘true,’ and thus, we could take a trade in the direction of the reversal.

The below image shows a downtrend reversal, as indicated by MACD.

Step 3: In this step, we should make sure that the price makes a ‘high’ that is above the previous ‘lower high,’ in an upward reversal. While in a downward reversal (reversal of an uptrend), the price should make a ‘low’ that is lower than the previous ‘higher low.’ When all these conditions are fulfilled, we can say that the reversal is real, and now we will look to trade the reversal.

We enter the market for a ‘buy’ or ‘sell’ when price ‘tests’ the median line of the Bollinger band after the reversal and stays above (‘buy’) or below (‘sell’).

Step 4: Finally, after entering the trade, we need to define appropriate levels of stop-loss and ‘take-profit’ for the trade. The rules of stop-loss are pretty simple, where it will be placed below the lowest point of the downtrend in a ‘long’ position and above the highest point of the uptrend in a ‘short’ position. ‘Take-profit’ will be set such that the risk-to-reward (RR) of the trade is at least 1:1.5. Once the price starts moving in our favor, we will put our stop-loss to break-even and extend our take-profit level.

Strategy Roundup

The combination of the Bollinger band and MACD is not suitable for novice traders. Since it involves complex rules and indicators, we need prior experience of using the indicators and charts before we can apply the strategy successfully. Traders should pay attention to every rule of the strategy to gain the maximum out of it. As there many rules and conditions, there is a tendency among traders to skip some rules, but it is not advisable.

Categories
Forex Daily Topic Forex Price Action

Count the Breakout Length

In today’s lesson, we are going to demonstrate an example of a chart where the price makes an H4 breakout at the last week’s low. However, the chart does not offer entries. It rather gets choppy. We will try to find out the reason behind that. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart where the price makes an H4 breakout at the last week’s low. However, the chart does not offer entries. It rather gets choppy. We will try to find out the reason behind that. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart where the price makes an H4 breakout at the last week’s low. However, the chart does not offer entries. It rather gets choppy. We will try to find out the reason behind that. Let us get started.

It is an H4 chart. The chart shows that the price makes a bearish move and had a bullish correction. Upon producing a bearish engulfing candle, it heads towards the South again. The market is about to close for the weekend, and the sellers are going to wait for the H4 chart to make a bearish breakout and go short in the pair.

The chart produces a Doji candle to start its trading week. The next candle comes out as a bearish engulfing candle. It seems that the pair is going to make an H4 breakout at the week’s low soon.

The chart produces a long bearish candle closing well below the week’s low. It does not consolidate but produces a spinning top with a bearish body. The chart looks bearish, and the sellers may love to wait for the price to consolidate and to offer them a short entry. The question is whether they should wait to go short in the pair or not.

Look at those two drawn lines. One at the above indicates the highest high of the current week. The other one at the bottom indicates the lowest low of the last week. The difference between these two lines is vital. It determines the length of the next move. Usually, the price travels twice the distance of that length with good momentum. Once it travels three times that distance, the price usually makes longer consolidation or correction. The price travels three times that distance here. Thus, it may make a long bullish correction.

The chart produces a bullish engulfing candle followed by another bullish candle closing within the last week’s lowest low. The chart then creates an inverted hammer and drives the price towards the South. Look at the pace of that bearish move. It has been sluggish, and it suggests that the sellers are not interested in going short in this chart. The price has been roaming around the last swing low for quite a while. In a word, the H4 traders must wait for the price to give them the next direction. Meanwhile, it is a chart not to invest money and time in.

Categories
Forex Market Analysis

Dow Jones Moves Under Bearish Signals

Overview

Overview

Overview

The Dow Jones Industrial Average is developing a descending sequence that could drive the price to new lower lows. This bearish context occurs in the middle of the US presidential elections campaign, which will take place on November 03rd.

Market Sentiment Overview

The United States benchmark, led by the Dow Jones index, appears to be preparing for the presidential elections on November 3.

The short-term market sentiment exposed in the following 8-hour chart illustrates the price shift below the 200-day weighted moving average, which has turned from support to the next short-term resistance to struggle with.

On the other hand, we observe the 90-day high and low range, where the Industrial Average Index has found support in the neutral zone at over the 26,700 pts, where it bounced, being traded slightly bullish during the last Friday 25th session. This context, added to the shifting movement of the price and against its 200-day moving average, leads us to suspect that the Dow Jones Index could see a further drop within the next few sessions.

Concerning the volatility associated with the Industrial Average, expressed by the Dow Jones Volatility Index (VXD) on its daily chart, we distinguish that the action consolidates above the 60-day moving average. Likewise, VXD shows an increasing sequence of short-term lows, which provides a chance of a new bullish movement of the VXD in the short term.

In consequence, the market context leads us to expect a potential bearish movement for the Industrial Average. However, this scenario still needs to be confirmed by the price action.

Technical Analysis Outlook

From a technical analysis perspective, the Dow Jones Index in its 4-hour chart is showing a descending sequence that began once the price found resistance at 29,193.6 pts on September 03rd. Once the Industrial Average found fresh sellers, the downward pressure drove the price to a retracement till the 26,541 level, where the leading US benchmark found support and began to bounce back to the current trading levels.

On the other hand, in the previous figure, we distinguish the progress of a head and shoulders pattern, which has its neckline at the level of 27,457.5. The bearish breakdown developed during the September 21st trading session, and its subsequent pullback confirmed the bearish signal in the Industrial Average. In this regard, according to the head and shoulder pattern definition, this trend reversal formation has a pending bearish target located at 25,724 pts.

Similarly, if the price confirms a new lower high under the previous peak at 28,370.8 pts, it would confirm a bearish continuation pattern identified as three descending peaks, which would support the bearish scenario for Dow Jones.

In conclusion, our short-term perspective is mainly bearish as long as the price remains below 28,370.8 pts, with a bearish target established at 25,724 pts. The invalidation of our bearish scenario will occur if the Industrial Average consolidates above 28,370.8 pts.

 

Categories
Forex Daily Topic Forex Price Action

Weekly High/Low Offers a Better Reward in the H4 Chart Trading

We are going to demonstrate an example of a trade setup on the H4 chart. The price, after breaches the last week’s low; it consolidates and produces a strong bearish reversal candle. It then heads towards the South with extreme bearish momentum. Let us find out how that happens.

We are going to demonstrate an example of a trade setup on the H4 chart. The price, after breaches the last week’s low; it consolidates and produces a strong bearish reversal candle. It then heads towards the South with extreme bearish momentum. Let us find out how that happens.

We are going to demonstrate an example of a trade setup on the H4 chart. The price, after breaches the last week’s low; it consolidates and produces a strong bearish reversal candle. It then heads towards the South with extreme bearish momentum. Let us find out how that happens.

It is an H4 chart. Look at the vertical line on the left. It is the beginning of the week. The chart shows that the price gets trapped within two horizontal levels. The pair is about to finish its trading week. The chart suggests that both the sellers and the buyers are going to keep their eyes on the chart next week to get the breakout and trade.

The pair produces two bullish candles consecutively to start its trading week. However, it produces a bearish engulfing candle and drives the price towards the South. Do you see anything here? Yes, the pair makes a breakout at the last week’s low. It means that the Bear may dominate on the H4 chart. Ideally, traders are to wait for the price to consolidate or make a bullish correction followed by a bearish breakout to go short in the pair.

The price consolidates. It produces some bearish reversal candles such as spinning top, hammer, Doji candle. However, it does not make a breakout at the last swing low. The sellers must wait for an H4 candle to close below consolidation support. Let us wait for more and see what the price does.

The chart produces a bearish engulfing candle closing well below consolidation support. The sellers may trigger a short entry right after the last candle closes. They may set their stop loss above consolidation resistance and set their take profit with 2R. This is the beauty of using weekly high/low and the H4 chart. It offers an excellent reward. Let us now proceed and find out how the entry goes.

The price heads towards the South with good bearish momentum. It produces three bullish inside bars in this move. The last candle comes out as a bullish engulfing candle. The sellers may consider closing their entry and come out with the profit. If we count, we find that the entry offers more than 2R reward. This is what usually happens when the price makes an H4 breakout at the last week’s high/low. Deep consolidation and a strong reversal candle add more fuel to its journey as usual. In our fore coming lessons, we will learn to integrate Fibonacci levels in this strategy to determine our target with better accuracy. Stay tuned.

Categories
Forex Price Action

It is Not over until It’s Over

In today’s lesson, we are going to demonstrate an example of a trendline trade setup. The price heads towards the North, and upon finding its support, it keeps moving towards the upside. At some point, it seems that the price is about to make a breakout at the trendline. However, the trendline works as a level of support and produces a beautiful bullish engulfing candle ending up offering a long entry. Let us find out how that happens.

In today’s lesson, we are going to demonstrate an example of a trendline trade setup. The price heads towards the North, and upon finding its support, it keeps moving towards the upside. At some point, it seems that the price is about to make a breakout at the trendline. However, the trendline works as a level of support and produces a beautiful bullish engulfing candle ending up offering a long entry. Let us find out how that happens.

In today’s lesson, we are going to demonstrate an example of a trendline trade setup. The price heads towards the North, and upon finding its support, it keeps moving towards the upside. At some point, it seems that the price is about to make a breakout at the trendline. However, the trendline works as a level of support and produces a beautiful bullish engulfing candle ending up offering a long entry. Let us find out how that happens.

The chart shows that the price makes a bullish move and comes down to make a bearish correction. It makes a bullish move again but finds its resistance around the same level. At the moment, the chart suggests that the bears have the upper hand.

The chart produces a Doji candle having a long lower spike. It pushes the price towards the North, and the price makes a breakout at the highest high. The last move confirms that the bull has taken control. The buyers may look for buying opportunities. Assume you are a trendline trader. Do you see anything?

Yes, you can draw an up-trending trendline. The last candle comes out as a bearish engulfing candle. It suggests that the price may make a bearish correction. As a trendline trader, you are to wait for the price to produce a bullish reversal candle at the trendline’s support to go long on the chart.

The chart produces two more candles that are bearish. The last candle closes just below the trendline’s support. It seems that the price is about to make a breakout at the trendline. The next candle is going to be very crucial for both. If the next candle comes out as a bullish reversal candle, the buyers are going to push the price towards the North. On the other hand, if the next candle comes out as a bearish candle closing below the trendline’s support, the sellers may push the price towards the South. Let us find out what happens next.

The chart produces a copybook bullish engulfing candle. Traders love to get this kind of reversal candle. The buyers may trigger a long entry right after the last candle closes. Let us proceed to find out how the trade goes.

The price heads towards the North with good bullish momentum. It makes a breakout at the last swing high as well. It means the trendline is still valid for the buyers. The chart produces a bearish reversal candle. Thus, the buyers may consider taking their profit out here.

If we look back, we find that the trendline’s support produces an excellent bullish reversal candle, which some buyers may not expect. This is what often happens in the market. Thus, never give up until its really over.

Categories
Forex Daily Topic Forex Price Action

What Does A Combination of Double Top and Evening Star Do?

We know a double top is a strong bearish reversal pattern. When the price trends with a double top, it usually creates strong bearish momentum. At consolidation, if it produces an evening star, it creates more momentum that is more bearish since the evening star is a strong bearish reversal pattern as well. In today’s lesson, we are going to demonstrate an example of that.

We know a double top is a strong bearish reversal pattern. When the price trends with a double top, it usually creates strong bearish momentum. At consolidation, if it produces an evening star, it creates more momentum that is more bearish since the evening star is a strong bearish reversal pattern as well. In today’s lesson, we are going to demonstrate an example of that.

We know a double top is a strong bearish reversal pattern. When the price trends with a double top, it usually creates strong bearish momentum. At consolidation, if it produces an evening star, it creates more momentum that is more bearish since the evening star is a strong bearish reversal pattern as well. In today’s lesson, we are going to demonstrate an example of that.

The chart shows that the price has been roaming around within two horizontal levels. It has several rejections at the resistance zone. At the last two rejections, it produces two bearish engulfing candles. Moreover, the last candle breaches through the level of support or the neckline. It means the chart may get bearish since it produces a double top.

As expected, the price heads towards the South with good bearish momentum. The sellers are to wait for the price to consolidate and a bearish reversal candle/pattern to go short in the pair.

It seems that the price may have found its support. It produces a bullish inside bar followed by a Doji candle. If the price makes a breakout at the level of consolidation support, the sellers may go short in the pair and drive the price towards the South.

The chart produces a bearish engulfing candle closing well below consolidation support. It is a strong bearish reversal candle itself. The combination of the last three candles is called the evening star, which is a very strong bearish reversal pattern. It suggests that the price may get very bearish soon. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above the last candle’s highest high. We talk about the take-profit level in a minute. Let us find out how the trade goes.

The price heads towards the South with extreme bearish momentum. The last candle comes out as a bullish engulfing candle. It may make a bullish correction or reversal now. However, before producing the bullish engulfing candle, the price travels 2R. Even if the sellers close the entry at the last candle close, they make 1R profit.

When a trend starts with a strong reversal pattern such as the double top/double bottom, morning star, evening star, and it produces a strong reversal pattern at consolidation as well, the price usually produces a longer wave. Trade management is to immaculate, though. Thus, make sure that the trade is made relatively on a bigger time frame such as the H4, the daily, the weekly, etc.

Categories
Forex Daily Topic Forex Price Action

Using Weekly High or Weekly Low in the H4 Chart Trading

The Weekly high or Weekly low plays a significant part in the H4 chart traders. In today’s lesson, we will demonstrate an example of how last week’s high works as a level of support and pushes the price towards the upside by offering a long entry to the buyers. Let us get started.

The Weekly high or Weekly low plays a significant part in the H4 chart traders. In today’s lesson, we will demonstrate an example of how last week’s high works as a level of support and pushes the price towards the upside by offering a long entry to the buyers. Let us get started.

The Weekly high or Weekly low plays a significant part in the H4 chart traders. In today’s lesson, we will demonstrate an example of how last week’s high works as a level of support and pushes the price towards the upside by offering a long entry to the buyers. Let us get started.

It is an H4 chart. Look at the vertical dotted line. The price starts its week with a spinning top having a bullish body. The price then heads towards the North and come down again. In the end, the price closes its week around the level where it starts its trading week.

The pair starts its week with a spinning top having a bearish body this time. The price heads towards the North and makes a breakout at the last week’s high. The price usually comes back at the breakout level to have consolidation and ends up offering entry upon producing a reversal candle. Let us draw the breakout level to have a clearer picture.

The drawn line indicates the last week’s high. Now, the H4 chart suggests that the price made a breakout, and the pair is trading above the level currently. The buyers are to wait for the price to consolidate and produce a bullish reversal candle to go long in the pair.

The chart produces a bearish candle closing within the breakout level first. The next candle comes out as a Doji candle. The buyers are to wait for a breakout at consolidation resistance to go long in the pair. Let us proceed to the next chart to find out what the price does next.

The chart produces three more bullish candles. One of the candles breaches through the level of resistance closing above it. The buyers may trigger a long entry right after the last candle closes. The buyers may set their stop loss below the breakout level. To set the take-profit level, the buyers may set their take profit with 2R. It is the best thing about this trading strategy. It offers at least 2R. Sometimes the price travels even more than 2R. Let us find out how the trade goes.

The price heads towards the North with good bullish momentum. Before hitting 2R, it produces a bearish inside bar. It continues its journey towards the North and travels more than 2R. The last candle comes out as a bearish engulfing candle. It suggests that the price may get bearish now.

The best things about using the strategy are

  1. Traders know where the price is going to consolidate.
  2. Which level is going to produce the signal candle.
  3. It offers an excellent risk-reward.
Categories
Forex Daily Topic Forex Price Action

Keep an Eye at the Last Daily Candle’s Closing

In today’s lesson, we are going to demonstrate an example of the daily-H4 chart combination trading. In the daily-H4 chart combination trading, the daily chart plays a very significant role. As long as the price in the daily chart heads towards the trend, the traders may find the opportunities to take entry. Let us now proceed and find out what that means.

In today’s lesson, we are going to demonstrate an example of the daily-H4 chart combination trading. In the daily-H4 chart combination trading, the daily chart plays a very significant role. As long as the price in the daily chart heads towards the trend, the traders may find the opportunities to take entry. Let us now proceed and find out what that means.

In today’s lesson, we are going to demonstrate an example of the daily-H4 chart combination trading. In the daily-H4 chart combination trading, the daily chart plays a very significant role. As long as the price in the daily chart heads towards the trend, the traders may find the opportunities to take entry. Let us now proceed and find out what that means.

It is a daily chart. The chart shows that the price heads towards the North with good bullish momentum. The last candle comes out as an inverted hammer with a tiny bullish body. The long upper shadow suggests that the price has a strong rejection at a level of resistance. Nevertheless, the candle has a bullish body, and the candle closes above its last candle’s highest high. Thus, the daily-H4 combination traders may flip over to the H4 chart to go long in the pair.

This is how the H4 chart looks. It produces a bearish engulfing candle followed by a spinning top. It seems that the price may have found its support. If the price makes a breakout at the last swing high, the buyers may go long in the pair.

The chart produces two more bullish candles. The last candle comes out as a hammer with a bearish body. It seems that the price does not know where to go. Traders must be patient here.

The chart produces a bullish engulfing candle closing well above the last swing high. The buyers may trigger a long entry right after the last candle closes. It seems that the bull may make another strong move towards the North. Let us find out how the trade goes.

As expected, the price heads towards the trend with extreme bullish pressure. It hits 1R by the next candle. The candle closes with a thick bullish body. It means that the buyers still have control in the chart. Thus, the buyers may wait for the price to consolidate and get a bullish reversal candle followed by a bullish breakout to go long and drive the price towards the North further.

If we concentrate on the daily chart, we see that the last daily candle is not a strong bullish candle. However, consolidation and a bullish engulfing candle in the H4 chart attract the buyers to go long in the pair. As long as the daily candle closes above/below the last candles highest high/lowest low, the daily-H4 chart combination traders shall keep their eyes in the H4 chart for finding trading opportunities.

Categories
Forex Daily Topic Forex Price Action

Double Top and Evening Star Drive the Price Far Down to Consolidate

In today’s lesson, we are going to demonstrate an example of a double top offering an entry, not right after the breakout. It rather offers an entry upon finding its resistance, which is well below the neckline level. Let us find out how that happens.

In today’s lesson, we are going to demonstrate an example of a double top offering an entry, not right after the breakout. It rather offers an entry upon finding its resistance, which is well below the neckline level. Let us find out how that happens.

In today’s lesson, we are going to demonstrate an example of a double top offering an entry, not right after the breakout. It rather offers an entry upon finding its resistance, which is well below the neckline level. Let us find out how that happens.

The chart shows that the price gets trapped within two horizontal levels. It produces a bearish engulfing candle but heads towards the North upon having a bounce at the level of support. The last candle comes out as a Doji candle around the resistance zone. Let us find out what happens next.

The chart produces a bearish engulfing candle closing well below the neckline. The chart produces an evening star to make the breakout. It suggests that the price may head towards the South with good bearish momentum.

The price heads towards the South with three more candles. However, the price does not consolidate around the neckline. Thus the sellers in the chart may find it difficult to go short in the pair. Let us wait and see whether it consolidates or not.

The chart produces two bullish corrective candles. If the price finds its resistance and produces a bearish reversal candle, the sellers may go short below the last swing low.

The chart produces a bearish engulfing candle closing well below the last swing low. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above the candle’s highest high and by setting take profit with 1R.

The price travels a long way towards the South. The last candle comes out as a bullish inside bar. It is a weak bullish reversal candle. However, the way the price has been heading towards the South; it suggests that the price may continue its bearish move. However, many sellers may want to close their entries and come out with the profit after the last candle.

Usually, traders wait for the price to consolidate and produce a reversal candle at the breakout level. However, when a trend starts with a strong reversal pattern, such as the morning star/evening star, the price may not consolidate around the neckline level. Nevertheless, if the chart allows the price space to travel, traders may wait for the price to consolidate and to get a reversal candle to trade. This is what happens here. The price finds its resistance, not at the neckline but somewhere else, and produces a strong bearish engulfing candle offering an entry.

Categories
Forex Daily Topic Forex Price Action

Trendline Trading: A Trendline forming with a Tiny Slope

In today’s lesson, we are going to demonstrate the formation of a down-trending Trendline. A trendline can be formed with a double top or double bottom as well. However, double top’s resistance or double bottom’s support may not be horizontal. Let us find out how they may look in the chart.

In today’s lesson, we are going to demonstrate the formation of a down-trending Trendline. A trendline can be formed with a double top or double bottom as well. However, double top’s resistance or double bottom’s support may not be horizontal. Let us find out how they may look in the chart.

In today’s lesson, we are going to demonstrate the formation of a down-trending Trendline. A trendline can be formed with a double top or double bottom as well. However, double top’s resistance or double bottom’s support may not be horizontal. Let us find out how they may look in the chart.

The chart shows that the price heads towards the South with moderate bearish pressure. The last candle comes out as a bearish engulfing candle closing well below the last swing low. The sellers may wait for the price to consolidate or make a bullish correction to go short.

The chart produces two bullish candles. The price has a rejection from the zone where it had a rejection earlier. The last rejection does not come from horizontal support, but it looks adjacent to that. Thus, it can be considered as a double top’s resistance zone.

The price heads towards the South by making a breakout at the last swing low. It produces a bullish inside bar. If the chart produces a bearish reversal candle, the sellers may go short below the last swing low. Let us proceed to find out what happens next.

The price gets bearish by making a breakout at the last swing low. Look at the last three candles. The combination of these three candles is called Morning Star. It seems that the price may make a long bullish correction. Can you guess where the price may find its next resistance?

We can draw a down-trending trendline here by using those points of the double top. Look at the price action around the trendline’s resistance. The last candle comes out as a bullish candle with an upper shadow. A bearish reversal candle at the trendline’s resistance may drive the price towards the South again.

The trendline’s resistance produces a bearish engulfing candle. It has a long lower shadow, though. The sellers may go short below the last candle’s lowest low. Let us find out what the price does.

As expected, the price makes a strong bearish move and makes a new lower low. Thus, the sellers may wait again for the price to go towards the trendline’s resistance and get a bearish reversal candle to go short in the pair. In a word, a very valid trendline is in play in this chart. Do you remember how it has started? It has started from a point that does not seem to form a trendline. The slope has been tiny, making it difficult to spot out. However, the market often produces such a trendline with a tiny slope, which shall be taken into account by the trendline traders.

Categories
Forex Price Action

An Interesting Fact about Equidistant Channel

In today’s lesson, we are going to demonstrate an example of the formation of an up-trending equidistant channel. Usually, the price forms an up-trending equidistant channel by having two bounces and one rejection. However, the price sometimes determines the upper band first by having two rejections. In today’s lesson, this is what we are going to demonstrate.

In today’s lesson, we are going to demonstrate an example of the formation of an up-trending equidistant channel. Usually, the price forms an up-trending equidistant channel by having two bounces and one rejection. However, the price sometimes determines the upper band first by having two rejections. In today’s lesson, this is what we are going to demonstrate.

In today’s lesson, we are going to demonstrate an example of the formation of an up-trending equidistant channel. Usually, the price forms an up-trending equidistant channel by having two bounces and one rejection. However, the price sometimes determines the upper band first by having two rejections. In today’s lesson, this is what we are going to demonstrate.

The chart shows that the price makes a bullish move and produces a bearish engulfing candle. The last candle in the chart comes out as a doji candle with a long lower shadow. It suggests that the price finds a strong level of support in the minor charts.

The price heads towards the North and has a strong rejection. The last candle comes out as a bearish engulfing candle again. A candle with a long upper shadow followed by a bearish engulfing candle may drive the price towards the South.

It does not. It produces a bullish engulfing candle and pushes the price towards the North. The chart produces an inverted hammer. The long upper shadow suggests that the price has a rejection from a strong level of support. So far, we have noticed that the price is up-trending by making new higher highs. Do you notice anything else? Let us proceed.

After making a bearish correction, the price finds its support. It produces a bullish engulfing candle and pushes the price towards the North. The last candle comes out as a bullish candle with a long upper shadow though. It is more evident now that the price is up-trending by obeying an equidistant channel.

Upon finding its support, it produces a bullish inside bar. It seems that the buyers based on the equidistant channel may go long in the pair. We have not drawn the channel yet. The reason is we have to be able to spot out the channel by looking at the price action. Let us now draw an equidistant channel and see how the price has been obeying it.

It looks like a copybook equidistant channel. It offers two good long entries. Do you notice one thing here? The price gives a clear sign that it may form an up-trending equidistant channel at the very outset. When it has its second rejection, it does not trend from the lower band. However, it determines its upper band, which helps traders sniff about a potential up trending equidistant channel. This is what happens so often. The price may determine its upper band first not by bouncing off at the lower band or it may determine its lower band by not having rejection from the upper band.

Categories
Forex Daily Topic Forex Price Action

Double Top/Double Bottom and Intraday Trading

In today’s lesson, we are going to demonstrate an example of a double top that drives the price towards the downside in an intraday chart. The double top/double bottom usually makes the price bearish if they are formed in a major chart. However, they work in the same way in minor charts as well. Let us find out how it drives the price in an H1 chart. Let us get started.

In today’s lesson, we are going to demonstrate an example of a double top that drives the price towards the downside in an intraday chart. The double top/double bottom usually makes the price bearish if they are formed in a major chart. However, they work in the same way in minor charts as well. Let us find out how it drives the price in an H1 chart. Let us get started.

In today’s lesson, we are going to demonstrate an example of a double top that drives the price towards the downside in an intraday chart. The double top/double bottom usually makes the price bearish if they are formed in a major chart. However, they work in the same way in minor charts as well. Let us find out how it drives the price in an H1 chart. Let us get started.

It is an H1 chart. The chart shows that the price makes a long bearish move. The chart belongs to the sellers. The sellers may wait for the price to make a bullish correction and produce a bearish reversal candle at flipped resistance to go short in the pair.

The chart makes a strong bullish move instead, upon producing a bullish engulfing candle. The last candle comes out as a bullish engulfing candle after consolidation. It seems that the buyers are dominating the minor charts.

The price does not continue its bullish move. It has been in long consolidation. The price is roaming around the level of resistance, where it has had a bounce. A bullish breakout may attract the buyers to go long in the pair. On the other hand, a bearish reversal candle at a double top resistance may make the sellers wait to go short in the pair below the neckline.

The chart produces a long bearish candle closing below the neckline. It suggests that the Bear may dominate in the pair. The sellers are to wait for the price to consolidate and produce a bearish reversal candle to go short in the pair. Let us find out what happens.

The next candle comes out as a spinning top closing within the breakout level. It seems that the pair is getting ready to get bearish. The sellers are to keep their close eyes in the pair to get a bearish reversal candle and a breakout at the lowest low to trigger a short entry.

Here it comes. The pair produces a bearish engulfing candle. The candle’s body engulfs the last candle’s body. However, the sellers may wait for the price to make a breakout at the lowest low of the last candle (wick’s lowest low). It is very important as far as intraday trading is concerned.

The price breaches the wick’s lowest low and heads towards the South with good bearish momentum. It travels a long way by offering 1:2 risk-reward. It’s a good thing about intraday trading that it offers good risk-reward.

We have demonstrated an example of a double top driving the price towards the downside in the H1 chart. They work in any time frame from 1M to 1Month. However, it is better not to use it in too minor time frames such as the 1M, 5M, 15M.

Categories
Forex Market Analysis

DAX Advances in an Ending Diagonal Pattern

Overview

Overview

Overview

The German benchmark index, DAX 30 advances in the extreme bullish sentiment zone accumulating gains over 60% after the German index gained support on the March’s low at 7,957.6 pts. In spite of the up-up-up market sentiment, the DAX develops an ending diagonal pattern that is still unfinished, suggesting the current upward trend’s exhaustion.

Market Sentiment Overview

DAX 30 continues its recovery following the German index drop to 7,957.6 pts, on March 23rd, which is the lowest level since late August 2013. From Mach’s low, DAX 30 advances over 60%.

The next DAX chart presents the German index in its daily timeframe illustrates the 52-week high and low range. The German index currently develops an upward movement in the extreme bullish sentiment zone. The short-term bullish sentiment is being confirmed by the 60-day moving average, which acts as support in the latest trading sessions.

The extreme bullish sentiment aided by the DAX surpassing the opening price of the year boosted the up-up-up sentiment in the news media added with the incomplete ascending wedge that remains in progress. These signals suggest the exhaustion of the current short-term bullish trend.

On the other hand, the daily chart of the DAX Volatility Index (VDAX) shows a mostly sideways movement in the extreme bearish zone. At the same time, the lateral consolidation pattern developed by VDAX, which remains unfinished, could experience a new decline raising the possibility of further upside in the German stock market.

Consequently, the German stock market sentiment is being dominated by extreme bullish bias. However, the incomplete ascending wedge pattern suggests the exhaustion of the upward movement.

Elliott Wave Outlook

The short-term outlook of the German stock market under the Elliott Wave perspective unveils the progress on an incomplete ending diagonal pattern, developing a new upward movement.

The DAX, in its 4-hour chart, exposes the progress of an upward corrective formation that follows an internal structure of a zigzag pattern of Minute degree labeled in back. The bullish move began in the March low when the German stock market plummeted until 7,957.6 pts. 

Currently, DAX advances in its fifth wave of Minuette degree labeled in blue, which, in turn, develops an ending diagonal pattern in its internal structure. This terminal formation, subdivided in a 3-3-3-3-3 sequence of Subminuette degree, identified in green, is seen advancing in its fifth wave. This pending upward movement agrees with the likely decline in the DAX Volatility Index.

Consequently, according to the Elliott wave perspective, our short-term outlook anticipates further upsides as long as the price stays above 12,737.5 pts. This potential upside could strike the 13,544.3 pts completing the wave ((c)) of Minute degree identified in black.

Categories
Forex Daily Topic Forex Price Action

Intraday Trading: Watch Out for Highest High/Lowest Low

In today’s lesson, we are going to demonstrate an intraday chart that ends up offering an entry. Intraday trading can be prolific if it is done in the right way. In today’s example, the price heads towards the North by making a good bullish move. It seems that the bull is in control. However, the price gets bearish later and ends up offering entry to the sellers. Let us find out how that happens.

In today’s lesson, we are going to demonstrate an intraday chart that ends up offering an entry. Intraday trading can be prolific if it is done in the right way. In today’s example, the price heads towards the North by making a good bullish move. It seems that the bull is in control. However, the price gets bearish later and ends up offering entry to the sellers. Let us find out how that happens.

In today’s lesson, we are going to demonstrate an intraday chart that ends up offering an entry. Intraday trading can be prolific if it is done in the right way. In today’s example, the price heads towards the North by making a good bullish move. It seems that the bull is in control. However, the price gets bearish later and ends up offering entry to the sellers. Let us find out how that happens.

It is an H1 chart. The chart shows that the price makes a good bullish move. The last candle comes out as a hanging man. The price does not make any bearish correction, so the daily candle closes without having an upper shadow. It suggests that the bull may dominate in the pair the next day.

The next day, the price makes a bullish breakout at the last day’s highest high. The pair is trading above the level. Ideally, the price above the last day’s highest high means the bull is in control. However, in this chart, the price does not make any bearish correction before making the breakout. Thus, the buyers are to wait for the price to consolidate and produce a bullish reversal candle to go long in the pair.

The next candle comes out as a bearish engulfing candle. The candle closes below the breakout level. If the level works as a level of resistance, the sellers may come into play and go short in the pair. Let us find out what happens next.

The next candle comes out as a hammer closing within the breakout level. It looks good for the sellers. The sellers may wait for the price to produce a bearish reversal candle and go short below the hammer’s lowest low.

The chart produces a bearish engulfing candle closing below the hammer’s body. The sellers may trigger a short entry below the hammer’s lower shadow. The last day’s lowest low offers the price to travel towards the North with a good reward.

One of the candles comes out as a bearish Marubozu candle closing well below the hammer’s lowest low. The entry may be triggered earlier just by using price breakout. Some traders may wait for a 15M breakout to trigger the entry, and some even wait for an H1 breakout. Ideally, a 15M breakout is good enough to trigger such entry. Traders may set their stop loss above the breakout level since it is the new resistance and Take profit with 2R. If they set the stop loss above the trend’s highest high, they may set take profit at the previous day’s lowest low. Let us find out how the entry goes.

The price heads towards the South with good bearish momentum. It hits 2R in a hurry. The way it has been going, it may hit the previous day’s lowest low soon as well.

To do intraday trading, pay attention to the last day’s highest high and lowest low, breakout, breakout confirmation, and reversal candle. Do some backtesting and then try live trading with a tiny lot at the beginning. Once you have mastered this, it can make your hand full.

Categories
Forex Market Analysis

CAD/JPY: A massive round number holding the key

CAD/JPY produced a bullish inside bar yesterday. The price had a bounce at the same level earlier and made a bullish move. The daily chart suggests that the price has some space to travel towards the North. However, if a bullish inside bar is followed by a bearish engulfing candle, it ends up being prolific for the sellers. The H4 chart looks bullish. On the other hand, the H1 chart looks a bit bearish biased. Thus, traders are to be very watchful to trade in the pair. Let us now have a look at three vital charts.

CAD/JPY produced a bullish inside bar yesterday. The price had a bounce at the same level earlier and made a bullish move. The daily chart suggests that the price has some space to travel towards the North. However, if a bullish inside bar is followed by a bearish engulfing candle, it ends up being prolific for the sellers. The H4 chart looks bullish. On the other hand, the H1 chart looks a bit bearish biased. Thus, traders are to be very watchful to trade in the pair. Let us now have a look at three vital charts.

CAD/JPY produced a bullish inside bar yesterday. The price had a bounce at the same level earlier and made a bullish move. The daily chart suggests that the price has some space to travel towards the North. However, if a bullish inside bar is followed by a bearish engulfing candle, it ends up being prolific for the sellers. The H4 chart looks bullish. On the other hand, the H1 chart looks a bit bearish biased. Thus, traders are to be very watchful to trade in the pair. Let us now have a look at three vital charts.

Chart 1 CAD/JPY Daily Chart

The chart shows that it had a bounce at the level of 80.000 earlier. It is a massive round number. It pushed the price towards the North, and the price made a bearish move, closing within the level. Yesterday’s candle came out as a bullish inside bar. As far as the round numbered support is concerned, the price may make a bullish move. However, if the price gets bearish and ends up producing a bearish engulfing candle closing below 80.000, the sellers may go short in the pair aggressively and drive the price towards the level of 78.300. On the other hand, if the price gets bullish, it may find its next resistance around 81.400.

Chart 2 CAD/JPY H4 Chart

The chart shows that the price upon having a bounce at the level of 80.800 produced a spinning top and headed towards the North. It made a bullish breakout at the level of 80.600. The pair had a rejection at 80.800. It has been in a bearish correction. The level of 80.600 may work as a level of support. If the level ends up producing a bullish reversal candle, the buyers may go long above the level of 80.800. The price may find its next resistance around 81.400.

Chart 3 CAD/JPY H1 Chart

The price had a rejection at the level of 80.800 twice. It produced a bearish engulfing candle. The pair is trading around the neckline at 80.640. A bearish reversal candle may attract the sellers to go short in the pair and drive the price towards the South. The price may find its next support around 80.150. On the other hand, the buyers are to wait to go long above the level of 80.800.

The H1 chart looks bearish biased. However, the daily and the H4 chart look bullish. Considering these three charts, it seems that the pair may end up having another bullish day.

Categories
Forex Daily Topic Forex Price Action

Trendline Trading: How a Trend upon a Trendline Run Longer

In today’s lesson, we are going to demonstrate an example of a chart that made a long bearish move obeying a bearish trendline. The price after forming a bearish trendline does not offer entry to the sellers. It makes a breakout at the first trendline and then produces another bearish trendline ending up offering short entries. Let us now have a look at the chart and find out how it happens.

In today’s lesson, we are going to demonstrate an example of a chart that made a long bearish move obeying a bearish trendline. The price after forming a bearish trendline does not offer entry to the sellers. It makes a breakout at the first trendline and then produces another bearish trendline ending up offering short entries. Let us now have a look at the chart and find out how it happens.

In today’s lesson, we are going to demonstrate an example of a chart that made a long bearish move obeying a bearish trendline. The price after forming a bearish trendline does not offer entry to the sellers. It makes a breakout at the first trendline and then produces another bearish trendline ending up offering short entries. Let us now have a look at the chart and find out how it happens.

The chart shows that it makes two swing lows trending from two swing highs. By joining those points, we can draw a trendline shown in the above chart. The sellers may wait for the price to go back at the trendline’s resistance and produce a bearish reversal candle to go short in the pair. However, the price action has been choppy around the trendline’s resistance. The last candle comes out as a bullish engulfing candle. It does not look good for the sellers.

The price makes a breakout at the trendline’s resistance. It heads towards the North and then makes a strong bearish move. Such price action may puzzle traders. Do you notice something interesting here? Have a look at the next chart.

The sellers may draw another bearish trendline by joining two swing lows. As long as the price makes new lower lows, we can draw a bearish trend line by joining two higher highs. We know what sellers are to do here. Yes, they are to wait for the price to go back to the trendline’s resistance and produce a bearish reversal candle to go short in the pair.

The chart produces a bearish inside bar. It is not a strong reversal candle. However, it is produced at a trendline’s resistance. The sellers may keep their eyes in the pair to go short according to their trading strategies. The price may find its next support at the last swing low. The chart shows that the price has enough space to travel towards the South.

The price heads towards the South at a moderate pace. It makes a long bearish wave, though, by making a breakout at the horizontal support. In the end, it comes out as an excellent trade for the sellers.

If we recap, the first drawn trendline is disobeyed by the price. It is breached, and the chart looks slightly bullish biased. It does not make any more bullish breakout but makes a long bearish move by making a breakout at the last swing low. It gives the sellers an opportunity to draw another bearish trendline, and that ends up offering an excellent entry.

Categories
Forex Price Action

When Key Fibonacci Level Produces an Engulfing Candle

In today’s lesson, we are going to demonstrate an example of a chart that makes a strong bullish move upon producing a bullish engulfing candle at a key Fibonacci level. We know an engulfing candle creates good momentum. If it is created at a significant Fibonacci level, it often pushes the price towards the trend […]

In today’s lesson, we are going to demonstrate an example of a chart that makes a strong bullish move upon producing a bullish engulfing candle at a key Fibonacci level. We know an engulfing candle creates good momentum. If it is created at a significant Fibonacci level, it often pushes the price towards the trend […]

In today’s lesson, we are going to demonstrate an example of a chart that makes a strong bullish move upon producing a bullish engulfing candle at a key Fibonacci level. We know an engulfing candle creates good momentum. If it is created at a significant Fibonacci level, it often pushes the price towards the trend further than traders’ expectations. Let us see and find out what and how that happens.

It is an H1 chart. The chart shows that the price heads towards the South. It keeps making new lower lows. At the last bounce, the chart produces a Morning Star. It may make a bullish reversal now. Let us wait and see whether it makes a breakout at the last swing high or not.

The chart produces four consecutive bullish candles. The price breaches the last swing high. The buyers may wait for the price to consolidate around the breakout level and get a bullish reversal candle to go long in the pair.

It produces a bearish candle closing within the breakout level. The buyers may keep their eyes sharp to see how the next candle comes out. A bullish reversal candle followed by a breakout at the highest high is the signal to trigger a long entry. If the reversal candle comes out as a bullish engulfing candle closing above the resistance, the buyers may trigger a long entry right after the candle closes.

The candle comes out as a bullish engulfing candle closing well above the resistance. The buyers may trigger a long entry right after the candle closes. Since it is an H1 chart, Fibonacci levels come extremely handy to determine the take profit level. We find out that in a minute. At first, let us find out what the price does.

The price heads towards the North with extreme bullish momentum. It produces only one bearish candle and resumes its bullish journey. With naked eyes, we can tell that the price travels about 4R. It means as far as risk-reward is concerned, it is an excellent deal. Let us draw Fibonacci and see price trends from where to where.

The price makes the bullish reversal at 61.8% and heads towards the level of 161.8% in a hurry. It makes a breakout at 161.8% consolidates and resumes its bullish move. Ideally, the buyers should set their take profit at 161.8%. It would allow them to take 1:2 risk-reward. However, we have seen here that the price travels towards the North even further than that. It often happens when the reversal candle comes out as a bullish engulfing candle, and it is produced at the key Fibonacci level at 61.8%. We may not be too greedy but set our take profit at 161.8% in such cases. However, back in our mind, we know that we are dealing with an excellent trade setup.

Categories
Forex Daily Topic Forex Price Action

Trend Line Trading: The Entries to be Skipped

In today’s lesson, we are going to demonstrate an example of a chart that trends towards the North by obeying a trendline. It offers a long entry once the trendline is established. At the fourth bounce, it produces a bullish reversal candle. We find out whether the buyers should take a long entry or not upon getting the bullish reversal candle at the trendline’s support. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart that trends towards the North by obeying a trendline. It offers a long entry once the trendline is established. At the fourth bounce, it produces a bullish reversal candle. We find out whether the buyers should take a long entry or not upon getting the bullish reversal candle at the trendline’s support. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart that trends towards the North by obeying a trendline. It offers a long entry once the trendline is established. At the fourth bounce, it produces a bullish reversal candle. We find out whether the buyers should take a long entry or not upon getting the bullish reversal candle at the trendline’s support. Let us get started.

The chart shows that the price heads towards the North upon producing a bullish reversal candle. It consolidates and resumes its bullish journey. The chart looks like the buyers’ hunting ground.

The price upon producing a spinning top, it produces a long bearish candle. It consolidates with some candles and produces a bullish engulfing candle. The buyers may keep an eye in the chart to go long above the last swing high. If the price makes a bullish breakout, the buyers get two swing lows and two swing highs to draw an uptrending trend line.

Here it goes. The price makes a bullish breakout and heads towards the North further. The chart produces a bearish engulfing candle. It may make a bearish correction. As it looks, the chart belongs to the Bull without any doubt.

The price makes a bearish correction; consolidates and heads towards the North again. The breakout traders may find a long opportunity and grab some pips. The price makes a long bearish correction. In fact, it makes a breakout at a significant level of swing low. It seems that the chart is slightly bearish biased. Have a look at the chart below.

The trendline’s support holds the price and produces a bullish engulfing candle. The trendline traders may go long in the pair right after the last candle closes. The last swing high is the safest option to set take profit. It means the risk-reward ratio looks good for the trendline traders.

The price heads towards the North with good bullish momentum. However, it seems that the horizontal level of resistance is too strong to be breached. The price consolidates here with several candles. The last candle comes out as a bearish engulfing candle. The buyers may close the entry. The question is does the price come back to the trendline’s support or it makes a breakout at the highest high.  Let us proceed to the next chart and find out what happens.

The price comes back at the trendline’s support. It produces a hammer. Should the buyers go long from here as far as trendline trading is concerned? Think about it for a minute.

If your answer is ‘No’, you are right. The reason why the buyers should not go long from here is it does not make a new higher high upon getting its last bounce. In fact, traders may wait for the price to make a breakout at the trendline’s support and go short in the pair. In our forthcoming lessons, we will learn about trendline breakout and trendline breakout trading. Stay tuned.

Categories
Forex Price Action

Fibonacci Trading: Fibonacci Levels Maximize Profit for Intraday Traders

In today’s lesson, we are going to demonstrate an H1 chart offering an entry by using intraday support/resistance. To go with it, Fibonacci levels are used to spot out the stop-loss and take-profit levels. Let us now get started.

In today’s lesson, we are going to demonstrate an H1 chart offering an entry by using intraday support/resistance. To go with it, Fibonacci levels are used to spot out the stop-loss and take-profit levels. Let us now get started.

In today’s lesson, we are going to demonstrate an H1 chart offering an entry by using intraday support/resistance. To go with it, Fibonacci levels are used to spot out the stop-loss and take-profit levels. Let us now get started.

The chart shows that the price makes a long bearish move. The H1 chart makes a breakout at the last day’s lowest low (black drawn line). Usually, the chart attracts the sellers to look for short opportunities upon getting a bearish reversal candle. However, look at the combination of the last three candles. It is called Morning Star, which is one of the strongest bullish reversal patterns.

The price heads towards the North and goes back in the last day’s lowest low. Moreover, it makes a breakout at today’s highest high as well (black drawn line). Within four candles, the chart looks good for the buyers. The buyers may look to go long in the pair upon getting a bullish reversal candle at the breakout level.

The chart produces a bearish candle. The breakout level seems to hold the price as a level of support. A bullish reversal candle at the level may attract the buyers to go long and push the price towards the North further.

Here it comes. The chart produces a bullish engulfing candle right at the breakout level. The buyers may trigger a long entry right after the last candle closes by setting stop loss below the lowest low of the signal candle. We are going to talk about the take profit level in a minute. Let us find out how the trade goes.

The chart produces a bullish candle. The price heads towards the upside with the next candle as well. However, the candle comes out as a Doji candle having a long upper shadow. It suggests that the price may make a bearish correction or make a bearish reversal. Since the trade setup is based on the H1 chart, the buyers may lose a good number of pips if they are to wait for the chart to produce a reversal candle to close their entry. It is tough to manage trade in the H1 chart manually. Thus, setting the take profit is the best way. The question is, where should we set our take profit? In this regard, Fibonacci levels come extremely handy. Let us draw the Fibonacci levels in the chart and find out how they work in the chart above.

There you go. The price produces a bullish reversal candle at 61.8% level and heads towards the level of 161.8%. It means the buyers may achieve 1:2 risk-reward easily by using Fibonacci levels in intraday trading. In our fore coming lessons, we are going to demonstrate more examples of integration of Fibonacci levels and intraday trading. Stay tuned.

Categories
Forex Daily Topic Forex Price Action

A Classic Example of Trading on a Double Top

Last week, in one of our lessons, we showed an example of how the price gets bullish based on the double bottom and flipped support. In today’s lesson, we are going to demonstrate an example of a double top and flipped resistance. a Double Top is the opposite of a Double Bottom, so it drives the price towards the South. It is one of the strongest bearish reversal patterns. Traders love to go short when a chart produces a double top in the Forex market. Let us now proceed and find out how it usually works.

Last week, in one of our lessons, we showed an example of how the price gets bullish based on the double bottom and flipped support. In today’s lesson, we are going to demonstrate an example of a double top and flipped resistance. a Double Top is the opposite of a Double Bottom, so it drives the price towards the South. It is one of the strongest bearish reversal patterns. Traders love to go short when a chart produces a double top in the Forex market. Let us now proceed and find out how it usually works.

Last week, in one of our lessons, we showed an example of how the price gets bullish based on the double bottom and flipped support. In today’s lesson, we are going to demonstrate an example of a double top and flipped resistance. a Double Top is the opposite of a Double Bottom, so it drives the price towards the South. It is one of the strongest bearish reversal patterns. Traders love to go short when a chart produces a double top in the Forex market. Let us now proceed and find out how it usually works.

The chart shows that the price heads towards the North and finds its resistance. It produces a bearish engulfing candle. Sellers on the minor chart may look to go short in the chart. However, the sellers in this chart may wait for either the price consolidates and makes a bearish breakout or to produce a double top.

The price finds its support and heads towards the level of resistance again. It consolidates around the level of resistance. A bearish reversal candle followed by a breakout at the last support may attract the sellers to go short in the pair since the chart would produce a double top, and the breakout would be a neckline breakout.

Here it goes. The price heads towards the South with good bearish momentum. It makes a breakout at the neckline and produces one more bearish candle. The sellers are going to wait to go short in the pair below the lowest low. However, it is best to wait for the price to consolidate around the breakout level and produce a bearish reversal candle to get a better risk-reward.

The price consolidates around the breakout level and produces a bearish engulfing candle at the breakout level. The sellers may go short below consolidation’s support by setting stop-loss above consolidation’s resistance and by setting a take-profit target with 1R at least. Please note, a double bottom/double top and consolidation around the neckline breakout level usually offers more than 1R. Let us find out how the trade goes.

The price heads towards the downside with extreme bearish momentum. It produces an inverted hammer. The price may make a bullish correction from here. Count the length that the price has traveled so far. It has traveled a long way offering about 6R to the sellers. One trade like this in a week may make a trader fulfilled. Thus, keep your eyes on patterns such as the Double Top/Double Bottom. Remember the procedure; wait for the price to consolidate and produce a reversal candle at the breakout level; trigger an entry below consolidation support/resistance, and manage your trade accordingly.

Categories
Forex Price Action

Trendline Trading: Be Sensible to Count or Not to Count Shadows

We are going to demonstrate an example of trendline trading in today’s lesson. The price, after being bearish, produces a bullish engulfing candle and heads towards the North. It makes a bearish correction and produces another bullish candle to make a bullish breakout at the last swing high. At the second bounce, the candles have tiny lower shadows. In the end, the pair makes another bullish move at the trendline’s support without counting those lower shadows at the second bounce. Let us now have a look at what and how that happens.

We are going to demonstrate an example of trendline trading in today’s lesson. The price, after being bearish, produces a bullish engulfing candle and heads towards the North. It makes a bearish correction and produces another bullish candle to make a bullish breakout at the last swing high. At the second bounce, the candles have tiny lower shadows. In the end, the pair makes another bullish move at the trendline’s support without counting those lower shadows at the second bounce. Let us now have a look at what and how that happens.

We are going to demonstrate an example of trendline trading in today’s lesson. The price, after being bearish, produces a bullish engulfing candle and heads towards the North. It makes a bearish correction and produces another bullish candle to make a bullish breakout at the last swing high. At the second bounce, the candles have tiny lower shadows. In the end, the pair makes another bullish move at the trendline’s support without counting those lower shadows at the second bounce. Let us now have a look at what and how that happens.

The price makes a bearish move makes a bullish correction and resumes its bearish journey. Upon finding its support, it produces a bullish engulfing candle at the last bounce in this chart. The chart is slightly bearish biased. Let us see what happens next.

The chart produces another bullish candle, consolidates, and heads towards the North. Then, it makes a bearish correction. A bullish reversal candle followed by a breakout at the highest high will make the chart a hunting ground for the buyers.

The chart produces a bullish engulfing candle and makes a breakout at the last swing high. It means the buyers may draw a trendline and wait for the price to come back at the trendline’s support to go long in the pair.

This is the drawn trendline, which is drawn by using the first two spikes. However, spikes at the second bounce are not counted. After the second bounce, the price heads towards the North, but it doesn’t come at the trendline’ support to offer a long entry to the buyers. As long as the price does not breach the trendline support, it is valid, and traders may wait for the price to come back at the trendline’s support and offer them a long entry.

Here it comes. The chart produces a bullish engulfing candle right at the trendline’s support. The buyers may go long right after the last candle closes by setting stop loss below the signal candle’s lowest low and by setting take profit with 1R. Let us find out how the trade goes.

The price hits 1R in a hurry. It then produces a spinning top. However, the next candle comes out as a bullish engulfing candle, which suggests that the buyers may wait again for the price to come back at trendline’s support to take another long entry.

If we use spikes of the second bounce, the trendline’s support would have more space for the price to travel. We have used spikes of the first bounce and candle’s bodies of the second bounce. Since both spikes of the second bounce cannot be added with a line, it is better to skip it. Moreover, the price at the third bounce produces a bullish engulfing candle. Most probably, the price is going to obey the trendline. This is what happens here, and this is what usually happens with a trendline.

Categories
Forex Daily Topic Forex Price Action

The Double Bottom and the Flipped Level of Support

In today’s lesson, we are going to demonstrate an example of a double bottom, which pushes the price towards the North. The example also proves an old theory of support becomes resistance or resistance becomes support after a breakout. Let us get started.

In today’s lesson, we are going to demonstrate an example of a double bottom, which pushes the price towards the North. The example also proves an old theory of support becomes resistance or resistance becomes support after a breakout. Let us get started.

In today’s lesson, we are going to demonstrate an example of a double bottom, which pushes the price towards the North. The example also proves an old theory of support becomes resistance or resistance becomes support after a breakout. Let us get started.

The chart shows that the price makes a bearish move and finds its support. The level of support produces a bullish candle, which is followed by two more bullish candles. The buyers may wait for the price to consolidate and produce a bullish reversal candle to go long in the pair.

The price makes a long bearish correction. It comes back to the level of support again. A bearish breakout may attract the sellers to go short and drive the price towards the South. On the other hand, the buyers may wait to get a bullish reversal candle at its second bounce.

The chart produces a bullish engulfing candle. Since it is produced at the second bounce, the buyers in the chart may wait for the price to make a breakout at the neckline and go long.

The price heads towards the North with good bullish momentum. It makes a breakout at the neckline and trades above the level for one more candle. The buyers would love to see the price to consolidate or make a bearish correction at the breakout level and produce a bullish reversal candle to trigger a long entry.

The price makes a bearish correction and produces a bullish engulfing candle closing above the level of resistance. The buyers may trigger a long entry right after the last candle closes by setting Stop Loss below the candle’s lowest low and by setting Take Profit with 1R. Here we must notice that the neckline level becomes the level of support. This is one of the most reliable theories in the financial market.

The price heads towards the North with extreme bullish momentum. It hits 1R in a hurry and travels towards the North further. The last candle comes out as a hanging man, which is a bearish reversal candle. However, it is not a strong one. The price may keep traveling towards the North. Anyway, the buyers achieve their target with the entry, which is taken on two theories.

  1. Double Bottom- A very strong bullish reversal pattern
  2. Resistance works as a level of support after the breakout.

In the case of a double bottom and neckline breakout, we may sometimes find that the price does not come at the breakout level. It consolidates well above and makes a bullish move. In some cases, the price may not hit the target. However, if the price comes and produces a bullish reversal candle at the breakout level, the price may hit the target in most of the cases.

Categories
Forex Market Analysis

Gold Still Controlled by the Bull

Overview

Overview

Overview

The Gold price continues developing a sideways movement, which corresponds to an incomplete corrective structure that is still incomplete. Although there is an extreme bullish sentiment among market participants, the price of the golden metal could be poised to a decline in the following trading sessions.

Market Sentiment Overview

Gold prices continue moving sideways, consolidating above the psychological barrier of $1,900. The precious metal gains of over 28% (YTD) were boosted by the US Dollar weakness, which has dropped 5.47% (YTD) so far.

Gold, in its weekly timeframe, illustrates the market sentiment of the precious metal exposed by its 52-week high and low range. In the chart, we currently distinguish the market action moving mostly sideways, on the extreme bullish sentiment zone. The indecision candle that the yellow metal developed leads us to observe a state of equilibrium between the market participants.

On the other hand, looking at the volatility of the precious metal (GVZ) exposed in its daily chart, we observe the price action is consolidating in a flag pattern in the bearish sentiment zone. At the same time, we highlight the bounce GVZ developed from the extreme bearish sentiment zone toward the bearish zone in which currently is consolidating. We see that GVZ, moving above its 60-day moving average, shows an improvement in the investors’ sentiment.

The current market context observed in the Gold Volatility Index, which is consolidating creating a flag formation, added to Gold’s retesting of  $1,917.81 per ounce, corresponding to the support of the extreme bullish sentiment zone, leads us to expect a new decline in the price of the yellow metal.

Elliott Wave Outlook

The short-term outlook under the Elliott wave perspective and illustrated in its 2-hour chart exposes the sideways movement evolving an incomplete corrective structure, after the yellow metal touched its all-time high at $2,075.14 per ounce, reached on August 06th.

Once the precious metal topped at $2,075.15 per ounce, Gold completed its fifth wave of Minuette degree, and it is drawing a corrective sequence that remains incomplete. In the previous figure, we distinguish the aggressively developed first downward leg. This fast movement drove the yellow metal to ease over 10%, finding a bottom at $1,862.32 per ounce. That gave the pass to the wave (b), identified in blue, which remains in development.

The second leg of the incomplete three-wave sequence completed its first wave of a lesser degree at $2,015.65 per ounce, starting to retrace with a lower momentum. This decelerated movement observed in the wave b of Subminuette degree, identified in green, drives us to verify the alternation principle stating that a fast move should alternate with a slow movement.

For the coming trading sessions, we expect an upward movement that would complete the wave c of Subminuette degree, in green, which at the same time would end the wave (b) in blue. Once this wave ends, the price should start to decline in a five-wave sequence corresponding to wave (c) of Minuette degree, labeled in blue. This downward scenario agrees with the potential upside observed in the Gold Volatility Index chart.

Categories
Forex Daily Topic Forex Price Action

Trend Line Trading and Trade Management

In today’s lesson, we are going to demonstrate an example of trendline trading and how the trade may be managed. We know that trading with a trendline is very rewarding since an established trendline often ends up offering several entries. However, things may not always go as smoothly as we like. Like other trading strategies, trendline trading may end up offering entries that may not hit the target or make traders have a loss. In today’s lesson, we are going to see an example of trendline trading, where things do not go according to traders’ expectations.

In today’s lesson, we are going to demonstrate an example of trendline trading and how the trade may be managed. We know that trading with a trendline is very rewarding since an established trendline often ends up offering several entries. However, things may not always go as smoothly as we like. Like other trading strategies, trendline trading may end up offering entries that may not hit the target or make traders have a loss. In today’s lesson, we are going to see an example of trendline trading, where things do not go according to traders’ expectations.

In today’s lesson, we are going to demonstrate an example of trendline trading and how the trade may be managed. We know that trading with a trendline is very rewarding since an established trendline often ends up offering several entries. However, things may not always go as smoothly as we like. Like other trading strategies, trendline trading may end up offering entries that may not hit the target or make traders have a loss. In today’s lesson, we are going to see an example of trendline trading, where things do not go according to traders’ expectations.

The chart shows that the price makes a strong bearish move. It may have found its support. It produces two bullish candles. The sellers may wait for the price to make a breakout at the lowest low to go short in the pair. Let us find out what happens next.

The price makes a long bullish move followed by a bearish correction. It produces a bearish engulfing candle and heads towards the South again. The chart is bearish biased, but the pair is trading around the level, where it had a bounce earlier.

The price makes a breakout at the level and trades below the level for several candles. It means the sellers have two higher highs from where the price makes two bearish breakouts. It means the sellers can draw a trendline here and wait for the price to go towards the trendline’s resistance to go short in the pair.

The price heads towards the South and produces a bearish engulfing candle. The sellers may trigger a short entry right after the last candle closes by setting take profit at the last swing low.

It looks fantastic for the sellers. The price heads towards the target in a hurry. It seems the sellers do not have to wait too long to reach the target. The way it has been going, the price may end up making a breakout at the last swing low too.

It does not. The price finds its support and produces a bullish engulfing candle. It heads towards the trendline’s resistance. The sellers must be disappointed with the entry. They may have to encounter a loss here.

The price finds its resistance as well. It does not go towards the trendline’s resistance, but it makes a bearish move. Look at the last candle. It comes out as a bullish engulfing candle. The entry is running with some profit, and the trendline’s resistance is still intact. What do you think the sellers do with the entry? If we follow ‘set and forget,’ we may leave it like this and wait until the price hits either the stop loss or the take profit. It is an H4 chart. Many traders look after their trades and manage their trade by taking a decision as far as price action is concerned. In this case, they may do two things.

  1. Close the whole trade
  2. Close 50% trade and let rest of the 50% run

We come across three types of trade management here. It is up to you which one you choose. Choose one that suits your trading style and stick with it.

Categories
Forex Price Action

The Beauty of Horizontal Channel Trading

In today’s lesson, we are going to demonstrate an example of a chart where the price gets caught within a horizontal channel. We’ll try to learn how we can trade and make the most of it. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart where the price gets caught within a horizontal channel. We’ll try to learn how we can trade and make the most of it. Let us get started.

In today’s lesson, we are going to demonstrate an example of a chart where the price gets caught within a horizontal channel. We’ll try to learn how we can trade and make the most of it. Let us get started.

The chart shows that, after being bearish, the price bounces at the drawn level. It produces a bullish engulfing candle and heads towards the North. The chart is bullish-biased. Thus, price-action traders are to look for long entries. Let us see what happens.

The price finds its resistance instead. It produces a bearish inside bar, but it does not make a new higher high. Thus, the buyers do not get an opportunity to go long at the top. The price heads towards the South towards the level of support. Since the level has been working as a level of support, the buyers may wait for the price to produce a bullish reversal candle to go long in the pair.

The chart shows that the price produces a bullish engulfing candle at the support zone. The buyers may trigger a long entry by setting stop loss below the candle’s lowest low and by setting take profit at the level of resistance. The risk-reward looks good.

The price heads towards the North with good bullish momentum. It hits the target in a hurry too. At the moment, the price is right at the level of resistance. Can you guess what traders should do now? Look at the next chart.

The chart shows that the price produces a bearish engulfing candle at the resistance zone. A point is to be noticed here that the chart produces a bullish spinning top. However, it cannot be considered a breakout. It rather produces a bearish engulfing candle. Thus, the traders may go short in the pair by setting take profit at the support zone and by setting stop-loss above the last candle’s highest high.

The price heads towards the South with an average pace. It consolidates for a while and resumes its bearish journey. The price has been roaming around the level of support for quite a while. It means the support gets even stronger. Look at the last candle. It comes out as a bullish engulfing candle. The buyers may trigger another long entry here. Let us find out what happens next.

The price hits the target. The price makes a long bearish correction and tests the buyers’ patience, though. However, in the end, the buyers come out with their pips. Trading is beautiful when the price moves like this, isn’t it?

Categories
Forex Price Action

Trend Line Trading: An Incident That Often Confuses Traders

In today’s lesson, we are going to demonstrate an occurrence that often happens when the price trends with a trendline. A trendline works as a support/resistance. However, there is a little dissimilarity between horizontal support/resistance and trendline support/resistance. To draw a horizontal support/resistance, one bounce or rejection is enough. However, a trendline can be drawn only when the price makes a new higher low/lower high. This is what traders must remember, and we find this out the reason behind it.

In today’s lesson, we are going to demonstrate an occurrence that often happens when the price trends with a trendline. A trendline works as a support/resistance. However, there is a little dissimilarity between horizontal support/resistance and trendline support/resistance. To draw a horizontal support/resistance, one bounce or rejection is enough. However, a trendline can be drawn only when the price makes a new higher low/lower high. This is what traders must remember, and we find this out the reason behind it.

In today’s lesson, we are going to demonstrate an occurrence that often happens when the price trends with a trendline. A trendline works as a support/resistance. However, there is a little dissimilarity between horizontal support/resistance and trendline support/resistance. To draw a horizontal support/resistance, one bounce or rejection is enough. However, a trendline can be drawn only when the price makes a new higher low/lower high. This is what traders must remember, and we find this out the reason behind it.

The price makes a strong bullish move, as it produces seven consecutive bullish candles. The last candle comes out as a bearish engulfing candle. Considering the trend’s length, the buyers may keep their eyes on the pair to go long upon having a bullish reversal candle at flipped support.

The price consolidates and bounces at the same level twice. The last candle comes out as a bullish reversal candle. The buyers on the minor chart may look to go long in the pair and push the price towards the North.

The price heads towards the North and makes a breakout at the last swing high. It means we can draw an up-trending trend line and wait for the price to come at trendline’s support and to get a bullish reversal candle to go long in the pair. Let us find out what happens next.

The price does not produce a bullish reversal candle. It makes a breakout at trendline’s support and trades below the level for several candles. If the price makes a breakout at the last swing low, the sellers may look to go short in the pair. Let us see what happens next.

The price upon finding its horizontal support heads towards the North and makes a breakout at the last swing high. What does that mean? It means we can draw an up-trending trend line by using the last swing low from where the price makes a bullish breakout. Let us draw it and see how it looks.

It is a new trendline. It offers price to makes more bearish correction and more space towards the North to travel. As a matter of fact, its support zone has changed, but the new trendline is valid for the same old chart. It’s an incident that happens in the Forex market so often. Thus, keep an eye on a chart closely and do not make an immediate trading decision. Be sure about the breakout. If the breakout is confirmed, change your trading direction. If the breakout is not confirmed, let the price decide its way. We just have to follow the price and trade with its direction.

Categories
Forex Price Action

Trendline Trading: Major Chart’s Support/Resistance and Take-Profit Target

In today’s lesson, we are going to demonstrate an example of trendline trading where the price trends towards the South by obeying a down-trending trendline. In one of our lessons, we learned the importance of choosing a chart for trendline trading. In today’s example, we find out one more point to go with that. Let us get started.

In today’s lesson, we are going to demonstrate an example of trendline trading where the price trends towards the South by obeying a down-trending trendline. In one of our lessons, we learned the importance of choosing a chart for trendline trading. In today’s example, we find out one more point to go with that. Let us get started.

In today’s lesson, we are going to demonstrate an example of trendline trading where the price trends towards the South by obeying a down-trending trendline. In one of our lessons, we learned the importance of choosing a chart for trendline trading. In today’s example, we find out one more point to go with that. Let us get started.

It is an H4 chart. The chart shows that the price heads towards the South by having a bullish correction. The chart shows that the price produces a double bottom. The buyers may keep their eyes on the chart to go long upon having a breakout at the neckline.

The price makes a breakout at the neckline and heads towards the North. It makes a bearish correction and resumes its bullish journey. The last wave suggests that the buyers may push the price towards the level, where the price made its bearish move earlier.

It does not. The price finds its resistance and makes a strong bearish move. It makes a breakout at the last swing low. What does that mean? It means we have two swing highs. With those, we can draw a down-trending trend line and wait for the price to go towards the trendline’s resistance to go short in the pair.

The price attempts to go towards the trendline’s resistance several times. However, it comes back to its horizontal support again. If we look at the horizontal support, the price bounces at the level three times. It becomes daily support, considering the number of H4 candles. On the other hand, the trendline’s resistance is an H4 resistance. The question is whether the H4 trendline traders should wait to go short from the trendline’s resistance or not? Let us proceed to the next chart and find more about it.

The chart produces a bearish engulfing candle. The price trends towards the South from the same trendline’s resistance. It produces another bearish reversal candle in the same chart.  Ideally, trendline traders should trigger a short entry right after the last candle closes by setting their take profit at the horizontal support. This is how the daily support is respected as well as the H4 sellers go short in the pair by using the trendline trading strategy. Let us see how the trade goes.

Wow! The price heads towards the South with good bearish momentum. It hits the target and makes a breakout at the horizontal support. It means the trendline is still active. The sellers may wait again for the price to go towards the trendline’s resistance and to get a bearish reversal candle to go short in the pair.

We must choose the right chart for trendline trading to take entry and we must remember the bigger time frame’s support/resistance to set take profit. If the risk-reward ratio is at least 1:1, we may take entry. If it is less than 1:1, we may skip taking entry and concentrate on some other charts.

Categories
Forex Market Analysis

Russell 2000 in Consolidation, Expecting for More Upsides

Overview

Overview

Overview

The Russell 2000 Index raised over 64% off its lowest level of the year, advancing from the extreme bearish to the extreme bullish sentiment zone. The incomplete complex corrective structure, still in progress, calls for more upsides in the coming trading sessions.

Market Sentiment Overview

This year, the Russell 2000 index is underperforming by 6.24% (YTD); however, it continues its recovery from the first quarter massive sell-off, when the U.S. index plummeted until its lowest level of the year at 953.77 pts, currently advancing 64.38% off its lows. 

The Russell 2000’s daily chart shows it’s moving inside the 52-week high-low range, exposing the development of a consolidation formation in the extreme bullish sentiment zone. Simultaneously, the 71-point reading observed in the fear and greed index reveals a bullish bias, helping support the upward bias that now prevails on the Russell 2000 Index. 

On the other hand, Russell 2000’s volatility index shows it’s moving in the extreme bearish sentiment zone, which increases the bullish perspective for the U.S index grouping the 2,000 small-cap U.S. companies.

Consequently, both the market structure consolidating in the extreme bullish sentiment zone and the decreasing volatility observed, lead us to expect further upsides for the following trading sessions, which could make it advance till its opening level of the year, at 1,672 pts.

Elliott Wave Outlook

The short-term overview under the Elliott wave perspective is shown in its 4-hour chart, which reveals the structure of a bullish sequence that remains intact since March 23rd when Russell 2000 found fresh buyers at 963.62 pts.

In the previous chart, we distinguish Russell 2000’s upward progression, moving in a complex corrective formation identified as a double three pattern (3-3-3) of Minute degree, marked in black, which belongs to a wave B of Minor degree labeled in green. 

The complexity level in the corrective sequence could be understood under the alternation principle context. Observing the first chart and considering the aggressive sell-off, lasting about in one month (since mid-February till mid-March), the alternation principle states that after a high-momentum level movement, a reduced-momentum move comes next, and vice versa.

Currently, Russell 2000 advances in wave (c) of Minuette degree, which began on July 10th when the U.S. index ended the wave e of the triangle pattern corresponding to wave (b) in blue. Once wave (b) was completed, the market participants pushed prices higher, carrying it till the 1,608 level on August 11th after the Russell 2000 Index found stiff resistance, which ended wave iii of Subminuette degree identified in green.

Consequently, we expect a limited sideways movement during the following trading sessions before continuing its advance toward fresh highs. Russell’s next upward movement could boost it to the 1,702.17 level, to test last February’s highs.

Categories
Forex Price Action

Strong Reversal Pattern in the Daily Chart? Make Full Use of It

In today’s lesson, we are going to demonstrate an example of a daily chart, which ends up offering an H4 entry by producing a Morning Star in the daily chart. The Morning Star is one of the strongest bullish reversal patterns. The combination traders may make full use of it too. This is what we are going to demonstrate in today’s lesson. Let us get started.

In today’s lesson, we are going to demonstrate an example of a daily chart, which ends up offering an H4 entry by producing a Morning Star in the daily chart. The Morning Star is one of the strongest bullish reversal patterns. The combination traders may make full use of it too. This is what we are going to demonstrate in today’s lesson. Let us get started.

In today’s lesson, we are going to demonstrate an example of a daily chart, which ends up offering an H4 entry by producing a Morning Star in the daily chart. The Morning Star is one of the strongest bullish reversal patterns. The combination traders may make full use of it too. This is what we are going to demonstrate in today’s lesson. Let us get started.

It is a daily chart. The chart shows that the price makes a bearish move. The last candle closes within a level, where the price had a bounce earlier. The buyers may keep their eyes on the chart to get a bullish reversal to go long in the pair. Let us proceed to the next chart to find out what happens next.

The chart produces a Doji candle. It means neither the buyers nor the sellers are confident. The next candle is going to be very crucial. A bearish candle may drive the price towards the South. On the other hand, a bullish reversal candle may push the price towards the North.

The candle comes out as a bullish engulfing candle closing well above the Doji candle’s upper wick. It is a sign that the buyers may take over. Do not forget that the chart produces a Morning Star. It is one of the strongest bullish reversal patterns. The buyers on the daily chart may keep their eyes on the pair to go long with their different strategies. What do the daily-H4 combination traders do? They are to flip over to the H4 chart to find out long entry. Let us flip over to the H4 chart.

The H4 chart shows that the price heads towards the North with good bullish momentum. The price has not produced any bearish candles yet. The combination traders are to wait for the price to consolidate and produce a bullish reversal candle to go long in the pair.

The chart produces a bearish candle. The candle length suggests that the bull may show its strength in the next candle. If that happens, the buyers may find the opportunity to trigger a long entry.

The chart produces a bullish engulfing candle closing well above consolidation resistance. The buyers may trigger a long entry right after the last candle closes. Let us proceed to the next chart to find out how the entry goes.

The price heads towards the North further. Do not forget to notice the upper wick’s length. It means buyers on the minor charts have had a feast here. Most probably, it is because of the Morning Star in the daily chart. When a daily chart produces a Morning Star, it usually attracts buyers in the minor charts and vice versa. Thus, keep your eyes on the daily chart and make full use of it when it produces such a strong reversal pattern.

Categories
Forex Price Action

Trend Line Trading: Establishment and Choosing the Chart Timeframe

In today’s lesson, we are going to learn how a trend line is established and how to choose the chart to trigger entry as far as trend line trading is concerned. Traders at the beginning often are carried away and select a wrong chart to trade with a trend line. The point is, we must choose the right time frame to make the best use of a trend line. Let us now find out how we can do that.

In today’s lesson, we are going to learn how a trend line is established and how to choose the chart to trigger entry as far as trend line trading is concerned. Traders at the beginning often are carried away and select a wrong chart to trade with a trend line. The point is, we must choose the right time frame to make the best use of a trend line. Let us now find out how we can do that.

In today’s lesson, we are going to learn how a trend line is established and how to choose the chart to trigger entry as far as trend line trading is concerned. Traders at the beginning often are carried away and select a wrong chart to trade with a trend line. The point is, we must choose the right time frame to make the best use of a trend line. Let us now find out how we can do that.

It is a daily chart. The chart shows that the price after making a bullish correction heads towards the South and makes new lower lows. We see four significant swing highs from where the price makes four swing low. If you are a trendline trader, you know from where you have to keep an eye on this chart, don’t you? Then again, let us explore it.

The price produces a spinning top followed by a bearish engulfing candle. It makes a bullish correction and finds its resistance at point B. The price makes a breakout at the last swing low and heads towards the South further. By joining two swing highs, we can draw a down-trending trend line.

The chart shows that the price is down-trending by obeying the drawn trend line with the first two points. Concentrate on the point C. This is where traders keep their eyes to get a bearish reversal candle to go short in the pair. The chart shows that the price produces an inverted hammer. The trend line sellers may go short below the last candle’s lowest low.

As expected, the price heads towards the South with good bearish momentum. The chart produces two consecutive bearish candles. Moreover, the chart makes a new lower low as well. This means the game is not over yet for the trend line sellers. They may wait to go short again from the resistance of the trendline upon getting a bearish reversal candle.

The chart produces a bearish inside bar. The sellers may go short again below the last candle’s lowest low. It seems that the sellers are having a feast here. This is the beauty of trend line trading.

The sellers again make a handful of pips. In fact, the price makes a breakout again at the last swing low. They may wait for the price to go towards the trendline and produce a bearish reversal candle at point E to go short again. Now, let’s flip over to the H4 chart and find out how it looks.

The chart shows that the price is down trending. However, it is tough to find out the signal candle. We get more than one bearish reversal candle at point B and C. At point D, it is extremely confusing were to trigger an entry. With the Daily chart, it is very explicit, though. To be able to choose the right chart that obeys a trend line, we may always concentrate on point B (2nd point) and calculate with which chart it responds more. We then keep our eyes on that particular chart to be able to take entry with precision.

 

Categories
Forex Daily Topic Forex Price Action

Trend Line Trading: It Takes at Least ‘two’ to Draw a Trend Line

In today’s lesson, we are going to demonstrate an example of trendline trading. We try to learn what steps traders need to take to trade using a trendline strategy. We are going to demonstrate a chart, which heads towards the North by obeying an up-trending trend line. With the trend line trading strategy, we must remember, “It takes at least ‘two’ lows to draw a trend line.” Let us proceed and find out how it works.

In today’s lesson, we are going to demonstrate an example of trendline trading. We try to learn what steps traders need to take to trade using a trendline strategy. We are going to demonstrate a chart, which heads towards the North by obeying an up-trending trend line. With the trend line trading strategy, we must remember, “It takes at least ‘two’ lows to draw a trend line.” Let us proceed and find out how it works.

In today’s lesson, we are going to demonstrate an example of trendline trading. We try to learn what steps traders need to take to trade using a trendline strategy. We are going to demonstrate a chart, which heads towards the North by obeying an up-trending trend line. With the trend line trading strategy, we must remember, “It takes at least ‘two’ lows to draw a trend line.” Let us proceed and find out how it works.

The chart shows that the price produces a double bottom and heads towards the North. The buyers may wait for the price to make a bearish correction and create a bullish reversal candle to go long in the pair. The last candle comes out as a bearish pin bar. The price may make a bearish correction from here.

The price makes a long bearish correction. It produces several Doji candles. However, it does not create any bullish momentum. It is an H4 chart. The correction takes more than six candles. The level of resistance becomes a daily resistance. Some buyers may skip eyeing on the chart to go long in the pair. Let us see what happens next.

The chart produces a bullish engulfing candle and heads towards the North by making a new higher high. Do you notice anything here? Yes, we can draw an up-trending trend line. Let us draw it.

Over here, we have two swing lows. At the second swing low, the price makes a breakout at the last swing high. It means as far as fundamentals of drawing a trend line is concerned, the chart offers the buyers to draw an up-trending trend line. We must remember that it takes at least two swing lows (price trending higher from those points) to draw a trend line. The buyers are to wait for the price to come at the level of support and produce a bullish reversal candle to go long in the pair.

The price comes at the level of support and produces a bullish pin bar. It is delivered right at the trendline’s support. The buyers may get ready to go long in the pair above the reversal candle’s highest high.

The next candle comes out like a spinning top, which breaks the reversal candle’s highest high. However, the price does not head towards the North according to the buyers’ expectations. Nevertheless, on the next day, the price makes bearish correction at intraday charts and heads towards the North. Let us proceed to the following chart to find out how the trade goes.

The price hits the first target in a hurry. It makes a breakout at the level and creates a new higher high as well. It means the buyers are going to keep their eyes on the chart to go long again from the trendline’s support, and this is the beauty of the trendline trading.

Categories
Forex Daily Topic Forex Fibonacci

Fibonacci Trading: Fibonacci Levels Help Traders be Precise

Fibonacci Trading: Fibonacci Levels Help Traders be Precise

Fibonacci Trading: Fibonacci Levels Help Traders be Precise

Fibonacci Trading: Fibonacci Levels Help Traders be Precise

In today’s lesson, we are going to demonstrate an example of a chart where the price makes a bullish move from 78.6% Fibonacci level. The 78.6% Fibonacci level often makes the price reverse towards the trend’s direction. In today’s example, the price produces a Morning Star and heads towards the trend’s direction with good bullish momentum. Let us see how it happens.

It is an H4 chart. The price produces double bottom and heads towards the North with good bullish momentum. On its way, it produces only a single bearish candle. The buyers are to wait for the price to make a bearish correction and to get a bullish reversal candle to go long with a good risk-reward in the pair.

The chart produces a bearish inside bar. Then, it produces one more bearish candle. Look at the last candle. It comes out as a doji candle. It seems that the price may have found its support. A strong bullish reversal candle may attract the buyers to go long in the pair and push the price towards the North to make a new higher high.

The chart produces a bullish engulfing candle. The combination of the last three candles is called Morning Star. This is one of the strongest bullish reversal patterns in the Forex market. The buyers may trigger a long entry right after the last candle closes. They may set stop loss below the signal candle’s lowest low. We’ll find out the take-profit level in a minute. Let us first see how the trade goes here.

The price heads towards the trend’s direction with extreme bullish momentum. The last candle comes out as a bearish inside bar. It may make a bearish correction now. Some sellers may close their trade manually after the last candle. You may notice if they do that, they lose a few pips. How about if we knew that the price may make a bearish reversal from here before the last candle is produced. Yes, it is possible by using Fibonacci levels. Let us draw Fibonacci levels on the chart.

The chart shows that the price trends from 78.6% level. When the level of 78.6% makes the price move, it usually makes a reversal at 138.2%. Thus, if we set our take profit at 138.2%, we do not have to wait to get a bearish reversal candle to close our trade manually. It saves our time and gets us more pips too. This is why Fibonacci (extension/ retracement) is called a magic trading tool, since it helps traders in taking and exiting with precision.

Categories
Forex Price Action

Trend Line Trading: Keep an Eye at New Highs/Lows

In today’s lesson, we are going to demonstrate an example of trendline trading. The trendline trading is one of the most consistent trading strategies. Thus, a trader can make profits by properly dealing with how trends develop. In today’s example, we will demonstrate a chart with an up-trending trendline, where the price goes down trendline’s support. However, it produces a bullish reversal candle and ends up offering a long entry. Let us get started.

In today’s lesson, we are going to demonstrate an example of trendline trading. The trendline trading is one of the most consistent trading strategies. Thus, a trader can make profits by properly dealing with how trends develop. In today’s example, we will demonstrate a chart with an up-trending trendline, where the price goes down trendline’s support. However, it produces a bullish reversal candle and ends up offering a long entry. Let us get started.

In today’s lesson, we are going to demonstrate an example of trendline trading. The trendline trading is one of the most consistent trading strategies. Thus, a trader can make profits by properly dealing with how trends develop. In today’s example, we will demonstrate a chart with an up-trending trendline, where the price goes down trendline’s support. However, it produces a bullish reversal candle and ends up offering a long entry. Let us get started.

The chart shows that the price heads towards the North upon finding its support. It has several higher lows that can be used to draw trendlines. However, before drawing a trendline on a chart, we have to spot out the most significant higher lows to draw an upward trend line and, conversely, the most significant lower highs to draw a downtrend line. Over here, look at the two points with the ‘right’ marks. Let us proceed to the next chart to find out how it looks with a drawn trendline.

We have drawn the trendline by using two right marks. Ideally, traders are to wait for the price to come at the level of support (trendline’s support) and get a bullish reversal candle to go long in the pair. At the last swing low, the price approaches at the level of support. However, the chart does not produce a bullish reversal candle at the level of support. They may wait for the price to come right at the drawn trendline’s support.

The price comes down. One of the bearish reversal candles closes below the level of support. The sellers may become interested here that the price may end up making a bearish breakout. If the next candle closes below the trendline, the sellers may consider having a breakout. Let us find out what happens.

The next candle does not close below the trendline. It comes back in. It means that the price obeys the trendline’s support. The last candle comes out as a bullish Marubozu candle forming by testing the trendline support. The buyers may go long in the pair again and push the price towards the last swing high.

The price heads towards the North at a moderate pace. As far as the bullish reversal candle is concerned, it is supposed to create more buying pressure. Anyway, the price hits buyers’ first take profit target. It may continue its bullish journey if it makes a bullish breakout at the last swing high. If it does not make a new higher high but comes back at the trendline’s support, the price may get choppy. If it makes a new higher high, the trendline becomes active, and the buyers may wait to go long from the trendline’s support again.

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Forex Price Action

Equidistant Channel: An Excellent Price Action Trading Tool

In today’s lesson, we are going to demonstrate a trade setup with Equidistant Channel. Price action traders rely on Equidistant Channel a lot. It is one of the best price action trading tools. However, Forex traders’ life is not as easy as it seems. Like other trading tools, Equidistant Channel needs adjustment. To be able to do that traders need enough knowledge and experience. Let us now proceed to find out what a trader may need to do to make it work for him.

In today’s lesson, we are going to demonstrate a trade setup with Equidistant Channel. Price action traders rely on Equidistant Channel a lot. It is one of the best price action trading tools. However, Forex traders’ life is not as easy as it seems. Like other trading tools, Equidistant Channel needs adjustment. To be able to do that traders need enough knowledge and experience. Let us now proceed to find out what a trader may need to do to make it work for him.

In today’s lesson, we are going to demonstrate a trade setup with Equidistant Channel. Price action traders rely on Equidistant Channel a lot. It is one of the best price action trading tools. However, Forex traders’ life is not as easy as it seems. Like other trading tools, Equidistant Channel needs adjustment. To be able to do that traders need enough knowledge and experience. Let us now proceed to find out what a trader may need to do to make it work for him.

To draw the equidistant channel, we need to find out at least four points. Two swing highs and two swing lows are the best combinations. It works with three swing highs and one swing low or vice versa. In the chart above, we have two swing highs and two swing lows. In naked eyes, it seems that we will be able to draw an equidistant channel here.

We have drawn an equidistant channel. The price is now at the resistance. Some traders go long from here. Ideally, to get a good risk-reward, traders should wait for the price to go at the level of resistance and produce a bearish reversal candle to go short in the pair. Let us find out what happens next.

The chart does not produce a bearish reversal candle. It breaches the level instead. It means this is not a valid equidistant channel anymore. The sellers must be disappointed. What do you think is there any twist in the tail?

The chart makes the new lowest low. It gives three swing highs and one swing low. It means we can draw another equidistant channel. Look at the above chart where the price getting a bounce at the level of support. The price again heads towards the North. Traders may wait for the price to get a rejection at the level of resistance and produce a bearish reversal candle to go short in the pair again.

Here it comes. The level of resistance produces a bearish engulfing candle right at the level of resistance. Traders may trigger a short entry right after the last candle closes. To set take profit, they may use the level of equidistant support. The price often keeps going down with a down-trending equidistant channel. However, the best practice is closing down the trade at the first bounce in case of down-trending equidistant channel trading. Let us find out how the trade goes.

The price hits take profit level like a rocket. Some may regret that they should hold the position and close it manually. Do not forget the rule of sticking with the rule in forex trading. We have seen that the chart does not produce a signal on the first occasion. It rather breaches and lets traders draw another equidistant channel. Yes, it does offer an excellent entry for the sellers too.

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Forex Basic Strategies

Forex Momentum Trading With The Help of RSI & MA Indicators

Introduction

Introduction

Introduction

If you are a trader, you should have some good ideas about the forex market. After having the basic knowledge and related stuff, you, as a trader, need to find a profitable forex strategy. After that, you need to find a proven track record of your strategy.

Therefore, you can easily implement it and start earning through your trades within a short time. However, it would help if you kept in mind that the forex is an uncertain and unstable trading market. Therefore, you must have a profitable and excellent trading strategy if you want to sustain here.

If you search on the internet, you will find thousands of proven strategies out there. The good thing is that experienced traders or mathematicians have created most of the strategies. You have to choose the best one for you.

However, the momentum-based strategy is profitable and famous too. Lots of traders are using this one as their primary trading strategy. However, if you find another suitable strategy, you can go for it besides the momentum trading strategy to boost your probability.

What is The Momentum Trading Strategy?

Momentum is a term that refers to buying a currency pair when it goes up and selling when it goes down. It is a very popular trading strategy among most professional traders.

When a big volume starts a movement, it creates a reliable market trend. Therefore, market momentum will be towards the trend that we can identify by reading the chart. In a strong bullish momentum, the price will aggressively create higher highs with a constant speed.

Similarly, in a strong bearish momentum, the price will create lower lows. After identifying the market momentum, we will move to one timeframe lower to take the trade.

However, forex trading always has an uncertain environment. No one can guarantee a 100% movement of price. However, when the market is in a trend, we can make a decent profit by using the momentum-based trading strategy.

Momentum Trading Strategy

Here is the most important part that you are looking for passionately. You will find the best momentum trading strategy for both the newbie and experienced traders. This guideline will answer all your queries.

Let’s have a look at the step by step approach of the momentum trading strategy.

Select the Currency Pair

First, you need to determine the price change from the last three months of some selected currency pairs. Also, don’t forget to do this calculation for the weekend. Once you find the last three months’ price changes, you need to research the last 13 weeks’ price movement.

In terms of currency pair, there is no clear indication of how much pair you should choose. Nevertheless, the ideal and wise option is to go through seven major currency pairs and cross pairs. It is better to put less importance on exotic pairs as they are risky because of their volatility.

After calculating the last three months’ price changes, it’s time to select the currency pair that moved much more than the others. As it is a proven profitable trading strategy, a currency pair can provide a 17% average annual profit. As per the last seven years of market observation, three months’ price has become a reliable factor while selecting the momentum-based strategy.

Entry

As we have a predetermined trend, you need to implement a trend continuation trading strategy to improve your overall trading result better. Moreover, many trend continuation strategies are there for you; you need to select a suitable one. In this trading strategy, we will use 20 Dynamic Exponential Moving Average (EMA) as a trend continuation indicator.

You should enter the trade towards the direction based on market momentum once the price rejects the 20 EMA with its body. Moreover, there is a good and effective solution for determining the trends’ strength: RSI. RSI is a good indicator, as well.

RSI stands for the Relative Strength Index. It has a 0-100 levels indicator. If the price goes below 30 levels, the price is likely to reverse towards the upside. On the other hand, if the price moves above the 70 RSI, it is likely to move down.

For a sell trade follow the following condition:

  • The price is moving towards the direction set in the market momentum.
  • The RSI is moving down from the 70 or 80 levels.
  • Price rejects the 20 EMA with a reversal candlestick formation.

Similarly, for a buy trade follow the following condition:

  • The price is moving towards the direction set in the market momentum.
  • The RSI is moving up from the 20 to 30 levels.
  • Price rejects the 20 EMA with a reversal candlestick formation.

Later on, enter the trade as soon as the candle closes above or below the dynamic level.

Stop Loss and Take Profit

After taking a trade, you need to determine the strength of the trend. You can set the stop loss 15 pips above or below the reversal candle or 20 days Average True Range (ATR).

To set the take profit, you need to determine how strong the running trend is. Moreover, impulsive pressure will indicate that the price may break the near-term support or resistance level. In that case, you can increase your take profit level. Alternatively, you can book some profit once you see the price stalling at the support or resistance levels.

Summary

In a nutshell, the summary of the entire guideline is here-

  • Find out the direction by calculating the last 13 weeks of market momentum.
  • Follow the market direction using a dynamic and hourly candle level of 20 EMA with a proper candlestick pattern.
  • According to the price action or ATR, set your stop-loss.
  • Following the market movement, you can set your take profit.

In this momentum trading strategy, trade management is the most challenging part as it requires to follow the market trend strongly. Since we know the forex market is uncertain, we should follow the market trend robustly. Moreover, you should follow an appropriate money management system that goes with your personality, and for each trade, it is wise to take less than 2% risk.

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Forex Market Analysis

Daily F.X. Analysis, August 11 – Top Trade Setups In Forex – Stronger Dollar In Play! 

On the news front, the economic calendar is a bit light and may not be offering any major economic release. Therefore, we need to trade based upon stronger dollar sentiment, as traders are likely to price better than expected NFP data from last week.

On the news front, the economic calendar is a bit light and may not be offering any major economic release. Therefore, we need to trade based upon stronger dollar sentiment, as traders are likely to price better than expected NFP data from last week.

On the news front, the economic calendar is a bit light and may not be offering any major economic release. Therefore, we need to trade based upon stronger dollar sentiment, as traders are likely to price better than expected NFP data from last week.

Economic Events to Watch Today  

 

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.17363after placing a high of 1.18005 and a low of 1.17358. Overall the movement of the EUR/USD pair remained bearish throughout the day. The EUR/USD pair extended its previous day’s losses on Monday amid the strong U.S. dollar and increasing US-China tensions. The main driver of the EUR/USD pair on Monday was the U.S. dollar.

The U.S. Dollar was strong across the board with the U.S. Dollar Index at 93.5 level, with investors taking comfort from President Donald Trump’s move to boost the economy in the wake of coronavirus pandemic.

Over the weekend, U.S. President Trump signed a series of executive orders aimed at enhancing the economic condition. The orders included an extension of expanded jobless benefits at a lower rate of $400 a week. It was down from the previous $600 a week. The State government will pay 1/4th of the bill, which was also included in Trump’s order.

However, it is not clear that the executive orders can withstand court scrutiny as the power relies on Congress. Nevertheless, the President’s orders were an attempt to play his part in breaking the impasse. Though the talks between Republicans & Democrats on August 7 broke some of the differences, they still did not show any consensus. The new round of talk is expected to resume at some point, but the date is not yet confirmed.

The chances for a $3 trillion stimulus package have been compromised to $2 trillion by Democrats, but that is still a trillion more than the framework that the ruling party aimed for. Additionally, the JOLTS Job Openings data from the U.S. on Monday came in as 5.89 M in June in comparison to 5.30M of forecasts and supported the U.S. dollar that weighed on EUR/USD pair.

From the Europe side, the Sentix Investor Confidence for August dropped to -13.4 from the anticipated -16.0 and the previous -18.2 and supported Euro that kept the losses of EUR/USD pair limited on Monday.

Meanwhile, early on Monday, the Defence Ministry of Taiwan said that a Chinese jet fighter crossed the median of the Taiwan Strait line, possibly in response to the U.S. Health Secretary Alex Azar’s visit to Taipei.

Any form of American recognition of the island nation Taiwan that China claimed its own make Beijing angry, and hence, it responded. The tensions in Taiwan have grown since the Hong Kong clash between the U.S. & China.

Besides this, the world’s biggest nations are also clashing over the technological front; recently, the U.S. banned American firms from dealing with TikTok and WeChat app. However, the most important matter between both countries lies with the fulfillment of the phase-one trade deal. Negotiators from both sides are scheduled to meet this week to analyze the achievements of the deal. The risk-off market sentiment was picking its pace after the escalation of US-China tensions, and it has weighed on the riskier pair EUR/USD.

Daily Technical Levels

Support Pivot Resistance
1.1713 1.1758 1.1780
1.1691 1.1825
1.1646 1.1848

EUR/USD– Trading Tip

The single currency Euro slipped against the U.S. dollar amid increased USD demand as traders started to price in stronger than expected NFP data released on Friday. The EUR/USD is now bouncing off the support level of the 1.1728 level. It may head higher towards 23.6% Fibonacci retracement level of 1.1768, and above this, the next resistance can stay at 1.1765 level, which marks 38.2% Fibonacci retracement level.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.30730 after placing a high of 1.31032 and a low of 1.30188. Overall the movement of GBP/USD pair remained bullish throughout the day. The GBP/USD pair rose on Monday ahead of key data due later this week, despite the U.S. dollar’s strength. The risk sentiment favored some of the factors, and investors believe that further upside could be on the horizon.

The latest higher move in the Pound was because of the key economic data, including the update of the labor market and second-quarter GDP scheduled to be released later this week. Moreover, the GBP/USD pair was also supported by the improving risk sentiment in the market after the hopes about the US-China phase-one trade deal became optimistic.

The U.S. trade representative and U.S. Treasury Secretary will meet the Chinese Vice Premier later this week to evaluate the implementation of the phase-one trade deal by China. China has assured that it will fulfill its promises made under the agreement that include the increased U.S. farm purchases and the better protection of Intellectual property rights.

This faded some of the risk-off market sentiment and caused GBP/USD to surge.

The risk sentiment was backed by the comments of WHO Chief Scientist Dr. Soumya Swaminathan, who praised the global efforts in the development of the COVID-19 vaccine. She reported that almost 200 vaccines were being developed globally and were in the stage of clinical or pre-clinical trials. According to her, 24 vaccines had entered the clinical trials in human beings.

The unprecedented global efforts to develop the coronavirus vaccine triggered the risk-on market sentiment as various potential paths to the end of coronavirus gave hope to the investors. The improved risk appetite gave a push to GBP/USD pair on Monday.

On Brexit front, the U.K. media has suggested that David Frost remain the U.K.’s chief Brexit negotiator and will stay on committed to securing an agreement with the European Union even if a deal is not secured by the end of September.

The U.K. formally left the E.U. in January after voting to leave in 2016, and negotiations to reach post-Brexit trade deal are currently deadlocked because both sides have failed to reach a consensus on various matters.

As the end of the transition periods is getting closer day by day, Prime Minister Boris Johnson has vowed to end the year with or without a deal, outside Europe. David Frost is set to take up a new position as National Security Advisor (NSA) in September. However, his position as Chief Brexit Negotiator will remain in place.

Meanwhile, the U.K. government pledged a further 20 Million Pounds in aid to Lebanon following Tuesday’s deadly explosion in Beirut. The U.K.’s support will directly go to the injured and people displaced by the explosion. It will also provide food, medicine, and urgent supplies to the needy in Lebanon affected by the explosion.

The U.K. government has already given 5 Million Pound to the emergency relief effort and said that it would stand by the Lebanese people in the hour of need. This also helped GBP in recovering its position and pushed GBP/USD pair higher on Monday.

Daily Technical Levels

Support Pivot Resistance
1.3024 1.3064 1.3110
1.2978 1.3150
1.2938 1.3196

GBP/USD– Trading Tip

On Tuesday, the GBP/USD consolidates at 1.3067 level, holding right above the 50 periods EMA support area of 1.3040 level while the bearish breakout of 1.3040 level can extend selling unto 1.2918 level. Recently as we can see in the chart above that the GBPUSD pair has violated its upward trendline that supported the pair around 1.3130 level, and now below this, we can expect GBP/USD to continue trading bearish. The GBP/USD should show a bearish crossover to confirm a strong selling bias in the Cable. On the higher side, Sterling may find resistance at 1.3105 and 1.3175. Let’s consider selling below 1.3045 level today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair succeeded to break its previous session thin trading range and rose above 106.00 marks mainly due to the broad-based U.S. dollar fresh strength, buoyed by the Friday’s better-than-expected employment report, which eventually helped the U.S. dollar to put the bids. 

On the other hand, the upbeat market sentiment, backed by the optimism that the U.S. policymakers are showing signs to resume talks about the stimulus package, undermined the safe-haven Japanese yen and contributed to the pair’s gains. In the meantime, the risk-on market sentiment was further bolstered by the upbeat key U.S. and China data, which tends to urge buyers to invest in riskier assets instead of safe-have assets. Currently, the USD/JPY currency pair is currently trading at 106.00 and consolidating in the range between 105.72 – 106.06.

Despite concerns about the ever-increasing coronavirus cases across the world and worsening US-China relations, the investors continued to cheer the hopes of the U.S. fiscal stimulus package triggered by the signs that White House officials and congressional Democrats showed a willingness to compromise on another stimulus package to bolster the stalled economy. 

On the other hand, U.S. President Donald Trump fulfilled his promise to take executive action as the U.S. Congress failed to offer any outcome over the country’s latest stimulus measures. As a result, U.S. President Trump’s signed four executive orders to release unemployment claim benefits, help with student loans, and aid those living in a rented house, which also exerted a positive impact on the market trading sentiment and contributed to the currency pair losses.

Moreover, the upbeat market sentiment was being supported by Friday’s better-than-expected employment report. Details suggested Non-farm payrolls increased by 1.763 million in July month, vs. the estimated 1.6 million increase. The unemployment rate also declined to 10.2% in July, compared to June’s reading of 10.5%.

Despite the positive data, the doubts remain about the U.S. economic recovery amid the on-going surge in the coronavirus cases. As per the latest report, the U.S. crossed the five million COVID-19 cases as of August 10, according to Johns Hopkins University. Whereas Australia’s 2nd-most populous state, the epicenter of the pandemic, Victoria, reported the biggest single-day rise in deaths. As per the latest figures, Australia’s coronavirus death losses crossed 314 as Victoria announces a daily record of 19 deaths and 322 new cases in the past 24 hours. 

Apart from the virus woes, the long-lasting struggle between the world’s two largest economies remained on the cards as U.S. President Donald Trump turned off the business tap for China’s TikTok and WeChat. As well as, the U.S. imposed sanctions on the Hong Kong Leader Carry Liam, which keeps challenges the upbeat market tone. In the meantime, the White House National Security Adviser Robert O’Brien blamed China while saying that the “Chinese hackers have been targeting U.S. election infrastructure ahead of the 2020 presidential election.” These gloomy updates capped further upside in the currency pair by giving support to the safe-haven Japanese yen.

As a result of the upbeat U.S. data, the broad-based U.S. dollar succeeded in gaining some positive traction on the day. Still, the bullish bias in the U.S. dollar is expected to be short-lived as doubts remain about the U.S. economic recovery amid on-going coronavirus cases. However, the gains in the U.S. dollar became the key factor that kept the currency pair higher.

Daily Technical Levels

Support Pivot Resistance
105.6900 105.9500 106.1900
105.4500 106.4500
105.1900 106.7000

USD/JPY – Trading Tips

The USD/JPY has made a slight bullish recovery from 105.780 to 106.150 area, especially after examining the 38.2% Fibonacci support level of 105.650. A bullish breakout of 106.467 resistance level can drive more buying until the next resistance area f 107.198. On the lower side, the USD/JPY may find support at 105.600 and 105.078, extended by the 38.2% and 61.8% Fibonacci retracement level. The current market price of USDJPY is staying over 50 EMA, which extends support and may push the pair higher. Let’s consider buying above 105.750 level today. Good luck! 

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Forex Market Analysis

Daily F.X. Analysis, August 10 – Top Trade Setups In Forex – Market Prices In NFP Outcome! 

On the news front, eyes will be on the low impact events such as Sentix Investor Confidence from Eurozone and JOLTS Job Openings from the U.S. Besides, the stronger NFP data may keep dollar bullish.

On the news front, eyes will be on the low impact events such as Sentix Investor Confidence from Eurozone and JOLTS Job Openings from the U.S. Besides, the stronger NFP data may keep dollar bullish.

On the news front, eyes will be on the low impact events such as Sentix Investor Confidence from Eurozone and JOLTS Job Openings from the U.S. Besides, the stronger NFP data may keep dollar bullish.

Economic Events to Watch Today  

 

 

EUR/USD – Daily Analysis

The EUR/USD prices were closed at 1.17849 after placing a high of 1.18829 and a low of 1.17550. Overall the movement of the EUR/USD pair remained bearish throughout the day. The EUR/USD pair broke under the 1.1800 level and reached 1.175 the lowest in 3 days after the U.S. dollar took its pace and outperformed in the market. The greenback rebounded from its two years low and trimmed its weekly losses on Friday that weighed on EUR/USD pair.

The rising tensions between the U.S. & China have already driven the U.S. dollar higher, and the U.S. jobs data on Friday added further strength to it. The latest development in the US-China conflict was the U.S. imposed sanctions on officials in Hong Kong and China, including Hong Kong leader Carrie Lam, over the suspension of protests in the territory.

On the data front, at 11:00 GMT, the German Industrial Production for June increased to 8.9% from the forecasted 8.3% and supported Euro. The German Trade Balance also came in positive as 14.5 B against the expected 10.3 B. At 11:45 GMT, the French Industrial Production for June increased to 12.7% against the forecasted 8.6% and supported Euro. The French Prelim Private Payrolls for the quarter came in as -0.6% against the anticipated -1.0%.

The French Trade Balance for June came in negative as 8.0B against the projected -7.1B and weighed on Euro. The Italian trade Balance at 13:00 GMT came in line with the expectations of 6.23 B.

Investors failed to cheer the positive data from Europe as the U.S. dollar was stronger on Friday, and the sharp decline in Turkish Lira over the past week exerted downside pressure on Euro.

A sharp selloff triggered the Euro’s correction in Turkish Lira that dropped it to the lowest of 2 years, the historic currency crisis of August 2018. The reserves of Central Banks of Turkey (CBRT) went negative for a couple of weeks, which caused a surge in the Turkish Lira’s selloff. However, last month, CBRT made a massive purchase of gold and overtook Russia as the world’s largest gold purchaser. In the lira currency crisis of 2018, Euro underperformed during that time period, and this has raised fears that if the history repeated, then downside risks for Euro can be seen.

However, on the U.S. front, at 17:30 GMT, the Average Hourly Earnings for June increased to 0.2% from the forecasted -0.5% and supported the U.S. dollar. The Non-Farm Employment Change suggested that 1.8M jobs were created in June against the expectations of 1.6B and supported the U.S. dollar. In the month of June, the Unemployment Rate also fell to 10.2% from the expected 10.5% and weighed on the U.S. dollar. The strong U.S. dollar weighed heavily on EUR/USD pair and dragged its prices to the level below 1.8000 on Friday.


Daily Technical Levels

Support Pivot Resistance
1.1773 1.1783 1.1792
1.1764 1.1802
1.1754 1.1812

EUR/USD– Trading Tip

The EUR/USD pair retraced lower to trade at 1.1793 level. On the upside, the EUR/USD may encounter resistance at 1.1865 and 1.1909 mark. A bullish breakout at this level can extend the buying trend to 1.2050. Today, the EUR/USD is likely to find support at 1.17650 level, and below this, further selling can be seen until the 1.1713 level. Let’s keep a focus on 1.1805 level to stay bearish below this in the EUR/USD pair.

GBP/USD – Daily Analysis

The GBP/USD pair was closed at 1.30521 after placing a high of 1.31492 and a low of 1.30092. Overall the movement of GBP/USD pair remained Bearish throughout the day.

The Pound to U.S. dollar exchange rate fell by -0.3% on Friday to a low of 1.3000. The Sterling fell against the U.S. dollar after the concerning comments from the UK Chancellor Rishi Sunak, who warned that the extended furlough scheme would only give false hopes to the people. Mr. Sunak said that it was wrong to trap the people in a situation and pretended that there was always a job that they can go back to.

However, apart from this downbeat comment, Mr. Sunak also raised hopes for a possible Brexit deal and said that he was confident that there was a possibility to get an agreement with the E.U. by September. As in result, GBP investors became hopeful that there was possible progress in the EU-UK trade talks.

On the data front, the Halifax House Price Index for July rose from 0% to 1.6% and beat the expectations of 0.2%. However, the GBP investors failed to cheer the U.K.’s positive data as the U.S. dollar was strong across the board on Friday.

The U.S. dollar gained traction on the board on Friday after the release of better than expected U.S. jobs data. The latest US Non-Farm Employment Change suggested an increase in the number of jobs created in June by the U.S. Department of Labor & Statistics to 1.8M from the expected 1.5M and helped the U.S. dollar gain traction.

The Average Hourly Earnings from the U.S. also rose to 0.2% from the previous -1.3% and the expected -0.5% and supported the U.S. dollar. The Unemployment Rate for June dropped to 10.2% against the expected 10.5% and May’s 11.1%. The less unemployment rate from the U.S. showed that the U.S. economy was moving on the recovery side even after the widespread coronavirus cases across the country.

The better than expected U.S. jobs data weighed heavily on GBP/USD pair and dragged it to 1.3000 level on Friday. The Sterling traders will be looking ahead to Monday’s release of the latest Retail Sales figures from the U.K. Any improvement in the U.K.’s retail sector would provide strength to Sterling.

The U.S. Dollar Investors will be looking at the publication of the US NFIB business optimism index for July. The demand for safe-have greenback can be lifted after any improvement in the outlook for the American economy. On Tuesday, the release of the U.K.’s ILO unemployment rate report for June. If the figures came in equal to 3.9% or less, we could see the GBP/USD pair go on the upward as fears of high unemployment will be diminished.

Daily Technical Levels


Support Pivot Resistance
1.3037 1.3052 1.3065
1.3024 1.3080
1.3010 1.3093

GBP/USD– Trading Tip

The GBP/USD consolidates at 1.3067 level, holding right above the 50 periods EMA support area of 1.3040 level while the bearish breakout of 1.3040 level can extend selling unto 1.2918 level. Recently as we can see in the chart above that the GBPUSD pair has violated its upward trendline that supported the pair around 1.3130 level, and now below this, we can expect GBP/USD to continue trading bearish. The GBP/USD should show

a bearish crossover in order to confirm a strong selling bias in the Cable. On the higher side, Sterling may find resistance at 1.3105 and 1.3175. Let’s consider selling below 1.3045 level today. 

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 105.912 after placing a high of 106.055 and a low of 105.478. Overall the movement of the USD/JPY pair remained bullish throughout the day. After falling for two consecutive days and staying flat for a day, USD/JPY pair rose and posted gains on Friday amid strong U.S. dollar comeback.

Since two years after U.S. President Donald Trump decided to ban U.S. transactions with two popular Chinese apps, the U.S. dollar rebounded from the lowest level. During the occasions of massive conflicts between the U.S. & China, the U.S. dollar has often preferred as a refuge, and on Friday, the U.S. dollar again used this status.

The U.S. President Donald Trump officially banned American companies from working with TikTok, the video streaming app, and WeChat, the social messaging app. the action to ban these companies was taken in response to the widespread fears of data privacy. However, the chances that the US-China conflict will rise further increased after this move, and hence, the U.S. dollar gained.

Meanwhile, the U.S. Treasury imposed sanctions on 10 top officials from Hong Kong and China, including the Hong Kong Leader Carrie Lam, as the protests arose in the territory against the new security law in Hong Kong.

Furthermore, the U.S.’s macroeconomic data also remained supportive of the U.S. dollar when it came to better than expectations on Friday. 

At 17:30 GMT, the highlighted Average Hourly Earnings rose to 0.2% in June from the negative expectations of -0.5% and supported the U.S. dollar. The Non-Farm Employment Change rose to 1763K from the forecasted 1530K and came in favor of the U.S. dollar. The greenback was also supported after the Unemployment rate for June also dropped to 10.2% from the expected 10.5%. In June, the better-than-expected U.S. jobs data gave a push to the U.S. dollar that added further strength to USD/JPY pair on Friday.

However, the gains remained limited as the data from Japan was also supportive of its local currency. At 04:30 GMT< the Average Cash Earnings for the year from Japan came in as -1.7% against the forecasted -3.0% and supported the Japanese Yen. The Household Spending for the year from Japan also came in as -1.2% against the expectations of -7.8% and supported the Japanese Yen. However, the Leading Indicators from Japan were released at 10:00 GMT, came in line with the expectations of 85.0%.

The positive data from Japan supported Japanese Yen on Friday that kept a check on USD/JPY pair gains. On the vaccine front, the risk sentiment was supported by the news that Russia was all set to register the world’s first COVID-19 vaccine next week. The Russian vaccine third phase trials were currently in progress, and Russia announced to disclose them on August 12. This vaccine was developed by the collaboration of the Russian Defence Ministry and the Gamaleya Research Institute.

The improvement in risk sentiment weighed on safe-haven Japanese Yen and contributed to the USD/JPY pair’s gains.

Daily Technical Levels

Support Pivot Resistance
105.8200 105.8900 105.9300
105.7800 106.0000
105.7200 106.0400

USD/JPY – Trading Tips

The USD/JPY continues to trade at 105.780 area with the bullish sentiment, especially after testing the 38.2% Fibonacci support level of 105.650. On the lower side, the USD/JPY may find support at 105.600 and 105.078 level, which is extended by the 38.2% and 61.8% Fibonacci retracement level. A bullish breakout of 106.467 resistance level can drive more buying until the next resistance area f 107.198. The current market price of USDJPY is staying over 50 EMA, which extends support and may push the pair higher. Let’s consider buying above 105.600 level today. Good luck! 

Categories
Forex Basic Strategies

Trading The Forex Market Using ‘Price Action With Context’ Strategy

Introduction

Introduction

Introduction

Price action with context is a process to predict a currency pair’s movement by reading the chart. The key price driver of a currency pair is fundamental events, but we can predict the future movement based on the present and past activity of the chart.

Central banks and financial institutes drive the forex market. Therefore, when they make the price move, they left some signs of their activity. As a price action trader, we will read their activity and anticipate what they might do in the future.

What is Price Action?

Price action is a process to inquiry about a currency pair’s price development. The main aim of the price action trading is to understand buyers’ and sellers’ sentiment in the price and predict future movement based on these. The price action trading is based on the combination of several trading indicators and price behaviors. Therefore, you might have to use multiple trading tools as a price action weapon.

The price of a currency pair moves based on the sentiment of buyers’ and sellers’. Therefore, using price action is logical that can provide accurate trading signals. In the price action with context trading strategy, we will identify a market direction by reading the chart and then enter a trade from the correction to get the maximum return with a minimum risk.

What are Price Action Weapons?

There are many parts in the price action trading that a trader should know, like- candlestick, support and resistance, trend, market flow, event level, key Level, and market context.

Candlestick

Candlestick represents the price movement of a currency pair for a specific timeframe. The four major parts of candlestick trading are- opening price, closing price, high price, and low price. Candlestick represents both continuation and reversal price direction based on the opening, closing, high and low. There are many candlestick patterns in the market, but in this trading strategy, we will focus on reversal candlesticks only.

Example of reversal candlestick – Pinbar, Engulfing Bar, and Two Bar, etc.

Support & Resistance

Support and resistance are a price zone from where the price is likely to change the direction. When the price is moving up, it will reverse as soon as it finds resistance. On the other hand, the price will stop moving down as soon as it finds a support level. There is more to know about the support and resistance in this trading strategy-

Event Level – Event level is a price zone that works as both support and resistance. It is the most important Level as both buyers and sellers put attention to it.

Key Level – key levels are a significant level in the daily or weekly timeframe to understand the price’s top and bottom.

Dynamic Level – Dynamic levels move with the price rather than a specific horizontal zone. In this trading strategy, we will use 20 Exponential Moving Average as the dynamic Level.

Market Context

Market context is a process to identify the nature of a trend. It has four elements:

Impulsive – When the price aggressively creates new highs and lows, it is considered as an impulsive trend. It indicates that the price will continue the current trend.

Corrective – In a corrective market structure, price barely creates new higher highs or lower lows. It is an indication of market reversal.

Volatile Trend – In volatile trends, the market follows the corrective structure and indicates a market reversal.

Non Volatile Trend – Non-volatile trend appears with the impulsive market momentum when the price tries to continue the current movement.

Bullish Price Action Trade Setups

Find the market in an impulsive bullish pressure in H4 or daily timeframe. Identify the Key support level and consider buy trades only as soon as the price is trading above it.

Entry

To enter the trade, you have to wait until the price comes down towards an event level with a corrective structure in 1 Hour timeframe. Enter the trade as soon as the price rejects and closes above the event level with a reversal candlestick.

Stop Loss

Put the stop loss below the recent swing low with 10-15 pips buffer. Here the buffer means you should put the stop loss 15 pips below the swing low.

Take Profit

The primary target of the take profit would be the next event level. However, if the bullish trend remains impulsive, you can extend the take profit. On the other hand, you can close earlier if the price barely creates new higher highs.

In the example below, we can see a visual representation of how to take the entry with stop loss and take profit level.

Bearish Price Action Trade Setups

Find the market in an impulsive bearish pressure in H4 or daily timeframe. Identify the key resistance level and consider sell trades only as soon as the price is trading below it.

Entry

To enter the trade, you have to wait until the price comes down towards an event level with a corrective structure in 1 Hour timeframe. Enter the trade as soon as the price rejects and closes below the event level with a bullish reversal candlestick.

Stop Loss & Take Profit

Put the stop loss above the recent swing high with 10-15 pips buffer. Here the buffer means you should put the stop loss 15 pips above the swing high.

The primary target of the take profit would be the next event level. However, if the bearish trend remains impulsive, you extend the take profit. On the other hand, you can close earlier if the price barely creates new Lower lows.

In the example below, we can see a visual representation of how to take the sell entry with stop loss and take profit level.

Final Thoughts – Trade Management Idea

In the above section, we have seen how to trade using the price action with context. In this trading strategy, buy and sell trades come after filtering out unusual market movements from the volatile market conditions.

However, no forex trading strategy in the world can guarantee a 100% profit, so your trades might go wrong even if you strictly followed all rules. If you want to grow your account with a consistent profit, you should follow strong trade management tools, as mentioned below:

  • Ensure that you are not taking over a 2% risk per trade of your trading balance.
  • Move your stop loss at breakeven as soon as the price creates a new higher high or lower low.
  • If you face a 3 or 4 consecutive losses, take a break and observe the market until it follows the trend accurately.
  • Make sure to keep your mind free from any bias while you are analyzing the market.

Overall, price action is the core element of trading that every trader should know. There are many trading strategies combining price action and other trading tools. The strategy we have seen above has a good history of providing profitable trades. Therefore, if you can implement it properly, you can consistently grow your trading account.

Categories
Forex Basic Strategies

Dynamic Channel Trading Using The Concepts Of Price Action!

Introduction

Introduction

Introduction

In forex, the dynamic channel trading is a profitable strategy that forms with standard trendlines. It indicates a potential move to identify the market direction both to the downside and upside. On the other hand, price action is a method to identify the price direction based on price behavior. Therefore, we can create a profitable trading strategy by reading the price action from any channel support and resistance level.

In general, traders use price channel as a technical analysis tool that helps to identify the potential market movement. The dynamic channel moves like a zigzag by creating lower lows and higher highs. In Forex trading, we usually have two types of dynamic channels:

  • An upward or ascending channel
  • Downward or descending channel

Dynamic Channel Identification

We can easily identify the dynamic channel by connecting the swing lows or swings highs they create. In an upwards dynamic channel, it will move with the price with a higher high formation.

Similarly, in a downward dynamic channel, it will move with the price by creating lower lows.

In the image above, we can see that the higher highs and the lower lows connected through straight lines. The dynamic price channel shows a significant movement from down to upside in the trend line. The trendline below the price may work as a dynamic support level, and the trendline above the price may work as a dynamic resistance level.

Besides the dynamic channel, we will use the concept of price action by measuring what buyers and sellers are doing in the market. Any slower and corrective movement from the dynamic channel support and resistance would indicate a possibility of a potential market reversal.

Later on, we will use the appropriate reversal candlestick from that area to enter a trade. In this trading strategy, we can make a profit when the price is trading within the channel, or it breaks out from the channel. However, we will filter out the unusual false movement by reading the price action.

Bullish Dynamic Channel Trading Strategy

In the bullish channel continuation trade setup, we will identify the price that is moving upside within the channel.

Identify the Price Location

Central banks and big financial institutes drive the price of a currency pair. Therefore, institutional traders focus on long timeframes mostly, as it provides the most reliable price direction. Therefore, we will move to the daily or weekly timeframe and identify the location of the price. We will consider channels that only meets the following condition:

⚠️ An upward channel should move within an uptrend above a key support level.

Entry

In an upside movement of a price channel, there will be new higher highs. Therefore, we need to identify a price channel where the price moves down towards channel support with a corrective speed. We will enter the trade as soon as the price rejects the channel support with a reversal candlestick formation.

Stop Loss

In a bullish channel trading, the stop loss would be below the reversal candlestick with 10 to 15 pips buffer.

Take Profit

The primary aim of the taking profit would be the immediate channel resistance. However, we have to read the price action to make a trading decision regarding the take profit.

If the price starts to move with an impulsive bullish pressure, it can go beyond the channel resistance. In that case, we can take some partial closing 10-15 pips below the channel resistance and wait for the price to test any event level.

Bearish Dynamic Channel Trading Strategy

In the bearish channel continuation trade setup, we will identify the price that is moving downside within the channel.

Identify the Price Location

Based on the price action context, we will move to the daily or weekly timeframe and identify the price’s location. We will consider channels that only meets the following conditions:

⚠️ A downward channel should move within a downtrend from a key resistance level.
Entry

In the downward price channel, there will be lower lows. Therefore, we need to identify a price channel where the price is moving down towards a channel resistance with a corrective speed. Therefore, we will read the price action and enter the trade as soon as it rejects the channel resistance with a reversal candlestick pattern.

Stop Loss

In the bearish channel trading, the stop loss would be above the reversal candlestick with 10 to 15 pips buffer.

Take Profit

The primary aim of the taking profit would be the immediate channel support. However, we have to read the price action to make a trading decision regarding the take profit.

If the price starts to move with an impulsive bearish pressure, it can go beyond the channel support. In that case, we can take some partial closing 10-15 pips above the channel support and close the rest of the amount at the next event level.

Channel Breakout Trading Strategy

In forex trading, when the price crossed (above or below) the channel, there is a profitable trading strategy. For making the trade sustainable, we need to identify the speed of the breakout. When institutions or banks enter the market, we see such massive breakout from the channel support or resistance.

Entry

After a massive breakout from a dynamic channel, we will wait for a correction. The correction indicates that the massive breakout would be strong. We will wait until the price moves to the channel support or resistance level with a corrective speed and enter the trade as soon as it rejects the level with a reversal candlestick formation.

Stop Loss

Setting a stop loss is similar to the channel continuation trade setup. You can put your stop loss above or below the reversal candlestick with 10 to 15 pips buffer.

Take Profit

The primary target of the channel breakout is the immediate event level. However, you can extend the take profit by reading the price action. If the power of the breakout is strong, the price may move beyond the immediate event level.

Conclusion

The Forex market is a competitive trading market where trade management is a key element for a forex trader. No trading strategy can assure you a confirmed profit. Therefore, it is recommended to use not more than 2% risk per trade and move the stop-loss at breakeven as soon as the price creates new lows or highs.

Categories
Forex Daily Topic Forex Price Action

Pay Attention to the Signal Candle Along with Reversal Candle

In today’s lesson, we are going to demonstrate an example of a combination of an H1-15M chart trading strategy. The price makes a strong bullish move and makes a long bearish correction. It produces several bullish reversal candles, but the price does not react to all of them. It makes its bullish move at last. We try to find out why it reacts to that particular bullish reversal candle. Let us get started.

In today’s lesson, we are going to demonstrate an example of a combination of an H1-15M chart trading strategy. The price makes a strong bullish move and makes a long bearish correction. It produces several bullish reversal candles, but the price does not react to all of them. It makes its bullish move at last. We try to find out why it reacts to that particular bullish reversal candle. Let us get started.

In today’s lesson, we are going to demonstrate an example of a combination of an H1-15M chart trading strategy. The price makes a strong bullish move and makes a long bearish correction. It produces several bullish reversal candles, but the price does not react to all of them. It makes its bullish move at last. We try to find out why it reacts to that particular bullish reversal candle. Let us get started.

This is an H1 chart. The chart shows that the price produces a bullish engulfing candle and heads towards the North. The buyers are to wait for the price to make a bearish correction and produce a bullish reversal candle to go long again in the pair. The last candle comes out as a hanging man. It may make the pair make a bearish correction. Let us proceed to the next chart to find out what happens next.

The price makes a long bearish correction. It produces several bullish reversal candles. However, it does not make its bullish move. If we spot out, we find that there have been three significant bullish reversal candles. To make things clearer, have a look at the chart below.

Here are the three most significant bullish reversal candles that the chart produces. On the first two occasions, the price does not head towards the North. Let’s try to dig out what happens on the first occasion. On the first occasion, the chart produces a bullish engulfing candle. This is one of the strongest bullish reversal candles. The buyers are to flip over to the 15M chart. If the 15M chart produces a bullish continuation candle, they may trigger a long entry. Over here, the 15M chart does not produce a bullish continuation candle. Thus, the price does not head towards the North. On the second occasion, the 15M chart produces a bullish continuation candle. You can assume by the look of the next H1 candle. However, the price does not continue its move or makes a breakout at the highest high. The reason behind that is the reversal candle comes out as an Inside bar. On the third occasion, the reversal candle comes out as a bullish engulfing candle. Let us flip over to the 15M chart.

Look at the arrowed candle. This is what comes out after the bullish engulfing candle. The buyers have been waiting to get a candle like this after a strong H1 bullish reversal candle. They may trigger a long entry right after the candle closes (15M). Let us find out how the price moves now.

It moves towards the North with good bullish momentum. We must notice that when two factors come together, the price reacts vigorously. We may find that sometimes the price moves on the case of the second occasion as well. However, when it meets two of them together (H1 bullish engulfing and 15M bullish continuation and vice versa), most likely, it goes towards the trend and helps traders make money.

Categories
Forex Course

143. Trading Breakouts Using Trend lines

Introduction In our previous course lessons, we saw how to trade breakouts in an effective manner. As we know, Breakout trading is one of the most common ways of trading the financial markets. Most of the other trading tools tend to fail in accurately identifying a trading signal, or they lag a lot in doing […]

Introduction In our previous course lessons, we saw how to trade breakouts in an effective manner. As we know, Breakout trading is one of the most common ways of trading the financial markets. Most of the other trading tools tend to fail in accurately identifying a trading signal, or they lag a lot in doing […]

Introduction

In our previous course lessons, we saw how to trade breakouts in an effective manner. As we know, Breakout trading is one of the most common ways of trading the financial markets. Most of the other trading tools tend to fail in accurately identifying a trading signal, or they lag a lot in doing so. But that’s not the case with breakout trading. If done accurately, it helps traders in making consistent cash from the market.

In this lesson, let’s learn how to trade breakouts using trendlines. Trendlines are one of the simplest tools you can use to trade the breakouts on both lower and higher timeframes.

Trendline and it’s working!

A trend line highlights the ongoing trend by connecting the swing lower highs in an uptrend and swing higher lows in a downtrend. Just like S&R levels, trendlines also signify the appropriate areas to enter the market. The only difference is that support and resistance levels are horizontal areas while trendlines are sloping. Now let’s get to the topic.

Trading Breakouts Using Trendlines

Upward Trendline

An upward trend line connects a swing high to swing low from the lowest point to the highest point in an ongoing trend.

Buy Trade 1

The price chart below represents a trendline Breakout on the daily chart.

 

By looking at the market, it is clear that the sellers had a hard time going down as the buyers continue to give a strong fight. After a couple of months, sellers gave up, and buyers took the show to break above the trend line. The hold above the trendline confirms the buying entry in this pair. After riding the uptrend for a bit, we understood that the buyers got weak. Hence we decided to close our positions at the most recent higher high.

Buy Trade 2

The image below represents a trendline breakout in the CAD/JPY forex pair.

The pair was in a strong uptrend, and during the pullback phase, when the price action broke above the trend line, it indicates that the buyers are ready to lead the market again. The hold above the trendline confirms our buy entry. The original trend was quite strong, so the stop below the trend line was good enough to ride a new trend.

Downward Trendline

Downward trend line connects a swing low to swing high from the highest point in a trend to the lowest point in a trend.

Sell Trade 1

The chart below represents a trendline breakout in the GBP/USD Forex pair.

As we can see, the buying trend was quite strong, and the price action closely followed the trendline. A breakout below the trendline is a clear indication for us to go short in this pair.

Sell Trade 2

The price chart below represents the breakout of a trend line in the GBP/USD Forex pair.

We can see the pullback on a weekly chart, and during the pullback, the price broke below the trendline. This shows that the sellers are desperate to take the price down. After our entry, the price went down and turned sideways. After a few weeks, it again goes down, and we choose to close our trade at the most recent lower low.

This attempt is to give you an understanding of how to trade trendline breakouts in most of the scenarios. In our upcoming lessons, let’s delve deeper into this concept. Cheers!

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Categories
Forex Daily Topic Forex Price Action

It Often Makes You Wait Longer Than You Want

In today’s lesson, we are going to demonstrate an example of a daily-H4 chart combination entry. The daily char produces a bearish engulfing candle at a significant level of resistance. It makes the daily-H4 chart combination traders flip over to the H4 chart to look for a potential entry. The H4 chart shows that the chart creates a double top. Simply, an ideal combination for the traders to go short on that chart. However, things do not go as smoothly as traders expect it to go in the Forex market. Let us find out what happens.

In today’s lesson, we are going to demonstrate an example of a daily-H4 chart combination entry. The daily char produces a bearish engulfing candle at a significant level of resistance. It makes the daily-H4 chart combination traders flip over to the H4 chart to look for a potential entry. The H4 chart shows that the chart creates a double top. Simply, an ideal combination for the traders to go short on that chart. However, things do not go as smoothly as traders expect it to go in the Forex market. Let us find out what happens.

In today’s lesson, we are going to demonstrate an example of a daily-H4 chart combination entry. The daily char produces a bearish engulfing candle at a significant level of resistance. It makes the daily-H4 chart combination traders flip over to the H4 chart to look for a potential entry. The H4 chart shows that the chart creates a double top. Simply, an ideal combination for the traders to go short on that chart. However, things do not go as smoothly as traders expect it to go in the Forex market. Let us find out what happens.

This is the daily chart. The chart shows that the price, after being bullish, has a rejection at the level of resistance marked with the red line. The price comes down and makes a bullish move again. If it makes a breakout, the buyers may push the price further up. On the other hand, sellers are to wait for the price to produce a bearish reversal candle to consider short opportunities. Let us find out what happens next.

The chart produces a bearish engulfing candle. Since it shows in the daily chart, the combination traders may flip over to the H4 chart to look for a short opportunity. A double top resistance and a bearish engulfing candle suggest the sellers may jump in here to drive the price towards the South further.

It is the H4 chart. The chart produces a double top and makes a breakout at the neckline. The combination traders are to wait for the price to consolidate and produce a bearish reversal candle to go short below consolidation support. The price consolidates here. However, considering consolidation length, it is better to skip such entry.

The price heads towards the South with extreme bearish pressure. It travels a long way to produce a bullish reversal candle. The sellers would love to get the reversal candle earlier though. Anyway, it is better late than never.

The chart produces a bearish engulfing candle closing well below consolidation support. The sellers may trigger a short entry right after the last candle closes by setting stop-loss above consolidation resistance with 1R.

The price heads towards the South with good bearish momentum and hits the target. It seems that the price may travel towards the South further. The point to be noticed here is that the chart consolidates after traveling a long way. It would give a better reward if it consolidated and produced the signal candle earlier. It makes the sellers wait for more as well. In the end, the sellers make a profit out of it but think how hard they are to concentrate on it to make it work for them.Traders’ life is not as easy as some people may think.

Categories
Forex Basic Strategies

Learning To Trade The ‘Order Block’ Forex Strategy

Introduction Order block is a market behavior that indicates order collection from financial institutions and banks. Prominent financial institutes and central banks drive the forex market. Therefore, traders must know what they are doing in the market. When the market builds the order block, it moves like a range where most of the investing decisions happen. […]

Introduction Order block is a market behavior that indicates order collection from financial institutions and banks. Prominent financial institutes and central banks drive the forex market. Therefore, traders must know what they are doing in the market. When the market builds the order block, it moves like a range where most of the investing decisions happen. […]

Introduction

Order block is a market behavior that indicates order collection from financial institutions and banks. Prominent financial institutes and central banks drive the forex market. Therefore, traders must know what they are doing in the market. When the market builds the order block, it moves like a range where most of the investing decisions happen.

The market makes a sharp move towards both upside and downsize once the order building is completed. The key term of the order block trading strategy is that it includes what the institutional traders are doing. As they are the key price driver, any strategy that includes institutional trading might

What is the Order Block?

Financial institutes do not make a sudden investment in any trading instrument. They spend a lot of money on analysis to get the best trading result. Furthermore, they play with the money that is often impossible to arrange by retail traders.

Smart money makes several steps in their trading based on the availability of the price. For example, if a bank wants to buy $100M EURUSD, it will take trade-in three or four steps. In the first step, they will take $20M, in the second step, $50M, and in the third step $30M. The price usually makes a movement when the full quota of $100M completes.

Order block seems like a range, but every range is not an order block. Moreover, we don’t know when and where the smart money moves. Therefore, we will rely on the best location and price action to identify a suitable order block.

Besides the order block, we have to know what the order flow is. Once the price starts a movement from an order block, it provides an order flow towards any direction. Order flow from a higher timeframe indicates a market direction, and we have to find the order block towards the direction of it.

Order Block Trading Strategy

From the above section, we have seen what the institutional order block and order flow is. In this trading strategy, we will use 1 hour- 4 hours or the daily timeframe to enter the trade and weekly timeframe to identify the order flow. Furthermore, we will use the Fibonacci to identify the potential location from where the market is expected to move.

Timeframe

  • One hour to 4 hours to identify the entry-level.
  • Weekly timeframe to measure the order flow.

Currency Pair

The best part of this trading strategy is that it can provide profitable trades in all currency pairs. However, we have done extensive research and found that it works well in all major currency pairs, including EURUSD, GBPUSD, and USDJPY.

Identify the Order Flow

In the weekly timeframe, we will look for the price that tested an order block and moving higher or lower. Once it completes the test and starts the movement will find the direction.

In the image above, we can see that the price moved higher and came back sharply towards the order block with an impulsive bearish pressure but did not break the lowest. After the rejection candle, we will wait for the price to move higher with a candle close. Once the candle closes, we found our weekly order flow.

Later on, we will move to the H4 or daily timeframe and identify the order block to trade towards the direction of the order flow.

Location of the Order Block

Move to the H4 timeframe and draw the Fibonacci retracement from upside to downside. While you draw the Fibonacci level, make sure to draw from the last available price, not more than 200 candles. Furthermore, for a buy trade, draw the Fibonacci from the highest price to the lowest price.

After drawing the Fibonacci level, you should consider order blocks residing below the 50% Fibonacci retracement levels. Any price below the 50% Fibonacci retracement level is the discount price and any price above the 50% retracement level is the premium price.

In the bullish order block trading strategy, you should consider the discount price and, in a bearish order block trading strategy, consider the premium price only.

Entry

Wait for the price to break above or below the order block, win an impulsive bullish or bearish pressure. Later on, the price will make new highs or lows, but you should wait when it comes back to the order block. In most cases, the price will come back to the order block and test the 50% level before making the final movement.

Therefore, if you don’t want to monitor the price, you can take a pending order at a 50% level of the order block. However, the best practice is to enter the trade once it starts moving from the order block with a candle close above or below it.

Stop Loss and Take Profit Level

The stop loss level should be below or above the order block with some buffer. In most of the cases, use 10 or 15 pips buffer to avoid unexpected market behavior.

On the other hand, the ordinary take profit level would be towards the order flow with 1:1 risk: reward ratio. However, the final take profit level is Fibonacci 0%, which is usually the top of the available price in a bullish condition and the bottom of the price in a bearish condition.

Summary

Let’s summaries the order block trading strategy:

  • Identify the weekly order flow and consider the direction.
  • Identify the premium and discount zone level with the Fibonacci retracement levels.
  • Move to H1 to H4 timeframe and find the order block within Fibonacci 50% to 100% levels.
  • The price should move towards the order flow directly from the order block, but it should come down to test the order block again.
  • Enter the trade as soon as the price rejects the order block with a reversal candlestick.

The order block trading strategy is profitable in most of the currency pairs. However, it is essential to keep in mind that the forex market is very uncertain. We, as a trader, anticipate the price, and that’s why we use stop loss. No trading strategy can assure a 100% profit. Although the Order block is a very profitable trading strategy, you should use appropriate trade management and money management rules to avoid unexpected market conditions.