Tag: Technical Analysis

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 29 – Bitcoin Cash mining tax not happening; Bitcoin leading the crypto market to bull season

The crypto market is having a great weekend so far. Bitcoin, as the most prominent cryptocurrency, stepped above $9,000 level and is comfortably above it. Bitcoin’s price went up 3.45% on the day. It is currently trading for $9,359. Meanwhile, Ethereum gained 3.49% on the day, while XRP went up 2.97%.

The crypto market is having a great weekend so far. Bitcoin, as the most prominent cryptocurrency, stepped above $9,000 level and is comfortably above it. Bitcoin’s price went up 3.45% on the day. It is currently trading for $9,359. Meanwhile, Ethereum gained 3.49% on the day, while XRP went up 2.97%.

The crypto market is having a great weekend so far. Bitcoin, as the most prominent cryptocurrency, stepped above $9,000 level and is comfortably above it. Bitcoin’s price went up 3.45% on the day. It is currently trading for $9,359. Meanwhile, Ethereum gained 3.49% on the day, while XRP went up 2.97%.

BlockStamp took today’s most prominent daily gainer title with gains of 104.92%. On the other side, Molecular Future lost 7.90% on the day, which made it the most prominent daily loser.

Bitcoin’s dominance increased slightly in the past 24 hours. It is now at 66.13%, which represents an increase of 0.14% when compared to the value it had yesterday.

The cryptocurrency market capitalization gained quite a bit of its value in the past 24 hours, as all the bigger cryptocurrencies went up in price. It is currently valued at $257.06 billion, which represents an increase of $8.29 billion when compared to yesterday’s value.

What happened in the past 24 hours

Popular Bitcoin exchange platform LocalBitcoins seems to be stealthily suspending its user accounts from certain countries with little forewarning. Each suspended account got suspended for the “enhanced due diligence process.”

LocalBitcoins, one of the biggest P2P crypto exchanges, has reportedly suspended its user accounts based on their location. The targets were some parts of Africa, the Middle East as well as Asia. This all happened without any warning, with some users even being unable to withdraw their Bitcoin.

Honorable mention

Bitcoin Cash

Bitcoin Cash announced earlier this month that they would impose a 12.5% mining tax on all its miners. This news caused a major backlash as the decentralization that this coin promotes would be gone. According to an announcement, Roger Ver’s Bitcoin.com is officially backing down from this idea due to the negative responses they got from their user-base.

They said that they will not follow through as the negativity regarding the new implementations could cause a chain split. Bitcoin.com also added that they value transparency, flexibility as well as unity.

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Technical analysis

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Bitcoin

Bitcoin’s chart looks like the bull season is starting. The largest cryptocurrnecy had another great day, leading the cryptocurrency market to new highs. The price established itself above $9,000 and is currently in the consolidation move after it stopped going up. Bitcoin breezed through the $9,120 resistance, making it a support line. Its next support looks like it will be near $9,585, while its support is at $9,251. The price is currently standing above the 200-day moving average (on the 1-day chart), which acts as another form of support.


Bitcoin’s RSI is deep into the overbought territory on the 4-hour chart, while its volume is elevated and on the approximately the same level as all the significant price fluctuations in the past two weeks.

Key levels to the upside                    Key levels to the downside

1: $9,585                                           1: $9,251

2: $9,732                                           2: $9,120

3: $10,000                                         3: $8,905

Ethereum

Ethereum also continued to increase in price, racking in another green day. Its price exploded from $171 and reached all the way to $178.5, but could not break the resistance level. Ethereum is now trading just below the immediate resistance. With elevated volume it has now, another small spike might just bring the price above the level. However, as this has not happened yet, Ethereum is still in the middle of the range, with the closest resistance level being $178.5, and the closest support level still being $167.8.


Ethereum’s volume is elevated, while its RSI is currently showing overbought trading. Key levels are remaining the same as Ethereum didn’t break any levels (to the upside or downside).

Key levels to the upside                    Key levels to the downside

1: $178.5                                             1: $167.8

2: $185                                               2: $164

3: $193.6                                            3: $160

Ripple

Out of the top3 cryptocurrencies, XRP was the one that had the most linear path to the upside. The bullish trend that Started Jan 25 continued, and XRP passed through the resistance level of $0.235. It is currently trading in the middle of the range, bound by $0.235 to the downside and $0.2454 to the upside.


XRP’s volume had one major 4-hour candle, which had elevated volume. However, the rest of the day remained on the same volume levels as the past week. XRP’s RSI level dipped into the overbought territory but is on a downward slope.

Key levels to the upside                    Key levels to the downside

1: $0.2454                                            1: $0.235

2: $0.266                                          2: $0.227

3: $$0.285                                            3: $0.221

 

Categories
Chart Patterns

Chart Patterns: Wedge Patterns

Wedge Patterns

Falling Wedge
Falling Wedge

Wedge Patterns

Wedge Patterns

I want to stress, again, that the frequency and positive expectancy of patterns in technical analysis will vary from market to market. Most of the literature is written for the stock market, which is an overwhelmingly long-biased market. So, bullish patterns perform much better than bearish patterns in the stock market. I don’t have any real statistics to reference other than my years of trading experience. It has been my experience that wedge patterns are one of the most profitable setups in the forex market.

Wedges look like (and in fact, are) extended triangles. Wedges are made of two trend lines that are drawn just like a triangle. The difference between wedge patterns and triangle patterns is simple: the trendlines in a wedge pattern point in the same direction. Ascending triangles have flat tops and a rising bottom. Descending triangles have flat bottoms with declining tops. Symmetrical triangles have a downtrend line and an uptrend line. Wedges are different. Rising wedges have a trendline both above and below price sloping up. Falling wedges have a trendline both above and below, but sloping down. Depending on the technical analysis material you read, you will see wedges that may look like channels, and that is fine – many do.

Wedge patterns should tell you one thing: the end is coming. Because wedges have two trendlines that point in the same direction, the slope of the move is often extreme and is indicative of a climax move. These are incredibly profitable and favorable patterns when you spot them – and they are horrible to trade against if you are trading inside of them. If you read Bulkowski’s work, you’ll know that he recommends at the trendlines in a wedge should be touched at least five times in order for the wedge pattern to authentic. This is true in the stock market as well as in the forex market.

 

Rising Wedge

Rising Wedge
Rising Wedge

You might think that a rising wedge pattern shows up at the top of a trend, and it often does. But you will also find the rising wedge appear at the bottom of a trend. When you see the rising wedge appear after a prolonged downtrend, be careful! The rising wedge that forms after a long bear move is often a continuation pattern. An easy way to think of the rising wedge is that it is an overwhelmingly bearish pattern. It doesn’t matter where it shows up in any trend – it is an extremely bearish pattern.

When I am trading the rising wedge, I generally take the initial breakout that moves below the second to last test of the bottom trendline. The example above shows that there is no immediate retest of the breakout lower. Retests do happen, but they are less frequent than what we see in the ascending, descending and symmetrical triangles.

 

Falling Wedge

Falling Wedge
Falling Wedge

The inverse of the rising wedge pattern is the falling wedge pattern. It can show up at either the end of an uptrend or a downtrend. If you see a falling wedge that occurs at the top of an uptrend, then you could we witnessing a false breakdown lower and see a resumption of the prior bull move. If you see the falling wedge at the end of a downtrend, then you can expect a swift reversal or deep throwback. Just like the rising wedge, the falling wedge is heavily biased towards one direction: overwhelmingly bullish.

On the image above, I’ve added an Impulse Wave to show how you can use Elliot Waves to help determine whether or not a wedge pattern is valid. Remember: Bulkowski said that that a wedge pattern is only confirmed when the trendlines have been tested at least five times. Another condition on the chart above that we didn’t see on the falling wedge is the attempted retest of the break. Again, retests are common in all patterns, but they are definitely less frequent with wedge patterns – that has been my experience with them in forex markets.

When trading the falling wedge, I like to enter when price moves above the second to last swing high. On the chart above, the entry would be above wave four.

 

Sources:

Kirkpatrick, C. D., & Dahlquist, J. R. (2016). Technical analysis: the complete resource for financial market technicians. Upper Saddle River: Financial Times/Prentice Hall.

Bulkowski, T. N. (2013). Visual guide to chart patterns. New York, NY: Bloomberg Press.

Bulkowski, T. N. (2008). Encyclopedia of candlestick charts. Hoboken, NJ: J. Wiley & Sons.

Bulkowski, T. N. (2002). Trading classic chart patterns. New York: Wiley.

Categories
Candlestick patterns Forex Candlesticks

Candlestick Reversal Patterns: Refresh your Knowledge

After our last articles on candlestick reversal patterns, test your kowledge.

After our last articles on candlestick reversal patterns, test your kowledge.

After our last articles on candlestick reversal patterns, test your knowledge.

If you need to give a second read, these are the links:

 

 

Let’s begin

 

[wp_quiz id=”59882″]

 

 

Reference:

The Candlestick Course: Steve Nison

 

Categories
Forex Videos

255 Pip Move! Can Trading The USDJPY Be As Easy As ABC

https://youtu.be/RYfd6CJwBxw

https://youtu.be/RYfd6CJwBxw

255 Pip Move! Can Trading The USDJPY Be As Easy As ABC

The USDJPY pair have been heavily correlated with the Dow Jones 30 index over the last few months as the US and China trade deal has rattled on.
However, it was only around ten months ago that this pair reached a high point of 112.40 before dropping to the 105.00 level. Big swings in a currency pair like this can catch institutions, investors, and traders completely offside and wondering where future direction might be. In situations such as this, it is obvious that many traders will have been caught out and lost money through stop losses or closing out positions that have gone against them and where they have suffered heavy losses. And when we see big swings like this in price action, it is difficult for traders to know how to value a currency pair’s exchange rate. Because traders at an institutional level tend to buy yen in times of high risk in the market, we can only presume that the yen is losing ground to the dollar-based on the fact that phase one of the US and China trade deal is complete.

Example A

Let’s turn to example A, which is an hourly chart of the USDJPY pair. We can see that since the 6th of January 2020, price action has been almost glued to two simple moving averages; the black 13 MA and the green 17 MA.
At position A, which is a key 108.00 level, we can see that price action strongly moved lower than the moving averages; however, price action was curtailed, probably because of the previous low at this level. Traders often use previous levels as targets because they are often areas of support and resistance, and especially at key-round-number levels.


Certainly, there was a lot of volatility during these few hours before price action then moves up and becomes almost inseparable from the moving averages to the key 109.00 level, where again we see some volatility at this position before price action again moves while almost sticking to those moving averages, and apart from a small dip the price action, continues all the way up to the key 110.00 area at position C.
Price action then moves underneath the moving averages, again sticking very closely to them, while drifting lower, as traders wonder where the next big move will be on this pair.
In times of uncertainty in the market, please remember that nobody knows where the price action will go to. And if in doubt, it is not unusual for the market to fall back on some very basic trading methodology: if price action is above the moving averages, which have crossed over, and are moving in an upward direction, they buy, and if the moving averages have crossed over and are moving in a downward direction they sell — keeping in mind the importance of those key round number levels.

Categories
Forex Market Analysis

Daily F.X. Analysis, January 28 – Top Trade Setups In Forex – Brace for U.S. C.B. Consumer Confidence! 

A day before, the U.S. stock indexes slid over 1% as the coronavirus outbreak in China intensified. The Dow Jones Industrial Average slipped 453 points (-1.6%) to 28535, the S&P 500 dropped 51 points (-1.6%) to 3243, and the Nasdaq Composite tumbled 175 points (-1.9%) to 9139.

A day before, the U.S. stock indexes slid over 1% as the coronavirus outbreak in China intensified. The Dow Jones Industrial Average slipped 453 points (-1.6%) to 28535, the S&P 500 dropped 51 points (-1.6%) to 3243, and the Nasdaq Composite tumbled 175 points (-1.9%) to 9139.

A day before, the U.S. stock indexes slid over 1% as the coronavirus outbreak in China intensified. The Dow Jones Industrial Average slipped 453 points (-1.6%) to 28535, the S&P 500 dropped 51 points (-1.6%) to 3243, and the Nasdaq Composite tumbled 175 points (-1.9%) to 9139.

Shares in Semiconductors & Semiconductor Equipment (-3.91%), Technology Hardware & Equipment (-2.83%) and Energy (-2.76%) sectors lost the most.

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

EUR/USD slipped 0.1% to 1.1018. The German IFO Business Climate Index unexpectedly fell to 95.9 in January (97.0 estimated) from 96.3 in December, and the Expectations Index dropped to 92.9 (94.8 expected) from 93.9. The EUR currency was beaten badly last week, possibly due to the European Centra Bank’s President Christine Lagarde spoke unexpectedly dovish.

Looking forward, the shared currency will likely continue its bearish bias during the week ahead because the safe-haven U.S. treasuries are putting the bids in the wake of Coronavirus fears. The buying sentiment around the greenback may increase further if the United States Durable Goods release better-than-expected, by the way, this data is scheduled to release at 13:30 GMT on Tuesday.

Daily Support and Resistance

  • S3 1.095
  • S2 1.0993
  • S1 1.1009

Pivot Point 1.1035

  • R1 1.1051
  • R2 1.1078
  • R3 1.112

EUR/USD– Trading Tips

The EUR/USD is trading at 1.1026 area, having formed a Doji candle above 1.1015 support level, particularly on the 4-hour timeframe. The bullish Doji pattern is suggesting the probabilities of a bullish and bearish trend both in the EUR/USD. The German Ifo Business Climate reported worse than expected figures falling below economists’ expectations of 96.3. 

The EUR/USD can show bullish correction until 1.1060 and 1.1075. On the lower side, a breakout of the support level of 1.1015 can lead EUR/USD prices towards the 1.0945 area. 

GBP/USD– Daily Analysis

The GBP/USD fell 0.2% to 1.3058, posting a three-day decline. The GBP/USD pair touched a daily high of 1.3105 but withdrew from that level later to conclude the day in a bearish mode, just a few pips above its intraday low of 1.3039. 

The GBP/USD has placed a little drop for another day, as the GBP/USD sees itself jus over the crucial 1.30 mark, which has psychological importance. Presently, the GBP/USD is holding at 1.3027, soaring 0.23% on the day. There are no significant GBP related economic events on the calendar.

 The Bank of England is holding it’s monetary policy conference this Thursday, and there are 50-50 possibilities of a rate decrease. Several MPC members have indicated that they would propose a rate cut, and there’s solid speculation that Governor Carney may want to drop the rate before giving his seat. Also, Brexit will finally happen this Friday, after over three years of back and forth.

At the Brexit front, another reason behind the risk-off market sentiment could be the uncertainty surrounding the Brexit trade talks between the United Kingdom and the Europan Union. Moreover, the Irish Taoiseach Leo Varadkar said that the European Union would have the leading authority in Brexit talks that may miss the deadline. In contrast, the U.K. politicians also not interested in respecting their old neighbors after got public support in the latest general election.

Daily Support and Resistance

  • S3 1.2937
  • S2 1.3002
  • S1 1.303

Pivot Point 1.3067

  • R1 1.3095
  • R2 1.3133
  • R3 1.3198

GBP/USD– Trading Tip

The GBP/USD has violated the symmetric triangle pattern, which is now keeping the pair support around the 1.3065 area. Closing of Doji candle above this level is likely to keep the GBP/USD bullish until 1.3170. Above 1.3170, the GBP/USD may go after the next resistance level of 1.3160. Whereas, a bearish breakout of 1.3065 can lead the GBP/USD prices towards 1.2975. The RSI and MACD support a mixed bias. Let’s look for selling trades below 1.3102 and bullish trades above 1.3044. 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the three-week lows and registered the 8-day losing streak, mainly due to the fears of China coronavirus, which has recently destroyed trade market sentiment. As of writing, the USD/JPY currency pair is currently trading at 109.06 and having dropped to 108.90 at the starting of the Asian session. By the way, the pair consolidates in the range between the 108.83 – 109.06.

The United States data came in mixed, whereas tensions in the Middle East also weighed on the market’s performance. At the Coronovirus front, the statement came from China’s health officials that the Coronavirus could be much more dangerous than earlier thought. As we know, this perilous virus has killed almost 100 lives, and more than 30,000 are infected so far in China. Meanwhile, the United States has advised all citizens not to travel to China.

On the other hand, diplomats in the U.S. and Iran ignore Iraq’s peace requests because Iran prepares for a satellite while the Trump administration joins side with France to make Irans’ act like a normal country.

Daily Support and Resistance

  • S3 108.4
  • S2 108.89
  • S1 109.08

Pivot Point 109.37

  • R1 109.56
  • R2 109.85
  • R3 110.33

USD/JPY – Trading Tips

The USD/JPY pair has violated long-held horizontal support level has already been violated at 109.250 level, and now, the USD/JPY is holding below this level. At the same level, the USD/JPY is also getting supported by the bullish channel, which can be seen in the chart above. 

Technically, the USD/JPY may find resistance around 109.250, which is the same level that provided support to the USD/JPY earlier. We can see selling below this level until 108.520. Moreover, the RSI and MACD have crossed over in the selling zone and are supporting the selling bias. 

All the best for today! 

Categories
Candlestick patterns Forex Candlesticks

Candlestick Reversal Patterns II: Let’s know The Engulfing Patterns

 

 

 

The engulfing pattern is a major reversal figure, and it is composed of two inverted candlesticks, as in the case of the Piercing pattern and the Dark Cloud Cover figure. Typically, this figure appears at the end of an upward or downward trend. It is common that the price pierces a significant resistance or support level, then making a gap up or down in the following session, to, suddenly, change its direction and end the day entirely covering the first candle.

The Bullish Engulfing

The bullish engulfing candle shows at the bottom of the trend. After several sessions with the price controlled by sellers, another black candle forms. The next session opens below the previous session close and closes above the last open, thus, completely covering the body of the black candle made on the previous session.

Criteria:

  1. The body of the second candlestick covers completely that of the black candle.
  2. There is evidence of a downward trend, even a short-term one.
  3. The body of the second candle is white and of the opposite color of the first candlestick. The exception is when the first candlestick is a doji or a tiny body. In this case, the color of the first candle is unimportant.
  4. The signal is enhanced if a large body engulfs a small body.
  5. a Large volume on the engulfing day also improves the signal.
  6. A body engulfing more than one previous candle shows the strength of the new direction.
  7. Engulfing also the shadows of the previous candle is also good news.
  8. In case of a gap, the larger the gap, the higher the likelihood of a significant reversal.

Market Sentiment:

After a downtrend, the next day, the price starts lower than the previous close but, after a short while, the buyers step in and move the price up. The late sellers start to worry, as they see their stops caught, adding more buying to the upward movement. As the price moves up, it finds a combination of profit-taking, stop-loss orders, and new buy orders. At the end of the day, this combination creates a strong rally that moves the price above the previous close.

 Fig 1- Bearish and Bullish engulfing patterns in the Bitcoin 4H  chart

The Bearish Engulfing

The Bearish engulfing pattern is the specular figure of a Bullish engulfing figure. And more so in the Forex market where assets are traded in pairs, making every move symmetrical.

The bearish engulfing forms after an upward trend. It is composed of two different-colored bodies, as in the above case. This time, though, the order is switched, and a bullish body is followed by a black candle. Also, the black body engulfs completely the body of the previous white candlestick. Sometimes that comes after the price piercing a key resistance, to then come back, creating a fake breakout.

Criteria:

  1. The uptrend is evident, even short-term.
  2. The body of the second day engulfs the body of the previous day.
  3. The body of the second candle is black, and the previous candle is a white candlestick, except for tiny bodies or dojis. In that case, the color of the first candlestick is unimportant.
  4. A large body engulfing a small body is an enhancement, as it confirms a change in the direction.
  5. A large volume on the engulfing day is also good for the efficacy of the signal.
  6. A body engulfing more than one previous candle shows the strength of the new direction.
  7. Engulfing also the shadows of the previous candle is also good news.
  8. In case of a gap, the larger the gap, the higher the likelihood of a substantial reversal.

Market sentiment:

After an uptrend, the price opens higher but, after a while, it reverses and moves below the previous open and below. Some stops trigger and add more fuel to the downside. The downward action accelerates on a combination of profit-taking, more stops hit, and new short orders. At the end of the day, the price closes below the open of the previous session, with the sellers in control. 

—- 

References:

The Candlestick Course: Steve Nison

Profitable candlestick Patterns, Stephen Bigalow

Categories
Forex Market Analysis

Daily F.X. Analysis, January 27 – Top Trade Setups In Forex – Safe Haven Appeal Soars! 

The Friday major U.S. stock indexes closed in negative territory as the coronavirus outbreak in China intensified. The Dow Jones Industrial Average dropped 170 points (-0.6%) to 28989, the S&P 500 fell 30 points (-0.9%) to 3295, and the Nasdaq Composite was down 87 points (-0.9%) to 9314.

The Friday major U.S. stock indexes closed in negative territory as the coronavirus outbreak in China intensified. The Dow Jones Industrial Average dropped 170 points (-0.6%) to 28989, the S&P 500 fell 30 points (-0.9%) to 3295, and the Nasdaq Composite was down 87 points (-0.9%) to 9314.

The Friday major U.S. stock indexes closed in negative territory as the coronavirus outbreak in China intensified. The Dow Jones Industrial Average dropped 170 points (-0.6%) to 28989, the S&P 500 fell 30 points (-0.9%) to 3295, and the Nasdaq Composite was down 87 points (-0.9%) to 9314.

In Asian trading hours, EUR/USD edged up to 1.1030, while GBP/USD fell to 1.3058. The coronavirus outbreak continues to dent market sentiment, with Canada and Australia confirming their first cases of the virus over the weekend.

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/USD currency pair continued its longest weekly losing trend since November 2018 ahead of German IFO data. As of writing, the EUR/USD currency pair is currently trading at 1.1029 and consolidating in the range between the 1.1021 – 1.1037.

As we know, the currency pair represented 0.26% losses last week as the EUR currency faced selling pressure on the same day. That was mainly due to the European Central bank was seen more dovish after President Lagarde said that the risks to the economy have turned to the downside.

After that, the German PMI figures were released better-than-expected but failed to give some bids to the EUR currency. However, the EUR/USD currency pair has been moving in a bearish trend since the last week of January. At the data front, expectations are on the peak that the German IFO reading for January will hit the highest level since June 2019. 

Whereas the headline German business climate index was expected to rise to 97.2 (mkt 97.0), its highest level since June, but it came as 95.9 and weighed on Euro currency.

The shared currency continued its downward movement after the release of weaker than expected German Ifo Business Climate, which indicated a slowdown in the German economy. The short-run technical bias is expected to remain bearish until or unless the prices trade below the ascending trend line. 

Daily Support and Resistance    

  • S3 1.095
  • S2 1.0993
  • S1 1.1009

Pivot Point 1.1035

  • R1 1.1051
  • R2 1.1078
  • R3 1.112

EUR/USD– Trading Tips

The EUR/USD is trading at 1.1026 area, having formed a Doji candle above 1.1015 support level, particularly on the 4-hour timeframe. The bullish Doji pattern is suggesting the probabilities of a bullish and bearish trend both in the EUR/USD. The German Ifo Business Climate reported worse than expected figures falling below economists’ expectations of 96.3. 

The EUR/USD can show bullish correction until 1.1060 and 1.1075. On the lower side, a breakout of the support level of 1.1015 can lead EUR/USD prices towards the 1.0945 area. 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashed red and continued its 3-day losing rally mainly due to China’s coronavirus outbreak & hard Brexit fears. As of writing, the GBP/USD currency pair is currently trading at 1.3062 and is consolidating in the range between the 1.3052 – 1.3079. 

At the Brexit front, the representative of the European Union and the United Kingdom are trying to expand the indirect fears regarding hard Brexit. The Brexit Secretary Stephen Barclay said that they would publish their objectives for the negotiations in due course after leaving E.U. on January 31. He also said that the U.K. would have control over its rules, and it would not diverge for the sake of diverging but would start from a position of alignment. 

On the other hand, British Home Secretary Priti Patel repeated this morning that Britain would diverge from Brussels after leaving E.U. despite warnings from European Union that they could rule out a free trade deal.

On the other hand, the European Union has already given a warning to the UK PM Boris Johnson that he will fail if he tries to use the support of a U.S. trade deal to strike better terms with Brussels.

At the China front, fears of China’s coronavirus explosion have threatened the global risk sentiment by crossing national boundaries and possibly affected more than 30,400 people within a few days.

As a result, the U.S. ten-year treasury yields fell to multi-week low while surrounding 1.63%, whereas most of the Asia-Pacific stocks also representing the risk-off sentiment in the wake of holidays in China and Australia.

Looking forward, traders will closely watch the 2nd-tier U.S. data on the economic calendar before Thursday’s monetary policy meeting by the Bank of England (BOE), which will show a final chance for rate change in the wake of mixed data. After that, the EU-UK will formally be departed at 21:00 GMT on January 31, 2020.

Daily Support and Resistance

  • S3 1.2865
  • S2 1.2984
  • S1 1.3028

Pivot Point 1.3102

  • R1 1.3146
  • R2 1.322
  • R3 1.3338

GBP/USD– Trading Tip

The GBP/USD has violated the symmetric triangle pattern, which is now keeping the pair support around the 1.3065 area. Closing of Doji candle above this level is likely to keep the GBP/USD bullish until 1.3170. 

Above 1.3170, the GBP/USD may go after the next resistance level of 1.3160. Whereas, a bearish breakout of 1.3065 can lead the GBP/USD prices towards 1.2975. The RSI and MACD support mixed bias. Let’s look for selling trades below 1.3102 and bullish trades above 1.3044. 

USD/JPY – Daily Analysis

The USD/JPY currency pair was found on the bearish track and dropped heavily on the day because the Japanese yen picked up a bid in the wake of bad news regarding the China coronavirus fears threatened the market risk sentiment. As of writing, the USD/JPY currency pair is currently trading at 109.05 and is consolidating in the range between the 108.73 and 109.11.

At the China front, fears of China’s coronavirus have threatened the global risk sentiment by crossing national boundaries and possibly affecting more than 30,400 people within a few days.

On the other hand, the Federal Reserve meeting is scheduled to happen during this week, and traders are keeping their eyes on the Federal Reserve rate decision. The agreement surrounding the Federal Reserve is of a neutral stance with much of the hard work done last year, and traders are expecting stability in the monetary policy for now.

As a result, the U.S. ten-year treasury yields fell to a multi-week low while surrounding near 1.63%. In contrast, most of the Asia-Pacific stocks are also representing the risk-off sentiment in the market on the back of holidays in China and Australia.

A report came in that Singapore has reported four cases of the coronavirus that has killed 80 people in China so far, and the numbers look to be increasing with the time. As in result, most currencies are under pressure due to risk-off market sentiment; on the other hand, the safe-haven currencies like Japanese yen are looking bullish.


Daily Support and Resistance    

  • S3 108.4
  • S2 108.89
  • S1 109.08

Pivot Point 109.37

  • R1 109.56
  • R2 109.85
  • R3 110.33

USD/JPY – Trading Tips

The USD/JPY pair has violated long-held horizontal support level has already been violated at 109.250 level, and now, the USD/JPY is holding below this level. At the same level, the USD/JPY is also getting supported by the bullish channel, which can be seen in the chart above. 

Technically, the USD/JPY may find resistance around 109.250, which is the same level that provided support to the USD/JPY earlier. We can see selling below this level until 108.520. Moreover, the RSI and MACD have crossed over in the selling zone and are supporting the selling bias. 

All the best for today! 

Categories
Forex Course

50 – Basic Anatomy Of A Candlestick Chart

Introduction

Introduction

Introduction

In the previous article, we have discussed the history, introduction, advantages, and disadvantages of using candlestick charts. Now, in this lesson, we will discuss how to read a typical candlestick chart.

Every candlestick has a central portion which is referred to as the body of the candlestick. It shows the distance between the opening price and the closing price of the security that is being traded. The faint line between the top of the body and the high of the trading period is the upper shadow. Likewise, the thin line between the low of the body and the low of the trading period is known as the lower shadow.

The chart below is made up of lines going from top to bottom. These lines are known as candles. This vertical axis of this chart shows the price, whereas the horizontal axis shows the time.

(Chart Taken From Trading View)

Each of the candles in the above chart gives us four pieces of information.

Candlesticks always refer to the information for a specific unit of time. For example, in a daily chart, each candle represents one single trading day. Every single candle is comprised of the open, close, high, and low for that given trading period. The horizontal axis of the above chart can be used to know which day corresponds to which candlestick. Almost every candle has a wick (also known as shadow) that goes outside the body of the candle. They represent the highest and lowest price of a security during that period.

               

The color of the candle is the essential aspect of any candle. It determines if the opening price of a security was higher or lower than the closing price of a security. If the candle is Red, it is known as a bearish candle. Always remember that the opening price is higher than the closing price in a bearish candle. Contrarily, if the candle is Green in color, it is known as a bullish candle, and that means that the opening price is lower than the closing price.

Market Emotions & Candlesticks

The names given to candlestick patterns are a colorful way to describe the emotional sentiment of the market. When we hear words like ‘dark-cloud cover’ or ‘hanging-man,’ they easily indicate the unhealthy state of the market. We are not saying they provide proper trading signals, but they clearly indicate the negative market state.

Without even knowing the technicalities of these patterns, we get an idea of where the market is heading to just by hearing their names. For instance, consider the names like ‘morning star’ & ‘evening star’ candlestick patterns. The morning star essentially implies the bullish state of the market as the appearance of the morning star is just before the sunrise. Likewise, the evening star indicates a bearish signal because it comes out just before the sunset.

The other emotional price point that should be noted is the closing of any candle. If you recall the concept of Margin calls from brokers, they are based on the close of the candle alone. Thus we can expect emotional involvement when the market closes.

That’s about the anatomy of candlesticks. In the upcoming articles, we will be discussing many of such amazing candlestick patterns which are sure going to be very interesting.

[wp_quiz id=”59661″]
Categories
Forex Daily Topic Forex Price-Action Strategies

High Impact News Events and Risk Management

In today’s lesson, we are going to demonstrate an example of price action trading on the daily chart. The lesson has a message if a high impact news event comes in between, what daily traders should do?. Let us get started.

In today’s lesson, we are going to demonstrate an example of price action trading on the daily chart. The lesson has a message if a high impact news event comes in between, what daily traders should do?. Let us get started.

In today’s lesson, we are going to demonstrate an example of price action trading on the daily chart. The lesson has a message if a high impact news event comes in between, what daily traders should do?. Let us get started.

This is EURJPY daily chart. The chart produces a bullish engulfing candle, which suggests that the buyers may dominate in the pair. Traders on different time frames may get themselves ready to go long on the pair. Traders who trade on the daily chart, they are to wait for the price to consolidate and produce a bullish reversal candle to go long on the pair. Let us proceed to the next chart.

The pair produces another bullish candle before creating the corrective candle. It means the buyers on the H4, H1, or 15M may have found some entries and drove the price towards the North last day. Anyway, the daily traders may keep an eye on the pair to go long upon a bullish engulfing candle closing above the last candle’s highest high.

Here it comes. A bullish engulfing candle closes above the daily resistance. The buyers may trigger a long entry right after the candle closes by setting stop loss below the candle’s lowest low. The nearest significant swing high is quite far away. It offers a tremendous reward considering the risk.

The price heads towards the North for one more candle. However, it does not get as bullish as expected. The good thing is it is a bullish candle. The buyers must hold the trade at least up to the level, which offers 1:1 risk-reward.

The pair produces a doji candle. The price hits the level, which offers 1:1 risk-reward. Then, it ends up producing a candle, which neither a bullish nor a bearish candle. Technically, the buyers shall take out at least 50% profit and let the rest of it run. As far as the price action is concerned, the price still may go towards the North further. I may give you information that this is the Wednesday market dated 11/09/2019. Here I have something interesting to show you before we start Thursday trading.

Source: Forex Factory

The pair we are dealing with here is EURJPY. Look at those news events with the EURO. The EURO pairs are to ride on a roller coaster on such news days. Let us not guess, but have a look at the daily chart to find out how it looks.

The price goes towards the trend’s direction. Do not miss the lower spike. You can see that it hits the stop loss. It is painful, but this is how the Forex market is. Thus, traders must take extra care of their positions before such high-impact news event. Otherwise, they may lose their hard-earned profit by getting hit such high impact news events.

 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 27 – Crytpos on a rise over the weekend; Blockchain companies helping coronavirus victims

The crypto market established its prices above major support lines over the weekend. Bitcoin, as the most prominent cryptocurrency, stepped above $8,500 and stayed there. Prices started moving up on Saturday and continued throughout the weekend. Bitcoin’s price went up 3.87% on the day. It is currently trading for $8,632. Meanwhile, Ethereum gained 4.85% on the day, while XRP went up 4.58%.

The crypto market established its prices above major support lines over the weekend. Bitcoin, as the most prominent cryptocurrency, stepped above $8,500 and stayed there. Prices started moving up on Saturday and continued throughout the weekend. Bitcoin’s price went up 3.87% on the day. It is currently trading for $8,632. Meanwhile, Ethereum gained 4.85% on the day, while XRP went up 4.58%.

The crypto market established its prices above major support lines over the weekend. Bitcoin, as the most prominent cryptocurrency, stepped above $8,500 and stayed there. Prices started moving up on Saturday and continued throughout the weekend. Bitcoin’s price went up 3.87% on the day. It is currently trading for $8,632. Meanwhile, Ethereum gained 4.85% on the day, while XRP went up 4.58%.

Centrality had another great day. The cryptocurrency gained 22.37% on the day, making it the most prominent daily gainer. There were no losers in the past 24 hours, as only four cryptocurrencies out of the top100 were in the slight red. Enjin Coin lost the most, which was 1.09%.

Bitcoin’s dominance increased slightly over the weekend. It is now at 65.78%, which represents an increase of 0.53% when compared to the value it had yesterday.

The cryptocurrency market capitalization gained quite a bit of its value over the weekend. It is currently valued at $239.93 billion, which represents an increase of $10.82 billion when compared to yesterday’s value.

What happened in the past 24 hours

Some blockchain and cryptocurrency firms decided to use their resources to help victims of the coronavirus in Wuhan, China. Cryptocurrency exchange Binance will donate 10 million Chinese yuan (which is approximately $1.44 million) to the effort.

Binance CEO Changpeng Zhao told the press that Binance did make a pledge towards the cause, but did not announce it after a Twitter user tagged the exchange CEO in a post regarding cryptocurrency donations being accepted for the cause.

Honorable mention

MakerDAO

Financial technology data company Digital Assets Data shared that out of all the Ether (ETH) that is locked in the collateralized debt positions of the old MakerDAO system, an astonishing 27% belong to a single Ethereum address.

Dai, a cryptocurrency made by MakerDAO, allows its users to borrow or generate stablecoins by staking their cryptocurrency funds as collateral.

The Dai stablecoin reached a milestone of 100 million token debt ceiling and introduced a multi-collateral Dai that can be backed by multiple assets in November 2019.

The old, single-crypto collateral Dai, became known as “Sai.”

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin had a great weekend as its price reached over $8,500 and established support there. Bitcoin bulls pushed (and are still trying to push) the price above the $$8,650 price line, which became recognized again after some time of price movements ignoring it. However, Bitcoin did not yet manage to cross this resistance line.


Bitcoin’s RSI is approaching overbought territory on the 4-hour chart, while its volume is elevated, but not at the high levels it had on Jan 14.

Key levels to the upside                    Key levels to the downside

1: $$8,650                                         1: $8,436

2: $8,815                                           2: $8,130

3: $8,905                                           3: $7,880

Ethereum

Ethereum also increased in price over the weekend. Its price went from $156 all the way up to $170. However, Ethereum is still fighting to stay above the $167.8 line, as it is right on it at the moment of writing. If the price goes above, it might face the next resistance at $178.5. If it, however, goes down, its support level will be at $164.


Ethereum’s volume is elevated, while its RSI is (just as with Bitcoin) approaching the overbought territory.

Key levels to the upside                    Key levels to the downside

1: $178.5                                             1: $$167.8

2: $185                                               2: $164

3: $193.6                                            3: $160

Ripple

XRP did not stay from the rest of the market, and it increased in price as well. The third-largest cryptocurrency moved from $0.2165 to $0.2333 but fell down to the current level of $0.23. Its first resistance level is waiting at $0.235, while its support is currently at $0.227.


XRP’s volume is, unlike with Ethereum and Bitcoin, not elevated. It has been steadily rising over the weekend, but it is still lower than what it was most of 2020. Its RSI level is descending at the moment after XRP’s price stopped moving upwards.

Key levels to the upside                    Key levels to the downside

1: $0.235                                            1: $0.227

2: $0.2454                                          2: $0.221

3: $0.266                                            3: $0.211

 

Categories
Forex Course

49. Quick History & Introduction To Japanese Candlesticks

What are Candlestick Charts?

What are Candlestick Charts?

What are Candlestick Charts?

A candlestick chart is simply a way of depicting the price moment’s information. Since these chats are very famous, they are available on almost every trading platform. Candlestick charts were first developed by a Japanese rice trader Sokyu Honma in the late 17th century. He is known as the father of candlesticks. Yes, it has been more than 250 years since this chart has been devised and yet they are so relevant even today.

Sokyu Honma – Father of Candlesticks

(Photo Credits – Alchetron)

Japanese are huge technical traders. They use a combination of candlestick techniques & western charts to analyze the market. The primary advantage of a candlestick chart is that it identifies the underlying psychology of traders in the market. This feature differentiates candlesticks from the other chart types we know today.

Have you come across terminologies like ‘hanging-man,’ ‘dark-cloud,’ and ‘evening-star’ but not sure what they are? Good. In the first part of this course lessons, we will be discussing everything about candlesticks and its patterns. We will also discuss how to use these charts & patterns to make profitable trades, as it will open a new way of analysis for you and show how Japanese candlesticks can enhance your trading performance.

Why do most of the traders use candlestick charts? 

There is a great interest in candlesticks by top traders. There are many reasons for that, and few of them are listed below:

🕯️ Candlestick charts are flexible. This is because they can be used as standalone or in combination with other technical indicators. These charts provide an extra dimension to the analysis.

🕯️ This technical approach is an age-old tradition of analysis, which has evolved from centuries of trial and error.

🕯️ Japanese are quite visual on the terms used to describe the patterns. A term like ‘hanging-man’ will spark interest among traders. There are hundreds of such names. Once a trader gets an understanding of what that pattern is, they will not be able to trade without using them.

🕯️ Another important reason for using the candlestick chart is that it can be paired along with the bar charts for people who see bar charts alone.

🕯️ All the usual technical analysis tools can be easily used with candlestick chartings, such as moving averages, trend lines, Elliot waves, retracements, and more. These charts provide a unique way of analysis, which is not provided by any other charting tool.

Limitations of using the Candlestick charts

🕯️ As with all other charting methods, candlestick pattern depends on the interpretation of the trader. This could be one of their limitations. As a trader gain experience, they discover which candlestick pattern suits them the best.

🕯️ Every candlestick has a close. Therefore, traders will have to wait for the close to get a valid trading signal. However, a trader might try and anticipate what the close would be a few minutes before the actual close.

🕯️ The opening price is vital in candlestick. Traders with no access to live market data might not be able to get the opening price of a security.

That’s about the introduction to Candlestick charts, its pros & cons. In the next article, we will learn the anatomy of a single candlestick chart so that you can read the chart better. Make sure to take the quiz below before moving on. Cheers!

[wp_quiz id=”59568″]
Categories
Forex Market Analysis

Daily F.X. Analysis, January 24 – Top Trade Setups In Forex – Busy Friday Ahead! 

The U.S. Dollar Index gained 0.2% on the day to 97.69. The EUR/USD slid 0.4% to 1.1055, the lowest level since early December. The European Central Bank left its monetary policy steady (deposit facility rate at -0.50%). ECB President Christine Lagarde said there are signs of a moderate increase in underlying inflation, and the downside risks to the growth outlook are less pronounced. Later today, research firm Markit will release Eurozone January Manufacturing PMI (46.8 expected) and Services PMI (52.8 expected).

The U.S. Dollar Index gained 0.2% on the day to 97.69. The EUR/USD slid 0.4% to 1.1055, the lowest level since early December. The European Central Bank left its monetary policy steady (deposit facility rate at -0.50%). ECB President Christine Lagarde said there are signs of a moderate increase in underlying inflation, and the downside risks to the growth outlook are less pronounced. Later today, research firm Markit will release Eurozone January Manufacturing PMI (46.8 expected) and Services PMI (52.8 expected).

The U.S. Dollar Index gained 0.2% on the day to 97.69. The EUR/USD slid 0.4% to 1.1055, the lowest level since early December. The European Central Bank left its monetary policy steady (deposit facility rate at -0.50%). ECB President Christine Lagarde said there are signs of a moderate increase in underlying inflation, and the downside risks to the growth outlook are less pronounced. Later today, research firm Markit will release Eurozone January Manufacturing PMI (46.8 expected) and Services PMI (52.8 expected).

The U.S. Labor Department reported that initial jobless claims climbed to 211,000 in the week ended January 18, lower than 214,000 expected. The Conference Board Leading Index declined 0.3% on month in December (-0.2% expected).

Economic Events to Watch Today

 

EUR/USD – Daily Analysis

The EUR/USD currency pair is moving on the bearish track, after hitting the 7-weeks low of 1.1036 yesterday after the European Central Bank President Lagarde told during her conference that the risk to the Eurozone growth was still on the negative side. As of writing, the EUR/USD currency pair is currently trading at 1.1050 and is consolidating in the range between the 1.1047 – 1.1058.

Looking forward, Germany’s Markit Manufacturing PMI for January is expected to increase by 44.5 in January from December’s 43.7, while Eurozone’s Manufacturing PMI for January is expected to release as 46.9 against December’s 46.3.

It is worth to mention that the published Below-Forecast figures would confirm Lagarde’s concerns about downside risks to the Eurozone economy and increase the selling pressures on the EUR currency. As a result, the EUR/USD currency pair may test support at 1.0981 (November 29 low).

On the positive side, the common currency will likely to get bids if the PMI numbers exceed the estimation by a significant margin, although the bearish outlook would be canceled only if the pair succeeds to close above Thursday’s high of 1.1109.

As well as, the EUR/USD currency pair may also take directions from the ECB President Lagarde’s speech, which is scheduled to happen at 10:30 GMT and from the release of the U.S. Manufacturing PMI, which is scheduled to publish at 14:45 GMT.

Daily Support and Resistance

  • S3 1.0922
  • S2 1.0994
  • S1 1.1025
  • Pivot Point 1.1067
  • R1 1.1097
  • R2 1.1139
  • R3 1.1212

EUR/USD– Trading Tips

The EUR/USD is trading at 1.1036 area, having formed a series of Doji candles pattern above 1.1030 support level, particularly on the 4-hour timeframe. The bullish Doji pattern is proposing the odds of a bullish and bearish trend both in the EUR/USD. The recent manufacturing and services PMI economic events have performed really well and these may help support the EUR/USD currency pair today. 

The EUR/USD can show bullish correction until 1.1060 and 1.1075. On the lower side, a breakout of the support level of 1.1037 can lead EUR/USD prices towards the 1.0945 area. 

GBP/USD– Daily Analysis

The GBP/USD currency pair stopped the Thursday losses and recovered slightly, possibly due to the positive trade headlines. But the traders are looking careful ahead of the preliminary readings of January month’s PMI for fresh impulse. As of writing, the GBP/USD currency pair is currently trading at 1.3123 and is consolidating in the range between the 1.3113 – 1.3128.

On the front of Brexit, the leading news was that the Queen’s Royal approval had been given to the United Kingdom Prime Minister Boris Johnson’s Departure Agreement Bill (WAB). Now the United Kingdom is trying to make a trade deal with the United States and Japan before leaving the European Union.

 However, the United Kingdom Chancellor Sajid Javid gave a positive statement to satisfy the industries after his previous comment about the fear of hard Brexit. He assured that the U.K. would use the power to diverge from E.U. rules only when it would be in the interest of British business.

 Even after, the fears of the United States tariff cannot be decreased because the Tories Party gave permission to China’s Huawei Company to take part in 5G, whereas the Trump administration has repeatedly given notices against such action.

Moreover, United States President Donald Trump earlier warned to impose tariffs on the United Kingdom if it fines the digital service tax to major search engines like Facebook and Google.

More importantly, the European Union (E.U.) leaders are keeping the head high before the EU-UK trade discussions. The situation will continue to weigh on the risk tone. On the other hand, China’s explosion of coronavirus already gave the major shock to the global risk sentiment.

Looking forward, preliminary readings of January month PMIs from the U.K. and the U.S. will be the key to watch, whereas the recent increase in the U.K.’s earnings and CBI data have decreased the chances of the BOE’s easing. So, traders will keep their eyes on the PMIs for fresh directions.

Daily Support and Resistance

  • S3 1.3023
  • S2 1.3073
  • S1 1.31
  • Pivot Point 1.3123
  • R1 1.315
  • R2 1.3174
  • R3 1.3224

GBP/USD– Trading Tip

The GBP/USD has traded sideways in the wake strong dollar and strong Sterling. The GBP gained bullish momentum on the release of better than expected manufacturing figures which hurt the BOE’s interest rate cut sentiment. 

At the moment, the GBP/USD pair is trading at 1.3090 as it has violated the symmetric triangle pattern on 4 hourly charts. It seems to extend its bullish bias after retracing back to the 1.3080 level.

The GBP/USD pair may find support around the 1.3044 area today. Whereas, the RSI and MACD support the mixed bias. Let’s look for selling trades below 1.3123 and bullish trades above 1.3044. 

USD/JPY – Daily Analysis

The USD/JPY currency pair flashed green and recovered from the low of 109.27 to 109.58 because Japanese yen lost ground despite the upbeat Japanese inflation data. As of writing, the USD/JPY currency pair is currently trading at 109.53 and is consolidating in the range between the 109.44 – 109.58.

At the data front, Japan’s core consumer price index (CPI) increased 0.7% in December from a year earlier after November’s 0.5% rise. The headline CPI rose 0.8%, bettering the forecast of 0.4% by a big margin.

The inflation data was published at 23:30 GMT but did not find a bid tone around the Japanese yen so far. Ultimately, inflation remained well away from the central bank’s elusive 2% target despite the acceleration from the previous month.

At the BOJ front, the Bank of Japan’s (BOJ) December monetary policy meeting minutes were released a few minutes before press time and repeated the need for continued easing. As well as, most bank members agreed that it was right to continue easing consistently. The central bank has been operating an ultra-easy policy for almost above seven years, so its rate cut bias has been priced for long ago.

The Japanese yen could find bids tone if the equities remain risk-averse on coronavirus fear. As of January 23, there were 830 confirmed cases in China. Whereas, the futures on the S&P 500 are currently reporting marginal gains.

               

Daily Support and Resistance

  • S3 108.7
  • S2 109.09
  • S1 109.29
  • Pivot Point 109.47
  • R1 109.68
  • R2 109.86
  • R3 110.24

USD/JPY – Trading Tips

The USD/JPY pair has finally violated the double bottom level of 109.850, which is now leading the currency pair towards the next support level of 109.185. Technically, the USD/JPY may find resistance around 109.850, which is the same level that provided support to the USD/JPY earlier. We can see selling below this level until 109.250. Moreover, the RSI and MACD have crossed over in the selling zone. Today, I will be looking for selling trades below 109.850 and selling above 109.250 level. 

All the best for today! 

Categories
Forex Basic Strategies

Identifying Accurate Trading Signals Using The Dark Cloud Cover Candlestick Pattern

Introduction

Introduction

Introduction

Dark Cloud Cover is a bearish reversal candlestick pattern. It essentially shows the shift in momentum from the buyers to sellers. This pattern is formed by a bullish candle, which is then followed by a bearish candle. Traders can look for an entry on the next red candle. The Dark Cloud Cover pattern can only be used when it occurs in an uptrend. Because, if the price rises above the Dark Cloud Cover pattern, it becomes less significant to trade. It is essential to know that the bearish engulfing pattern and Dark Cloud Cover pattern are very similar in their appearance. If the second candle of the pattern closes below the previous candle, you have the bearish engulfing pattern; if not, it is a dark cloud pattern.

Criteria to identify the Dark Cloud Cover pattern 

  1. The market must be in an existing uptrend.
  2. The first candle must be bullish candle within that uptrend.
  3. A gap must be on the following day.
  4. The gap up candle must close into a bearish candle.

Dark Cloud Cover Pattern – Trading Strategies

DCC + MACD Indicator

As we always say, do not trade any pattern stand alone in the market. Pairing the pattern with other credible trading tools like indicators or oscillators will dramatically increase the odds of your trades. In this strategy, we have paired the Dark Cloud Cover pattern with the MACD indicator to filter out the low probability trades. MACD indicator stands for Moving Average Convergence and Divergence. It is one of the most popular indicators that has been in use since the late 1970s. It belongs to the oscillator family, and it is designed to measure the magnitude, direction, and rate of change in any underlying currency pair.

STEP 1 – First of all, find the Dark Cloud Cover pattern in an uptrend.

STEP 2 – Wait for a MACD Crossover

Once you have found the Dark Cloud Cover pattern, the next step is to take the sell trade when MACD gives crossover at the oversold area.

As you can see in the below daily chart of the GBPJPY forex pair, the price action turned sideways for some time. After that, it prints the Dark Cloud Cover pattern, and at the same time, we can see the MACD indicator giving a reversal at the overbought area. This is a potential sign for us to go short on this pair.  As mentioned earlier, do not confuse between the Dark Cloud Cover and Engulfing Pattern. In a Bearish engulfing pattern, the red candle completely takes over the preceding green candle, whereas, in the Dark Cloud Cover pattern, the red candle takes over only 50% of the previous green candle.

Step 3 – Take Profit and Stop loss

In this strategy, we have closed our full position at the major support area, and stop-loss was above the Dark Cloud Cover pattern. Price action holds below the support area, but it immediately came back, and prints a brand new higher high. We can also close our positions based on the MACD indicator. When the MACD indicator reversed at the oversold area, it’s a perfect sign to exit our position. Always remember the sure sign of market reversal is when the price action is at the significant support area and the MACD lines crossover at the oversold region.

DCC + Donchain Channel

In this strategy, we have paired the Dark Cloud Cover pattern with the Donchain Channel. Richard Donchain developed the Donchain channel indicator in 1936. He was a fund manager, writer, and also known as the father of trend trading. Once the Donchain channel indicator is plotted on to the price chart, it helps the traders to visualize the price of an asset and if it is relative to the upper and lower bounds of the indicator.

STEP 1 – Find out the Dark Cloud Cover pattern in an uptrend.
STEP 2 – Check if the price action respects the upper Donchain Channel

Once you find the Dark Cloud Cover pattern in an uptrend, the next step is to check if the price action respects the upper Donchain Channel.

The image below represents the EUR/AUD forex pair, and the price action was held at the major resistance area. Before printing the Dark Cloud Cover pattern, the price hits the upper bound of the Donchain channel twice. When price action hits the upper bound of the Donchain channel and if the market prints the Dark Cloud Cover pattern at the same time, it is a clear indication of sellers stepping into the market. After the completion of the pattern, we activate our trade, and for a profit-booking, we aim for the second target.

STEP 3 – Take Profit and Stop loss

In this example, we have two target areas. If you are a short term or intraday trader, then exit your position at first support area, and if you are a positional trader or a swing trader, then go for target two. When you activate your trade and if the market has two major support areas, always try to exit your position at target two, because the end goal of every trader is to make as much money as possible when the market gives them an opportunity & minimize the losses when the trade goes against them. The placement of stop-loss should always be above the Dark Cloud Cover pattern.

Bottom Line

The Dark Cloud Cover is quite a popular trading pattern in the industry, and it can easily be recognized on the price charts. This pattern is only useful or reliable to trade when it appears in an overall uptrend. This pattern identifies the shift in momentum from buyers to sellers. The test of the resistance line or trend line can be used as a confirmation tool to take sell trades. If you are using the Dark Cloud Cover pattern alone, always use it on the higher timeframe. Also, use more significant stop loss because none of the indicators or patterns are capable enough to indicate accurate signals all alone. On a lower timeframe, this pattern often provides some false signals. Still, by pairing it with other trading indicators, we can dramatically filter out the low probability signals.

We hope you find this article useful. Try trading this pattern with the indicators we have mentioned above to maximize your profits, as these combinations have been back-tested by experienced traders. Cheers!

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 24 – Crypto sell-off or just a leg down? Libra discussed at World Economics Forum

The crypto market spent the past 24 hours losing value. Prices started moving down the day before and continued throughout the day. Bitcoin’s price went down 1.76% on the day. It is currently trading for $8,336. Meanwhile, Ethereum lost 2.66% on the day, while XRP went down 2.84%.

The crypto market spent the past 24 hours losing value. Prices started moving down the day before and continued throughout the day. Bitcoin’s price went down 1.76% on the day. It is currently trading for $8,336. Meanwhile, Ethereum lost 2.66% on the day, while XRP went down 2.84%.

The crypto market spent the past 24 hours losing value. Prices started moving down the day before and continued throughout the day. Bitcoin’s price went down 1.76% on the day. It is currently trading for $8,336. Meanwhile, Ethereum lost 2.66% on the day, while XRP went down 2.84%.

Centrality gained 28.89% on the day, making it the most prominent daily gainer. On the other side, Komodo lost 16.04% on the day, making it the biggest daily loser.

Bitcoin’s dominance went up half a percent over the past 24 hours as its price decreased far less than the price of other cryptocurrencies. It is now at 66.25%, which represents an increase of 0.5% when compared to the value it had yesterday.

The cryptocurrency market capitalization lost quite a bit of its value in the past 24 hours. It is currently valued at $229.11 billion, which represents a decrease of $8.43 billion when compared to the value it had on yesterday.

What happened in the past 24 hours

After some time of not hearing about it and writing it off as a failed project, Libra might be back in the game. Major global economists are now crediting Facebook’s Libra with pushing the entire world to start reconsidering the US dollar as the anchor currency.

World Economic Forum panel in Davos, filled with officials as well as financial experts, discussed the US dollar and how it has become the world’s reserve currency.

Honorable mention

Bitcoin

Bitcoin enthusiasts have been fighting for an exchange-traded fund (ETF) for a long time now. Everyone expected an ETF to be approved in 2019. However, most of the proposals sent to the SEC were quickly rejected.

However, this might be the end of all the waiting. Ryan Selkis, a cryptocurrency analyst, claims that “we’ll finally see a Bitcoin ETF in the next 12-18 months.” Selkis believes Grayscale will be the first approved ETF, as the developments in the past 3 months placed Grayscale in quite a good position in SEC’s eyes.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin lost quite a bit of its value in the past 24 hours. The sell-off was not quick, but rather slow and happened throughout the entire day. Bitcoin moved away from its $8,650 level and started decreasing in price. Bulls resisted a bit, but bears ultimately took over and the price went down to $8,270. However, the price recovered slightly and Bitcoin is now just slightly above that level, sitting at $8,300.


The key level of $8,436 moves to the upside levels.

Key levels to the upside                    Key levels to the downside

1: $8,436                                           1: $8,130

2: $8,815                                           2: $7,880

3: $8,905                                           3: $7,640

Ethereum

Ethereum also faced a sell-off. Its price dropped slightly more than Bitcoin’s. The pattern of the price drop seems almost entirely the same as Bitcoin’s, as the price fell under $167.8 and continued going downwards. Bulls made some noise, but were quickly ran over, and the price continued dropping to $157.9, where it is at currently. A drop to these price levels means that Ethereum made $160 level its immediate resistance, while its support is currently sitting at $154.2.


Ethereum’s volume is at the same level for four days already, while its RSI moved to the lower parts of the value-range.

Key levels to the upside                    Key levels to the downside

1: $160                                                1: $154.2

2: $163.5                                            2: $148.2

3: $167.8                                            3: $141.3

Ripple

XRP lost quite a bit of value in the past 24 hours. Not only that, but it fell under two major support levels. XRP bears pushed the price down below the $0.227 and $0.221 support levels all the way down to $0.220. The price is stable at that level, at least for the moment being. XRP’s immediate resistance is now $0.221, while its first major support level is at $0.211.


XRP’s volume is pretty stagnant for the past couple of days, while its RSI is extremely close to the oversold territory.

Key levels to the upside                    Key levels to the downside

1: $0.221                                            1: $0.211

2: $0.227                                            2: $0.204

3: $0.235                                            3: $0.198

 

Categories
Forex Basic Strategies

Pairing The Shooting Star With Stochastic & Awesome Oscillators

Introduction

Introduction

Introduction

The Shooting Star is one of the most popular bearish candlestick patterns in the industry. This pattern appears in an uptrend most of the time, and it indicates bearish reversals in the price action of any underlying currency. So basically, when this pattern appears on the charts, it implies that the buyers are exhausted, and its sellers turn to lead the market. Once we have identified the Shooting Star pattern in an uptrend and confirm the trend reversal with any other credible indicator, we should look to open a short position.

This pattern has a unique structure as it consists of a small body and a high upper wick, as shown in the image below. This image accurately represents the trend reversal because we can clearly see the buyers losing momentum and sellers taking over the market.

Trading strategies with the Shooting Star pattern

Shooting Star + Stochastic Indicator

In this strategy, we have paired the Shooting Star pattern with the Stochastic Indicator to identify the trading opportunities. Just like RSI and MACD, the Stochastic Indicator also belongs to the oscillator group. It is developed in the 1950s, and it is still widely used by the traders. The Stochastic indicator oscillates between 0 & 100 levels. When the indicator goes below 20, it means that the currency pair is oversold. Similarly, when the indicator goes above the 100 level, it indicates that the currency pair is overbought.

STEP 1 – First of all, find the Shooting Star pattern in an uptrend.

STEP 2 – Check the Stochastic indicator

Once you find the Shooting Star pattern, the next step is to check the Stochastic Indicator. If the indicator is giving a reversal at the oversold area, it indicates the overbought market conditions.

The image below represents the EUR/USD weekly Forex chart. In this pair, price action was held at a significant resistance area, and it prints the Shooting Star pattern. Also, the Stochastic indicates the overbought conditions. These three clues clearly say that this pair is all set to change its direction. The Stochastic pattern on a higher timeframe has very higher chances to perform. So whenever you find this pattern, and if it supports the rules of this strategy, always trade big.

Step 3 – Stop-loss and Take Profit

A stop loss is specially designed to limit the loss of the trader. So before activating your trade, it is essential to decide where you are going to place the stop loss. In the example above, we put the stop loss just above the Shooting Star candle.

Shooting Star pattern indicates the reversal in price action. This means that we are catching the top of the trend. As the end goal of every trader is to maximize their profits and minimize losses, always try to hold the positions for more extended targets.

In the example, we have closed our position at a higher timeframe support area. We can use the higher timeframe support or look for the Stochastic Indicator to reach the oversold area. Another way to close the position is when the market reaches the major support area while the Stochastic is in the oversold area.

As we can see in the image below, we closed our full position at a significant support area. You can use the Stochastic or any other trading tool to exit your position, but we always suggest to use the considerable support/resistance area to book profits.

Shooting Star Pattern + Awesome Oscillator

In this strategy, we have paired the Shooting Star pattern with the Awesome Oscillator to identify the trading opportunities. The Awesome Oscillator is a boundless indicator. When the Awesome Oscillator reverses below the zero-level, it indicates the buying pressure. When it reverses above the zero-level, it means sellers are ready to lead the market. Furthermore, some traders use this indicator to confirm the strength of the trend. When the indicator goes above zero-level, it means the buying trend is quite strong, and when it goes below the zero-level, it shows the sellers dominating the market.

Step 1 – First of all, find the Shooting Star pattern in an uptrend.

Step 2 – Look for the Awesome oscillator reversal

Once we find the Shooting Star pattern, the next step is to take a sell-entry when the Awesome Oscillator reverses at overbought market conditions.

The image below is the EURUSD 240 chart. On this pair, at first, the buyers were quite weak, and they started holding at the resistance area. Furthermore, in that small range, price action turned sideways, and it printed the Shooting Star pattern. The Awesome Oscillator even reversed at the overbought conditions. Both of the trading tools are indicating the exhaustion of the buyers. And sellers are ready to take over the market.

Step 3 – Take Profit and Stop loss

Every trader has different expectations from the market, some like to trade short term trends, and some like to trade longer-term moves. If you are an intraday trader, then we suggest you close your position when the Awesome Oscillator reverses at the oversold area. But, if you are a swing trader or investor, wait for the opposite pattern (Hammer Pattern) to appear to close all of your positions. We can even use the higher timeframe support/resistance area to close our positions.

We advise you to place the stop-loss order above the Shooting Star pattern. As you can see in the image below, we booked full profits at the major support area. After that, the price action dropped a bit more but reversed immediately to follow the buy direction. It is important not to ignore the higher timeframe support/resistance areas.

The psychology behind the Shooting Star Pattern

At first, we see the buyers enjoying the uptrend as the price of the currency keeps printing brand new higher high. As this euphoric moment begins to set in, the sellers start to sell their positions at higher prices. Now the buyers get panicked, and even they start to sell their positions. Now that the buyers and sellers are both selling their positions, panic is created in the market, which leads to a sharp reversal in price action. Thus a long wicked small body candle appears on the trading charts.

Keep in mind that the Shooting Star pattern is more reliable when it is formed after the three consecutive bullish candles. It creates strong bullish pressure on the price chart, and in such cases, the upper wick of Shooting Star is even longer. It indicates that the price is about to reverse with even more strength.

Bottom line

The Shooting Star is a single candle pattern, and it is the most popular trend reversal pattern in the industry. There is a strong psychological pattern that exists beyond the Shooting Star pattern. When the market is in an uptrend, and when buyers gain exponential strength, most of the traders book the profit, and as a result, the bullish trend loses its strength. This results in sellers sending the price down. Most of the time, the Shooting Star pattern provides the 3:1 risk-reward ratio trades.

We hope you find this article informative. Please let us know if you have any questions regarding the same in the comments below. Cheers!

Categories
Forex Course Forex Daily Topic

Introduction To Forex Course 3.0

Hola Readers! We have successfully completed the first two courses and received an amazing response for both of them. We can’t thank you enough for that. Also, we hope these first two courses have helped you in understanding the most fundamentals basics of the Forex market. It is very important to know these basics in order to succeed in the Forex market. We have made a quick navigation guide for both the courses just for you to access the articles easily.

Hola Readers! We have successfully completed the first two courses and received an amazing response for both of them. We can’t thank you enough for that. Also, we hope these first two courses have helped you in understanding the most fundamentals basics of the Forex market. It is very important to know these basics in order to succeed in the Forex market. We have made a quick navigation guide for both the courses just for you to access the articles easily.

Hola Readers! We have successfully completed the first two courses and received an amazing response for both of them. We can’t thank you enough for that. Also, we hope these first two courses have helped you in understanding the most fundamentals basics of the Forex market. It is very important to know these basics in order to succeed in the Forex market. We have made a quick navigation guide for both the courses just for you to access the articles easily.

You can find them here the guides for – Course 1.0 | Course 2.0

With all these basics in mind, we will be moving on to our new course, which is a bit different than the other two courses. We are saying this because the first two courses are more inclined towards information and theory. But Course 3.0 is all about Technical Analysis. Hence most part of it deals with the practical applications that are involved rather than just theory. The quizzes and everything remain as is, but a lot more effort from your side is required to ace the knowledge that we are going to provide in the lessons.

Having said that, Technical Analysis has the most logical approach to the prediction of price movement than the Fundamental & Sentimental Analysis. There are a lot of components within the technical analysis, and some of them include Price-Action trading, technical tools such as Indicators & Oscillators, Volume based trading, etc. In this course, we will be going through all of them in detail.

Topics that will be covered in this course 

✫ Everything About Candlesticks

✫ Support & Resistance Levels

✫ Moving Averages

✫ Popular Indicators & Oscillators

✫ Fibonacci Trading

In each of the topics, there will be about 7 – 10 article lessons where complete information is provided related to the topics. Quizzes will be available for each of the articles like before.

We are proud to present this course to you as it is prepared by some of the top technical traders with great expertise in this field. Aren’t you excited? We wish you all the best in studying and learning the concepts with at most interest. Cheers!

Categories
Forex Market Analysis

Daily F.X. Analysis, January 23 – Top Trade Setups In Forex – ECB Interest Rate In Highlights! 

The European Central Bank will deliver its interest rates decision (deposit facility rate expected to be unchanged at -0.50%). The European Commission will release the eurozone’s December Consumer Confidence Index (-7.0 expected).

The European Central Bank will deliver its interest rates decision (deposit facility rate expected to be unchanged at -0.50%). The European Commission will release the eurozone’s December Consumer Confidence Index (-7.0 expected).

The European Central Bank will deliver its interest rates decision (deposit facility rate expected to be unchanged at -0.50%). The European Commission will release the eurozone’s December Consumer Confidence Index (-7.0 expected).

The U.S. Labor Department will post initial jobless claims in the week ended January 18 (215,000 expected). The Conference Board will release its December Leading Index (-0.2% on month expected).

Economic Events to Watch Today

 

EUR/USD – Daily Analysis

The EUR/USD currency pair is moving flat and consolidating in the narrow range between the 1.1070 – 1.1120 ahead of the European Central Bank’s decision regarding rates. As of writing, the EUR/USD currency pair is currently trading at 1.1085. The pair have not attempted any move out of the range 1.1070 – 1.1120 since January 17.  

The European Central Bank is likely to keep interest rates and other essential policy tools unchanged. As we know, the ECB had delivered rate cut by ten basis points to -0.5% in September 2019. Moreover, the Bank also restarted bond purchases in October.

It is worth to mention that the purpose of Thursday’s meeting would be to announce the official strategy review, which would redefine its mission and tools. The Bank would also set the scope and parameters for the review, which could gain the attention of traders.

Moving ahead, the EUR currency will likely put strong bids if the speech of ECB President Lagarde decreases the chances of the possible change in the sense of the price stability and methods to achieve it.

On the other hand, the German economy is flashing green in the wake of optimism surrounding the United States and China trade deal. As we already mentioned that the EUR currency might pick up bid if Lagarde focuses on recent positive data, and confirm the need for more effort toward the economy.

On the negative side, the EUR currency could be subject to selling pressure if the Lagarde ignores the recent German/Eurozone economic recovery and focus more on the downside risks. Furthermore, any sign regarding Bank planning to adopt a higher inflation target in the future will likely push the EUR currency lower.


Daily Support and Resistance           

  • S3 1.1031
  • S2 1.1059
  • S1 1.1076
  • Pivot Point 1.1087
  • R1 1.1105
  • R2 1.1116
  • R3 1.1144

EUR/USD– Trading Tips

On Thursday, the EUR/USD is trading at 1.1086 area, having formed a series of Doji candles pattern above 1.1070 support level, particularly on the 4-hour timeframe. The bullish Doji pattern is proposing the odds of a bullish and bearish trend both in the EUR/USD as it depends upon the ECB rate decision. 

The EUR/USD can show bullish correction until 1.1106. On the lower side, a breakout of the support level of 1.1077 can lead EUR/USD prices towards the 1.1045 area. 

GBP/USD– Daily Analysis

The GBP/USD currency pair was flashing red, and it failed to continue its three-day bullish rally despite the United Kingdom’s Prime Minister Boris Johnson’s Brexit deal victory regarding Withdrawal Agreement Bill (WAB). As of writing, the GBP/USD currency pair is currently trading at 1.3015 and is consolidating in the range between the 1.3119 – 1.3152.

On the front of the leading news, despite seeing 5-amendments from the House of Lords, the Tory leader/UK PM Boris Johnson has passed his WAB Bill through the Parliament (without modification) in the wake of majority support. As of now, the bill will get the royal approval within 9-days to become law.

Whereas, the hard Brexit fears continue to surround the market. That is due to the European Union chief Von der Leyen saying that the United Kingdoms’ position would be weakened in the single market if it does not continue to sign up the European Union rules and regulations after Brexit withdrawal. The E.U. chief also said that the trade talks would start from February, after considering that there could be a further delay until March.

Moreover, the pair could weaken further in the wake of the U.S. threat to impose the sanctions if the United Kingdom moves forward in its punitive measures to impose digital service tax on search engines like Google and Facebook. Whereas France backed out after the warning from Washington and agreed with the U.S. to develop an international framework for digital taxation at the OECD level, but both disagree on ways to shape it.

At the China front, fears of a Chinese virus explosion and noises surrounding the US-China trade deal, as well as the U.S. President Donald Trump’s impeachment hearings, all are keeping the market under pressure.

As a result, the U.S. ten-year treasury yields remained under pressure around 1.75%, while the Asian stocks also gave mixed trade sentiment.

Daily Support and Resistance

  • S3 1.2879
  • S2 1.2994
  • S1 1.3067
  • Pivot Point 1.311
  • R1 1.3182
  • R2 1.3225
  • R3 1.3341

GBP/USD– Trading Tip

On the 4 hour timeframe, the GBP/USD is testing the resistance level, which is extended by the bearish channel at 1.3060. At the moment, the GBP/USD pair is trading at 1.3060, and it seems to extend its bullish bias until 1.3090.

The GBP/USD pair may find support around the 1.3044 area today. Whereas, the RSI and MACD support the bullish bias. Let’s look for selling trades below 1.3080 and bullish trades above 1.3010. 

USD/JPY – Daily Analysis

The USD/JPY currency pair failed to cross the 110.00 range and is still trading on the bearish track below the 110.00 level, mainly due to the risk-off market sentiment in the wake of global coronavirus spread. As of writing, the USD/JPY currency pair is currently trading at 109.55 and is consolidating in the range between the 109.50 – 109.86.

As we already mentioned, the USD/JPY currency pair failed to break the 110 handles because of the lack of events to distract the market attention from the virus fears as well as Trump’s impeachment trial. Whereas the U.S. stock markets had mixed sentiment and without the full commitment from U.S. dollar traders, the prices finally dropped.

The virus has killed 17 people so far in China, and leaders have almost closed Wuhan and also keeping the focus on the other nation to understand the cause behind the virus. By the way, the virus is known to be humanly transmitted. As a result, market risk-tone has severely disturbed.

At the Sino-US trade font, the U.S. has decided to reduce some part of its tariffs on Chinese products on this Valentines’ Day, as agreed in the phase-one deal, which resulted in ease in the uncertainty about the impact of the US-China deal on global financial markets.

Although the trade and geopolitical fears have been pushing the markets off lately, the rising trade optimism has given a cool tone to the market. Despite that, the U.S. ten-year treasury yields remained weak, around 1.77%, whereas global equities have also shown mixed results.

Looking forward, the Investors will keep their eyes on Japan’s trade figures, All Industry Activity Index, and Leading Economic Index, as well as the news headlines, to further invest in the market. On the negative side, a possible recovery in Japanese Yen will likely keep the pair under pressure. And on the positive side, the BOJ Governor’s overall dovish outlook in the latest meeting, as well as the broad greenback strength, could keep the pair bullish.

Daily Support and Resistance

  • S3 109.4
  • S2 109.65
  • S1 109.74
  • Pivot Point 109.9
  • R1 109.99
  • R2 110.15
  • R3 110.41

USD/JPY – Trading Tips

The USD/JPY pair has finally violated the double bottom level of 109.850, which is now leading the currency pair towards the next support level of 109.185. Technically, the USD/JPY may find resistance around 109.850, which is the same level that provided support to the USD/JPY earlier. We can see selling below this level until 109.250. Moreover, the RSI and MACD have crossed over in the selling zone. Today, I will be looking for selling trades below 109.850 and selling above 109.250 level. 

All the best for today! 

Categories
Forex Price-Action Strategies

When Things Go Like This

In today’s lesson, we are going to demonstrate an example of H1 breakout trading. We have come to know that it is an excellent trading strategy. It offers 1:1 risk-reward but maintains a tremendous winning consistency. However, the H1 chart is to maintain some attributes to offer us entry with the strategy. Today’s example is […]

In today’s lesson, we are going to demonstrate an example of H1 breakout trading. We have come to know that it is an excellent trading strategy. It offers 1:1 risk-reward but maintains a tremendous winning consistency. However, the H1 chart is to maintain some attributes to offer us entry with the strategy. Today’s example is […]

In today’s lesson, we are going to demonstrate an example of H1 breakout trading. We have come to know that it is an excellent trading strategy. It offers 1:1 risk-reward but maintains a tremendous winning consistency. However, the H1 chart is to maintain some attributes to offer us entry with the strategy. Today’s example is one of the ideal charts with those attributes. Let us have a look.

The chart shows that the price gets caught within two horizontal lines. The last candle comes out as a bearish Marubozu candle. Thus, It may be the beginning of a new bearish trend. Traders must wait for the price to continue its bearish move and make a breakout at the level of support.

The price continues its bearish move. The last candle comes out as a strong bearish candle closing below the level of support. It is an explicit breakout. Here comes the trickiest part of this strategy. Traders must wait for the next candle to close below the breakout candle. Let us find out what the price does in the next chart.

Look at the confirmation candle. This is one good-looking bearish candle. Traders shall look for such candle for the breakout and breakout confirmation to trade with H1 breakout trading. A short entry may be triggered right after the last candle closes. Let us find out the level of Stop Loss and Take Profit.

Measure the difference between Stop Loss to Entry and set the Take Profit at the level with the same distance. In a word, it gives us 1:1 risk-reward. It often travels more, but usually, the price consolidates after hitting the target with 1:1 risk-reward. Let us proceed and find out how the trade goes.

The price heads towards the Take Profit level with extreme bearish momentum. The level where we set Take Profit, the price seems to be making another breakout. It looks the sellers still have the controls. However, as far as H1 breakout trading is concerned, the sellers are out with the profit.

You might have noticed that after the breakout confirmation, how the price heads towards the South. It does not take any pauses. We must not be certain about the reasons since it is the Forex market. However, if we consider

  1. The trend initiating candle
  2. The breakout candle
  3. The breakout confirmation candle

We see that three of these candles have all the attributes that the sellers look for in an ideal bearish market. In a bullish market, it is vice versa. If things go like this, H1 breakout trading is one of the most consistent winning strategies. In most cases, the price hits the target as we have demonstrated the example in today’s lesson.

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 23 – SEC hunting ICOs, Cryptos having a red day

The crypto market seems to have stopped consolidating and started moving slightly downwards. Prices started moving down slightly, so the real downtrend is still early to call. Bitcoin’s price went down 1.76% on the day. It is currently trading for $8,567. Meanwhile, Ethereum lost 2% on the day, while XRP went down 2.31%.

The crypto market seems to have stopped consolidating and started moving slightly downwards. Prices started moving down slightly, so the real downtrend is still early to call. Bitcoin’s price went down 1.76% on the day. It is currently trading for $8,567. Meanwhile, Ethereum lost 2% on the day, while XRP went down 2.31%.

The crypto market seems to have stopped consolidating and started moving slightly downwards. Prices started moving down slightly, so the real downtrend is still early to call. Bitcoin’s price went down 1.76% on the day. It is currently trading for $8,567. Meanwhile, Ethereum lost 2% on the day, while XRP went down 2.31%.

SWIPE gained 18.95% on the day, making it the most prominent daily gainer. On the other side, Centrality lost 9.52% on the day, making it the biggest daily loser for the third time in a row.

Bitcoin’s dominance went up a quarter of a percent in the past 24 hours. It is now at 65.75%, which represents an increase of 0.25% when compared to the value it had yesterday.

The cryptocurrency market capitalization lost a bit of its value in the past 24 hours. It is currently valued at $237.54 billion, which represents a decrease of $2.61 billion when compared to the value it had on yesterday.

What happened in the past 24 hours

It is known that the Securities and Exchange Commission (SEC) is investigating ICOs for any potential fraud. During the investigation, the SEC has charged Sergii Grybniak, the founder of Opporty. The SEC targeted this project for falsely declaring that they are 100% SEC compliant, while they were not. This project managed to raise $600,000 during its ICO.

Opporty project launched its ICO between Sept and OCT 2018. The project was mainly aimed at US investors and claimed to provide a “blockchain-based ecosystem for small businesses and their customers.”

Honorable mention

NEM/XEM

The NEM Foundation managed to reach an agreement with the leading crypto hotel booking platform, Travala. The deal makes the NEM native token, XEM, available for booking. This way, NEM users can book their stay in over 2 million hotels across the world.

The integration of XEM on the platform would certainly open the path for this cryptocurrency, as it will provide a great use-case to it. XRM can now be used to book hotels in over 2 million hotels in 230 countries.

Travala users who want to use XEM for booking a hotel will get about 40% discount rate where Travala offers accommodation booking services.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin was trading in a very tight range for 48 hours straight. The largest cryptocurrency finally left that range and started moving. Unfortunately, the move was downward-facing. Bitcoin moved away from its $8,650 level and started decreasing in price. Bulls and bears are currently fighting for who is going to take over the next move. Bitcoin’s next support level is somewhere around $8,436, while its resistance is all the way up to $8,815. The $8,650 level was not an important level in the most recent price activities, so it should be disregarded.


Key levels remain the same as there were no support or resistance breakouts.

Key levels to the upside                    Key levels to the downside

1: $8,815                                           1: $8,436

2: $8,905                                           2: $8,130

3: $9,115                                           3: $7,880

Ethereum

Ethereum has once again confirmed that it is the most correlated crypto asset. Its price followed the market downwards, which made the price drop to $165. Ethereum is currently in a really tight range, as its immediate support level is right at $163.5. On the other hand, its nearest resistance level is at $167.8.


Ethereum saw a slight rise in volume in the past few candles as the direction of the next move is unsure, and bulls and bears are fighting. Its RSI value is right below the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $167.8                                             1: $163.5

2: $178.65                                          2: $160

3: $185                                               3: $154.2

Ripple

XRP lost some value as well today. The price drop solidified XRP’s position below the $0.235 line. Even though this line was not well-respected in the most recent price activity, it is still a valid resistance level. XRP is now trading in the middle of the range, bound by $0.227 to the downside and $0.235 to the upside. If we disregard the $0.235 resistance, the next viable level would be $0.24545.


XRP’s volume is pretty stagnant for the past couple of days, and so was its RSI level.

Key levels to the upside                    Key levels to the downside

1: $0.235                                            1: $0.227

2: $0.24545                                        2: $0.221

3: $0.2553                                          3: $0.211

 

Categories
Candlestick patterns Forex Candlesticks

Candlestick Reversal Patterns I: Overview and The Piercing Pattern

Candlestick Reversal patterns: An Overview

Candlestick Reversal patterns: An Overview

Candlestick Reversal patterns: An Overview

Candlestick reversal figures are composed mainly of bu two or three candlesticks, which in combination harness the psychological power to shift the market sentiment. 

Depending on the importance of the severity of reversal, their names vary. Japanese are very visual regarding the names they gave to them. Therefore, we can almost visualize them just by its name.

In this article, we will learn the following content:

  • Overview of the reversal candlestick patterns
  • how to identify a Bullish Piercing pattern and its specular Dark Cloud Cover pattern
  •  How important engulfing patterns are and how to recognize them
  • Experience how counterattack figures lead to swift trend reversals.

The predicting power of two candle figures is sometimes astonishing. For a sample to be statistically significant, scientists need more than 20 samples for normally distributed phenomena, sometimes more. A reversal figure only shows eight data points. 2x (OHLC), and besides that traders most of the time, the reversal figure warns about a trend reversal or at least the end of the current trend.

The typical reversal pattern is a two candle figure that begins with a topping or bottoming candle followed by an opposite candle that erases partially or totally, the price action of the first one.

Piercing pattern and Dark Cloud Cover

The Piercing Pattern and the Dark Cloud Cover are specular patterns. The Piercing Pattern warns of a reversal of the bearish trend, whereas the Dark Cloud Cover heralds the end of a bullish trend.

 Candlesticks are not always good predictors, and the Piercing Pattern is a weak signal, especially if the trend has not moved too deep yet. Of course, the most oversold is the price, the better a Piercing Pattern predicts a reversal. The Dark Cloud Cover, though, is seen to show much more predicting power.

Timeframes

The Japanese used them mostly in daily and weekly timeframes. The use of these two patterns in intraday trading must be confirmed with other signals, as, for instance, the Piercing Pattern occurring after hitting a significant support or a Dark Cloud cover as a result of a strong resistance rejection. The use of short-term oscillators such as 10-period stochastics or Williams percent R in combination with these two signals will improve the likelihood of success while trading them.

Recognizing a Piercing Pattern

 

The bullish Piercing Pattern is composed of a large bearish body forming after a broad downtrend. The next candle begins below the low of the first black candle, and closes above the midway up, or even near the open if the preceding bearish candle. 

Criteria:
  1. The first candle shows a black body
  2. The second candle shows a white body
  3. The Downtrend is clear and for a long time
  4. The second day opens below the range of the previous day
  5. the second white candle closes beyond the 50% of the range of the last day.
  6. The longer the candles, the better their predicting power.
  7. If there is a gap down, the greater, the better
  8. The higher the white candle closes, the stronger the signal
  9. A large volume during these two candles is significant.

The Dark Cloud Cover

Apply the specular conditions to the Dark Cloud cover. We also should remember that trading forex pairs make both patterns fully symmetrical.

Criteria:
  1. The first candle shows a white body
  2. The second candle shows a black body
  3. The upward trend is clear and for a long time
  4. The second day opens above the range of the previous day
  5. the second black candle closes below the 50% of the range of the last day.
  6. The longer the candles, the better their predicting power.
  7. If there is a gap up, the greater, the better
  8. The lower the black candle closes, the stronger the signal
  9. A large volume during these two candles is significant.

 

Final words

lease note that the Forex and crypto markets rarely have gaps. Therefore, the condition that the second open being below the range of the first candle is almost impossible to satisfy. In this case, we rely solely on the relative size of both candlesticks and the closing above 50 percent of the range of the black candle. Of course, it is almost impossible to get gaps in intraday charts except for spikes due to sudden unexpected events.

 

References: 

The Candlestick Course: Steve Nison

Profitable candlestick Patterns, Stephen Bigalow

Categories
Forex Market Analysis

Daily F.X. Analysis, January 22 – Top Trade Setups In Forex – Weaker Dollar Sentiment In Play! 

In Asian trading hours, EUR/USD edged up to 1.1098, and GBP/USD climbed to 1.3011. The USD/JPY slid to 109.97. This morning, the Bank of Japan, as widely expected, kept its policy rate at -0.10% and a 10-year yield target at 0% unchanged. The central bank raised its 2020 Japan’s GDP growth forecast to 0.9% from 0.7% previously. Spot gold marked a day-high of $1,568.6 an ounce before easing to $1,566.0 an ounce.

In Asian trading hours, EUR/USD edged up to 1.1098, and GBP/USD climbed to 1.3011. The USD/JPY slid to 109.97. This morning, the Bank of Japan, as widely expected, kept its policy rate at -0.10% and a 10-year yield target at 0% unchanged. The central bank raised its 2020 Japan’s GDP growth forecast to 0.9% from 0.7% previously. Spot gold marked a day-high of $1,568.6 an ounce before easing to $1,566.0 an ounce.

In Asian trading hours, EUR/USD edged up to 1.1098, and GBP/USD climbed to 1.3011. The USD/JPY slid to 109.97. This morning, the Bank of Japan, as widely expected, kept its policy rate at -0.10% and a 10-year yield target at 0% unchanged. The central bank raised its 2020 Japan’s GDP growth forecast to 0.9% from 0.7% previously. Spot gold marked a day-high of $1,568.6 an ounce before easing to $1,566.0 an ounce.

The ZEW Financial Market Survey is an aggregation of the sentiments of almost 350 economists and analysts on the economic future of Germany is scheduled to release today. Germany, which is considered as the Eurozone’s manufacturing powerhouse, suffered a marked slowdown in 2019, in the wake of the Sino-US trade tensions.

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/USD slipped 0.1% to 1.1085. The German ZEW Current Situation Index bounced to -9.5 in January (-13.5 expected) from -19.9 in December.  

The EUR/USD currency pair bullish level above 1.11 was not long-lived. The pair closed the day with 0.11% losses, creating an inverted hammer and confirming a head-and-shoulders breakdown on the daily chart. 

Looking forward, Italy’s Business Climate, Industrial Sales, and Industrial Orders for November are scheduled to release today. However, these data could not influence the market as well as the U.S. housing data is expected to release and will likely leave the impact on the U.S. Dollar.

The ECB is not supposed to appear on Thursday, although Bloomberg announced that 90% of analysts anticipate a change to the inflation strategy. It will be the first move in 17 years if President Lagarde rules to perform the adjustment.

Daily Support and Resistance

  • S3 1.0996
  • S2 1.1051
  • S1 1.107
  • Pivot Point 1.1106
  • R1 1.1125
  • R2 1.1161
  • R3 1.1216

EUR/USD– Trading Tips

On the 4 hour timeframe, the EUR/USD is trading at 1.1086, having formed a Doji and bullish engulfing pattern above 1.1070 support level. The bullish engulfing pattern is proposing the odds of a bullish trend in the EUR/USD. The EUR/USD can show bullish correction until 1.1106. On the lower side, a breakout of the support level of 1.1077 can lead EUR/USD prices towards the 1.1045 area. 

GBP/USD– Daily Analysis

The GBP/USD rebounded 0.3% to 1.3046. Official data showed that the U.K. jobless rate for the three months to November remained steady at 3.8% (as expected), and average weekly earnings grew 3.2% on year (+3.1% estimated).

The U.K. Office for National Statistics will release December public sector net borrowing, excluding banking groups (5.3 billion pounds expected).

In the U.S., the Federal Reserve Bank of Chicago will post the December National Activity Index (0.15 expected). The National Association of Realtors will report December’s existing-home sales (5.43 million units expected). The FHFA will release November House Price Index (+0.3% on month expected).

The pound to dollar is striving to post a third continuous day of profits and is probing a vital resistance zone. GBP/USD set higher on Monday and spread gains yesterday following an upbeat U.K. jobs report.

Daily Support and Resistance

  • S3 1.2812
  • S2 1.2928
  • S1 1.2969
  • Pivot Point 1.3044
  • R1 1.3085
  • R2 1.316
  • R3 1.3276

GBP/USD– Trading Tip

On Wednesday, GBP/USD continues to trade bullish over a weaker dollar. On the 4 hour timeframe, the GBP/USD is testing the resistance level, which is extended by the bearish channel at 1.3060. At the moment, the GBP/USD pair is trading at 1.3060, and it seems to extend bullish bias until 1.3090.

The GBP/USD pair may find support around the 1.3044 area today. Whereas, the RSI and MACD support the bullish bias. Let’s look for selling trades below 1.3080 and bullish trades above 1.3010. 

USD/JPY – Daily Analysis

The USD/JPY closed at 109.859 after placing a high of 110.220 and a low of 109.760. Overall the movement of the USD/JPY pair remained strongly bearish that day.

On Tuesday, USD/JPY dropped to its one-week lowest after the Bank of Japan revised its growth projections for 2020. The Bank of Japan raised its growth estimates for the fiscal year beginning in April to 0.9%, which it previously estimated as 0.7% in October.

According to reports, the Bank of Japan kept its monetary policy on hold. It raised its forecasts for economic growth in 2020 because of the stimulus package of government and the decreasing pessimism over the global outlook. 

The Bank of Japan signaled the rising optimism over the global outlook after the United States and China agreed on the Phase-one trade deal to resolve their trade conflicts. Bank said that the risks surrounding the global perspective have decreased to some extent, and this has provided the bank with the possibility to increase its forecast for the growth of Japan’s economy in 2020.

Daily Support and Resistance

  • S3 109.73
  • S2 109.94
  • S1 110.04
  • Pivot Point 110.15
  • R1 110.25
  • R2 110.35
  • R3 110.56

USD/JPY – Trading Tips

On Wednesday, the USD/JPY pair continues to exhibit choppy trading sessions due to a lack of fundamentals. The USD/JPY has traded bearishly as it fell from 110.200 to trade at 109.950, but the pair continues to consolidate in a narrow trading range of 109.800 – 110.150.

Technically, the USD/JPY is supported above 109.850, and we can see buying above this level until 110.490. The USD/JPY may find a resistance level of 110.570. Moreover, the RSI and MACD have crossed over in the selling zone. Today, I will be looking for buying trades over 110.15 and selling below at the same level. 

All the best for today! 

Categories
Forex Daily Topic Forex Price-Action Strategies

Friday Trading May Need More Attention

The Forex market is open from Monday to Friday. Since Friday is the last day of the week, traders may need to look after their trade more. To be precise, they may need to close their intraday trades manually. In today’s lesson, we are going to demonstrate an example of this.

The Forex market is open from Monday to Friday. Since Friday is the last day of the week, traders may need to look after their trade more. To be precise, they may need to close their intraday trades manually. In today’s lesson, we are going to demonstrate an example of this.

The Forex market is open from Monday to Friday. Since Friday is the last day of the week, traders may need to look after their trade more. To be precise, they may need to close their intraday trades manually. In today’s lesson, we are going to demonstrate an example of this.

This is an H1 chart. The price after being bearish has been trapped within a rectangle. It could make a breakout either side. However, the last candle suggests that the price is bearish biased. It closes within the level of previous swing low. If the price makes a bearish breakout, the sellers may trigger a short entry upon the breakout confirmation. Let us proceed to the next chart.

The price action produces an inside bar. As we know, an inside bar is a relatively weak reversal candle. It may push the price towards the North; however, if a bearish candle breaches the level of support, the sellers may get ready to go short on the pair.

The last candle breaches the level of support. It is not an explicit breakout. Nevertheless, the candle closes below the level. If the next candle closes well below the breakout candle, the sellers may trigger a short entry by setting the Stop Loss above the trend-initiating candle.

Yes, the next candle closes well below the breakout candle. The sellers may trigger a short entry right after the last candle closes. Usually, the take profit level is to be set with a 1:1 risk-reward ratio on the H1 breakout strategy. Do not forget that it is Friday. It is an essential factor to remember while trading in the H1 breakout trading strategy.

The last candle gets us some green pips. It looks good now. Most probably, it is going to get us the reward, which it usually does. We must wait and hold the position.

We have been waiting for long. The price has been on strong consolidation. It is still to travel more to hit the Take Profit. As mentioned, it is Friday. The market is about to close (within 2 hours). Usually, most of the pairs get sluggish before the market closes on Friday. On Monday, many pairs start trading with a gap. There is no point holding H1 breakout positions during the weekend. Thus, we may close the trade manually and be happy with half the profit of our expectations.

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 22 – Companies abandoning Libra project, BNB on the rise

The markets didn’t make any significant gains over the past 24 hours. Prices remained at the same level for the second day in a row. Bitcoin’s price went down 0.07% on the day. It is currently trading for $8,641. Meanwhile, Ethereum gained 0.56% on the day, while XRP went down 0.64%.

The markets didn’t make any significant gains over the past 24 hours. Prices remained at the same level for the second day in a row. Bitcoin’s price went down 0.07% on the day. It is currently trading for $8,641. Meanwhile, Ethereum gained 0.56% on the day, while XRP went down 0.64%.

The markets didn’t make any significant gains over the past 24 hours. Prices remained at the same level for the second day in a row. Bitcoin’s price went down 0.07% on the day. It is currently trading for $8,641. Meanwhile, Ethereum gained 0.56% on the day, while XRP went down 0.64%.

Komodo gained 23.90 on the day, making it the biggest daily gainer. Golem followed with a gain of 21.47% on the day. On the other side, Centrality lost 7.80% on the day, which makes it the biggest daily loser. Centrality was the biggest daily loser for two days in a row.

Bitcoin’s dominance didn’t move at all. It is now at 65.5%, which represents a decrease of 0.18% when compared to the value it had yesterday.

The cryptocurrency market capitalization did not move today. It is currently valued at $240.15 billion, which represents an increase of $1.62 billion when compared to the value it had on yesterday.

What happened in the past 24 hours

After Facebook’s Libra project had a successful start with many big companies supporting it, things started falling apart. We can now add the telecom giant Vodafone to the list of companies that cut ties with the Libra association. Vodafone’s spokesperson confirmed the news on Jan. 21, 2020.

Dante Disparte, Libra association’s head of policy and communications, confirmed this news in a statement. “We can confirm that Vodafone is no longer a member of the Libra Association.”

Honorable mention

Binance Coin

Binance Coin was one of the few top cryptocurrencies that gained over 2% on the day. Binance Coin managed to go up by 3.44%, making it today’s top performer in the top10. The reason for that is not technical, but rather fundamental.

Binance announced that it officially launched its Peer-to-Peer (P2P) Merchant Program. This program is a user-oriented fiat currency trading platform, which started working yesterday.

According to Coin360’s reports, Binance managed to achieve a staggering 30% growth in trading volume just over the past month. The Hong Kong-based firm also has the largest average monthly traffic at the moment, counting over 18 million users.

With the increased volume which means more users transacting with BNB, as well as the good news regarding the P2P platform launch, Binance Coin has a great fundamental outlook.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin is trading in a very tight range for 48 hours straight. The largest cryptocurrency traded sideways for around 2 days now, which is an incredibly long time for this tight of a range. The price movement shows lack of respect for the $8,650 trend line, which should be removed from the equation, at least for now (we will keep the line on our charts for now, but the price level will be removed from the “key levels” table). Each time Bitcoin consolidated in this way, the break afterwards was explosive.


Bitcoin’s volume stopped decreasing. It is now maintaining a certain level. Its RSI is hovering around the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $8,815                                           1: $8,436

2: $8,905                                           2: $8,130

3: $9,115                                           3: $7,880

Ethereum

Ethereum’s chart looks very similar to Bitcoin’s chart. The second-biggest cryptocurrency is consolidating as well at the moment. Its price is sitting right on top of the $167.8 line, and it is currently unknown whether the price will move up or down. If the price moves to the downside, Ethereum will face a support level of $163.5. On the other hand, if the price goes up, it will have leeway because the next resistance level is further away, sitting at 178.65.


Ethereum’s volume currently on the lower end of the spectrum, while its RSI level is precisely in the middle of the range (just like yesterday).

Key levels to the upside                    Key levels to the downside

1: $167.8                                             1: $163.5

2: $178.65                                          2: $160

3: $185                                               3: $154.2

Ripple

XRP was not performing any differently than the rest of the market. Its price is going through consolidation for the second day now. Its price is sitting right at the key level of $0.235, struggling to go up or down. If the price goes down, XRP will face support at the $0.227 level. If, on the other hand, it goes up, the price will face resistance at the $0.24545 level.


XRP’s volume is on the lower end of the spectrum, while its RSI is just precisely in the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $0.24545                                        1: $0.227

2: $0.253                                           2: $0.221

3: $0.266                                           3: $0.211

 

Categories
Forex Elliott Wave

How to Start a Wave Analysis – Part 3

In our previous article about the preliminary wave analysis, we commented on the relation between price and time and distinguished the difference between directional and non-directional movement. In this educational post, we will extend new concepts to develop a wave analysis.

In our previous article about the preliminary wave analysis, we commented on the relation between price and time and distinguished the difference between directional and non-directional movement. In this educational post, we will extend new concepts to develop a wave analysis.

In our previous article about the preliminary wave analysis, we commented on the relation between price and time and distinguished the difference between directional and non-directional movement. In this educational post, we will extend new concepts to develop a wave analysis.

Finding the end of a Movement

Identifying the end of a movement is usually a tough task, especially when the wave analyst makes its first analysis.

To reduce the subjectivity in this stage, the basic rule to identify the end of a segment is: if the price action of the following section of a directional movement experiences a retrace for more than 100%, it is indicative that the movement has ended.

To illustrate this rule, let us consider the GBPNZD in its 8-hour chart. In the figure, we observe the bearish directional movement starts at 2.00187. The last directional segment that begins at 1.87283 and declines until 1.82790.

Once the price surges from the lowest level, and advances over 1.87283, reaching at 1.90588, we observe that the bearish directional movement has finished.

In the case of a non-directional movement, the segments series that conforms to the consolidation formation frequently tends to finish once the price exceeds the 161.8% level of the non-directional range.

The next chart exposes to NASDAQ e-mini futures contract in its 12-hour timeframe. The figure illustrates the non-directional movement that developed once the price reached 8,040.75 pts.

The e-mini NASDAQ futures price made a first bearish segment From 8,040-75 until 7,359.75 pts. From this low, the price action reacted, making a bounce that exceeded the 61.8% of the first bearish decline. In the same way, the third internal segment retraces more than 61.8% of the second non-directional move.

After NASDAQ surpassed 8,040.75 pts, the price continued developing a directional sequence that drove the e-mini index to reach several consecutive record highs to the date.

GBPJPY Continue Developing in a Non-Directional Move

The GBPJPY cross went bearish, starting from the 147.954 level in a five-segmented wave creating a directional sequence until 141.161. From there, the price found new buyers expecting the boost of the GBPJPY once again.

The surpassing of the previous high of segment “4” at 143.054 makes us perceive that the bearish directional movement ended with the advance of leg “6” that ended at the 144.364 level.

Once the top of segment “6” at 144.364 was reached, the price reacted bearishly, making a new decline that created a new lower low at 140.818. In view that the movement exceeded a retracement of 61.8% and was less than 161.8%, the sequence corresponds to a non-directional move.

The next movement, identified as “8”, brought the price to 144.524. This path corresponds to an additional segment of the non-directional sequence. Once that fresh high was reached, the price action reacted downward. The movement remains currently active and based on the previous analysis, the price action bias is bearish.

Conclusions

The identification of the beginning and end of each segment allows the wave analyst to reduce subjectivity in the study.

We must remark that directional and non-directional movements are not the same concepts as impulsive and corrective movements.

Suggested Readings

  • Neely, G.; Mastering Elliott Wave: Presenting the Neely Method; Windsor Books; 2nd Edition (1990).
  • Prechter, R.; The Major Works of R. N. Elliott; New Classics Library; 2nd edition (1990).
Categories
Forex Videos

How To Get An Edge In Forex Using Statistical Thinking – Trade Like A Forex Titan Part 3

https://youtu.be/EpQBmw2O5oY

https://youtu.be/EpQBmw2O5oY

Stats for Traders III – Z-Scores, Market Strength and Market Signal to Noise

Z-Scores


Although all Normal distributions have the same shape, each one has different mean and standard deviations. We know that the area under de curve shows the probability of a new value falling within that area. For instance, we know that the likelihood of a value falling between the mean and +1 standard deviation (SD) of the mean is 34.1%.
So to have a proper picture of where a point is in the distribution, it is essential to standardize it.

A standardized Normal distribution is called a Z-Distribution. Every value in a Z-Distribution is called a Z-Score and represents the number of standard deviations that value is away from its mean. For example, if a EUR/USD price is +1.5 SD away, the z-score of that value is 1.5.
To compute the Z-Score of a value X, we simply subtract the mean from X and divide its result by SD.

Z = (X-m)/SD,

where m is the mean.

Evaluating the Market with Z -scores
The different currency pairs tend to move in long-term trends and short-term oscillations around their average. The first measure we can do to a currency pair to detect overextension is by a z-score using a short-term period such as 30 sessions. By taking the 30-session average and standard deviation, we can convert all the pair’s values into z-scores and assess how far the price is from the consensus price of the last 30 days.

Statistically Assessing the Strength of the Trend

A trend can be described by a price change. That is, prices making a slope. The slope of the trend shows the strength of the trend. The steeper, the stronger. If the slope is zero or very close to it, the market is ranging.
We can use simple periodic price subtractions, such as used by the Momentum indicator, or we can determine that slope using linear regression formulas and, from those lines, compute the gradients.
With a sizeable historical price database, it is possible to compute the typical slope and the standard deviation of the mean and its standard deviation.


To thoroughly assess a market, we could determine values for each timeframe of interest using 10, 30, and 100 periods. After having these values, we will be able to compare the current slope against its historical model, and the z-score will tell us how far it is from the mean if it is overextended and where on the map is against the other timeframes.

Signal to noise ratio of a market (S/N)

The concept of Signal-to-Noise is to determine how much of the price action is signal versus noise.
Signal is the component that gives a direction: The Close minus the open in absolute values

Signal = ABS( Close – Open)

Noise the range outside this. Thus we can compute the ratio of signal over the total range:

S/N Ratio = Signal/ range.

A day with a 100 percent signal and no noise will occur if the open and the close are at the extremes of the range. 0 percent signal will happen if Open =Close.


By keeping a record of each forex asset, we could easily evaluate which pairs show more trendiness and less nose. These will be more likely to produce gains. We can also classify S/N information using z-scores and to find where the current signal-to-noise of an asset compares against its average, to time the market in and detect the next wave of increasing signal to noise leg on the cyclic pattern.

Our next episode will deal with ways to evaluate the quality of a trading system and also apply this concept to the markets.

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 20 – India at a crypto crossroads; Bitcoin outperforms altcoins

The cryptocurrency market had a red weekend as Bitcoin could not make it through $9,000 to create a clear bull market path for the rest of the cryptos. Bitcoin’s price went down 4.61% on the day. It is currently trading for $8,643. Meanwhile, Ethereum lost 5.93% on the day, while XRP went down 5.95%.

The cryptocurrency market had a red weekend as Bitcoin could not make it through $9,000 to create a clear bull market path for the rest of the cryptos. Bitcoin’s price went down 4.61% on the day. It is currently trading for $8,643. Meanwhile, Ethereum lost 5.93% on the day, while XRP went down 5.95%.

The cryptocurrency market had a red weekend as Bitcoin could not make it through $9,000 to create a clear bull market path for the rest of the cryptos. Bitcoin’s price went down 4.61% on the day. It is currently trading for $8,643. Meanwhile, Ethereum lost 5.93% on the day, while XRP went down 5.95%.

The past 24 did not have any particular prominent gainers. Seele gained 6.78% on the day, making it the biggest daily winner. On the other side, Steem lost 14.74% on the day, which makes it the biggest daily loser.

While every cryptocurrency in the top10 by market cap performed better than Bitcoin during the price rise, each one of them (excluding BSV) fell more than Bitcoin once it was time to go down in price. Bitcoin’s dominance, therefore, increased over the weekend. It is now at 66.31%, which represents an increase of 0.47% when compared to the value it had yesterday.

The cryptocurrency market capitalization decreased over the weekend. It is currently valued at $237.26 billion, which represents a decrease of $8.54 billion when compared to the value it had on Friday.

What happened in the past 24 hours

Following the last August session, the Supreme Court of India reconvened once again this week. The topic was the Crypto v. RBI case. The Supreme Court had asked the Reserve Bank of India to further clarify its position towards crypto and to explain why it enforced a nationwide ban during the last session. It was also on the agenda to discuss if this move was constitutional at all.

In an attempt to defend its stance, the RBI tried to showcase all the security breaches that happened in the crypto industry, therefore presenting itself as an entity that takes care of its peoples’ financial safety.

Honorable mention

Bitcoin SV

Anyone who watched the markets over the past week saw the explosive gains that Bitcoin SV made, as well as the price drop afterward. The cryptocurrency led by Craig Wright, a prominent figure in the crypto industry that claims to be Satoshi Nakamoto, is leading a campaign claiming that Bitcoin SV is the “real deal” because he is the real Satoshi.

He is scheduled to appear before the court on Feb 3 to present the keys to the Tulip Trust that holds over 1.1 million Bitcoin. He supposedly got the rest of the key required from his former business partner Dave Klaiman.

An important thing to note is that most of the volume that brought Bitcoin SV’s surge was actually fake. The majority of the volume came on small exchanges that are easily influenced by one person. There is much evidence pointing to wash trading rather than a genuine interest in this cryptocurrency.

However, Bitcoin SV did manage to be the only cryptocurrency that ended up in the green over the past few day.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin tried to push over $9,000 over the weekend, but failed to do so. Pushing over this barier would, to most people, mean the start of a bull market. However, afterfailing to secure its position above the desired price, Bitcoin tumbled all the way down to $8,460. It has recovered since and is currently trading right above the $8,640 level. The level got tested several times, and might not hold if tested more.


Bitcoin’s volume is on the levels similar to the past week’s levels. Its RSI is in the lower part of the value range.

Key levels to the upside                    Key levels to the downside

1: $8,815                                           1: $8,640

2: $8,905                                           2: $8,436

3: $9,115                                           3: $8,130

Ethereum

Ethereum followed Bitcoin both to the upside and downside. While its gains surpassed Bitcoin’s during the “bull phase,” its losses were larger than Bitcoin’s during the price drop. Ethereum couldn’t break $178.65 and fell back down. It dropped under $167.8 where it is at currently. It is trading in a very tight range between $167.8 to the upside and $163.5 to the downside.


Ethereum’s volume currently on the lower end of the spectrum. Its RSI is near the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $167.8                                             1: $163.5

2: $178.65                                          2: $160

3: $185                                               3: $154.2

Ripple

XRP performed very similarly to other cryptocurrencies over the weekend. Its price was surging until it hit a wall at $0.24545. The only difference was that XRP actually managed to pass over the resistance a few times before dropping below it once again. It dropped more and more until bulls picked up the pace at $0.226. XRP’s price is now consolidating in a tight range, bound by $0.27 to the downside and $0.234 to the upside.


XRP’s volume is descending and currently on the lower end of the spectrum, while its RSI is in the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $0.234                                            1: $0.227

2: $0.24545                                        2: $0.221

3: $0.253                                           3: $0.211

 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 20 – Top Trade Setups In Forex – Martin Luther King Day

On the forex front, the U.S. Dollar Index rose 0.3% on the day at 97.61. The euro slid 0.4% to $1.1090. The British Pound dropped 0.5% to $1.3010, snapping a three-day rally. Official data showed that U.K. retail sales unexpectedly fell 0.6% on month in December (+0.6% estimated), fueling expectations of an interest-rate cut by the Bank of England.

On the forex front, the U.S. Dollar Index rose 0.3% on the day at 97.61. The euro slid 0.4% to $1.1090. The British Pound dropped 0.5% to $1.3010, snapping a three-day rally. Official data showed that U.K. retail sales unexpectedly fell 0.6% on month in December (+0.6% estimated), fueling expectations of an interest-rate cut by the Bank of England.

On the forex front, the U.S. Dollar Index rose 0.3% on the day at 97.61. The euro slid 0.4% to $1.1090. The British Pound dropped 0.5% to $1.3010, snapping a three-day rally. Official data showed that U.K. retail sales unexpectedly fell 0.6% on month in December (+0.6% estimated), fueling expectations of an interest-rate cut by the Bank of England.

The U.S. government bond prices declined further after the Treasury Department announced plans to sell 20-year government bonds later this year. The benchmark U.S. 10-year Treasury yield advanced to 1.834% from 1.809% Thursday.

Economic Events to Watch Today

  

 

EUR/USD – Daily Analysis

The EUR/USD pair was closed at 1.10893 after placing a high of 1.11425 and a low of 1.10862. Overall the movement of the EUR/USD pair remained strongly bearish that day.

On Friday, the EUR/USD pair was dropped near its January low amid the broad U.S. dollar strength after the upbeat macroeconomic data. 

The US-China phase-one trade deal was under whole focus week but failed to impress as it did not include the rolling back of tariffs in it, which was essential for boosting global growth. According to Trump, there would be rolling back of tariffs in Phase-two of a trade deal. The uncertainty from the trade front, as well as Brexit front, continued to weigh on the market.

On Thursday, the closely watched Retail Sales data from the United States exceeded the expectations and supported the U.S. dollar. The stronger U.S. dollar after December Retail Sales removed risk appetite from the market and dragged its rival currency Euro on Friday.

The upbeat data from the United States indicated that the economy was doing well then its significant counterparts and weighed on EUR/USD prices.

On Friday, from the European side, at 12:45 GMT, the French Government Budget Balance was announced for November, which showed a deficit of -113.9B. At 14:02 GMT, the Current Account Balance for the whole bloc was released, which also came in short of expectations as 33.9B against the forecasted 34.3B and weighed on Euro.

At 14:02 GMT, the Italian Trade Balance for November showed a decline of 4.87B against the expected 7.22B and weighed on single currency Euro. At 15:00 GMT, the Final Consumer Price Index (CPI) for the year remained flat at 1.3%. The Final Core Consumer Price Index from Eurozone for the year also remained the same as expected at 1.3%. Weaker than expected Trade Balance from Eurozone weighed on EUR/USD and dragged its prices near its month lowest point.

On the other hand, the U.S. dollar was in strength already due to Retail Sales data from Thursday and got even stronger after the release of Housing Starts on Friday. At 18:30 GMT, the number of Houses that started its construction in December exceeded the expectations of 1.38M and came in as 1.61M and supported the U.S. dollar.

The stronger U.S. dollar dragged further the prices of EUR/USD pair and gave the pair a strong bearish candle at the ending day of the week.

Daily Support and Resistance

  • S3 1.1056
  • S2 1.1101
  • S1 1.1119
  • Pivot Point 1.1146
  • R1 1.1164
  • R2 1.1191
  • R3 1.1236

EUR/USD– Trading Tips

On the 4 hour timeframe, the EUR/USD is trading at 1.1096, having formed a bullish engulfing pattern. The bullish engulfing pattern is suggesting the odds of a bullish trend in the EUR/USD. The EUR/USD can show bullish correction until 1.1106 and 1.1112 before showing further selling.

GBP/USD– Daily Analysis

The GBP/USD pair was closed at 1.30094 after placing a high of 1.31187 and a low of 1.30076. Overall the movement of GBP/USD pair remained bearish that day. On Friday, the British Pound was lower against the U.S. dollar as the Retail Sales data from the U.K. came in short of expectations, and the U.S. dollar gained traction at the end of the week amid robust data.

The member of Bank of England Monetary Policy Committee, Gertjan Vlieghe, who previously was in favor of rate hike said earlier this week that he would vote for a rate cut in the next meeting if the data continuously show signs of weakness.

The chances for a rate cut by Bank of England increased on Friday after the release of Retail Sales from Great Britain. At 14:30 GMT, the Office for National Statistics from the United Kingdom published Retail Sales report for December, which showed that Retail Sales slumped to -0.6% from the expectations of 0.5% and weighed on single currency Pound.

The GBP/USD prices rose in the early trading session on Friday before the release of Retail Sales, which decreased the size of the decline in prices of GBP/USD after the publication of data. The pair GBP/USD fell to 1.30 level on the back of the 5th consecutive monthly decline in Retail Sales. 

It should also be noted that in December, there were general elections in the United Kingdom, which could be a cause for the decline in Retail Sales as the political uncertainty could have weighed on consumer minds for spending on Christmas presents.

The next monetary policy decision by Bank of England will take place on coming Thursday, January 30. Only major data to be released by then from the United Kingdom is Manufacturing & Services PMI, which will also be released next week.

On the other hand, the U.S. dollar remained firm on the back of strong Housing Starts figures. At 18:30 GMT, the number of buildings that started their construction in December came in as 1.61M against the expectations of 1.38M and supported the U.S. dollar.

The member of the Federal Reserve Open Market Committee, Harker, also gave comments in favor of the U.S. economy. He said that the economy was doing well, and data will be monitored to decide the further fate of monetary policy and interest rates.

His comments also supported the upward trend of the U.S. dollar on Friday and added in the fall of GBP/USD prices at the ending day of the week.


Daily Support and Resistance

  • S3 1.2946
  • S2 1.3004
  • S1 1.304
  • Pivot Point 1.3062
  • R1 1.3098
  • R2 1.312
  • R3 1.3178

GBP/USD– Trading Tip

On Monday, the GBP/USD pair continues to trade bearish as it tested and failed to violate the downward channel, which was formed on the 4-hour chart. At the moment, the GBP/USD pair is trading at 1.2078, and it seems to extend bearish bais until 1.2925. 

The GBP/USD pair may find support around 1.2925 area today. Whereas, the RSI and MACD support the bearish bias. Let’s look for selling trades below 1.2980.  

USD/JPY – Daily Analysis

The USD/JPY pair was closed at 110.161 after placing a high of 110.287 and a low of 110.046. Overall the movement of the USD/JPY pair remained bullish that day.

At 9:30 GMT, the Tertiary Industry Activity for November from Japan exceeded the market expectations and supported the Japanese Yen when it came in as 1.3% against the forecasted 1.0%. 

At 2:00 GMT, the TIC Long-Term Purchases data from the United States for November was released by the U.S. Department of Treasury. The report showed a decline of 22.9B from the expected 34.5B and weighed on the U.S. dollar.

At 18:30, the Building Permits for December from the United States showed a decline to1.42M from the expected 1.47M and weighed on the U.S. dollar. However, the Housing Starts in December were increased to 1.61M from the expected 1.38M and supported the U.S. dollar.

At 19:15 GMT, the Capacity Utilization Rate from the U.S. remained flat at 77.0%. But the Industrial Production for December dropped and came in negative as -0.3% from forecasted 0.0% and weighed on the U.S. dollar.

At 20:00 GMT, the Prelim Consumer Sentiment from the University of Michigan came as 99.1, almost in line with the expectations of 99.3, and gave null effect to the U.S. dollar. However, the release of JOLTS Job Openings weighed on the U.S. dollar when it dropped to 6.80M against the expectations of 7.24M for November.

The Prelim Inflation Expectations from the University of Michigan increased in January to 2.5% from December’s 2.3%. The increased Housing Starts and Increased expectations of rising Inflation gave a boost to the U.S. dollar on Friday. The U.S. dollar was further supported by the comments of Patrick Harker, the President of Philadelphia Federal Reserve Bank.

Daily Support and Resistance

  • S3 109.57
  • S2 109.83
  • S1 110
  • Pivot Point 110.1
  • R1 110.27
  • R2 110.36
  • R3 110.62

USD/JPY – Trading Tips

On Monday, the USD/JPY pair is trading with a bullish bias at 110.200 after consolidating in a narrow trading range of 109.800 – 110.150. Recently, the USD/JPY pair has formed Three While Soldiers pattern on the 4-hour timeframe, which typically suggests a bullish trend in the market. 

The USD/JPY is now supported above 110.100, and we may see further buying above this level until 110.490 today. The USD/JPY may find a resistance level of 110.570. Moreover, the RSI and MACD are still staying in the buying zone. Today, I will be looking for buying trades over 110.1 levels with a target of 110.570. 

All the best for today! 

Categories
Forex Elliott Wave

How to Start a Wave Analysis – Part 2

In the previous article, we presented the wave identification process starting with the segment as the basic unit of the price movement. In this educational article, we will introduce some rules to support the preliminary analysis.

In the previous article, we presented the wave identification process starting with the segment as the basic unit of the price movement. In this educational article, we will introduce some rules to support the preliminary analysis.

In the previous article, we presented the wave identification process starting with the segment as the basic unit of the price movement. In this educational article, we will introduce some rules to support the preliminary analysis.

Price and Time in the Waves Identification

When an Elliott wave analyst decides to study a financial asset, he tends to choose a specific timeframe, and in consequence, he will visualize a defined group of waves. However, in view that the speed of price changes across time, the analyst must be flexible in the timeframe selection process.

The psychology of masses changes over time; this phenomenon can be reflected in the speed of price, making a market more volatile in a specific moment than another. For this reason, it is useful to analyze using different timeframes.

R.N. Elliott, in his work “The Wave Principle,” exposes the importance of selecting different timeframes when the speed of price doesn’t allow us to visualize the different waves adequately.

Directional and Non-Directional Movement Concept

Before starting to analyze the price through time, it is essential to distinguish the concept of directional and non-directional movement. The directional move contains a group of segments that produces a global increase or decrease in the value of a financial asset.

When the price action runs in a directional movement, the segment that moves in the opposite direction of the previous move, never retracing beyond the 61.8% Fibonacci level of that movement.

Directional and Non-Directional Movement in GBPJPY Cross

The following chart illustrates the concept of directional and non-directional movement. The GBPJPY cross in its 2-hour chart exposes the bearish directional movement started on December 13th, 2019, when the price reached 147.954 and ended when the price found support at 141.161 on December 23rd, 2019.

The bearish directional movement ended once the segment identified as “6” surpassed the origin of the last bearish section tagged as “5”.

The sixth segment climbed until 144.364, from there, the cross found fresh sellers, which drove its price to a new low at 140.817. This non-directional movement is identified as the segment “7”.

After this new support, GBPJPY bounced in a segment identified as “8” until 144.524, being the third segment of the non-directional sequence. Currently, the price is retracing in a bearish segment that still is active.

Conclusion

The price moves following a rhythm that changes through time. Sometimes, in a different timeframe, it isn’t straightforward to visualize the Elliott wave formations, in this case, the wave analyst has to be flexible to select a different timeframe to develop its study.

The identification of directional and non-directional movements will allow the analyst to understand and follow the rhythm of the market.

Suggested Reading

– Neely, Glenn. Mastering Elliott Wave: Presenting the Neely Method. Windsor Books. 2nd Edition.

Categories
Forex Market Analysis

Crude oil gains support – Is It a good time to go long?

The WTI crude oil prices unchanged and maintain its biggest gain in the wake of sluggish economic growth in China, the world’s largest crude importer, as it increased concerns regarding the fuel demand.

The WTI crude oil prices unchanged and maintain its biggest gain in the wake of sluggish economic growth in China, the world’s largest crude importer, as it increased concerns regarding the fuel demand.

The WTI crude oil prices unchanged and maintain its biggest gain in the wake of sluggish economic growth in China, the world’s largest crude importer, as it increased concerns regarding the fuel demand.

In the 4th-quarter of 2019, the world’s 2nd-largest economy grew by an expected 6% from a year earlier, whereas the full-year expansion was 6.1%, the slowest in 29 years. The U.S. West Texas Intermediate dropped 7 cents at $58.45 a barrel, having risen more than 1% in the previous session. The contract was down about 1% for the week and also set for a second weekly decline.

WTI crude oil prices rose yesterday after the United States and China signed the phase-one trade agreement. The sentiment in the market was further recovered after the United States Senate approved changes to the U.S.-Mexico-Canada Free Trade Agreement.

On the flip side, decreasing chances of the US-Iran war and the U.S. dollar strength, which generally weighs on the commodity basket. The International Energy Agency gave a dark picture of the oil market outlook for 2020 on Thursday. The agency expected that oil supply would exceed demand for crude from the Organization of the Petroleum Exporting Countries (OPEC), even if members are fully compliant in their agreement with Russia and other producers to curb output, a grouping known as OPEC+.

On the other hand, the United Arab Emirates energy minister said this week that he is expecting a positive meeting with OPEC and its allies to meet next in March.

Daily Support and Resistance

S3 55.83
S2 57.1
S1 57.86
Pivot Point 58.37
R1 59.13
R2 59.64
R3 60.91

The U.S. Oil is holding around 58.80 with a bullish bias to target a 23.6% Fibonacci retracement mark of 59.46. On the higher side, further bullish bias can lead to crude oil prices towards 60.60, which marks 38.2% Fibonacci retracement. Today consider staying bullish above 58.40 to target 9.45. Good luck!

Categories
Forex Daily Topic Forex Price-Action Strategies

The Trend on the Daily Chart Means a Lot

Most of the Forex trading platforms have charts from 1M to Month. It is a debatable issue to determine the best chart among them. All these charts have merits as well as demerits. However, the Daily Chart plays an important role as far as determining the trend is concerned in the Forex market. In today’s lesson, we are going to demonstrate an example of how long term trend on the daily chart may help us guess the price’s next direction.

Most of the Forex trading platforms have charts from 1M to Month. It is a debatable issue to determine the best chart among them. All these charts have merits as well as demerits. However, the Daily Chart plays an important role as far as determining the trend is concerned in the Forex market. In today’s lesson, we are going to demonstrate an example of how long term trend on the daily chart may help us guess the price’s next direction.

Most of the Forex trading platforms have charts from 1M to Month. It is a debatable issue to determine the best chart among them. All these charts have merits as well as demerits. However, the Daily Chart plays an important role as far as determining the trend is concerned in the Forex market. In today’s lesson, we are going to demonstrate an example of how long term trend on the daily chart may help us guess the price’s next direction.

This is a daily chart. The price after being very bearish gets choppy. A bullish breakout may make the price go towards the North. On the other hand, a bearish breakout keeps the price being bearish. It could go either way. However, the long-term trend on this chart is bearish biased. Moreover, the last candle comes out as a bearish engulfing candle. Thus, the pair may get bearish again. Let us flip over to the H4 chart and find out how it looks.

The chart shows that the price has been bearish on the H4 chart. However, the price finds its support at the same level, where it had a bounce earlier. If we consider only the H4 chart, the price may get bullish. Do not forget that the daily chart’s long-term trend is bearish. Let us proceed to the next H4 chart.

The last candle comes out as a bearish engulfing candle closing below the level of support. It may get tough to guess what happens here. Have a look at the same chart with two horizontal lines to make things simpler.

The price produces that bearish engulfing candle after a bullish corrective candle. The Stop Loss level is explicit, so it is entry-level. The sellers may trigger a short entry right after the last candle closes. Since there is no support nearby, the sellers may hold their entry until it produces a bullish reversal candle.

The short entry goes well — the price heads towards the South with good bearish momentum. The last candle comes out as a bullish engulfing candle. It is a strong bullish reversal candle. It is time for the sellers to close the entry.

As mentioned, the price in such a case can make a bullish breakout too. Traders must look for long entries then. However, in such price action on the daily chart, we may concentrate more on the chart when it produces a reversal candle in favor of the long-term trend. This is how we give ourselves more chances of getting an entry.

 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 17 – Russia making a national digital currency; Bitcoin fighting for $9,000

The cryptocurrency market went on a bull ride once again in the past 24 hours. Most cryptos ended up in the green, with altcoins usually performing better than Bitcoin. Bitcoin’s price went up 3.46% on the day. It is currently trading for $8,943. Meanwhile, Ethereum gained 6.95% on the day, while XRP went up 4.42%.

The cryptocurrency market went on a bull ride once again in the past 24 hours. Most cryptos ended up in the green, with altcoins usually performing better than Bitcoin. Bitcoin’s price went up 3.46% on the day. It is currently trading for $8,943. Meanwhile, Ethereum gained 6.95% on the day, while XRP went up 4.42%.

The cryptocurrency market went on a bull ride once again in the past 24 hours. Most cryptos ended up in the green, with altcoins usually performing better than Bitcoin. Bitcoin’s price went up 3.46% on the day. It is currently trading for $8,943. Meanwhile, Ethereum gained 6.95% on the day, while XRP went up 4.42%.

The past 24 had quite a few gainers, but we will mention only the most prominent ones. Mona Coin and Ethereum Classic were the best-performing digital assets today, gaining 29.15% and 28.32%, respectively. On the other side, Swipe lost 10.65% on the day, which makes it the biggest daily loser.

Every cryptocurrency in the top10 by market cap performed better than Bitcoin (excluding USDT).

Bitcoin’s dominance lost more than half a percent in the past 24 hours. It is now at 65.84%, which represents an increase of 0.53% when compared to the value it had yesterday.

The cryptocurrency market capitalization increased by quite a bit when compared to yesterday’s value. It is currently valued at $245.82 billion, which represents an increase of $10.88 billion compared to yesterday.

What happened in the past 24 hours

The new Prime Minister of the Russian Federation announced that the country will prioritize the development of the digital economy.

Mikhail Mishustin, who was confirmed for the Prime Minister position earlier today, said that Russia should improve and walk towards modern information technologies. One of the main things to develop, he said, was a national digital economy program.

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Technical analysis

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Bitcoin

Bitcoin had another explosive gain today. Even though its price rise is small in comparison to other cryptocurrencies, it still did move up with quite a good bull presence. Bitcoin bulls pushed the price to $9,000. The bull move is still in play, so this doesn’t have to be the biggest price we will see today. This move crushed all the upside levels, including $8,640, $8,815 and $8,905.


Bitcoin’s volume is quite high and stable. Its RSI level hit the overbought level on the 4-hour chart.

Key levels to the upside                    Key levels to the downside

1: $9,115                                          1: $8,905

2: $9,250                                          2: $8,815

3: $9,580                                          3: $8,640

Ethereum

Ethereum moved up along with other cryptos. Its move was bigger than Bitcoin. Ethereum’s price breezed through the resistance level of $167.8 and is currently trading at around $171. This move outperformed Bitcoin’s as well as XRP’s, making Ethereum the biggest gainer out of the top3 cryptocurrencies.


Ethereum’s volume is quite high due to the bull presence. Its RSI level is currently in the overbought territory.

Key levels to the upside                    Key levels to the downside

1: $178.5                                             1: $167.8

2: $185                                              2: $160

3: $193.5                                           3: $154.2

Ripple

XRP had a good day, as it too had quite an explosive gain. The price movement was quite linear and moved to the upside from $0.221 all the way to $0.237, which is XRP’s current price. There is still a place for XRP to move further up as the next resistance is quite far away.


XRP’s volume decently high and steady, while its RSI is touching the overbought territory at the moment. It has not, however, entered it yet.

Key levels to the upside                    Key levels to the downside

1: $0.24545                                        1: $0.2332

2: $0.253                                           2: $0.227

3: $0.266                                           3: $0.221

Categories
Forex Market Analysis

Daily F.X. Analysis, January 17 – Top Trade Setups In Forex – UoM Consumer Sentiment Ahead! 

On Friday, China’s industrial production rose by 6.9% in December, against the forecast figures of 5.9% by a significant margin to register the fastest rate of growth since March. Moreover, Retail Sales increased by 8%, beating forecasts of 7.9% growth, but remained unchanged from November. 

On Friday, China’s industrial production rose by 6.9% in December, against the forecast figures of 5.9% by a significant margin to register the fastest rate of growth since March. Moreover, Retail Sales increased by 8%, beating forecasts of 7.9% growth, but remained unchanged from November. 

On Friday, China’s industrial production rose by 6.9% in December, against the forecast figures of 5.9% by a significant margin to register the fastest rate of growth since March. Moreover, Retail Sales increased by 8%, beating forecasts of 7.9% growth, but remained unchanged from November. 

Whereas, the 4th-quarter GDP came in at 6% as expected, while China reported the full-year growth at 6.1%, the slowest in 29 years. Let’s take a look at the trade setups worth trading today. 

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/USD is facing selling pressure and dropped to 1.1131 from the high of 1.1173 despite the better-than-expected China data. As of writing, the EUR/USD currency pair is currently trading at 1.1134 and consolidates in the range between the 1.1131 – 1.1143. The greenback is seen strong in the wake of better-than-expected U.S. Retail Sales Data, and this is the main reason behind the EUR/USD pair declines.

At the USD front, the greenback picked up the bids across the board. The DXY rose for the day, above 97.30, recovering from weekly lows. The U.S. yield is up as well, with the ten-year at 1.81%, offering support to the greenback.

The EUR currency pair hit the peak of 1.1160 yesterday, confirming an upside break of the descending channel from December 31 and January 6 highs.

At the China data front, the Industrial production rose by 6.9% in December, against the forecast figures of 5.9% by a significant margin to register the fastest rate of growth since March. Moreover, Retail Sales increased by 8%, beating forecasts of 7.9% growth, but remained unchanged from November. 

Whereas, the 4th-quarter GDP came in at 6% as expected, while China reported the full-year growth at 6.1%, the slowest in 29 years. 

It is worth to mention that the markets priced in China recession during 2019, and the economy have been struggling to shift in the recovery mode since the last few weeks in the wake of Sino-US trade truce. Moreover, the Industrial production data shows that the economy will likely regain some stability.

Looking forward, the EUR currency may take further steady declines if the Untied States Industrial Production ignore past expectation; by the way, the data is scheduled to release at 14:15 GMT. As well as, the Eurozone current account surplus and the final consumer price index figures for December are also scheduled to release in Europe.

Daily Support and Resistance

  • S3 1.1056
  • S2 1.1101
  • S1 1.1119
  • Pivot Point 1.1146
  • R1 1.1164
  • R2 1.1191
  • R3 1.1236

EUR/USD– Trading Tips

The bullish setup of EUR/USD shifted dramatically into bearish setup on the release of U.S. Fundamentals. The retail sales and Philly Fed Manufacturing index surprised the market big times, beating the economist’s forecast. The EUR/USD drop from 1.1170 to 1.1130. 

Today, we don’t have any high impact economy which could rive such kind of movement again. Therefore the EUR/USD pair may continue treading in a bearish tone below 1.1145 resistance level. The immediate support can be found around the 1.1125 area. Below this, the next support can be found around 1.1100.

GBP/USD– Daily Analysis

The GBP/USD currency pair stopped its three-day recovery streak and dropped to 1.3065 from the above 1.3100 level, mainly due to broad-based greenback weakness and the European Union sturdy stand on the Brexit. The GBP/USD currency pair is trading at 1.3074 and consolidates in the range between the 1.3065 – 1.3080. The market traders await for the U.K.’s December month Retail Sales for the fresh move.

At the Brexit front, the European Union Trade Commissioner Phil Hogan was the newest man to join the regional diplomat’s voices who shook the Boris Johnson’s Brexit optimism. Moreover, the German minister struck a friendly tone while saying that the U.K. must get post-Brexit defense privileges.

At the USD front, the greenback got support from the upbeat data and over the news of Trump administration’s ability to strike the key trade deals with China, Mexico, and Canada.

Risk-sentiment is still inactive in the market despite China’s positive Industrial production data, and Retail Sales that crossed the forecast figures. The U.S. ten-year treasury yields rose by 1-basis-points to 1.82%. 

Looking forward, the U.K.’s December Retail Sales will be key to watch after the latest disappointment from inflation data, which increased the probabilities of the BOE’s rate cut. Economists are expecting an increase of 2.6% against 1.0% in the YoY figure, whereas the monthly growth might have reversed -0.6% prior growth to 0.7%. As a result, the U.S. housing figures, consumer sentiment, and industrial production will be closely observed for fresh direction.

Daily Support and Resistance

  • S3 1.2946
  • S2 1.3004
  • S1 1.304
  • Pivot Point 1.3062
  • R1 1.3098
  • R2 1.312
  • R3 1.3178

GBP/USD– Trading Tip

On Friday, the GBP/USD pair continues to trade bullish as it has already violated the downward channel, which was formed on the 4-hour chart. At the moment, the GBP/USD pair is trading at 1.3077, and it seems to extend bullish rally until 1.3165. However, this heavily depends upon the British Retail Sales data, which is due later in the day. 

The GBP/USD pair may find support around 1.3030 area today, but the RSI and MACD support the bullish bias. Let’s look for buying trades above 1.3060.  

USD/JPY – Daily Analysis

The USD/JPY currency pair rose mainly due to the strong greenback, and upbeat Industrial data which came out from China. The USD/JPY hit the high level above 110.00 and recently crossed the Tuesday high level of 110.20. The USD/JPY currency pair is trading at 110.25, representing 0.10% gains on the day. The bullish U.S. stocks markets and the positive U.S. data boosted the pair.

At the USD front, the greenback was trading slightly bearish in previous sessions. Still, currently, but currently, the currency has shifted into the bullish territory, mainly due to the release of U.S. economic data. The U.S. dollar index erased losses and climbed to 97.35, rebounding from weekly lows. Moreover, the US Jan Philly Fed index at 17.0 also helped a bid in the U.S. dollar, beating expectations (est. 3.7, prior 2.4) to retest mid-2019 highs.

On the other hand, another positive factor behind the risk sentiment recovery is the U.S. Senate approved the USCMA trade agreement, which now awaits Canada to agree on it and for Trump’s imminent signing.

Daily Support and Resistance

  • S3 109.57
  • S2 109.83
  • S1 110
  • Pivot Point 110.1
  • R1 110.27
  • R2 110.36
  • R3 110.62

USD/JPY – Trading Tips

On Friday, the USD/JPY pair is trading with a bullish bias at 110.200 after consolidating in a narrow trading range of 109.800 – 110.150. Recently, the USD/JPY pair has formed Three While Soldiers pattern on the 4-hour timeframe, which typically suggests a bullish trend in the market. 

The USD/JPY is now supported above 110.100, and we may see further buying above this level until 110.490 today. The USD/JPY may find a resistance level of 110.570. Moreover, the RSI and MACD are still staying in the buying zone. Today, I will be looking for buying trades over 110.1 level with a target of 110.570. 

All the best for today! 

Categories
Forex Market Analysis

AUD/USD Currency Pair Seesaws Near 0.6900 As Traders Want More Clarity Regarding Sino-US Trade deal.

The AUD/USD currency pair flat near the 0.6900, mainly due to mixed sentiment regarding the Sino-US trade deal. As of writing, the AUD/USD currency pair is currently trading at 0.6920. The currency pair recently benefited from the Sino-US phase-one trade deal signing and positive comments from the U.S. and Chinese trade negotiators.

The AUD/USD currency pair flat near the 0.6900, mainly due to mixed sentiment regarding the Sino-US trade deal. As of writing, the AUD/USD currency pair is currently trading at 0.6920. The currency pair recently benefited from the Sino-US phase-one trade deal signing and positive comments from the U.S. and Chinese trade negotiators.

The AUD/USD currency pair flat near the 0.6900, mainly due to mixed sentiment regarding the Sino-US trade deal. As of writing, the AUD/USD currency pair is currently trading at 0.6920. The currency pair recently benefited from the Sino-US phase-one trade deal signing and positive comments from the U.S. and Chinese trade negotiators.

Apart from the Sino-US trade deal, China also cheered Trump administration as the U.S. removed China from the currency manipulator list. Besides, the latest comments from the United States Senate leader McConnell who sent optimism that the latest United States–Mexico–Canada Agreement (USMCA) will pass the house on Friday, also supported the Aussie.

While the U.S. Vice President Mike Pence said that Phase 2 talks had already started and officials are struggling to resolve disputes. As in result, the risk-on sentiment improved in the market, and ultimately riskier assets also got support.

Looking forward, November month Home Loans and Investment Lending for Homes from Australia will be followed by China’sChina’s December month House Price Index to offer a fresh direction to the pair.

Daily Support and Resistance

S3 0.682
S2 0.686
S1 0.6881
Pivot Point 0.6899
R1 0.6921
R2 0.6939
R3 0.6978

Technically speaking, the AUD/USD is trading bullish at 0.6920 within a bullish channel, which is keeping the Aussie on the higher side. The AUD/USD pair is likely to find resistance around 0.6930, but the latest higher’s high pattern may drive more buying in the AUD/USD pair.

The MACD and RSI are crossing over in the bullish zone, and these may underpin the demand for AUD/USD. On the higher side, the bullish breakout of 0.6930 is likely to lead Aussie prices towards 0.6960, while support continues to stay around 0.6900. Let’sLet’s stay bullish above 0.6910 today. Good luck!

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 16 – Malaysia considering IEO’s, markets consolidating

It looks like the cryptocurrency market stopped growing and started consolidating. The past 24 hours were not very turbulent. Bitcoin’s price went down 1.51% on the day. It is currently trading for $8,617. Meanwhile, Ethereum lost 2.78% on the day, while XRP went down 4.38%.

It looks like the cryptocurrency market stopped growing and started consolidating. The past 24 hours were not very turbulent. Bitcoin’s price went down 1.51% on the day. It is currently trading for $8,617. Meanwhile, Ethereum lost 2.78% on the day, while XRP went down 4.38%.

It looks like the cryptocurrency market stopped growing and started consolidating. The past 24 hours were not very turbulent. Bitcoin’s price went down 1.51% on the day. It is currently trading for $8,617. Meanwhile, Ethereum lost 2.78% on the day, while XRP went down 4.38%.

The past 24 did not have as many big gainers as the day before had. However, Augur made some incredible uptick, gaining 52.02%. On the other side, Bitcoin SV bounced back 19.13% on the day, which makes it the biggest daily loser.

Out of the top50 cryptocurrencies by market cap, only the aforementioned Augur managed to rise significantly. Bitcoin Diamond also made some gains today.

Bitcoin’s dominance stayed at virtually the same place in the past 24 hours. It is now at 66.37%, which represents an increase of 0.03% when compared to the value it had yesterday.

The cryptocurrency market capitalization decreased slightly to yesterday’s value. It is currently valued at $234.94 billion, which represents a decrease of $3.88 billion compared to yesterday.

What happened in the past 24 hours

Following the US SEC’s alert to investors against Initial Exchange Offerings and their safety, Malaysia’s regulator published a regulatory guide that requires token offerings in the country to be attached to exchanges.

Malaysia’s Securities Commission report makes it clear that digital tokens are only supposed to be used for goods and services and within strict guidelines. These guidelines will take effect late 2020.

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Technical analysis

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Bitcoin

After a few days of explosive gains, Bitcoin bulls stopped pushing the price upwards and Bitcoin started consolidating today. The largest cryptocurrency could not break the $8,815 mark neither of two times, which made the price go slightly down. Bitcoin is now consolidating at around $8,600.


Bitcoin’s volume is still elevated, but it has reduced when compared to yesterday. Its RSI level dropped below overbought and is currently falling even further.

Key levels to the upside                    Key levels to the downside

1: $8,640                                           1: $8,425

2: $8,815                                           2: $8,125

3: $8,905                                          3: $7995

Ethereum

Ethereum, after it could not reliably break its $167.8 resistance, started to consolidate. Its price is now hovering just above the $160 support level.


Ethereum’s volume drop, in conjunction with a descending value of the RSI indicator, may show that the consolidating will last a little while longer.

Key levels to the upside                    Key levels to the downside

1: $167.8                                             1: $160

2: $178.5                                            2: $154.2

3: $185                                               3: $148.5

Ripple

XRP performed the worst out of the top3 cryptos on the day. It lost the most value as it managed to break a key support level of $0.227. Its price is currently right below this level, which could prove to be quite a resistance.


XRP’s volume is lower than yesterday and higher than its average, while its RSI is descending to the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $0.227                                            1: $0.221

2: $0.2332                                          2: $0.211

3: $0.24545                                        3: $0.205

Categories
Chart Patterns

Chart Patterns: The Head And Shoulders Pattern

The Head And Shoulders Pattern

Regular and Inverse Head & Shoulder Pattern
Regular and Inverse Head & Shoulder Pattern

The Head And Shoulders Pattern

The Head And Shoulders Pattern

Of all the patterns that exist in any market, the most well known is the Head And Shoulder Pattern. Kirkpatrick and Dahlquist’s book, Technical Analysis, detailed many studies on the performance of this pattern. The result of all the data is that the Head And Shoulder Pattern is the most profitable of all standard patterns. Interestingly, Dalquist and Kirkpatrick made no distinction between the performance of the head and shoulder pattern and the inverse head and shoulder pattern (sometimes called the bottom forming head and shoulder pattern). While this pattern is successful across many markets, it is also the pattern that causes the most losses to new traders. We’ll get into the specifics of why this pattern destroys a good number of traders. First, we need to understand what the pattern is.

Regular and Inverse Head & Shoulder Pattern
Regular and Inverse Head & Shoulder Pattern

The image above shows two head and shoulder patterns, the regular pattern and the inverse pattern. It just so happened that the daily chart of the AUDUSD conveniently had both of the patterns right next to each other – not a common occurrence. Now, you can and will read a lot of rules and theories behind the head and shoulder pattern. I could go into the behavior of this pattern, the psychology behind the three triangles that make up the broader pattern, the symmetrical nature of the left and right shoulders, etc., etc., etc., but we don’t need to complicate a pattern that can be very easily understood.

There’s a great book by Larry Pesavento titled Trade What You See. While the book Trade What You See is focused primarily on Harmonic Patterns, the title always stuck with me. If you were to stand in front of a mirror, you would more than likely notice the symmetrical nature of your left and right shoulders (unless you’ve had some significant injury or disease. There’s a good number of people who believe that both the right and left shoulders need to be as exact as possible – but this isn’t necessary.

Here’s a simple rule to follow:

If it doesn’t look like a human head and shoulder, then it probably isn’t a head and shoulder pattern.

 Are you familiar with the poker game Texas Hold’em or any other form of poker? There are several maxims that poker players follow, one of them is ‘Don’t chase the straight or the flush.’ Why? Because when you get dealt a hand that is missing just one card for your straight or one more suite to complete your flush, the odds are overwhelmingly against you getting that final card to complete the straight/flush. Head and shoulder patterns are the same way. The head and shoulder pattern is only complete when the neckline has been broken. Let me repeat that three times for you:

A head and shoulders pattern is not complete until the neckline is broken.

A head and shoulders pattern is not complete until the neckline is broken.

A head and shoulders pattern is not complete until the neckline is broken.

Failed Head & Shoulder Pattern
Failed Head & Shoulder Pattern

 

Many a trading account has been the victim of trying to anticipate the completion of a head and shoulder pattern, only to have it be broken. In addition to being the most profitable basic pattern, the head and shoulder pattern is also one of the most rejected patterns. We don’t chase straights or flushes in poker, and we don’t chase patterns in trading. In addition to the information above, here are some other factors that can help you interpret the head and shoulder pattern:

  1. If the volume in the left shoulder is greater than the right shoulder, there is an increased likelihood of the head and shoulder pattern completing.
  2. If the volume in the right shoulder is greater than the left shoulder, failure rates are higher.
  3. Horizontal necklines increase the probability of a head and shoulder pattern completing.
  4. The more dramatic the slop of the neckline, the more likely the pattern will fail to develop.
  5. Aggressive entries can be taken immediately when the price breaks the neckline.
  6. Conservative entries can be taken after the neckline has been re-tested post-breakout.
  7. If price breaks the neckline, retracements occur almost 70% of the time.

 

Sources:

Kirkpatrick, C. D., & Dahlquist, J. R. (2016). Technical analysis: the complete resource for financial market technicians. Upper Saddle River: Financial Times/Prentice Hall.

Bulkowski, T. N. (2013). Visual guide to chart patterns. New York, NY: Bloomberg Press.

Bulkowski, T. N. (2008). Encyclopedia of candlestick charts. Hoboken, NJ: J. Wiley & Sons.

Bulkowski, T. N. (2002). Trading classic chart patterns. New York: Wiley.

Categories
Forex Market Analysis

Daily F.X. Analysis, January 16 – Top Trade Setups In Forex – Retail Sales In Highlights! 

On Thursday, the investors are watching strictly political events in the U.S. and Russia. The Democratic-led U.S. House of Representatives proposed on Wednesday to send impeachment charges against President Donald Trump to the Senate. Russian Prime Minister Dmitry Medvedev published the compliance of his government after President Vladimir Putin proposed some constitutional changes.

On Thursday, the investors are watching strictly political events in the U.S. and Russia. The Democratic-led U.S. House of Representatives proposed on Wednesday to send impeachment charges against President Donald Trump to the Senate. Russian Prime Minister Dmitry Medvedev published the compliance of his government after President Vladimir Putin proposed some constitutional changes.

On Thursday, the investors are watching strictly political events in the U.S. and Russia. The Democratic-led U.S. House of Representatives proposed on Wednesday to send impeachment charges against President Donald Trump to the Senate. Russian Prime Minister Dmitry Medvedev published the compliance of his government after President Vladimir Putin proposed some constitutional changes.

The U.S. official data showed that the Producer Price Index (PPI) increased 0.1% on month in December, less than +0.2% expected. The Empire Manufacturing Index posted at 4.8 in December, better than 3.6 expected.

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/USD prices closed at 1.11495 after placing a high of 1.11633 and a low of 1.11185. Overall the movement of EUR/USD remained bullish that day.

The EUR/USD pair climbed above 1.1162 level on Wednesday and posted a fresh weekly high. The general weakness of the U.S. dollar supported the move amid increased uncertainty after the release of details about the phase-one trade deal. 

The U.S. & China signed phase-one of the trade deal on Wednesday in which some tariffs on Chinese goods were retained, and this disappointed the traders. Hence, the U.S. dollar lost its demand, and the U.S. Dollar Index moved to weekly lows of 97.20.

The U.S. yields also fell and remained in negative territory on Wednesday and helped EUR/USD to move further in an upward direction. As for the data is concerned, the U.S. macroeconomic data came in mix, and the Producer Price Index (PPI) declined to 0.1% against the expected 0.2% weaker than expected PPI from the U.S. also helped EUR/USD prices to post weekly gains and rise above 1.116 level on Wednesday.

From the Europe side, at 12:45 GMT, the French Final Consumer Price Index (CPI) for December came in line with the expectations of 0.4%. AT 15:00 GMT, Industrial Production from the Eurozone in November showed a decline to 0.2% from expected 0.3% and weighed on single currency Euro.

The Trade Balance from the European Union whole bloc for November showed a deficit of 19.2B against the expectations of 22.3Band added in the pressure of single currency Euro. Though the economic data from Eurozone was against the Euro, it failed to drag the EUR/USD prices on Wednesday because of broad U.S. dollar weakness.

Daily Support and Resistance

  • S3 1.1045
  • S2 1.1086
  • S1 1.1107
  • Pivot Point 1.1126
  • R1 1.1147
  • R2 1.1166
  • R3 1.1206

EUR/USD– Trading Tips

The EUR/USD pair continues to form a higher-high pattern on the 4-hour timeframe, which signifies bullish bias among traders. The pair has recently violated the resistance level of 1.1140, and now it is testing the double top level of 1.1160. It has become the current trading range of EUR/USD for now as the pair is being traded within a limited range. It looks like the market is calm as traders await the ECB Monetary Policy Meeting Accounts and ECB President Lagarde’s speech. We may see EUR/USD trading bullish above 1.114. On the higher side, the violation of 1.1160 can extend buying until 1.1188 today.

GBP/USD– Daily Analysis

The GBP/USD pair closed at 1.30373 after placing a high of 1.30423 and a low of 1.29848. Overall the movement of GBP/USD pair remained bullish throughout that day.

The policymakers of Bank of England have pledged to vote in favor of rate cut and turned the stance of BoE dovish, which weighed on Pound. However, despite the weakness of Pound, the GBP/USD pair managed to post gains on Wednesday amid the U.S. dollar’s weakness.

The US-China trade deal finally got signed on Wednesday but failed to impress traders when the details revealed that most tariffs would remain in place. It weighed on the U.S. dollar and gave a boost to GBP/USD prices.

On the other hand, at 14:30 GMT, the Annual Consumer Price Index (CPI) in the month of December from the United Kingdom was declined to 1.3%from the expectations of 1.5% and weighed on British Pound. The Producer Price Index (PPI) Input in December from the United Kingdom also dropped to 0.1% against the forecasted 0.2%.

The Core Consumer Price Index (CPI) for the year came in short of expectations and added in the pressure of Pound. It came as 1.4% against 1.7% forecasted. 

However, the House Price Index for the year from Britain increased to 2.2% from forecasted1.1% and supported Britain Pound. The PPI Output for December came in line with the expectations of 0.0%. 

The Retail Price Index (RPI) for December also dropped to 2.2% from expected 2.3% and weighed on British Pound.

Most data from Great Britain on Wednesday came against the expectations and weighed on Pound. This confirmed that policymakers would surely vote for a rate cut in the next meeting of Bank of England. GBP/USD was weighed a little after the release of economic data from the U.K. near the level of 1.298 but failed to post losses for the day.

The broad U.S. Dollar weakness gifted the gains posted by GBP/USD on Wednesday amid weaker than expected PPI data along with disappointed details from the US-China phase-one deal.

Daily Support and Resistance

  • S3 1.2845
  • S2 1.2924
  • S1 1.2972
  • Pivot Point 1.3002
  • R1 1.3051
  • R2 1.3081
  • R3 1.316

GBP/USD– Trading Tip

On Thursday, the GBP/USD is taking a bullish turn since the release of negative economic data from the United States. The GBP/USD has violated the strong resistance level of 1.3028, which was extended by the downward channel, and it seems to close candle outside this range. Continuation of bullish trends can lead to GBP/USD prices towards 1.3100 and 1.3156 soon. 

USD/JPY – Daily Analysis

The USD/JPY closed at 109.892 after placing a high of 110.008 and a low of 109.788. Overall the movement of USD/JPY remained bearish throughout the day.

USD/JPY on Wednesday posted losses on the back of the broad weakness of the U.S. dollar amid the release of details of the Phase-one trade deal between the U.S. & China.

U.S. & China finally reached a deal on Wednesday and signed on it to reduce the global trade tensions. Also, the details of the US-China trade agreement were revealed on Wednesday, which is comprised of 86 pages.

Many aspects were included in the phase-one deal like China would increase its U.S. farm purchases in 2020-2021 by $200B from its 2017 purchases. China would provide better protection for intellectual property to U.S. China pledged not to force technology transfer in exchange for entering the Chinese market. 

Both countries agreed on providing a series of measures to open the financial services sector. Both countries agreed not to devalue their currencies to benefit their exports. However, the deal also mentioned that the U.S. would retain 25% tariffs on $250B worth of Chinese industrial goods, which were used by U.S. manufacturers. The tariffs were kept as a threat to China to fulfill its part of the deal.

However, traders got disappointed as tariffs were not removed, and uncertainty emerged in the market, which put pressure on USD/JPY prices.



Daily Support and Resistance

  • S3 109.17
  • S2 109.51
  • S1 109.73
  • Pivot Point 109.84
  • R1 110.06
  • R2 110.17
  • R3 110.5

USD/JPY – Trading Tips

On Thursday, the USD/JPY pair is trading with a bullish bias at 110.017 after breaking above 109.600 triple top resistance level. Closing of Doji pattern followed by strong bullish candle seems to drive bearish bias for the pair, but it’s been trading with a bullish bias over faded demand for haven assets.

The USD/JPY may find a resistance level of 110.570. Moreover, the RSI and MACD are still staying in the buying zone. Today, I will be looking for buying trades over 109.84 level with a target of 110.570. 

All the best for today! 

Categories
Forex Market Analysis

Daily F.X. Analysis, January 15 – Top Trade Setups In Forex – Eyes on PPI Figures! 

On the forex front, the U.S. Dollar Index was little changed at 97.39 on Tuesday. Media reported that the remaining U.S. tariffs on Chinese goods imports are likely to stay in place until after the American presidential election. The Chinese yuan eased against the greenback, as USD/CNH edged up 0.1% to 6.8895, snapping a five-day decline.

On the forex front, the U.S. Dollar Index was little changed at 97.39 on Tuesday. Media reported that the remaining U.S. tariffs on Chinese goods imports are likely to stay in place until after the American presidential election. The Chinese yuan eased against the greenback, as USD/CNH edged up 0.1% to 6.8895, snapping a five-day decline.

On the forex front, the U.S. Dollar Index was little changed at 97.39 on Tuesday. Media reported that the remaining U.S. tariffs on Chinese goods imports are likely to stay in place until after the American presidential election. The Chinese yuan eased against the greenback, as USD/CNH edged up 0.1% to 6.8895, snapping a five-day decline.

The U.S. Labor Department will release December PPI (+1.3% on-year expected). The New York Federal Reserve will publish January Empire Manufacturing Index (3.6 expected). Also, The Federal Reserve will post its economic report, the Beige Book.

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/USD currency pair stopped its recovery rally and stuck in the bearish range mainly due to uncertainty surrounding the European Union and United States trade war. As of writing, the EUR/USD currency pair is currently trading at 1.1132 and consolidating in the narrow range between the 1.1125 – 1.1133. As we know, the currency pair hit a high level of 1.1135 during the U.S. trading hours and took a bid at a low near 1.11.

Moving ahead, the European Union’s (E.U.) new trade chief, Phil Hogan, is scheduled to meet the United States Trade Representative Robert Lighthizer and other American officials during Jan. 14-16.

During his visit, Phil Hogan will try to stop the on-going conflict regarding France’s new digital services tax, European support for Boeing’s chief rival, Airbus, and other differences. Whereas some experts said that it might not prove to be peaceful for the Phil Hogan because administration and congress both are frustrated mainly due to European Unions’ unwillingness to negotiate with the United States about agriculture.

Meanwhile, the Houk Lee-Makiyama, director of the European Centre of International Political Economy in Brussels, said that traders would keep their eyes on EU-US matter until any underlying progress is made in resolving US-EU policy differences regarding trade. 

Looking forward, the EUR currency may not get significant gains during this week in the wake of EU-US uncertainty. However, the currency may get some support if the Eurozone Industrial Production data beats past expectations; by the way, the data is scheduled to release at 10:00 GMT.

At the Sino-US front, the United States decided that it will not remove tariffs on Chinese imports until the 2020 presidential elections complete. As a result, the uncertainty grew in the market concerning the signing ceremony of phase one of the trade deal between the U.S. and China, which is scheduled to happen today, while no details of the trade deal have been revealed before the ceremony.

Daily Support and Resistance

  • S3 1.1062
  • S2 1.1097
  • S1 1.1115
  • Pivot Point 1.1131
  • R1 1.115
  • R2 1.1166
  • R3 1.12

EUR/USD– Trading Tips

The EUR/USD has traded slightly higher as investors seem to price in weaker CPI sentiments ahead of the news release. The support becomes a resistance level of 1.1145 is holding the pair below this level. We may have a bullish or bearish breakout upon the release of U.S. CPI data during the U.S. session. 

A bullish breakout of 1.1145 can open further room for buying until 1.1208. Conversely, the closing of bearish candles below 1.1145 can drive the selling trend until 1.1100 support. The next support is likely to be found around 1.1075 today.

GBP/USD– Daily Analysis

The GBP/USD currency pair is flashing green and continuing to trade in bullish sentiment towards 1.3050, mainly due to broad-based U.S. dollar weakness and traders await for the United Kingdom’s CPI report. As of writing, the GBP/USD currency pair is currently trading at 1.3028 and is consolidating in the range between the 1.3014 – 1.3030. 

As for today, the GBP currency has recovered to 1.3034 from the 3-week low of 1.2954. However, market traders are cautious ahead of the United States and China phase-one trade deal’s retail release. As well as, the signing ceremony leaves pressure on the greenback because the United States decided that it will not remove tariffs on Chinese imports until the 2020 presidential election completed. 

Moreover, the GBP currency got little love from the United Kingdom Prime Minister Boris Johnson’s fresh comments about refusing Scottish Prime Minister Sturgeon’s request to hold another Scottish independence referendum, because it gives further support to Hard-Brexit concerns. Besides this, the weak UK GDP data and increased the expectations that BOE’s could continue dovish.

On the other hand, the upbeat U.K. annualized inflation figures will likely strengthen the GBP/USD currency pair’s recovery. However, the greenback’s movement is mainly impacting able for the pair because of the United States and China phase-one trade deal signing ceremony, which is scheduled to happen today at 16:30 GMT.

Looking forward to the calendar, the CPI report is the key data to watch today. As well as, traders will now wait to hear from MPC member Saunders, a former hawk turned dovish, to speak in Northern Ireland today at 08:40GMT. Also, the trader will keep their eyes on the Sino-US phase-one details and signing ceremony.


Daily Support and Resistance

  • S3 1.2845
  • S2 1.292
  • S1 1.2955
  • Pivot Point 1.2996
  • R1 1.303
  • R2 1.3071
  • R3 1.3147

GBP/USD– Trading Tip

On Wednesday, the GBP/USD continues to trade with bearish bias around 1.2980 after violating the 1.3045 support level. On the 4 hour timeframe, the pair has formed a strong bearish candle which is supporting the bearish trend in GBP/USD. The pair is currently trading in a bearish channel, which is extending resistance around 1.3034 along with support around 1.2906. While the MACD is still staying in the selling zone. I will be looking to take sell trades below 1.3000 today to target 1.2925 and 1.2906. 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the low of 109.81 from the high of 110.01, mainly due to the risk-off market sentiment in the wake of uncertainty surrounding the Sino-US phase-one trade deal. As of writing, the USD/JPY currency pair is trading at 109.94 and is consolidating in the range between the 109.81 – 109.94.

Wall Street’s rally came to a sudden stop due to the statement that the United States decided that it will not remove tariffs on Chinese imports until the 2020 presidential elections completed. It raised the uncertainty surrounding the signing ceremony of phase one of the trade deal between the U.S. and China, which will happen today, while no details regarding the deal have been revealed before the ceremony.

Consequently, Asia equity markets have ticked lower after the similar negative bias with the ASX 200 (+0.2%), Nikkei 225 (-0.4%), KOSPI (-0.5%) at the time of writing. 

It should be noted that the market traders are cautious and await for any detail release regarding the Sino-US phase-one trade deal ceremony for taking new directions. Furthermore, the meeting is scheduled to happen today at the White House (reportedly 11:30 am N.Y. time but not confirmed).

Looking forward, the BoJ will maintain QQE with yield curve control for as long as needed to achieve a 2% inflation target. As well as, BoJ will continue to expand the monetary base until consumer inflation exceeds 2%. Moreover, it will not hesitate to take an additional rate cut if risks to achieve the price target grew.

Daily Support and Resistance

  • S3 109.17
  • S2 109.51
  • S1 109.73
  • Pivot Point 109.84
  • R1 110.06
  • R2 110.17
  • R3 110.5

USD/JPY – Trading Tips

On Wednesday, the USD/JPY pair has traded in line with the previous forecast as it continues to trade bullish at 110.017 after breaking above 109.600 triple top resistance level. On the 4-hour timeframe, the candlestick pattern three while soldiers are likely to extend buying trend until the next resistance level of 110.570. Moreover, the RSI and MACD are still staying in the buying zone. Today, I will be looking for buying trades over 109.84 level with a target of 110.570. 

All the best for today! 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 15 – Bitcoin SV skyrockets on fundamentals, Dash loved by Venezuela

It looks like the cryptocurrency market is booming as options on Bitcoin futures became available for trading at CME. The past 24 hours were very turbulent. While most cryptocurrencies are in the green, some moved just a bit while others skyrocketed. Bitcoin’s price went up 2.25% on the day. It is currently trading for $8,685. Meanwhile, Ethereum gained an astonishing 8.52% on the day, while XRP went up 5.8%.

It looks like the cryptocurrency market is booming as options on Bitcoin futures became available for trading at CME. The past 24 hours were very turbulent. While most cryptocurrencies are in the green, some moved just a bit while others skyrocketed. Bitcoin’s price went up 2.25% on the day. It is currently trading for $8,685. Meanwhile, Ethereum gained an astonishing 8.52% on the day, while XRP went up 5.8%.

It looks like the cryptocurrency market is booming as options on Bitcoin futures became available for trading at CME. The past 24 hours were very turbulent. While most cryptocurrencies are in the green, some moved just a bit while others skyrocketed. Bitcoin’s price went up 2.25% on the day. It is currently trading for $8,685. Meanwhile, Ethereum gained an astonishing 8.52% on the day, while XRP went up 5.8%.

The big gainer among the top cryptos, the controversial Bitcoin SV, managed to gain over 100% before starting to fall. At this moment, it retained 65% of its gains.

The past 24 hours had many big gainers. Bitcoin Gold and Bitcoin SV went up the most, gaining 72.48% and 65.23% on the day, respectively. On the other side, MaidSafeCoin lost 22.82% of its value when compared to yesterday, making it the biggest daily loser.

Worth mentioning is Dash, the private cryptocurrency which got lost in the news of Bitcoin SV. Dash went up 45.28%. Many attributed Dash’s rising price to its popularity in Venezuela. Burger King announced that they would accept Dash in forty of the country’s restaurants. This fact could have sparked up speculative investing.

Bitcoin’s dominance had a major drop over the past 24 hours. It is now at 66.34%, which represents a decrease of 1.62% when compared to the value it had yesterday.

The cryptocurrency market capitalization increased significantly to yesterday’s value. It is currently valued at $238.82 billion, which represents an increase of $15.92 billion compared to yesterday.

What happened in the past 24 hours

The big talk of the market in the past 24 hours definitely seems to be the price gain of Bitcoin SV. This parabolic move happened as the rumor has it that Craig Wright, the man behind Bitcoin SV and the person that claims he is Satoshi Nakamoto, announced that he received the other part of the Tullip Trust keys. If this is true, Wright could unlock the 1.1 million Bitcoin held in the trust.

On Jan 14, Craig Wright, filed a notice of compliance with the U.S. District Court of Southern Florida that states that he recieved the private keys that can, in conjunction with the ones he currently have, unlock 1.1 million Bitcoin.

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Technical analysis

_______________________________________________________________________

Bitcoin

Even though Bitcoin made gains yet again today, its moves lagged behind some other top cryptocurrencies. Its price went up and above $8,900 atfirst, but then died down and slowly reduced to its current state of around $8,650. This happened as bulls could not pass through the $8,810 resistance leve. However, they did pass the $8,640 support.


Bitcoin’s volume increased dramatically over the past 24 hours. Its RSI instantly went up to the overbought territory on the 4-hour chart, but has now gone below and is hovering near it.

Key levels to the upside                    Key levels to the downside

1: $8,815                                           1: $8,640

2: $8,905                                           2: $8,165

3: $9,120                                           3: $8,000

Ethereum

Unlike Bitcoin, Ethereum did make some great gains. Its price skyrocketed past its immediate resistance of $148.5. However, it did not stop there. It also went above the $154.2 and $160 resistances and managed to reach $171.25 before cooling off and consolidating at the ~$160 mark. Its current pivot point is the $164 level. Ethereum is currently fighting on whether its price will consolidate above or below it.


Ethereum’s volume is disproportionally huge when compared to the previous days, while its RSI is in the overbought territory for some time now.

Key levels to the upside                    Key levels to the downside

1: $167.8                                             1: $160

2: $178.5                                            2: $154.2

3: $185                                               3: $148.5

Ripple

XRP is also making some great daily gains. Its price went from $0.211 to $0.245 in less than a day. However, the $0.24545 resistance was too strong, and XRP bulls could not get past it. Its price started settling below the $0.235 level, where it currently is. Still, this bull move managed to break two resistances, namely $0.221, $0.227, and resistance levels. Its price is currently fighting with the $0.235 resistance level, which is the current pivot point.


XRP’s volume spiked significantly during the uptick, while its RSI is on the edge of the overbought zone, often going in and then out of it.

Key levels to the upside                    Key levels to the downside

1: $0.24545                                        1: $0.2332

2: $0.266                                           2: $0.227

3: $0.285                                           3: $0.221

Categories
Chart Patterns

Chart Patterns: Descending Triangle

[caption id="attachment_57098" align="aligncenter" width="3338"] Descending Triangle[/caption]
Descending Triangle
Descending Triangle
[caption id="attachment_57098" align="aligncenter" width="3338"] Descending Triangle[/caption]
Descending Triangle
Descending Triangle

The descending triangle is another version of the many triangle patterns in technical analysis. It is the opposite of the ascending triangle. This pattern is overwhelmingly bearish and is one of the more common bearish continuation patterns. If you’ve read Dahlquist and Kirkpatrick’s Technical Analysis, you will find that this pattern is treated with some considerable positivity. It was one of the best-performing patterns. But there is a caveat to why this is.

Descending Triangle
Descending Triangle

The two trendlines required for the formation of a descending triangle are a flat, horizontal trendline that acts as support with a downward sloping trendline that acts as resistance. Ideally, price should touch both the upper and lower trendlines twice. Volume typically decreases as price gets closer to the apex. Breakouts occur within the final 1/3rd of the pattern. Dahlquist and Kirkpatrick report that increasing volume is actually more favorable for this pattern. The most common breakout is lower at 64% of the time.

I’ve written in prior articles about the dangers of putting to much stock into technical analysis books where the initial testing of patterns and results have been in traditional equity markets (stock markets). I believe that one of the reasons that Dahlquist and Kirkpatrick have reported such powerful and swift moves with a downward breakout is due to the nature of bear moves in equity markets. Because markets like the stock market are exceedingly long-biased, any dramatic drop below crucial support will have an exceedingly more dramatic move when compared to the forex markets – which are primarily range bound. Another factor that may attribute to the overperformance of this pattern in stock markets vs. forex markets is the ease of shorting in forex vs. the stock market.

Sources:

Kirkpatrick, C. D., & Dahlquist, J. R. (2016). Technical analysis: the complete resource for financial market technicians. Upper Saddle River: Financial Times/Prentice Hall.

Bulkowski, T. N. (2013). Visual guide to chart patterns. New York, NY: Bloomberg Press.

Bulkowski, T. N. (2008). Encyclopedia of candlestick charts. Hoboken, NJ: J. Wiley & Sons.

Bulkowski, T. N. (2002). Trading classic chart patterns. New York: Wiley.

Categories
Forex Price-Action Strategies

An H1 Trading Strategy, A New Arrow in the Quiver

The H1 chart is one of the most traded charts in the Forex market. This is a very consistent chart considering other intraday charts. In today’s article, we are going to learn a strategy to trade on the H1 chart in the Forex market. This is an H1 chart. The price after making a bearish […]

The H1 chart is one of the most traded charts in the Forex market. This is a very consistent chart considering other intraday charts. In today’s article, we are going to learn a strategy to trade on the H1 chart in the Forex market. This is an H1 chart. The price after making a bearish […]

The H1 chart is one of the most traded charts in the Forex market. This is a very consistent chart considering other intraday charts. In today’s article, we are going to learn a strategy to trade on the H1 chart in the Forex market.

This is an H1 chart. The price after making a bearish move seems to have found its support. It produces two consecutive bullish candles. The buyers are to wait for the price to consolidate and create a bullish breakout to go long. On the other hand, the sellers are to wait for a bearish reversal candle and make a bearish breakout to go short on the pair. Let us find out what the price does next.

The chart produces a bearish engulfing candle, which is the strongest bearish reversal candle. The sellers have the upper hand here. A breakout at the level of support is the next thing to take a short entry here.

The price consolidates around the level of support. The level of support becomes double bottom support. A strong battle is going on between the buyers and the sellers. Traders must wait to find the next direction.

It makes an explicit bearish breakout. Admittedly, the sellers have outplayed the buyers. Traders shall get themselves ready to go short on the pair. The question is why they have to get themselves ready. Should not they trigger any entry right after the last candle closes? The answer is no. They must wait for the next candle to close below the breakout candle. This is the trickiest part of this strategy. Traders must wait for one more candle to make a new lower low (in a bearish market).

Here it comes. The next candle comes out as a bearish candle closing well below the breakout candle. An entry may be triggered right after the last candle closes. The stop loss level is easy to be found out. It is above the level where the trend initiates. We see that a red marked take profit level as well. However, the chart does not show that it is a significant level. How do we find this out then? We may set our take profit exactly with a 1:1 risk-reward ratio. It means the length of entry to stop loss equals to the length of entry to take profit in this strategy. Let us find out how the trade goes.

The trade goes well. We will demonstrate more examples of this strategy soon. Meanwhile, let us concentrate on the things to remember.

  1. The trend initiation candle is to be a strong reversal candle.
  2. The breakout is to be very explicit.
  3. The very next candle is to close below (in a bearish market) or close above (in a bullish market).
  4. Take Profit is to be set with no more than 1:1 risk-reward.
Categories
Chart Patterns

Chart Patterns: Pullback and Throwbacks

The most common term people associate with retracements in price that retest prior areas of support or resistance is a pullback. There is another term that goes with pullback, and that is a throwback. Let’s review the differences between these two definitions. Pullback Pullbacks occur after the price has moved lower. Think of any pattern […]

Throwback
Throwback

The most common term people associate with retracements in price that retest prior areas of support or resistance is a pullback. There is another term that goes with pullback, and that is a throwback. Let’s review the differences between these two definitions. Pullback Pullbacks occur after the price has moved lower. Think of any pattern […]

The most common term people associate with retracements in price that retest prior areas of support or resistance is a pullback. There is another term that goes with pullback, and that is a throwback. Let’s review the differences between these two definitions.

Pullback

Pullback
Pullback

Pullbacks occur after the price has moved lower. Think of any pattern or support line that has price breaking out to the downside. When price pulls back up to the price level of the initial break, that is known as a pullback. Pullbacks occur during breakouts lower.

 

Throwback

Throwback
Throwback

Throwbacks occur after the price has moved higher. Think of any pattern or level of resistance that has price breaking out to the upside. When the price is thrown back down to the first level of the break, that is known as a throwback. Throwbacks occur during breakouts higher.

While there are different definitions for retests of breakout zones, know that people will often call throwbacks, pullbacks. In practice, the description itself does not matter as much as you see the behavior that price exhibits after breaking out of support or resistance. The table below identifies the average occurrence rate for a pullback or throwback from the following patterns.

Pattern

 Pullback Rate (%)

Throwback Rate (%)

Ascending Triangle

56

60
Descending Triangle

55

50

Double bottom

 —-

56
Inverse Head-And-Shoulder

—-

57
Head-And-Shoulder

59

—-
Symmetrical Triangle

58

58
Triple Bottom

—-

58

Triple Top

 63

—

 

The table above comes from Thomas Bulkowski’s book, ‘Visual Guide to Chart Patterns.’ His book is part of the Bloomberg Financial Series. Bulkowski is, by far, the authority on the frequency of patterns experiencing pullback and throwbacks. His work focuses extensively on chart patterns. However, there is one problem, and it has nothing to do with his phenomenal work. This is a problem for anyone who focuses primarily on the Forex markets. Why? Because Bulkowski’s work and the broader technical analysis writer/education community focuses primarily on equity markets. This is a big deal because equity markets spend the vast majority of their time in one direction: up. This is especially true over the past decade. Again, this is not a dig towards the truly phenomenal authors and analysts who spend years creating their written work – it’s just a reality of the world we are in. It’s important to understand that the Forex markets, as we know them, are still a relatively new market – especially when compared to the stock market.

If you read Bulkowski’s work or any other work studying the frequency of throwbacks and pullbacks from patterns and support/resistance – I would recommend attributing the same rate of throwbacks to pullbacks in the forex market.

 

Sources:

Bulkowski, T. N. (2013). Visual guide to chart patterns. New York, NY: Bloomberg Press.

Bulkowski, T. N. (2008). Encyclopedia of candlestick charts. Hoboken, NJ: J. Wiley & Sons.

Bulkowski, T. N. (2002). Trading classic chart patterns. New York: Wiley.

Categories
Forex Elliott Wave

How to Start a Wave Analysis – Part 1

The wave analysis begins with a preliminary study of the basic patterns defined by the Elliott Wave Theory. In this educational article, we will view how to start to develop a wave analysis.

The Basic Concept

Glenn Neely, in his work “Mastering Elliott Wave,” introduces the concept “monowave” to describe a basic movement that develops the price within a price chart. However, by convenience, we will use the term “segment” hereafter to identify the basic move.

Waves Identification

The first step is the chart representation on the chart with which the entire wave study will be guided for it. The simplest way is to begin through a daily timeframe.

Concerning the type of chart, this could be a bar chart or a candlestick chart. This election does not be a limitation to advance in the wave analysis. In some cases, the use of a line chart could be useful in identifying structures.

Once chosen the asset to study, we will have to identify the lowest point, and the end of the first movement once identified these movements we identify the point where the move exceeds the end of the first wave.

The following chart corresponds to Copper in its daily range.

From the figure, we distinguish each segment that Copper develops in green, the upward move, and in red the downward movement.

The bullish sequence started in early January 2019, when Copper found buyers at $2.52 per pound. The red metal ended the upward path on April 17th, 2019, at $2.99 per pound.

Alibaba Still Moves Higher

The following example corresponds to Alibaba (NYSE: BABA) in its 2-hour timeframe. The chart exposes the rally developed by the e-commerce giant since October 08th, 2019, when BABA found fresh buyers at $161.92 per share.

Once the price found support at $161.92, BABA started to move upward, building the first segment. We identified this first move as “1” labeled in blue, the section ends at $178.59 on October 17th, when the price reacted retracing the first segment. This drop is identified as “2”.

The third segment is active after the surpass of the end of the first move at $178.59. The third movement finishes at $188.17 per share. From this segment, we distinguish that the third movement is extender than the first segment. In other words, the first upward movement advanced $16.89, while the third progressed $20.10.

However, we observe that the seventh segment rallied $28.17, which is the most significant move developed by the entire bullish sequence that started on October 08th to date.

Conclusion

Wave identification is a first step that allows us to recognize the trend of each market in a specific timeframe. Due to the fractal nature of market movements, this procedure will be valid in any range of time.

Suggested Reading

  • Neely, Glenn. Mastering Elliott Wave: Presenting the Neely Method. Windsor Books. 2nd Edition.
Categories
Forex Market Analysis

Daily F.X. Analysis, January 13 – Top Trade Setups In Forex – Stronger Dollar In Play! 

On the forex front, the U.S. dollar eased against other major currencies on Friday, as growth in December nonfarm payrolls missed expectations. The Dollar Index slipped 0.1% on the day to 97.36. The euro gained 0.1% to $1.1122.

On the forex front, the U.S. dollar eased against other major currencies on Friday, as growth in December nonfarm payrolls missed expectations. The Dollar Index slipped 0.1% on the day to 97.36. The euro gained 0.1% to $1.1122.

On the forex front, the U.S. dollar eased against other major currencies on Friday, as growth in December nonfarm payrolls missed expectations. The Dollar Index slipped 0.1% on the day to 97.36. The euro gained 0.1% to $1.1122.

The British pound fell 0.1% to $1.3061. Gertjan Vlieghe, a Bank of England policymaker, said in a Financial Times interview that he would vote for an interest-rate cut this month in case no signs of economic improvement show up after the general election. Later today, U.K. monthly GDP and industrial production for November will be reported (both flat on month expected).

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/USD currency pair took an active bid mainly due to the greenback weakness on the back of weak jobs data and wage growth figures, which were released on Friday. As of writing, the EUR/USD currency pair is currently trading at 1.1130 and representing 0.10% gains on the day. The pair is consolidating in the range between the 1.1113 – 1.1131. 

The Nonfarm Payrolls data confirmed the economy added 145K jobs in December and disappointed the forecasted figure of 164K additions by a big margin. 

Especially, the average hourly earnings increased by 2.9% year-on-year in December compared to the 3.1% projection. That was the first under 3% figure since July 2018. The weak wage growth almost renewed disinflation concerns, and as a result, the U.S. ten-year treasury yield dropped by 7-basis points to 1.81% on Friday, which continued to add losses on the day and supported EUR/USD currency pair further.

The EUR currency will be likely to continue its recovery rally because of the United States and China trade optimism. The United States Treasury Secretary Steve Munchin told the markets that there would be negotiations regarding phase-two of the US-China trade deal when the Chinese representatives arrive on January 15.

Looking forward, the German Wholesale Price Index for November is scheduled to release at 07:00 GMT. However, the data rarely leave an impact on the markets. Generally, the EUR/USD pair is at the mercy of the action in the treasury yield for now.

Daily Support and Resistance

  • S3 1.1023
  • S2 1.1068
  • S1 1.1094
  • Pivot Point 1.1112
  • R1 1.1138
  • R2 1.1156
  • R3 1.12

EUR/USD– Trading Tips

The EUR/USD is trading sideways as investors didn’t find any solid reason to determine the trend. The EUR/USD pair is trading at 1.1120, below a strong resistance level of 1.1140. The closing of Doji candle below 1.1140 is supporting the bearish bias. 

On the lower side, the EUR/USD has the opportunity to drop until 1.1070. Below this, the next support stays around 1.1040. The MACD is trying to cross below 0 to support the bearish bias, but there’s still no strong bearish fundamental which can push the pair lower. Consider staying bearish below 1.1125 today.

GBP/USD– Daily Analysis

The GBP/USD currency pair is flashing red and continuing its 4-day losing streak mainly due to dovish tone from the Bank of England, and the European Union-Irish uncertainty surrounding the Brexit. Whereas, the pair is still trading bearish despite the greenback’s weakness. As of writing, the GBP/USD currency pair is currently trading at 1.3026 and consolidates in the range between the 1.3026 – 1.3045.

At the Brexit front, the Irish Deputy Prime Minister Simon indicated uncertainty on the United Kingdom Prime Minister Boris Johnson’s deadline of December 31, 2020, for Brexit, which was also supported by the European Union chief Brexit negotiator and European Council President.

On the other hand, a survey led by the Confederation of British Industries (CBI) and the Price Water Cooper (PwC) showed that the business moral amongst the U.K.’s financial firms jumped for the first time in 4-years.

At the USD front, the greenback’s weakness could be attributed to weak employment figures released on Friday as well as the recent decrease in the U.S. Dollar’s demand. Notably, the rising optimism surrounding the United States & China trade front and decreased chances of the United States & Iran war are the reasons behind the risk-on sentiment in the market. 

Apart from this, the stocks in Asia and the S&P 500 Futures are still flashing green while the U.S. ten-year treasury yields show no signs of movement due to the Japanese holiday. It should also be mentioned that Iran recently arrested the United Kingdom’s ambassador to Tehran, and the global leaders do not like it.

Looking forward, the traders will keep their eyes on the U.K.’s November month Industrial Production, Manufacturing Production, monthly GDP and Trade Balance figures. There, a possible contraction in the production numbers to -0.3%, a fall in trade numbers, and no change in the GDP figure of 0.0% is expected, which would keep the pair’s movement under check. 

On the flip side, the Sino-US and Iran-US headlines will remain under the focus because no critical data and events are scheduled from the United States.


Daily Support and Resistance

  • S3 1.2958
  • S2 1.3013
  • S1 1.3038
  • Pivot Point 1.3068
  • R1 1.3093
  • R2 1.3122
  • R3 1.3177

GBP/USD– Trading Tip

The GBP/USD continues to trade with bearish bias around 1.2980 after violating the 1.3045 support level. On the 4 hour timeframe, the pair has formed a strong bearish candle which is supporting the bearish trend in GBP/USD. In addition to this, the UK GDP and Manufacturing figures have also disappointed the market.

The pair is currently trading in a bearish channel, which is extending resistance around 1.3034 along with support around 1.2906. While the MACD is still staying in the selling zone. I will be looking to take sell trades below 1.3000 today to target 1.2925 and 1.2906. 

 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the bullish track and is trading just above the 100-week average, mainly due to the safe-haven Japanese yen lost ground in the wake of the Sino-US and Iran-US optimism. As of writing, the USD/JPY currency pair is currently trading at 109.64 and representing 0.17% gains on the day, as well as the pair consolidates in the range between the 109.50 – 109.65.

As we already mentioned, the anti-risk Japanese yen is losing ground in Asian trading hours due to risk-on sentiment in the market and pushing USD/JPY higher on the back of positive trade-related news flow. 

At the Sino-US front, the United States and China trade tensions continue to ease. Both countries are ready to sign an official trade deal this week. As well as, the White House Economic Advisor, Larry Kudlow, has said during the weekend that everything depends on the China trade deal. In contrast, the U.S. Treasury Secretary Steve Mnuchin told markets that there would be talks on the phase-two of the US-China trade deal when the Chinese delegates arrive on January 15.

Notably, the USD/JPY currency pair has failed many times to secure a weekly close above the key average since the last week of November. Moreover, the pair may face a hard time to beat a breakout because markets are likely to offer greenback on disinflation concerns. 

At the data front, the data released on Friday showed the average hourly earnings increased by just 2.9% year-on-year in December compared to the 3.1% projection. That was the first below-3% reading since July 2018. 

While the Nonfarm payrolls showed, the economy added 145K jobs in December, missing the expected print of 164K additions by a big margin.

Looking forward, the Sino-US and Iran-US headlines will remain under the focus because of no major data and events scheduled from the United States.

Daily Support and Resistance

  • S3 109.02
  • S2 109.28
  • S1 109.38
  • Pivot Point 109.54
  • R1 109.64
  • R2 109.8
  • R3 110.06

USD/JPY – Trading Tips

The USD/JPY pair is trading bullish around 109.820 after breaking above a resistance level of 109.550. The way USD/JPY has closed three while soldiers on the 4-hour timeframe, which is likely to extend buying trend until the next resistance level of 110.570.  

Leading indicators are massively overbought, and USD/JPY is looking for a reason to trigger bearish retracement. Let’s keep an eye on 110.570 level to capture a sell positon below level. All the best! 

Categories
Forex Course

45. Analyzing the Forex Market – Technical Analysis

A way to analyze the markets other than fundamental analysis is technical analysis. In this lesson, we shall exactly understand what technical analysis is, and also the different techniques to analyze the market using technical analysis.

A way to analyze the markets other than fundamental analysis is technical analysis. In this lesson, we shall exactly understand what technical analysis is, and also the different techniques to analyze the market using technical analysis.

A way to analyze the markets other than fundamental analysis is technical analysis. In this lesson, we shall exactly understand what technical analysis is, and also the different techniques to analyze the market using technical analysis.

What Is Technical Analysis?

In simple terms, technical analysis can be defined as the study of price movements.

Unlike fundamental analysis, where people study the factors which affect the supply and demand of the market, technical analysis involves the study of the historical price movements and the present market condition.

Why should Technical Analysis be used?

Let us answer this question by bringing up an analogy.

The first thing one must understand about the market is that the forex market business is no different from a real-life business.

For instance, let’s say there’s a car dealer and they have been selling one particular car for six months by varying the prices every month. And an illustration of the sales report is given below.

Now, from the above table, can you predict what could be priced in the near future? If yes, then you can consider yourself as a technical analyst, as this is what technical analysts do.

Consider the above table. We can see that initially, the car was priced at $20,000, and 9,000 units of the car were sold. Next month, the owner price reduced by $1,000, and the sales increased by 1,000 units. Seeing this demand in the car, the owner increases the price to $25,000. But, this time the sales drop down to 1,000 units. So, the car owner reduces the price back to $19,000. And he observes that the sales increase from 1,000 to 10,000. Later, he again raises the price to $26,000.

Now, by analyzing the past price movements, we can predict with a high probability that the price will reduce yet again, as the previous time the price came to $25,000, the price dropped drastically. Thus, looking at the price of the car in June, we can see that the price did fall to $15,000.

Therefore, the above example, in a nutshell, is referred to as Technical Analysis.

Switching back to the Forex market, the analysis is done similarly. The only difference being the Forex market involves the trading of currency pairs, and the real market consists of the buying and selling of products.

Hence, from this, we can conclude that a market moves as per the historical price movements. The above example is just to give you a gist of how technical analysis work. There are many more complex ways to accurately predict the market using technical analysis. Price Action traders do their technical analysis using different types of charts (like candlesticks, bars, lines, area, etc.), timeframes, and indicators.

Hence, this brings us to the end of this lesson. In the lessons coming forward, we shall be discussing tons of stuff related to technical analysis. So, stay tuned.

[wp_quiz id=”56618″]
Categories
Forex Fibonacci

Fibonacci Confluence Zones

Fibonacci Confluence Zones

Fibonacci Retracements drawn inside boxes
Fibonacci Retracements drawn inside boxes

Fibonacci Confluence Zones

Fibonacci Confluence Zones

If you have not first read my article, ‘You’re still misusing Fibonacci retracements,’ please do so before reading this article. This article will continue where we left off in discussing the new and improved way of drawing accurate and efficient Fibonacci retracements using the Brown Method. I am going to use the same Forex pair that we used in the first article. The purpose of this article is to show you how you can create Fibonacci Confluence Zones to create natural price levels that act as future support and resistance. First, I am going to start my first swing using the March 2001 low and then retracing back to the confirmation swing high in March 1997. See below.

Fibonacci Retracement from low to confirmation lower swing high.
Fibonacci Retracement from low to confirmation lower swing high.

First, I want to know if this retracement is appropriate given how much time has passed – we’re 23 years from the March 1997 high and 19 years from the March 2001 low. Do these Fibonacci retracement levels still work? Do they remain valid? The black vertical line is the start of the retracement, so anything before the retracement is not used, it’s the data afterward that matters. Let’s look.

Fibonacci Retracement - testing of 20 year old retracement range.
Fibonacci Retracement – testing of 20 year old retracement range.

Are these Fibonacci retracement levels we drew still relevant? I would say so. A quick look at A, B, C, and D prove it. Especially for the most recent data at D on the AUDUSD weekly chart – seven-year lows bounce off of the 61.8% Fibonacci retracement level from 20+ years ago! But let’s look at some more Fibonacci retracements made off of other significant swings. Fair warning: there’s going to be several images here.

Fibonacci Retracement 2011 to 2008
Fibonacci Retracement 2011 to 2008

The Fibonacci retracement above is from the swing high in July 2018 to the confirmation swing low in October 2001. Like the previous Fibonacci image, we can see that prices have respected the retracement levels even a decade after the retracements were established. But we’re not done.

Fibonacci Confluence Zones
Fibonacci Confluence Zones

The above image is the first retracement we looked in this article (the same swing low in March 2001) using the same swing low; we draw more retracements to the next confirmation swing lower highs. I’ve drawn two additional Fibonacci retracements in Red and Orange. Notice how some of the Fibonacci retracements occur within proximity of one another. Letter A is shared retracement zones of the 50% and 61.8% of two different retracements. B has a confluence zone of three Fibonacci retracement levels, 50%, 61.8%, and 38.2%. And C has two overlapping retracements of 50% and 38.2%. Now let’s get to the fun part.

The previous image showed three Fibonacci retracement confluence zones at A, B, and C. Those confluence zones were just three of many that will appear on any chart on any time frame. What happens if we draw a series of retracements using major swings as the start point of the Fibonacci retracements and then retrace to the next confirmation swing highs and lows? We’ll get a chart that looks like the one below.

Full Confluence Zones
Full Confluence Zones

I’ve added some other letters to identify more confluence zones. I admit the chart does look like a mess. And it should. Not every Fibonacci retracement to a new confirmation swing high or low will coincide with shared Fibonacci levels, but they frequently do. Once we’ve drawn out a series of retracements, we should see a set of these confluence zones. Now begins the cleanup phase. We’re going to place horizontal lines where there are confluence zones of Fibonacci retracement levels.

Horizontal Lines replace confluence zones.
Horizontal Lines replace confluence zones.

The letters A, B, C, D, and E show where the Fibonacci confluence zones have formed, and are represented by horizontal lines (black) on the chart. Now, you can either delete or hide all of the Fibonacci retracements so that we are left with only the horizontal lines at A, B, C, D, and E.

Just the horizontal lines
Just the horizontal lines

I know that the horizontal line at D represented the most confluence zones on the AUDUSD weekly chart, but it also represented some of the longest-lasting and respected Fibonacci retracement levels. Starting at the horizontal level at D, I draw a box from D down to the major low on the AUDUSD chart. Now, the width of this box doesn’t matter – just the range.

First Box
First Box

After I’ve established that box from D down to the major low, I can remove the horizontal lines. Then I start to copy the box all the way to the top of the range. All I’m doing here is copying and pasting the box so they ‘stack.’

Stacking Boxes
Stacking Boxes

Now comes the cool part. I’m going to treat each box like its own range and place Fibonacci retracements inside each box, moving from bottom to top.

Fibonacci Retracements drawn inside boxes
Fibonacci Retracements drawn inside boxes

No matter how many times I’ve done this, it still blows my mind. But there is probably a lingering question. You’re probably looking at the chart and saying, ok, cool, but there are some massive gaps between these Fibonacci levels. You are correct if you are thinking about this. Now, Connie Brown never wrote about this next part; it’s something I discovered and developed on my own. The approach comes from the idea that markets are fractalized and proportional, so we should be able to break down like zones into smaller ranges. This is especially important and useful for traders who prefer to trade on faster time frames like four-hour or one-hour charts. Using price action that is more recent and relevant, I can draw a Fibonacci retracement from the 50% level at 0.71688 to the start/end of the box at 0.6368.

Intra Fibonacci level retracements
Intra Fibonacci level retracements

Letters a and b on the chart above identify the 50% Fibonacci level and start/end level described in the prior paragraph. The black horizontal lines represent the Fibonacci retracement drawn from a to b. I’ve also switched the chart from a weekly chart to a daily chart. When we see that daily chart, we get a real idea of how powerful the Brown Method of Fibonacci analysis is and how precise the study of these confluence zones can be.

In summary, to utilize the Brown Method, the followings steps are as follows:

  1. Create Fibonacci retracements by using a major swing high/low and drawing to the confirmation swing with a strong bar – not the next extreme high/low.
  2. After identifying Fibonacci confluence zones, place horizontal lines on the major price levels where multiple Fibonacci levels share the same price range.
  3. Delete or hide the Fibonacci levels so that only the horizontal lines are present – make sure you identify which horizontal line had the most powerful collection of Fibonacci levels.
  4. After identifying which horizontal line was the most potent and relevant, determine if it is closer to the all-time high or all-time low. Draw a box or a price range from that horizontal line to the all-time high or low – whichever is closest.
  5. Repeat the boxes by copying the same box and ‘stack’ it to the all-time high/low – the opposite of whichever was used to establish the box/price range.
  6. Draw Fibonacci retracements in the boxes.

 

Sources:

Brown, C. (2010). Fibonacci Analysis: Fibonacci Analysis. Hoboken: Wiley.

Brown, C. (2019). The Thirty-Second Jewell: Thirty Years Behind Market Charts From Price To W.D. Gann Time Cycles. Tyton, NC: Aerodynamic Investments Inc.

 

 

 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 13 – Block.One releasing EOS.io 2.0, Bitcoin back over $8,000 over the weekend.

The cryptocurrency market managed to restore some of its losses over the weekend. However, the past 24 hours were without much movement. Most cryptocurrencies made slight losses and are in the red. Bitcoin’s price went down 0.13% on the day. It is currently trading for $8,118. Meanwhile, Ethereum lost 0.54%, while XRP lost 1.51% on the day.

The cryptocurrency market managed to restore some of its losses over the weekend. However, the past 24 hours were without much movement. Most cryptocurrencies made slight losses and are in the red. Bitcoin’s price went down 0.13% on the day. It is currently trading for $8,118. Meanwhile, Ethereum lost 0.54%, while XRP lost 1.51% on the day.

The cryptocurrency market managed to restore some of its losses over the weekend. However, the past 24 hours were without much movement. Most cryptocurrencies made slight losses and are in the red. Bitcoin’s price went down 0.13% on the day. It is currently trading for $8,118. Meanwhile, Ethereum lost 0.54%, while XRP lost 1.51% on the day.

DxChain Token gained 31.22% on the day, making it the most prominent daily gainer. On the other side, Energi lost 8.52% of its value when compared to yesterday, making it the biggest daily loser.

Bitcoin’s dominance decreased by approximately half a percent during the weekend. It is now at 67.8%, which represents an increase of 0.58% when compared to the value it had on Friday.

The cryptocurrency market capitalization increased by over $10 billion over the weekend. It is currently valued at $217 billion. This value represents an increase of $11.11 billion on Friday’s value.

What happened in the past 24 hours

Blockchain software development company Block.One publically announced the release of EOS.io 2.0. EOS.io 2.0 is an update to the software that operates under the EOS blockchain.

Block.One called this update “faster, simpler, and even more secure” in the announcement.

This change is implemented with the aim to improve smart-contract execution performance. After testing the update behind close doors, Block.One claims that this update is supposedly up to 16 times faster when compared to their previous version of the engine.

_______________________________________________________________________

Technical analysis

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Bitcoin

Bitcoin managed to get over $8,000 over the weekend. It is currently in a tight range, bound by support level of $8,000 and resistance level of $8,165. There are currently no sure ways to see where Bitcoin’s price will go from here. Traders might consider abandoning range-trading and wait for the breakout to happen so they could catch the move.


Bitcoin’s volume is descending and is undoubtedly lower than what it was over the past week. Its RSI level is currently at 54.34, just above the middle point.

Key levels to the upside                    Key levels to the downside

1: $8,165                                           1: $8,000

2: $8,630                                           2: $7,780

3: $8,820                                           3: $7,530

Ethereum

Ethereum followed other cryptos on their move up over the weekend. It gained some upward momentum and reached over $141.15 level, which is where it’s at right now. Ethereum is now bound within a range between $148.5 to the upside and $141.15 to the downside.


Ethereum’s RSI is currently in the middle part of the value range. Its volume is descending but is still pretty high.

Key levels to the upside                    Key levels to the downside

1: $148.5                                             1: $141.15

2: $154.2                                            2: $130

3: $160                                              3: 128.1

Ripple

XRP is also following the industry trend of moving up after the consolidation, which brought the price down. XRP managed to bring its price above $0.211 over the weekend. However, unlike Ethereum and Bitcoin, XRP is now struggling to keep above that support. Its price is currently right on the $0.211 line or slightly below it. Whether the price will end up above or below this level plays an important role in this move, as passing above will mean consolidating at a much higher price. Consolidating below the line will most likely mean that XRP will fall into the middle of the range it was in on Friday.


XRP’s volume is much lower than yesterday, while its RSI is in the middle part of the value range.

Key levels to the upside                    Key levels to the downside

1: $0.211                                           1: $0.205

2: $0.221                                           2: $0.1978

3: $0.227                                           3: 0.1892

Categories
Forex Fibonacci

You’re still using Fibonacci Retracements Incorrectly

You’re still using Fibonacci retracements incorrectly Like any discipline or field of study, Technical Analysis goes through changes. Old theories and approaches are rigorously utilized and tested, new ideas are studied, and advancements in the field occur. And, like any discipline or study, it takes a while for people to adapt to the new way […]

Brown Method: Confirmation higher swing low
Brown Method: Confirmation higher swing low

You’re still using Fibonacci retracements incorrectly Like any discipline or field of study, Technical Analysis goes through changes. Old theories and approaches are rigorously utilized and tested, new ideas are studied, and advancements in the field occur. And, like any discipline or study, it takes a while for people to adapt to the new way […]

You’re still using Fibonacci retracements incorrectly

Like any discipline or field of study, Technical Analysis goes through changes. Old theories and approaches are rigorously utilized and tested, new ideas are studied, and advancements in the field occur. And, like any discipline or study, it takes a while for people to adapt to the new way of doing things. There is a shocking amount of updated theory and application in Technical Analysis that has yet to make its way down to the retail trader and investor – some of it is almost 25+ years old! One of the updates to old application and practice is how we use a tool known as a Fibonacci retracement. For many years, the method has been to draw a retracement from one extreme swing to the next (from swing high to swing low or swing low to swing high). In practice, there are a few incidents where this may work out just fine, but the new and better way shows how much more accurate and useful the update has been.

 

Old vs. New

I want to start off right away by showing you the difference between the old and new methods – I reference the new approach as the Brown Method. The AUDUSD Weekly chart below shows the old way of drawing Fibonacci retracements. With the old process, the Fibonacci retracement is drawn from the extreme swing high on the week of August 5th, 2011, to the extreme swing low on the week of October 31st, 2008. The vertical line delineates the starting point of the retracement, and no data to the left of that vertical line should be used to determine the efficacy of the retracement. It is only the data after the vertical line that is important and relevant.

Fibonacci Retracement: Incorrect
Fibonacci Retracement: Incorrect

Now, contrast the image above with the new Brown method below.

Fibonacci Retracement: Correct
Fibonacci Retracement: Correct

You will observe how much more accurate the Fibonacci retracement levels are on the Brown Method vs. the old method. What changed? Observe the swing low retracement on both charts – they are different. They both start at the same level, but the retracement end for the Brown method is drawn to the swing low on the week of February 6th, 2009. But why? Why do you draw to a seemingly random or ‘off’ swing and not the extreme? The reason for this is based on the writings of W.D. Gann.

 

The Brown Method

I call this new Fibonacci retracement method, the Brown Method, after Connie Brown. It is Connie Brown who discovered this new theory and wrote about it in her 2008 book, Fibonacci Analysis. It is not a very large book, under 200 pages, but it is one of the single most important works in Technical Analysis of the past 15-years. Her discoveries of how confluence zones of Fibonacci retracements dictate the normal rhythm and pulse of the market are truly groundbreaking. But to the first question of why I did not draw the retracement to the extreme low? Connie Brown points out that W.D. Gann made the point that the end of a trend is not established by the extreme high or low – it is the secondary high/low that confirms the change in trend (sometimes known as the confirmation swing). This makes sense because the extreme is very rarely the level where the participants in a market agree that a trend is finished.

So how do we identify what swing to use? How did I identify what candlestick was the confirmation swing low on the weekly AUDUSD chart? Again, this goes back to Brown – but this information is from her penultimate work (her magnum opus in my opinion), The 32nd Jewel. The first chapter of her massive book (it weighs about eight lbs., is three inches thick and nearly 1100 pages long) addresses some of the problems students of hers have had with the application of her updated Fibonacci retracement method. To identify the correct swing to use, we look for the strongest bar. Let’s take a ‘zoomed’ in look at the swing low used on the AUDUSD weekly chart above.

Brown Method: Confirmation higher swing low
Brown Method: Confirmation higher swing low

It will take you some practice to find the swing bar (also, gaps are used, but that is for another article) that would be considered the ‘strong bar.’ What constitutes a strong bar? That can be somewhat subjective, but look at the candlestick that I’ve identified as the strong bar compared to the candlesticks before it and around it. Why did I pick this candlestick? First, it is a bullish engulfing candlestick on the weekly chart. Second, that candlestick rejected any further downside pressure after a consecutive four week period of weekly candlestick closes below the open. Third, the open and low of the candlestick created the support zone for the next five weeks. In a nutshell, the candlestick is massive, its sentiment overwhelmingly one-directional, and the lows of that candlestick were respected. That candlestick was the confirmation swing low because it confirmed the end to lower prices and was the most substantial candlestick before the new uptrend occurred.

 

Side note: Connie Brown also said to look for gaps in the price action as areas to draw the confirmation swing. Finding gaps is a much easier process when looking at traditional markets like the stock market. Forex data can vary from broker to broker as some data providers show gaps, and others do not.

 

The following articles will go into further detail on how to implement more of the Brown Method. I believe that what you will read and learn will be one of the ‘wow’ moments you experience in the study of Technical Analysis. To say that what Connie Brown has discovered is truly amazing is an understatement when we learn about the confluence of Fibonacci zones and how they create the natural price zones that an instrument swings to, it is a truly eye-opening experience.

 

Sources:

Brown, C. (2010). Fibonacci Analysis: Fibonacci Analysis. Hoboken: Wiley.

Brown, C. (2019). The Thirty-Second Jewell: Thirty Years Behind Market Charts From Price To W.D. Gann Time Cycles. Tyton, NC: Aerodynamic Investments Inc.

Categories
Forex Course

44. Analyzing The Forex Market – Fundamental Analysis

Introduction

Introduction

Introduction

We’ve now come to one of the most exciting topics in this course, which is analyzing the Forex market. Now that we know the history and the working of the Forex market, we’re all set to predict the future of the market. Several types of analyses are used by traders across the world to analyze the  Forex market. However, these analyses can broadly be classified into three types.

In this lesson, and the lessons coming forward, we shall be discussing all these three types of analyses.

Types of Forex market analysis

The three types of forex market analysis are:

  1. Fundamental analysis
  2. Technical analysis
  3. Sentimental analysis

Now, you must be wondering which one of them is best for analyzing the markets. Well, if you look at the most successful professional traders in the industry, they analyze the market by considering all the types. In this lesson, let’s understand the most essential Fundamental Analysis.

Fundamental Analysis

Fundamental analysis, as the name pretty much suggests, is the way of analyzing the market by studying the economic, social, and political forces in the country. These factors are considered because they affect the supply and demand of an asset.

The whole idea of trading using fundamental analysis is by considering the factors that affect the supply and demand of a currency. These factors are technically referred to as fundamental or economic indicators.

The concept behind this type of analysis is straightforward. If a country’s currency or economic outlook is good, then there is a high probability that the currency will show strength in the future and vice-versa.

What are the major economic indicators?

Below are some of the economic indicators which have the power to shift the economic situation of a country.

Interest rates

One of the most popular and important economic indicators are interest rates. There are several types of interest rates, but we will be focusing on the basic form of the interest rates set by the central banks. Central banks are the creators of money. This money is borrowed by private banks. And the percentage (interest) or the principle the private banks pay to central banks for borrowing the money is called a nominal or a base interest rate.

If the central banks wish to boost the economy, they decrease the interest rates. This then stimulates borrowing by both private banks and other individuals. And this, in turn, increases consumption, production, and the overall economy. Lowering the interest rates can be a good way to inflate the economy but can be a poor strategy too. Because in the long term, low-interest rates can over-inflate the economy with cash and create an unbalance in the money supply.

So, to avoid this, central banks increase interest rates. And this increase results in less money in the hands of private banks, businesses, and individuals to play around with.

Inflation

Inflation, as the name pretty much says, is fluctuation in the cost of goods over time. Inflation, too, is a vital indicator for economists and investors to forecast the future economy. Inflation will have a good effect on the economy if done uniformly. But, too much inflation can bring the balance of supply and demand on the tip in favor of the supply. And this eventually will bring down the value of the currency.

Apart from these two, there are many other macroeconomic indicators that traders consider to do their fundamental analysis. Some of them include GDP, PPI, CPI, Unemployment Rate, Government Debt, etc. Indicators like these help the investors & traders in analyzing the market and predicting its future.

This completes the lesson on fundamental analysis. In the next lesson, let us understand the insights about technical analysis. Don’t forget to take the quiz below before moving ahead!

[wp_quiz id=”56601″]
Categories
Forex Market Analysis

Daily F.X. Analysis, January 10 – Top Trade Setups In Forex -NFP Figures in Highlights! 

The U.S. dollar strengthened for a third straight session on Thursday, ahead of the release of December nonfarm payrolls report due later today. The ICE Dollar Index gained 0.1% on the day to 97.42.

The U.S. dollar strengthened for a third straight session on Thursday, ahead of the release of December nonfarm payrolls report due later today. The ICE Dollar Index gained 0.1% on the day to 97.42.

The U.S. dollar strengthened for a third straight session on Thursday, ahead of the release of December nonfarm payrolls report due later today. The ICE Dollar Index gained 0.1% on the day to 97.42.

The euro was broadly flat at $1.1109. Official data showed that the eurozone’s jobless rate was steady at 7.5% in November as expected, while German industrial production grew 1.1% on the month (+0.8% estimated).

The British pound slipped 0.2% to $1.3069, posting a three-day decline. Bank of England Governor Mark Carney indicated that an interest rate cut may still be possible, saying, “there is a debate at the MPC (monetary policy committee) over the relative merits of near term stimulus to reinforce the expected recovery in U.K. growth and inflation.”

Economic Events to Watch Today

 

 

EUR/USD – Daily Analysis

The EUR/USD currency pair flat near the 1.11 and traders stay on the waiting mode ahead of the U.S. Nonfarm Payrolls report for December, which is scheduled to release at 13:30 GMT. As of writing, the EUR/USD currency pair is currently trading at 1.1109 and consolidates in the narrow range between the 1.1102 – 1.1111.

The currency pair charted a Doji candle Thursday because it marked two-way business and closed on a flat note. The Doji candle represents a lack of clear directional bias or indecision in the market place. 

Moving ahead, the pair may hit the bearish track if the U.S. Nonfarm Payrolls ignore expectations. Moreover, the United States economy expected to have added 164,000 new jobs in December, after increasing 226,000 positions during November. The unemployment rate is expected to remain stable at 305%, along with the participation rate is projected at 63.2%.

Meanwhile, Average Hourly Earnings are rising by 0.3% month-on-month and by 3.1% year-on-year, almost unchanged from the previous month.

According to the forecast, the positive report will likely support the dollar to gain across the board. In that case, EUR/USD will hit the bearish close below 1.1093. Although, in the case of a below-forecast NFP and wage growth figures, the shared currency may find bids, pushing the EUR/USD above 1.1120.

At the USD front, the greenback currency found on the bullish track because the markets await ahead of the NFP report. The U.S. Index is higher for the 3rd-consecutive day, trading back 97.50.

At the Sino-US front, the United States and China will possibly sign a phase one trade deal on January 15. However, any fresh is not coming yet regarding the Sino-US trade deal, but the trader keeps their eyes on January 15 for new impulse.

Looking forward, the Non-Farm Employment Change report is the trader radar, which is due to release at 13:30 GMT. Traders will also keep their focus on the Unemployment rate and Average Hourly Earnings, which are scheduled to release at the same time.



Daily Support and Resistance

  • S3 1.1014
  • S2 1.1067
  • S1 1.1086
  • Pivot Point 1.1121
  • R1 1.114
  • R2 1.1174
  • R3 1.1227

EUR/USD– Trading Tips

The EUR/USD is trading in a bearish mode below a crucial trading level of 1.1130, testing the support next level of 1.1100. This level worked as a support during the previous days, but this time it seems to get violated as the EUR/USD has formed a strong bearish candle. The MACD is trading below 0 levels, which is suggesting odds of the bearish trend continuation for the EUR/USD. 

On the 4 hour chart, the pair had formed a bullish channel that has now been violated at 1.1130 level, and now this can lead the EUR/USD prices towards 1.1077 level. 

GBP/USD– Daily Analysis

The GBP/USD closed at 1.30659 after placing a high of 1.31234 and a low of 1.30130. Overall the movement of GBP/USD remained bearish throughout the day.

The GBP/USD came under pressure after the Bank of England’s governor gave hints for an interest rate cut, and the pair GBP/USD dropped near 1.30 level.

On Thursday, the Governor of Bank of England, Mark Carney, dropped hints that interest rates could be cut soon to boost the British economy. He also warned that the BoE was running low on ways to fight the recession.

He said that the British economy had been sluggish recently, and the inflation was below the bank’s target of 2%. He added that if the weakness in the economy persisted the same, then the central bank could cut interest rates.

His comments put pressure on Britain Pound and sent it near 2-week lowest point against the U.S. dollar on Thursday. Mark Carney, in the previous monetary policy meeting of Bank of England, backed himself from cutting interest rates while 2 of nine policymakers were in favor of cutting rates to 0.5% from 0.75%.

He also said that there were tentative signs of stabilization in the global economy after a slowdown for almost 18 months, while the chances for Britain’s economy to drop still remain because of uncertainty after Boris Johnson’s election victory.

Regarding inflation, he said that the level of interest rates required to keep inflation steady would need to remain low for a prolonged period of time.

On the other hand, the U.S. dollar remained strong on Thursday amid positive job data from the U.S. labor department, which showed that jobless claims during the previous week decreased to 214K from expected 221K and supported U.S. dollar. The strong U.S. dollar added to the downward movement of GBP/USD.

Daily Support and Resistance

  • R3: 1.3296
  • R2: 1.3206
  • R1: 1.3151
  • Pivot Point 1.3116
  • S1: 1.3061
  • S2: 1.3026
  • S3: 1.2936

GBP/USD– Trading Tip

The GBP/USD continues to trade with bearish bias after violating the 1.3045 support level. On the 4 hour chart, the pair has closed a bearish engulfing candle under 1.3045 support level, which is a proof of bearish breakout. Below 1.3045, the GBP/USD has the potential to trade lower until 1.3000 level and even towards 1.2910 support zone. 

The leading indicators, such as RSI and MACD, are also supporting the bearish bias among traders. I will consider taking selling positions below 1.3058 to target 1.3000 today. 

 

USD/JPY – Daily Analysis

The USD/JPY closed at 109.514 after placing a high of 109.580 and a low of 109.010. Overall the movement of USD/JPY remained bullish throughout the day. The safe-haven Yen falls to 2-week lowest point against the U.S. dollar on Thursday amid the de-escalation of tensions between the U.S. & Iran after the targeted killing of Iranian general Qassem Soleimani by U.S. military.

On Wednesday, Iran, in retaliation against its general murder, dropped missiles on Iraqi airbases where U.S. troops were hosted. However, there were no American casualties that led to U.S. President Donald Trump to stop further military action against Iran. 

Instead, Trump announced economic & financial sanctions on Iran in response to Iranian airstrikes. Furthermore, the Iran officials also said that their missile attacks were to conclude the retaliation, and no more attacks will be made from them. Both parties backed from any escalation of military actions, and this gave pressure to safe-haven currencies like Yen.

Weaker Japanese Yen caused the USD/JPY to move in the reverse direction, and the pair moved to its 2-week highest level above 109.5.

On the other hand, the U.S. dollar remained strong across the board on the back of strong economic data and supportive comments from Federal Reserve officials.

At 1:00 GMT, the Consumer Credit from the U.S. Federal Reserve for November was released, which showed a decline to 12.5B from the expected 15.5B and weighed on the U.S. dollar. However, at 18:30 GMT, the Unemployment Claims from the U.S. Department of Labor dropped to 214K from forecasted 221K and supported the U.S. dollar.

   

Daily Support and Resistance

  • S3 106.93
  • S2 107.9
  • S1 108.49
  • Pivot Point 108.87
  • R1 109.46
  • R2 109.84
  • R3 110.81

USD/JPY – Trading Tips

The USD/JPY pair is trading bullish around 109.420 after breaking above a resistance level of 108.950. The way USD/JPY is forming bullish candles shows a strong buying bias among investors. We may see USD/JPY targeting the triple top resistance level around 109.700. 

Leading indicators are massively overbought, and USD/JPY is looking for a reason to trigger bearish retracement. 109.750 can offer this reason today. Let’s keep an eye on this level to capture a sell positon below this today. All the best! 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 10 – Blockchain will be used to tackle climate change; KPMG leader predicts

The cryptocurrency market is on the second day of consolidation after a big swing up. Bitcoin’s price went down 2.16% on the day. It is currently trading for $7,732. Meanwhile, Ethereum lost 1.64%, while XRP lost 1.17% on the day.

The cryptocurrency market is on the second day of consolidation after a big swing up. Bitcoin’s price went down 2.16% on the day. It is currently trading for $7,732. Meanwhile, Ethereum lost 1.64%, while XRP lost 1.17% on the day.

The cryptocurrency market is on the second day of consolidation after a big swing up. Bitcoin’s price went down 2.16% on the day. It is currently trading for $7,732. Meanwhile, Ethereum lost 1.64%, while XRP lost 1.17% on the day.

Aidos Kuneen gained 10.25% on the day, making it the most prominent daily gainer. On the other side, Bytecoin lost 20.76% of its value when compared to yesterday, making it the biggest daily loser.

Bitcoin’s dominance increased marginally in the past 24 hours. It is now at 68.38, which represents an increase of 0.23% from yesterday’s value.

The cryptocurrency market capitalization decreased slightly in the past 24 hours. It is currently valued at $205.89 9.65 billion. This value represents a decrease of $3.76 billion when compared to yesterday’s value.

What happened in the past 24 hours

One of the big four world-recognized accounting giants, KPMG, provided the media with its stance on the blockchain. KPMG US blockchain lead, Arun Ghosh, said that blockchain, alongside with the Internet of Things could be used to manage climate change in 2020 and beyond.

Ghosh also noted that the convergence of these two technologies enables organizations to accelerate their environmental governance. Blockchain’s chain of custody would be deployed as a central component in this system and it would be used to drive sustainability.

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Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin on a downward-facing path yet again. However, this may not be a bearish thing at all. Though some see this move as another short-term bear trend, many see it as the retracement to the base of the inverted H&S pattern which Bitcoin just left.


Bitcoin’s price went broke the $7,780 resistance and is right above it at the moment. Its volume is slowly descending, while its RSI value on the 4-hour chart is right in the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $7,780                                           1: $7,530

2: $7,990                                           2: $7,415

3: $8,165                                           3: $7,275

Ethereum

Ethereum followed Bitcoin on its downward path yet again today. The consolidation above the $141.15 support line currently does not seem like an option, as Ethereum continued its move down and is currently trying to stabilize in the middle of the range, bound by $141.15 at the top and $130 at the bottom.


Ethereum’s RSI is currently in the lower part of the value range. Its volume is descending but is still pretty high.

Key levels to the upside                    Key levels to the downside

1: $141.15                                            1: $130

2: $148.5                                            2: $128.1

3: $154.2                                            3: 122.1

Ripple

XRP is also following the industry trend of consolidating or going down in price. Its price fell under the $0.205 support level and is currently in the middle of the range, bound by $0.205 at the top and $0.1978 at the bottom. As momentum fades, volume lowers, and RSI drops down, further sharp downward movement is less likely to happen.


XRP’s volume is much lower than yesterday, while its RSI is in the lower part of the value range.

Key levels to the upside                    Key levels to the downside

1: $0.205                                           1: $0.1978

2: $0.211                                           2: $0.1892

3: $0.221                                           3: 0.1758