Tag: Technical Analysis

Categories
Forex Price-Action Strategies

It is Better to be Safe than Sorry.

Using Stop Loss is an essential component of trade management. The Forex market gets volatile from time to time. Taking an entry without using Stop Loss may make an account empty. Thus, under no circumstances, we shall take any entry without using Stop Loss. We need to make sure that we set our Stop Loss accordingly, which is neither too tight nor too saggy. In today’s lesson, we are going to demonstrate an example of that.

Using Stop Loss is an essential component of trade management. The Forex market gets volatile from time to time. Taking an entry without using Stop Loss may make an account empty. Thus, under no circumstances, we shall take any entry without using Stop Loss. We need to make sure that we set our Stop Loss accordingly, which is neither too tight nor too saggy. In today’s lesson, we are going to demonstrate an example of that.

Using Stop Loss is an essential component of trade management. The Forex market gets volatile from time to time. Taking an entry without using Stop Loss may make an account empty. Thus, under no circumstances, we shall take any entry without using Stop Loss. We need to make sure that we set our Stop Loss accordingly, which is neither too tight nor too saggy. In today’s lesson, we are going to demonstrate an example of that.

The above chart is a daily chart. We see that the price finds its support and produces a bullish engulfing candle. The candle closes within the last swing high. The daily-H4 combination traders are to flip over to the H4 chart to take a long entry upon consolidation and bullish breakout. Let us have a look at the H4 chart.

The H4 chart looks extremely bullish. The chart produces a morning star right at the support zone and heads towards the North for one more candle. Traders are to keep an eye on the chart for the price consolidation.

The chart produces one more bullish candle. It then consolidates and creates a bullish engulfing candle breaching the last highest high on the chart. This is an ideal price action opportunity to trigger a long entry right after the last candle closes. Traders shall set the stop loss below the level of support, where the engulfing candle bounces.

The next candle comes out as a bearish candle approaching the Stop Loss level. However, if we set the Stop Loss below the support level, we would be safe here. Things do not look as good as we expected. Let us proceed to the next chart.

The next candle comes out as a bullish engulfing candle. Things look much better now. However, we must not miss the fact that the bullish engulfing candle has a bounce right at the Stop Loss level. If we set too tight Stop Loss, we would have to encounter a losing trade here. Instead of making the profit, we would lose money.

It is a debatable issue how far we shall set our Stop Loss. It is not recommended that we should set our Stop Loss too far. However, we shall set our Stop Loss below the level of support/resistance and add some extra pips. For intraday trading on the 5M, 15M, 30M, H1, and H4 chart, to measure the number of extra pips, we may use the spread of that particular pair. Let us assume we are taking a long entry on EURUSD. If the spread is three pips, we may add three extra pips to set our Stop Loss. We must do a lot of back-testing with our favorite pairs to find out the perfect measure for this to be safe with our entries. As they say, “it is better to be safe than sorry.”

 

Categories
Crypto Market Analysis

Daily Crypto Review, Jan 09 – China announcing its cryptocurrency launch date

The cryptocurrency market got a well-deserved consolidation phase after the big moves to the upside it made over the past couple of days. As far as daily price changes go, Bitcoin’s price went down 4.88%. It is currently trading for $7,899. Meanwhile, Ethereum lost 3.74%, while XRP lost 3.55% on the day.

The cryptocurrency market got a well-deserved consolidation phase after the big moves to the upside it made over the past couple of days. As far as daily price changes go, Bitcoin’s price went down 4.88%. It is currently trading for $7,899. Meanwhile, Ethereum lost 3.74%, while XRP lost 3.55% on the day.

The cryptocurrency market got a well-deserved consolidation phase after the big moves to the upside it made over the past couple of days. As far as daily price changes go, Bitcoin’s price went down 4.88%. It is currently trading for $7,899. Meanwhile, Ethereum lost 3.74%, while XRP lost 3.55% on the day.

Lisk gained 23.41% on the day, making it the most prominent daily gainer. On the other side, Centrality lost 11.45% of its value when compared to yesterday, making it the biggest daily loser.

Bitcoin’s dominance fell quite drastically in the past 24 hours. Its dominance is now at 68.15, which represents an increase of 0.84% from yesterday’s value.

The cryptocurrency market capitalization decreased in the past 24 hours. It is currently valued at $209.65 billion. This value represents an increase of $8.83 billion when compared to yesterday’s value.

What happened in the past 24 hours

China announced that its nationwide blockchain network called the Blockchain-based Ser­vice Net­work (BSN) would be operational in April 2020. This is only six months after it’s testing phase started.

This project is fully backed by Chinese government policy. It is created to provide a platform on top of which new blockchain projects could be made, but also to help with the development of smart cities and the digital economy as a whole.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin is following the price movement that most analysts predicted so far. Even though it fell under the 200-day moving average (1-day time-frame) which it was under since November, this doesn’t have to be considered bearish at all. After creating an almost perfect head and shoulders pattern and breaking it to the upside, the true confirmation of a successful move would be a retracement to the neckline and then a burst in upwards momentum. This price movement seems exactly like a pullback that was expected.From a fundamental standpoint, Bitcoin is more and more bullish as the tension between the US and Iran rises.


Bitcoin’s price went under $8,000 and broke the $8,165 and $7,790 resistances.

Key levels to the upside                    Key levels to the downside

1: $7,990                                           1: $7,780

2: $8,165                                           2: $7,530

3: $8,640                                           3: $7,415

Ethereum

Ethereum didn’t have an additional day of gains, which resulted in it falling slightly less than Bitcoin. The consolidation above the $141.15 support line continues until the bearish pressure pushed the price below support.


Ethereum’s RSI moved away from the overbought territory and is currently in the lower value range. Its volume, on the other hand, is still above average.

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 did not have a day last time we reported, as it was falling in price while other cryptocurrencies were either rising or consolidating sideways. However, XRP might have found a strong support line to consolidate at. After creating a downtrend line, which dates from two days ago, XRP managed to find its support at $0.205. The price is currently right at that level and is testing it to the downside.


XRP’s volume lower than yesterday, while its RSI moved out of the overbought territory and is currently moving towards oversold on all time-frames.

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 Market Analysis

Daily F.X. Analysis, January 8 – Top Trade Setups In Forex – Eyes on Trump’s Speech! 

On the forex front, the U.S. Dollar Index rebounded 0.3% on the day to 96.97 on Tuesday. The USD/JPY dipped 0.4% to 108.00, as U.S.-Iran tensions curbed investors’ risk appetite. This morning, the pair slid further to 107.67, the lowest level since mid-October, following reports that Iran has started attacks on U.S. targets in Iraq.

On the forex front, the U.S. Dollar Index rebounded 0.3% on the day to 96.97 on Tuesday. The USD/JPY dipped 0.4% to 108.00, as U.S.-Iran tensions curbed investors’ risk appetite. This morning, the pair slid further to 107.67, the lowest level since mid-October, following reports that Iran has started attacks on U.S. targets in Iraq.

On the forex front, the U.S. Dollar Index rebounded 0.3% on the day to 96.97 on Tuesday. The USD/JPY dipped 0.4% to 108.00, as U.S.-Iran tensions curbed investors’ risk appetite. This morning, the pair slid further to 107.67, the lowest level since mid-October, following reports that Iran has started attacks on U.S. targets in Iraq.

The Euro dropped 0.4% to $1.1154. Official data showed that the Eurozone’s CPI grew 1.3% on year in December (as expected), while retail sales in November rose 1.0% on the month (+0.7% expected). Later today, German factory orders for November will be released (+0.2% on month expected).

Economic Events to Watch Today

 

EUR/USD – Daily Analysis

The EUR/USD currency pair is representing limited gains, having hit the 5-day average resistance level at 1.1168 and looking to gain ground again mainly due to intensified geopolitical tensions. The EUR/USD pair is trading at 1.1147 and consolidates in the range between the 1.1145 – 1.1169.

The German data is due to come out at 06:00 GMT and expected to show Factory Orders rose by 0.3% month-on-month in November, having dropped by 0.4% in the preceding month. In year-on-year terms, factory orders are anticipated to have slipped by 5.5%. 

On the flip side, the positive reading may support the narrative that the German economy has bottomed out and will likely help the EUR/USD currency pair re-test resistance at 1.1206. The EUR currency will likely face losses if the data drops short of expectations by a significant margin. 

Daily Support and Resistance

  • S3 1.1042
  • S2 1.1101
  • S1 1.1127
  • Pivot Point 1.116
  • R1 1.1186
  • R2 1.1219
  • R3 1.1279

EUR/USD– Trading Tips

The EUR/USD is trading bearish around 1.1132, testing the support level of 1.1130. This level worked as a support during the previous days, the way Euro is forming candles, it seems to violate it pretty soon. On the 4 hour chart, the pair has formed a bullish channel that is keeping the EUR/USD supported near 1.1110. The MACD is just crossing below the 0 levels, which is suggesting odds of the bearish trend in the EUR/USD. At the same time, the bearish engulfing candle on the daily timeframe is adding further bearish bias on the EUR/USD pair. Let’s stay bearish below 1.1160 today. 

GBP/USD– Daily Analysis

The GBP/USD currency pair stay quite and consolidates in the narrow range between the 1.3105 – 1.3040 in the wake of the United States and Iran war fears. The GBP/USD currency pair is trading at 1.3119. Notably, the pair did not show a massive response to the early-day attack by Iran to the U.S.

The GBP traders gave a weak response to the greenback’s weakness amid Iran’s attack on the United States bases in Iraq. Apart from this, the USD dropped later when the United States did not take any action instantly.

As we already mentioned in the previous report that the UK PM Johnson would stick to his Brexit deadline, i.e., the end of 2020. Though, the previous headline suggested that the country will likely push the British leader towards a soft landing. The Bill of Tory leaders is still safe to the reaction of the opposition, mainly due to the clear majority of the ruling Conservatives. 

Although, the opposition Labour Party blamed the United Kingdom Prime Minister Boris Johnson of giving protection to the United States PM Donald Trump regarding the killing of Iran military general.

At the US-Iran war front, the United States President Donald Trump is also ready to speak on Iranian attacks over the U.S. bases in Baghdad and could affect the market’s moves. The U.S. ADP Employment Change and comments from Federal Reserve Governor Lael Brainard can also be the reason behind the pair moves.


Daily Support and Resistance

  • S3 1.2905
  • S2 1.3022
  • S1 1.3066
  • Pivot Point 1.314
  • R1 1.3184
  • R2 1.3257
  • R3 1.3375

GBP/USD– Trading Tip

The GBP/USD is also trading bullish around 1.3185 due to weakness in the U.S. dollar. The recent bullish engulfing candle is suggesting odds of bullish trend continuation in the GBP/USD pair. 

On the higher side, the GBP/USD may find resistance near 1.3185 level today while the support still stays at 1.3060. A bullish breakout of 1.3185 level can extend the bullish trend until 1.3285. Let’s stay bullish above 1.3125 today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair dropped to 108.00, having hit the low of 107.83, mainly due to the risk-off market sentiment in the wake of Iran’s missile attacks on the U.S. airbases in Iraq earlier today. But currently, the USD/JPY currency pair has recovered to 108.50 but failed near the 108.45 due to risk recovery after confirmed that no damages have been seen by the United States President Donald Trump from the Iranian attacks. 

The USD/JPY pair is currently trading at 108.38 and consolidates in the range between the 107.64 – 108.53. More than one dozen missies have been reportedly launched at the Ain Assad Air Base. White House answers that they are aware of the attack, and the U.S. President Trump has been briefed, and he is monitoring the situation.

It is worth to mention that the United States President Donal Trump will make a statement tonight. With this, the U.S. Defense Secretary Esper and U.S. Secretary of State Pompeo have arrived at the White House. On the other hand, Iran’s guards warn the U.S. any aggression against Tehran will get a worse response.

Meanwhile, the market’s risk tone recently weakened with the U.S. 10-year Treasury yields slipping more than seven pips to 1.75%, whereas the S&P 500 Futures are losing more than 1% to 3,200 by the press time.

Looking forward, the traders will now keep their eyes on further progress surrounding the US-Iran tension for fresh direction. At the economic front, Japan’s Consumer Confidence for December and the US ADP Employment Change, an early signal to Friday’s NFP, will be closely observed.

Daily Support and Resistance

  • S3 106.54
  • S2 107.34
  • S1 107.66
  • Pivot Point 108.14
  • R1 108.46
  • R2 108.95
  • R3 109.75

USD/JPY – Trading Tips

The USD/JPY pair is trading bullish around 108.720, which marks 50% Fibonacci retracement on the 240 minutes chart. The pair is pretty much likely to surge higher to complete th2 61.8% Fibonacci retracement at 108.950. 

The MACD is forming bigger histograms than before, which indicates the positive sentiment of traders. Lastly, the 4 hour time has formed three white soldiers pattern, which is likely to keep the USD/JPY bullish today. Consider taking buying trades above 108.500 to target 108.950. 

All the best!

Categories
Forex Daily Topic Forex Price-Action Strategies

Significant Levels Must be Counted

Price action traders are to take entry and exit by determining support and resistance on the naked chart. Significant highs and lows are considered to draw support and resistance, which help traders find out stop loss, take profit as well as risk-reward. In today’s article, we are going to demonstrate an example of a level holding the price as support, where the price had a rejection earlier. Let us find out how we are to deal with such levels.

Price action traders are to take entry and exit by determining support and resistance on the naked chart. Significant highs and lows are considered to draw support and resistance, which help traders find out stop loss, take profit as well as risk-reward. In today’s article, we are going to demonstrate an example of a level holding the price as support, where the price had a rejection earlier. Let us find out how we are to deal with such levels.

Price action traders are to take entry and exit by determining support and resistance on the naked chart. Significant highs and lows are considered to draw support and resistance, which help traders find out stop loss, take profit as well as risk-reward. In today’s article, we are going to demonstrate an example of a level holding the price as support, where the price had a rejection earlier. Let us find out how we are to deal with such levels.

This is the daily chart. The price heads towards the North with good bullish momentum. Look at the last candle. It is a strong bearish candle with a long solid bearish body. The daily-H4 chart combination traders may want to flip over to the H4 chart to find short entries.

This is how the H4 chart looks. The price has been bearish. The last candle comes out as an inside bar. If the price consolidates and produces a bearish candle breaching the lowest low, the sellers may go short on the pair. The question is, where do they set their take profit level? Look at the red line, which is drawn right at the point where the price had a rejection earlier. The level of support is further down, but the red-lined level is a significant level, which the sellers must consider before making any selling decision on this chart.

The price produces a bearish engulfing candle breaching the lowest low. It means that the price has found its resistance. The sellers may draw two lines here to identify their stop loss and entry point.

This is how it looks with two drawn lines. The live above is the stop loss level. The price breaches the line and closes below it. Thus, the sellers may trigger a short entry right after the candle closes. Let us proceed to the next chart to find out how the trade goes.

The price heads towards the South with good bearish momentum. Look at the last candle, which comes out as an inside bar. It produces right at the flipped support. This is where the price had a strong rejection earlier. The sellers shall set the take profit right here. Some traders may take out partial profit and use trailing stop loss by making sure that they do not lose even a single penny. Both have pros and cons. However, the matter of fact is they must count such level before making any trading decision. It helps them determine the take profit level, risk-reward, and trade with more winning chances.

Categories
Forex Market Analysis

Daily F.X. Analysis, January 6 – Top Trade Setups In Forex – U.S. Iran Shakes The Market! 

On the forex front, the U.S. Dollar Index was little changed at 96.84 on Friday. Being regarded as a haven-asset, the Japanese yen strengthened against the greenback as geopolitical risks increased. USD/JPY dropped 0.5% to 108.09, the lowest level since mid-October.

On the forex front, the U.S. Dollar Index was little changed at 96.84 on Friday. Being regarded as a haven-asset, the Japanese yen strengthened against the greenback as geopolitical risks increased. USD/JPY dropped 0.5% to 108.09, the lowest level since mid-October.

On the forex front, the U.S. Dollar Index was little changed at 96.84 on Friday. Being regarded as a haven-asset, the Japanese yen strengthened against the greenback as geopolitical risks increased. USD/JPY dropped 0.5% to 108.09, the lowest level since mid-October.

The euro slipped 0.1% to $1.1160. Official data showed that German’s jobless rate was steady at 5.0% in December as expected, while CPI grew 1.5% on year (+1.4% expected). 

Besides, Iran vowed “severe revenge” on the U.S., while President Donald Trump threatened major retaliation on Iran if they do anything.

Economic Events to Watch Today

 EUR/USD – Daily Analysis

The EUR/USD currency pair hit the bullish track mainly due to U.S. Treasury yields, which dropped in the wake of risk-off sentiment. Besides, the greenback is also struggling to gain the ground. The EUR/USD pair is consolidating at 1.1164, consolidating in the range between the 1.1156 – 1.1172. 

The on-going tension between the United States and Iran further intensified during the weekend after Iran’s supreme leader Ayatollah Ali Khamenei’s statement that Iran would take revenge for the U.S. killing of Iranian general Soleimani. The country also announced that it would not follow any restrictions imposed by the 2015 nuclear deal.

On the other hand, the United States President Donald Trump also gave warning regarding retaliation if the Iran attacks on United States personnel or assets.

The yield on the United States ten-year Treasury note dropped to a one-month low of 1.757% in Asia and is currently seen at 1.777% – down ten basis points on the day.

At the data front, the German retail sale for November and final PMI indices for December are scheduled for release. However, these data will likely avoid in the wake of geopolitical development.



Daily Support and Resistance

  • S3 1.1082
  • S2 1.1133
  • S1 1.1153
  • Pivot Point 1.1183
  • R1 1.1203
  • R2 1.1234
  • R3 1.1284

EUR/USD– Trading Tips

On the 2 hour chart, the EUR/USD has tested the support level of 1.1130, which was being extended by the old triangle pattern. The U.S. Iran war sentiments are making EUR/USD weaker and are very likely to drive bullish bias until 1.1200 and 1.1245 level today. 

Speaking about the leading indicators, the RSI and MACD are holding in the buying zone, demonstrating the bullish trend in the EUR/USD pair today. Consider staying bullish until 1.1240 today.

 

GBP/USD– Daily Analysis

The GBP/USD currency pair shifted to bullish track from the two-day losing streak, mainly due to broad-based greenback weakness. As of writing, the GBP/USD is trading at 1.3160.

Just like the EUR/USD, the GBP/USD is also being influenced by the geopolitical tensions. On-going tension between the United States and Iran further intensified during the weekend after Iran’s supreme leader Ayatollah Ali Khamenei’s statement that Iran would take revenge for the U.S. killing of Iranian general Soleimani. The country also announced that it will not follow any restrictions imposed by the 2015 nuclear deal. As a result, the U.S. dollar is getting weaker.

At the Brexit front, the United Kingdoms’ opposition Labour Party will decide the schedule for the election to choose the next leader on Monday. Moreover, it seems like the contender Keir Starmer already accepted the Brexit while Jess Phillips says if Brexit fails, she will likely to rejoin the European Union.

The United Kingdom Prime Minister will meet the Ursula von der Leyen, European Commission President on Wednesday, and will likely discuss the Brexit process ahead. However, the daily mail hints that the senior Tory leaders are supporting Boris Johnson to kick off parallel post-Brexit trade talks with the U.S. to put pressure on the E.U. 


Daily Support and Resistance

  • S3 1.2932
  • S2 1.3047
  • S1 1.3094
  • Pivot Point 1.3163
  • R1 1.321
  • R2 1.3278
  • R3 1.3393

GBP/USD– Trading Tip

The GBP/USD is also trading bullish around 1.3185 due to weakness in the U.S. dollar. The recent bullish engulfing candle is suggesting odds of bullish trend continuation in the GBP/USD pair. 

On the higher side, the GBP/USD may find resistance near 1.3185 level today while the support still stays at 1.3060. A bullish breakout of 1.3185 level can extend the bullish trend until 1.3285. Let’s stay bullish above 1.3125 today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair found on the bearish track due to the risk-off sentiment in the market and a greenback’s weakness. The USD/JPY pair is trading at 108.00 and consolidates in the range between the 107.77 – 108.12.

On the front of main headlines, the on-going tension between the United States and Iran further intensified during the weekend after Iran’s supreme leader Ayatollah Ali Khamenei’s statement that Iran would take revenge for the U.S. killing of Iranian general Soleimani. As a consequence, the markets have turned into risk-off sentiment, boosting demand for safe-haven assets like U.S. treasury, gold, and Japanese yen.

On the other hand, the United States President Donald Trump also gave warning regarding retaliation if Iran attacks the United States personnel or assets. Notably, we can expect further conflicting updates.

The United States’ two-year Treasury yields declined from 1.57% to 1.51%, the lowest since early Nov, ten-year yields from 1.88% to 1.79%. Markets are pricing a near-zero chance of rate cut at the next Fed meeting on January 29 but a terminal rate of 1.28%.

Daily Support and Resistance

  • S3 107.24
  • S2 107.9
  • S1 108.23
  • Pivot Point 108.55
  • R1 108.89
  • R2 109.2
  • R3 109.86

USD/JPY – Trading Tips

The USD/JPY is trading in a bearish channel, which is keeping it support near 107.750 for now. At the same time, the resistance is likely to be found around 108.250. The RSI and MACD are staying above 50 and 0, suggesting a bullish trend in the USD/JPY.

Technically the pair has the potential to drop further until 107.800 level, and violation of this could extend selling until 107.600. All the best!

Categories
Forex Market Analysis

Daily F.X. Analysis, January 3 – Top Trade Setups In Forex – FOMC Meeting Minutes Ahead! 

On the forex front, the U.S. Dollar Index rebounded from its six-month low, gaining 0.4% on the day to 96.80. The investor will focus on the Federal Reserve’s latest monetary policy meeting minutes due later in the day. In Asian trading hours, safe-haven demand surged as the U.S. Defense Department confirmed that the U.S. military, “at the direction of the president,” killed Iranian general Qassem Soleimani in an airstrike in Iraq.

On the forex front, the U.S. Dollar Index rebounded from its six-month low, gaining 0.4% on the day to 96.80. The investor will focus on the Federal Reserve’s latest monetary policy meeting minutes due later in the day. In Asian trading hours, safe-haven demand surged as the U.S. Defense Department confirmed that the U.S. military, “at the direction of the president,” killed Iranian general Qassem Soleimani in an airstrike in Iraq.

On the forex front, the U.S. Dollar Index rebounded from its six-month low, gaining 0.4% on the day to 96.80. The investor will focus on the Federal Reserve’s latest monetary policy meeting minutes due later in the day. In Asian trading hours, safe-haven demand surged as the U.S. Defense Department confirmed that the U.S. military, “at the direction of the president,” killed Iranian general Qassem Soleimani in an airstrike in Iraq.

Economic Events to Watch Today

Economic Calendar by TradingView

 

EUR/USD – Daily Analysis

The Euro dropped 0.4% to $1.1171. Later today, German’s December jobless rate (steady at 5.0% expected) and CPI data (+1.4% on-year expected) will be reported. The contracted manufacturing PMI from Germany at the end of 2019 weighed on single currency Euro and dragged the pair EUR/USD below 1.120 on Thursday. 

On the other hand, the U.S. dollar rose today after a week on the release of U.S. initial jobless claims for December. The jobless claims for the previous week were in line with the expectations and supported the U.S. dollar.

The labor market of the United States showed signs of improvement, and American markets reacted positively to renewed hopes of growth in consumer spending. This could mean that the U.S. economy would grow with a moderate rate in 2020.

Meanwhile, the US-China trade deal developments had given some ease to the ongoing global economic slowdown when it was confirmed that the phase-one deal between the world’s two largest economies would be signed in mid –January. The strong U.S. dollar and weak Euro dragged the EUR/USD pair at the start of the New Year.


Daily Support and Resistance

  • R3: 1.1284
  • R2: 1.1234
  • R1: 1.1203
  • Pivot Point 1.1183
  • S1: 1.1153
  • S2: 1.1133
  • S3: 1.1082

EUR/USD– Trading Tips

Technically, the pair is trading at 1.1135, which is very closer to the bearish trendline support area of 1.1125. On the lower side, the EUR/USD is likely to find support around 1.1100 areas, which previously worked as a resistance for the EUR/USD. On the higher side, the EUR/USD may find resistance near 1.1150 and 1.1185 today.  

The RSI and MACD are holding in the bearish zone, suggesting chances of the bearish trend in the EUR/USD pair. Let’s stay bearish below 1.1180 and bullish above 1.1110 today. 

GBP/USD– Daily Analysis

The British pound sank 0.8% to $1.3147, halting a six-day rally. Research firm Markit will release U.K. Construction PMI for December (45.9 expected). However, Boris Johnson has pledged that U.K. would leave E.U. on January 31 and has announced to make his Brexit deal as a law in case no transaction was secured by the end of 2020 with E.U. in terms of trade.

PM Johnson insisted that 11 months period was enough to reach a trade deal with E.U., but critics have argued that the timetable was too tight and could lead to a no-deal Brexit. This has been weighing on British Pound, and hence, GBP/USD started to fell at the start of the New Year.

Meanwhile, the U.S. dollar gained traction in the market after the losses of 6 consecutive days on Thursday. 

The trader’s comeback after the holidays gave strength to the U.S. dollar when they re-entered in the market, and the volume of trades increased. Strong U.S. dollar added in the pressure of GBP/USD and caused the pair to lose its gains from the previous day.

Daily Support and Resistance

  • R3: 1.3393
  • R2: 1.3278
  • R1: 1.321
  • Pivot Point 1.3163
  • S1: 1.3094
  • S2: 1.3047
  • S3: 1.2932

GBP/USD– Trading Tip

Just like the EUR/USD, the GBP/USD pair has also completed a bearish retracement until 1.3045, which marks 61.8% Fibonacci Retracement area. Three black crows on the 2-hour chart are signifying bearish bias among traders. At the moment, the Cable is trading around 1.3050 level, and it may surge a bit above the 1.3045 area to target 1.3150 today. 

USD/JPY – Daily Analysis

The USD/JPY closed at 108.566 after placing a high of 108.864 and a low of 108.210. Overall the trend for USD/JPY remained bearish that day.

At 5:30 GMT, the Annual Challenger Job Cuts form the United States came in as-25.2% in comparison to the previous -16.0%. At 6:30 GMT, the Unemployment Claims for the last week from the United States came in line with the expected 222K. AT 7:45 GMT, the Final Manufacturing PMI for December forms the United States was dropped to 52.4 from the expectations of 52.5 and weighed on the U.S. dollar.

The decline in the Manufacturing activity in the United States at the end of 2019 gave pressure to the U.S. dollar and dragged USD/JPY for 4th consecutive day on Thursday to the level of 108.2.

The US-China trade deal optimism gave strength to the U.S. dollar when it failed to grow the economy of China. In response to what, on Wednesday, the Chinese Central Bank announced that it was diminishing the quantity of cash that all banks need to hold as reserves around $15B. This move from China’s Central Bank was taken to improve the economic condition of the country.

Daily Support and Resistance

  • R3: 109.86
  • R2: 109.2
  • R1: 108.89
  • Pivot Point 108.55
  • S1: 108.23
  • S2: 107.9
  • S3: 107.24

USD/JPY – Trading Tips

The USD/JPY was facing triple bottom support around108.400 level, which has now been violated after the USD/JPY completed 23.6% retracement at 108.700. The USD/JPY pair is trading in a bearish channel, which is likely to keep this pair bearish below 107.900. 

At the moment, the pair may find immediate support near 107.900, and violation of this could extend sell-off until 107.500. While resistance holds around 108.250 today, consider taking sell trades below 108.200 today.

All the best!

Categories
Forex Elliott Wave

Basic Concepts of Wave Analysis

The Elliott waves reflect the behavior of the masses, which characterizes by repeating itself over time. In this educational article, we will look at the basic concepts of wave analysis.

The Elliott waves reflect the behavior of the masses, which characterizes by repeating itself over time. In this educational article, we will look at the basic concepts of wave analysis.

The Elliott waves reflect the behavior of the masses, which characterizes by repeating itself over time. In this educational article, we will look at the basic concepts of wave analysis.

The Wave Concept

The first step before to start to analyze waves is to understand what a wave is? A wave is a movement that develops a market in terms of price over time. This move has its origin in the imbalance between the buying and selling forces that interact in the market.

Glenn Neely defines a “monowave” as a movement that begins with a variation in the direction of the price. This move ends when the next price variation occurs.

A monowave can have an ascending or descending diagonal direction. The speed with which it occurs in time can vary, but in no way will this be a vertical line.

The movement that develops the price through time can slow down and then gain momentum again. This variation is part of the same wave.

The Psychology of Participants

When a market moves for a large part of the time in the same direction, the interest of public participation tends to increase.

Different information media starts to pay more attention to the same time that the market movement progresses. In this stage, the general public seeks to participate and benefit from that movement. However, when it occurs, market movers tend to start to close their positioning.

R.N. Elliott, through his study, identified specific patterns that tend to repeat over time in different markets. However, these patterns do not have the same dimension; neither happens in the same way in the markets.

On the other hand, as patterns described by Elliott have specific similar characteristics. Its knowledge and identification allow making forecasts about the next movement with a high level of precision.

Types of Waves

There exist two types of basic wave movements; these are:

  • Impulses, that move in a defined direction. Impulsive waves characterize by composed of 5 segments, of which 3 of them move in the same direction of the trend.
  • Corrections move in the opposite direction of the motive movement. Generally, it tends to progress in a sideways sequence. These formations are composed of 3 segments.

Waves Identification

The market moves across time, and each movement developed can be grouped in different time ranges, from seconds to years. Elliott defined degrees and labels to ease the study of any market through time.

When a movement is grouped in a specific timeframe, each move should be considered in terms of the relationship between price and duration of itself over time, and not analyze it in absolute terms either price or time.

Once recognized, the wave to study, the next step is its identification. This stage will require the use of labels in each part of the sequence. Labels are a tool that allows distinguishing both the impulse as the correction and the degree to which it belongs each wave.

When the wave analyst carries on the labeling process, these should be used in waves of similar size and complexity. It means that waves should be identified in the same timeframe and kept proportionality between one and another measure. The labeling process will make it easier to ask where the market is going.

Another aspect to take into consideration is the complexity of waves. In other words, complex structures are the result of a combination of the combination of three or five waves; the result of this combination is the creation of a wave of a higher degree or timeframe.

The figure represents the concepts of wave (or monowave used by Glenn Neely), impulsive and corrective wave and label.

Conclusions

The study of Elliott waves lets us understand the path that a market develops. In this way, the study and the identification of patterns described by R. N. Elliott, allows the wave analyst to answer the question of where the price is and where it possibly goes with a considerably high level of precision.

Both, the use of degrees and the labels are tools that permit maintaining a logical order in the wave analysis.

Finally, when identifying wave patterns, there must be a level of proportionality in the structure being analyzed, that is, there must be consistency in terms of price ranges and time.

Categories
Forex Market Analysis

Daily F.X. Analysis, January 2 – Top Trade Setups In Forex – Trading Back to Normal! 

The U.S. dollar weakened against its major pairs on Tuesday. The ICE Dollar Index dropped 0.2% on the day to 96.53. U.S. President Donald Trump announced he would approve the phase one trade deal with China at the White House on January 15. Meanwhile, China’s central bank announced that it would lower the required reserve ratio for commercial banks by 50 basis points from January 6, releasing 800 billion yuan of liquidity into the financial system.

The U.S. dollar weakened against its major pairs on Tuesday. The ICE Dollar Index dropped 0.2% on the day to 96.53. U.S. President Donald Trump announced he would approve the phase one trade deal with China at the White House on January 15. Meanwhile, China’s central bank announced that it would lower the required reserve ratio for commercial banks by 50 basis points from January 6, releasing 800 billion yuan of liquidity into the financial system.

The U.S. dollar weakened against its major pairs on Tuesday. The ICE Dollar Index dropped 0.2% on the day to 96.53. U.S. President Donald Trump announced he would approve the phase one trade deal with China at the White House on January 15. Meanwhile, China’s central bank announced that it would lower the required reserve ratio for commercial banks by 50 basis points from January 6, releasing 800 billion yuan of liquidity into the financial system.

Economic Events to Watch Today

Let’s took at these fundamentals.

 

 

EUR/USD – Daily Analysis

The EUR/USD currency pair hit the biggest-quarter high since the third quarter of 2017, possibly due to the optimism surrounding the United States and China trade deal. As of writing, the EUR/USD currency pair increased by 2.8% in the 4th quarter and currently trading at 1.1213. 

The pair remains above critical Fibonacci level, i.e., 61.8% Fibonacci retracement of June-October declines, at 1.1210 now. Eventually, the currency pair has started 2020 with the bullish sentiment.

The continued optimism surrounding the US-China trade deal and signs of stability in the Eurozone economy support further gains in the EUR currency. 

On the flip side, the latest report from the People’s Bank of China’s (PBOC) regarding stimulating growth is also supportive news for the EUR currency as China is Eurozone’s biggest trading partner. 

People’s Bank of China (PBOC) announced 50 basis points into the Reserve Ratio Requirement (RRR) cut, which is scheduled to deliver on January 5. Besides this, commercial bankers will hold a reserve of 12.5% of their assets from now, while 10.5% for smaller institutions. 


Daily Support and Resistance

  • S3 1.1196
  • S2 1.1205
  • S1 1.1209
  • Pivot Point 1.1213
  • R1 1.1218
  • R2 1.1222
  • R3 1.123

EUR/USD– Trading Tips

On the technical side, the long upper wick attached to Tuesday’s candle is a tell-tale sign of buyer exhaustion. Meanwhile, the 4-hour chart is reporting a bearish divergence of the relative strength index and the MACD histogram. 

 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing red and dropped to 1.3210, mainly due to the fears of hard Brexit and thin trading conditions. As of writing, the currency pair is currently trading at 1.3221 and consolidates in the range between the 1.3202 – 1.3266. The Cable recently turned into bearish mode from the two-weeks high.

The market’s risk sentiment has recovered due to increasing optimism surrounding the US-China trade deal. However, the greenback recovers at the start of 2020. As a result, the U.S. ten-year treasury yields and stocks are moderately positive.

Whereas the holidays in Japan and New Zealand will keep the market’s sentiment light, all traders will keep their eyes on the trade/Brexit. December’s manufacturing PMI data from the U.S. and the U.K. will also be the key to watch.

If no significant change comes from the UK/US data, a downbeat figure against 47.4 prior and 47.6 expected will likely increase the chances of further rate cuts from the Bank of England (BOE).


Daily Support and Resistance

  • S3 1.3217
  • S2 1.3235
  • S1 1.3244
  • Pivot Point 1.3253
  • R1 1.3262
  • R2 1.3271
  • R3 1.3289

GBP/USD– Trading Tip

On the technical side, the 61.8% Fibonacci retracement of its December 12-23 fall, to around 1.3285, restricts the pair’s immediate upside, which in turn increases the chances of a pullback to 50% and 38.2% Fibonacci retracement levels of 1.3210 and 1.3135 respectively.

The GBP/USD has broken the support mark of 1.3060, and currently, this level is expected to serve as a resistance for the GBP/USD. On the downside, the GBP/USD can exhibit further selling until the next target level of 1.2940.

USD/JPY – Daily Analysis

The USD/JPY currency pair stuck between the range of 108.60 – 108.75 and took some gain due to risk-on sentiment in the wake of the Chinese central bank’s rate cut. Moreover, the optimism surrounding the United States and China trade deal relations also play their role. 

The tensions of the Middle East and holidays in Asia’s major parts continue to limit the market’s reaction because traders are cautious ahead of the key data from China.

It is worth to mention that China’s People’s Bank of China (PBOC) gave an announcement regarding 50 basis points into the Reserve Ratio Requirement (RRR) cut, which is scheduled to deliver on January 5. As well as, major banks will hold a reserve of 12.5% of their assets from now, while 10.5% for smaller institutions. 

Moreover, the announcement came from the PBOC that financial institutions should stop doing the 1-year lending rate as its reference rate while start with the Loan Prime Rate as the base rate beginning January 1.

At the Sino-US front, the United States President Donald Trump’s tweeted about the confirmation of phase-one singing in a ceremony on January 15. Meanwhile, the Republican leader also said that he would later go to China to discuss the phase-2 of the deal. Eventually, the White House Advisor, Peter Navarro, also said that more positive deals with China are coming this 2020.

On the other hand, the market holidays in Japan and New Zealand limit the latest news reaction because the trader waits for the China Caixin Manufacturing PMI data for December. Apart from this, there is another reason behind the lack of smiling welcome to 2020 is the political war between the United States and the Middle East after the Pentagon’s defensive strikes into Iraq and Syria.

At the data front, the data becomes even more critical due to the latest official figures confirms the continued manufacturing recovery. Forecasts suggest 51.7 values against 51.8. Looking forward, the traders will closely follow the U.S. Markit Manufacturing PMI for fresh direction.


Daily Support and Resistance

  • S3 108.48
  • S2 108.61
  • S1 108.69
  • Pivot Point 108.74
  • R1 108.81
  • R2 108.86
  • R3 108.99

USD/JPY – Trading Tips

The USD/JPY was facing triple bottom support near 108.400 level, which has pushed the USD/JPY higher towards a 23.6% retracement level of 108.700. Above this, the pair has the potential to go for 38.2% Fibo levels, which marks 108.900 resistance. 

Below the 108.900 level, we can expect a slight bearish reversal in the USD/JPY currency pairs until 108.600.  

All the best!

Categories
Forex Daily Topic Forex Price-Action Strategies

Need the patience to Manage Trade by Taking Partial Profit

Partial profit taking is a handy feature that Forex traders often use. Since the Forex market is very volatile, traders take out a portion of profit and let the rest of the trade run to get them more pips. Traders need to have patience, though, if they want to manage the trade by taking a partial profit. In today’s lesson, we are going to demonstrate an example of partial profit-taking and find out the importance of having patience.

Partial profit taking is a handy feature that Forex traders often use. Since the Forex market is very volatile, traders take out a portion of profit and let the rest of the trade run to get them more pips. Traders need to have patience, though, if they want to manage the trade by taking a partial profit. In today’s lesson, we are going to demonstrate an example of partial profit-taking and find out the importance of having patience.

Partial profit taking is a handy feature that Forex traders often use. Since the Forex market is very volatile, traders take out a portion of profit and let the rest of the trade run to get them more pips. Traders need to have patience, though, if they want to manage the trade by taking a partial profit. In today’s lesson, we are going to demonstrate an example of partial profit-taking and find out the importance of having patience.

This is a daily chart. The price produces a bullish harami right at the level where it bounces earlier. The daily-H4 combination traders are to flip over to the H4 chart to find out long opportunities. Let us flip over to the H4 chart.

The H4 chart looks fantastic for the buyers. The first candle comes out as a bullish engulfing candle followed by another bullish one. The price consolidates and produces a bullish reversal candle as well. The buyers are to wait for an H4 breakout at the resistance to trigger a long entry.

The price comes down to find its support and heads towards the North to make the breakout. Look at the breakout candle, which is a good-looking bullish candle with long lower shadow. The buyers have been waiting for this. It is time to trigger a long entry.

The price keeps heading towards the North after triggering the entry. The last candle comes out as a strong bullish candle, so the buyers let their trade to go along. Let us proceed to the next chart.

The chart produces a bearish reversal candle. The price may go up to the black marked level. It means that the price has enough space to travel and offer a handful of pips. The price may make a bearish move from here as well. What do the buyers do here? They may take out a portion of the profit. They may take out a 50% profit and leave the stop loss where it is. It will allow them grabbing more pips if it keeps going towards the North. If it does not, they will not lose a dime.

The price gets caught within a bullish rectangle. Do not forget that it has been a long time that the buyers were sticking with their trade. They have been very patient. The price still does not make an upside breakout. It might go either way. Let us proceed to the next chart.

At last, it makes a breakout at the first rectangle. It consolidates again with several candles and makes another bullish breakout. Eventually, it hits the level. Traders have grabbed more pips by taking a partial profit. However, we must not miss the part that they are to be extremely patient. Taking a partial profit may help us be more consistent in making a profit, but we now know what we have to put in to do it accordingly.

 

Categories
Forex Daily Topic Forex Price-Action Strategies

Do not Mix up, Stick with the Rules

In today’s lesson, we are going to demonstrate an example of an H4 chart offering an entry. The daily-H4 chart combination traders are to keep an eye on the daily chart first. Once the daily chart produces a daily reversal candle from the support/resistance zone, they are to flip over to the H4 chart to take an entry. Today, we are going to do it in another way for a reason. We are going to start monitoring from the H4 chart. Let us start. Soon you will know why I am doing it so.

In today’s lesson, we are going to demonstrate an example of an H4 chart offering an entry. The daily-H4 chart combination traders are to keep an eye on the daily chart first. Once the daily chart produces a daily reversal candle from the support/resistance zone, they are to flip over to the H4 chart to take an entry. Today, we are going to do it in another way for a reason. We are going to start monitoring from the H4 chart. Let us start. Soon you will know why I am doing it so.

In today’s lesson, we are going to demonstrate an example of an H4 chart offering an entry. The daily-H4 chart combination traders are to keep an eye on the daily chart first. Once the daily chart produces a daily reversal candle from the support/resistance zone, they are to flip over to the H4 chart to take an entry. Today, we are going to do it in another way for a reason. We are going to start monitoring from the H4 chart. Let us start. Soon you will know why I am doing it so.

This is the H4 chart, and the red-marked level is daily support. It shows that the price is at the level of support. The last candle comes out as a bearish candle with a long lower shadow. It suggests that the level may produce a bullish reversal soon.

As expected, the chart produces a bullish engulfing candle right at the level of support. A bullish engulfing candle at a support zone has a strong message to send to the buyers that it is their territory.

The price goes towards the North for one more candle. It then has a correction and produces another bullish engulfing candle closing above the resistance. This is an ideal sequence for the price action traders to take a long entry. Let us assume that we do not trigger an entry here and have a look at the next chart.

The price keeps heading towards the North. It means that we have missed an opportunity to make some green pips here. Everything seems perfect, but why we skip taking the entry. Is it a mistake? Is not it? No, it is not a mistake. We shall not take the entry as far as the daily-H4 chart combination chart is concerned. We have started monitoring the chart from the H4 chart today. The daily-H4 chart combination traders are to monitor from the daily chart. Let us have a look at the Daily chart how it looks before flipping over to the first H4 chart here.

You see that the last daily candle comes out as a bearish one. It closes within a level, which has the potential to hold the price as a level of support. However, it has not produced a bullish reversal candle yet. Thus, they shall not flip over to the H4 chart. This is the reason that the daily-H4 chart combination traders may not take the above entry. The H4-H1 chart combination traders may not get an entry here as well since the level of support is not H4 support. The price does not react to the level on the H4 chart in recent times.  It moves towards the North by obeying other trading methods but not according to the price action chart combination trading.

We must be disciplined and must not mix up one strategy with others but stick with the rules. Sticking with the rules is one of the most important factors to be consistent in trading.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 27 – Top Trade Setups In Forex – Weaker Dollar In-Play

On the forex front, the U.S. Dollar Index was little changed at 97.65 in thin holiday trading. The Euro edged up 0.1% to $1.1101, and the British pound gained 0.3% to $1.3001. The USD/JPY climbed 0.2% to 109.54.

On the forex front, the U.S. Dollar Index was little changed at 97.65 in thin holiday trading. The Euro edged up 0.1% to $1.1101, and the British pound gained 0.3% to $1.3001. The USD/JPY climbed 0.2% to 109.54.

On the forex front, the U.S. Dollar Index was little changed at 97.65 in thin holiday trading. The Euro edged up 0.1% to $1.1101, and the British pound gained 0.3% to $1.3001. The USD/JPY climbed 0.2% to 109.54.

The U.S. Labor Department reported that initial jobless claims fell to 222,000 in the week ended December 21 (220k expected) from 235,000 in the prior week. Today, the focus is going to be on the technical side of the market as the economic calendar remains muted. 

Economic Events to Watch Today

Let’s took at these fundamentals.

  

EUR/USD – Daily Analysis

The EUR/USD edged up 0.1% to $1.1101, and the British pound gained 0.3% to $1.3001. The U.S. President Donald Trump said on Tuesday that he and Chinese President Xi Jinping would have a ceremony to sign the phase-one of the trade deal reached earlier this month. 

Mr. Lowe also added that the E.U. was failing, so they rammed the Euro in. He said that Euro was destined to fail and would have collapsed by now if it was not for massive quantitative easing by ECB.

On the other hand, the macroeconomic calendar remained empty on Thursday except for the U.S. jobless claims for the previous week. The U.S. unemployment claims during last week were recorded as 222K, which came in line with the expectations. 

Daily Support and Resistance

  • S3 1.0974
  • S2 1.1031
  • S1 1.1053

Pivot Point 1.1089

  • R1 1.1111
  • R2 1.1146
  • R3   1.1203

EUR/USD– Trading Tips

The EUR/USD is trading with the slightly bearish sentiment, and it’s very likely to test the next support area around 1.1110 on the 4-hour chart. The bearish breakout of this level can trigger further selling until 1.1085. Conversely, the bullish bias can lead the EUR/USD to 1.1125 and 1.1160 resistance levels. Let’s wait for the buy trade above 1.1110 today.  

 

GBP/USD– Daily Analysis

The GBP/USD gained 0.3% to $1.3001. Boris Johnson has announced to make his Brexit deal as law, and in case of not reaching a trade deal with E.U. by the end of next year, then U.K. will leave E.U. without any agreement. However, it was highly unlikely because PM Johnson now holds the majority of the U.K. Parliament. 

The Parliament has already approved his deal for leaving E.U., and there are fewer chances that E.U. & U.K. will not reach a trade deal. Furthermore, PM Johnson has also said that he would make sure the departure of the U.K. from the European Union on January 31.

The British economy has been showing weaknesses for some time, and it is possible that Bank of England would start easing its monetary policy soon, which will drag the GBP/USD pair back from 1.30 level.

In the U.K., the British Banker’s Association will report November finance loans for housing (41.2 billion pounds expected).

Daily Support and Resistance

  • S3 1.2757
  • S2 1.2901
  • S1 1.2955

Pivot Point 1.3044

  • R1 1.3099
  • R2 1.3188
  • R3 1.3331

GBP/USD– Trading Tip

The GBP/USD has broken the support mark of 1.3060, and currently, this level is expected to serve as a resistance for the GBP/USD. On the downside, the GBP/USD can exhibit further selling until the next target level of 1.2940.

The RSI and MACD have now crossed over 50 and 0 zone, suggesting odds of a bullish reversal in the GBP/USD pair. Consider staying bullish above 1.2995 and bearish below 1.3100 today. 

USD/JPY – Daily Analysis

The USD/JPY fell to 109.48. This morning, official data showed that Japan’s jobless rate dropped to 2.2% in November (2.4% expected and in October), while industrial production slid 0.9% on the month (-1.0% expected). Also, retail sales grew 4.5% (+5.0% expected).

The Bank of Japan Governor Haruhiko Kuroda said on Thursday that the central bank would ease its monetary policy further without hesitation if the momentum toward its 2% inflation goal came under threat.

He also offered a brighter view of the global economic outlook and said that the Bank of Japan would not rush to change its current policy for now. After a week after Central bank kept its short term rates target at -0.1% and long-term at 0%, Kuroda said that the trend of Japan’s economy was at moderate growth.

However, the easing of global trade tensions has reduced the chances that the central bank would ease its monetary policy further. Reduction in uncertainties over the US-China trade war has played an essential role in facilitating global economic conditions.

Daily Support and Resistance

  • S3 108.56
  • S2 108.97
  • S1 109.17

Pivot Point 109.38

  • R1 109.58
  • R2 109.8
  • R3 110.21

USD/JPY – Trading Tips

The USD/JPY has already completed the 38.2% Fibonacci retracement around 109.200 level. Now, this level is supporting the safe-haven pair along with an immediate resistance around 109.350. 

The RSI and MACD are suggesting chances of further selling in the USD/JPY pair. The pair may trade bearish below 109.50 to target 109.200 and even below to 108.950 today. 

All the best!

Categories
Forex Elliott Wave

Introduction to Wave Analysis

To think in a scientific and objective method to analyze and forecast using the Elliott Wave Theory could sound impossible. However, Glenn Neely was the first one to develop it. This educational article is the first part of a series dedicated to exposing his contribution towards the Wave Analysis.

To think in a scientific and objective method to analyze and forecast using the Elliott Wave Theory could sound impossible. However, Glenn Neely was the first one to develop it. This educational article is the first part of a series dedicated to exposing his contribution towards the Wave Analysis.

To think about a scientific and objective method to analyze and forecast using the Elliott Wave Theory could sound impossible. However, Glenn Neely was the first one to develop it. This educational article is the first part of a series dedicated to exposing his contribution towards the Wave Analysis.

The Background

The Elliott Wave Principle is part of nature and can be applied to the financial markets as a socio-economic phenomenon. The result of this application is a graphic representation of mass psychology.

The interaction of different market participants reflects prices into identifiable patterns. These patterns tend to repeat across time and allow us to foresee the most likely next movement of the market.

In financial markets, the price does not have an absolute top or bottom. The application of the Elliott Wave can help to determine the time and price where a trend could start or end. The study and analysis of specific patterns or price structures support this analysis once formation ends.

Why the Wave Theory?

The comprehension of the psychology of the masses allows the trader to participate in any financial market. For example, stock markets, commodities, currency market, among others.

Compared with traditional technical analysis, the wave theory is based on the perspective of price behavior over time, not on the identification of a specific pattern, for example, a head and shoulders pattern, double or triple top or bottom, etc.

It should be noted that the wave theory is adaptable over time. Further, although wave patterns repeat over time, there are not two markets that make the same move at the same magnitude.

Pros and Cons

  • Panoramic overview, Wave theory knowledge provides an overview of the market and what should be the most probable next path.
  • To know the psychology of masses and the wave structures allows us to understand the market expectations. Further, it will enable us to identify the phenomena as fear and euphoria.
  • Complexity, the wave theory is probably the most complex method of analysis in its understanding.
  • Flexible mentality, the wave analysis requires to detach from the mass opinion, and comprehend what stage runs the market.
  • Time available to study and apply this method.
  • Indetermination when a price structure is incomplete. However, once the wave pattern is complete, the structure and the potential next move is clear.

Conclusions

The wave theory is a complete method that can represent the psychology of masses in identifiable patterns. This method provides a comprehensive perspective of the market situation and the most likely next move.

The difficulty in the application of wave theory requires not only to learn the basic concepts. It also is fundamental to develop the capacity of abstraction to visualize the movements in progress. This capability increases across time and continuous study of different markets and conditions.

Categories
Candlestick patterns Forex Daily Topic

Candlestick Trading Patterns V – The Long Black-bodied Candlestick

In the previous article, We talked about candles with long and white bodies and discovered how such a candle could provide us with very useful information about the hidden properties of the market situation and the psychology of its participants.

In the previous article, We talked about candles with long and white bodies and discovered how such a candle could provide us with very useful information about the hidden properties of the market situation and the psychology of its participants.

In the previous article, We talked about candles with long and white bodies and discovered how such a candle could provide us with very useful information about the hidden properties of the market situation and the psychology of its participants.

Actually, a black body in a currency pair is equivalent to a white body in the reciprocal pair. That is, the black body of the EUR/USD is the white body of the USD/EUR. In any case, in Forex, we can also operate with commodities, energy, or stock CFDs, therefore in this article, we will develop the properties and informative potential offered by the long-black candle bodies.

As we said in the article on long-white candles, the market can be described by two types of movement: impulsive movement and corrective movement. Large black-bodied candles (like the long-white candles) belong to the impulsive movement category, and as such, are indicators of a trend, in this case, a bearish one.

A black body in a topping area

As in the case of the white candle, a long black candle in a topping zone is a clear warning of the trend halt. For the warning to be stronger, the black candle must clearly be longer than the candles that preceded it. A black candle of this kind indicates that the bears have taken control.

Image 1 – The long black-bodied candle appearing after an uptrend.

In the previous image, we can see that the black body erased the gains acquired by the preceding five candlesticks showing a rush of close orders. Then, after the initial selloff, a short recovery but buyers were not able to move the price to new highs.

A long Black-bodied candle confirms resistance

If a top consolidation area appears, and, then, a black body shows up, it is an extra confirmation that the resistance area will hold, and the trend is reversing.

Image 2 – The long black-bodied candle appearing at a resistance level

On the picture above, the price topped and retraced, followed by a recovery touching but not exceeding the previous top close. Then the engulfing black body started up at the same level, but it created an exceedingly large body surpassing the previous retracement low and closing near it. That was the confirmation for bears to push the market down.

The Long Black-bodied candle breaks a support

The break of a support level by a long black candlestick is terrible news for bulls. This situation should be considered more bearish than other less evident breakouts.

Image 3 – The long black-bodied candle breaking support trendline and SMA 50-SMA

In the case of the preceding image, which corresponds to a 2H Euro Stoxx 50 chart, the large-bodied candle not only broke the ascending trend line but, also, the 50-Period SMA. This confirmation is what bears needed to move down the price.

Long Black-bodied Candle as Resistance

The top and open of a long black-bodied candle will act as resistance levels. That situation happens when the price retraces the complete impulse. According to Mr. Nison, it is more typical the retracement to stop near 50% of the candle’s body. In consequence, a typical strategy following the trend is to place a sell-short position at that level with a stop-loss level over the top of the candle.

 

Image 4 – The top of a black-bodied candle as a resistance

Conclusions

A large black body is a clear indication of a bear trend, especially if it appears at previous tops or resistance areas. We should always pay attention to a black body and analyze the implications of it in terms of market sentiment, and also its meaning as a new resistance area. Finally, from the point of view of a price-action trader, large black bodies are an opportunity to open a position with the trend, after waiting for a pullback. Not always the pullback will happen, but when it does, it is a low-risk place to create a short entry.

 

Categories
Forex Market Analysis

Daily F.X. Analysis, December 23 – Top Trade Setups In Forex – U.S. Durable Goods Ahead! 

On the forex front, the U.S. Dollar Index rose 0.3% to 97.68. The euro slipped 0.4% to $1.1079. The German GfK Consumer Confidence Index slipped to 9.6 for January (9.8 expected) from 9.7 in December.

On the forex front, the U.S. Dollar Index rose 0.3% to 97.68. The euro slipped 0.4% to $1.1079. The German GfK Consumer Confidence Index slipped to 9.6 for January (9.8 expected) from 9.7 in December.

On the forex front, the U.S. Dollar Index rose 0.3% to 97.68. The euro slipped 0.4% to $1.1079. The German GfK Consumer Confidence Index slipped to 9.6 for January (9.8 expected) from 9.7 in December.

The British pound was little changed at $1.3004. U.K. House of Commons voted 358 to 234 in support of Prime Minister Boris Johnson’s Brexit deal. 

Regarding U.S. economic data, third-quarter GDP growth was confirmed at an annualized rate of 2.1% on the quarter (as expected). Meanwhile, personal income rose 0.5% on month in November (+0.3% expected) and personal spending grew 0.4% (as expected). Later today, economists expect durable goods orders to rise 1.5% on month in November, while new home sales are anticipated to fall to 730,000 units.

Economic Events to Watch Today

Let’s took at these fundamentals.

 

EUR/USD – Daily Analysis

The EUR/USD currency pair flashing red and dropped to 1.1080 and failed to extend Friday’s declines from 100- Day Moving Average. As of writing, the EUR/USD currency pair is currently trading at 1.1078 and consolidates in the range between the 1.1073 – 1.1083.

At the yearly front, the EUR/USD currency pair has lost a significant part of the gains during the January 2017 – February 2018 period and trading bearish while ending 2019. As of now, the pair is trading near the 1.1082, representing a 3.17% decline on a year-to-date basis. Notably, the pair dropped by 14.14% during 2018.

The greenback strength held ground against the EUR currency over intensifying trade tensions, which pushed Germany to the recession. Besides this, the European Central Bank further delivered the rate cut into the negative territory during September and declared a fresh bond-buying program.

The market is expecting that the EUR/USD currency pair may pick up the strong bullish buying in 2020. Whereas, the continued gains could remain difficult if the Eurozone economic data do not show any substantial progress.

    


Daily Support and Resistance

  • S3 1.0974
  • S2 1.1031
  • S1 1.1053

Pivot Point 1.1089

  • R1 1.1111
  • R2 1.1146
  • R3    1.1203

EUR/USD– Trading Tips

The EUR/USD is trading with the slightly bearish sentiment, and it’s very likely to test the next support area around 1.1110 on the 4-hour chart. The bearish breakout of this level can trigger further selling until 1.1085. Conversely, the bullish bias can lead the EUR/USD to 1.1125 and 1.1160 resistance levels. Let’s wait for the sell trade below 1.1110 today. 

 

GBP/USD– Daily Analysis

The GBP/USD currency pair failed to extend its bearish weekly streak despite the United Kingdom’s political uncertainty. As of writing, the GBP/USD currency pair is currently trading at 1.3013 and consolidates in the bearish range between the 1.2990 – 1.3017. Moreover, the cables traders seem to avoid declining political optimism in the United Kingdom.

The British pound was little changed at $1.3004. U.K. House of Commons voted 358 to 234 for Prime Minister Boris Johnson’s Brexit deal.

The United Kingdom Prime Minister Boris Johnson succeeded in getting his European Union Withdrawal agreement bill passed from the new Parliament. Whereas, the House of Common has not passed the bill so far, but will have lesser stops considering the Tories majority.

The U.S. Commerce Department will release November durable goods orders (+1.5% on month expected) and new home sales (730,000 units expected). The Federal Reserve Bank of Chicago will post November National Activity Index (-0.31 expected).


Daily Support and Resistance

  • S3 1.2757
  • S2 1.2901
  • S1 1.2955

Pivot Point 1.3044

  • R1 1.3099
  • R2 1.3188
  • R3 1.3331

GBP/USD– Trading Tip

The GBP/USD has broken the support mark of 1.3060, and currently, this level is expected to serve as a resistance for the GBP/USD. On the downside, the GBP/USD can exhibit further selling until the next target level of 1.2940.

The RSI and MACD have now crossed over 50 and 0 zone, suggesting odds of a bullish reversal in the GBP/USD pair. Consider staying bullish above 1.2995 and bearish below 1.3100 today. 

USD/JPY – Daily Analysis

The USD/JPY was broadly flat at 109.44. The USD/JPY currency pair flashing green and picked up the bids to 109.50, mainly due to the United States President Donald Trump Weeknd’s positive comments. The pair also got support from the United States upbeat data, which turned the market risk-on. 

On the Weekend holidays, the United States President Donald Trump said: “We have just achieved progress on the trade deal, and we will be signing it very soon. The same motivates the risk-takers to start the holiday-shortened week on a positive side.

It is worth to mention that the Fridays strong United States GDP hit down the talks of the slowdown. Moreover, the reason behind the greenback strength was the upbeat data from the U.S., including Personal Consumption Expenditure and the Michigan Consumer Sentiment Index.

Looking forward, the market traders will take note of the November month U.S. Durable Goods Orders, up for publishing on Monday, to verify the fresh, positive data from the U.S. The report of Durable Goods Orders is anticipated to increase by 1.9% from downwardly revised 0.5% previous.

Besides this, the November month Chicago Fed National Activity Index, as well as New Home Sales, will also entertain traders before spreading the holiday mood. Whereas the activity gauge is anticipated to recover to -0.09 against -0.71 earlier, the housing data could soften to 0.728M against 0.733M prior.


Daily Support and Resistance

  • S3 108.56
  • S2 108.97
  • S1 109.17

Pivot Point 109.38

  • R1 109.58
  • R2 109.8
  • R3 110.21

USD/JPY – Trading Tips

The USD/JPY has already completed the 38.2% Fibonacci retracement around 109.200 level. Now, this level is supporting the safe-haven pair along with an immediate resistance around 109.350. 

The RSI and MACD are suggesting chances of further selling in the USD/JPY pair. The pair may trade bearish below 109.50 to target 109.200 and even below to 108.950 today. 

All the best!

Categories
Forex Price-Action Strategies

The H4-H1 Chart Combination Keeps You Busy Even in a sluggish Market

Usually, the Forex market gets sluggish in December. It gets tough for traders to find out a good entry on major charts as far as price action is concerned. However, the H4-H1 chart combination still offers a few entries. In today’s lesson, we are going to demonstrate an example of an entry based on the H4-H1 chart, which was offered in mid-December 2019.

Usually, the Forex market gets sluggish in December. It gets tough for traders to find out a good entry on major charts as far as price action is concerned. However, the H4-H1 chart combination still offers a few entries. In today’s lesson, we are going to demonstrate an example of an entry based on the H4-H1 chart, which was offered in mid-December 2019.

Usually, the Forex market gets sluggish in December. It gets tough for traders to find out a good entry on major charts as far as price action is concerned. However, the H4-H1 chart combination still offers a few entries. In today’s lesson, we are going to demonstrate an example of an entry based on the H4-H1 chart, which was offered in mid-December 2019.

Let us proceed.

We’re looking at the H4 chart. The last candle makes a strong breakout at the last swing low. Traders are to wait for consolidation and H1 breakout to go short on the pair. Let us find out whether it starts consolidating from right there or comes further down.

It comes down further for one more candle. It means traders are to wait longer. However, the nearest support is far enough. Thus, the price has a lot of space to travel towards the South.

The price starts consolidating and produces two bullish candles consecutively. The pair is to make a big decision from here. Does it continue its journey towards the North, or does it find its resistance nearby? Let us find out from the next chart.

The price finds its resistance and produces a bearish engulfing candle. The sellers have been waiting for this. It is time for the traders to flip over to the H1 chart and wait for an H1 bearish breakout to take a short entry. Let us find out how the H1 chart looks.

The H1 chart shows that the price produces an engulfing bearish candle and heads towards the South. The price on this chart makes a breakout at the red marked support level. It may make the traders wait for, or it may make a breakout straightway. Let us what the price does here.

The price makes an explicit bearish breakout. The breakout candle looks very strong, barely having a lower shadow. A short entry may be triggered right after the candle closes by setting Stop Loss above the level where the H4 chart produces the bearish reversal candle. Let us now find out how it ends.

The price heads towards the South with good bearish momentum. It produces a bullish engulfing candle having a long upper shadow. It may be time for the sellers to close the whole entry since it is the month of December.

As mentioned, in December, traders do not get as many entries as they usually get. However, the H4-H1 chart combination may offer a few entries occasionally even when the market gets sluggish.

Categories
Elliott Wave Guide Forex Elliott Wave

Advanced Elliott Wave Principle Concepts Guide

We have finished the section that covers advanced concepts of the Elliott Wave Principle. These concepts are unfolded, including the following aspects.

We have finished the section that covers advanced concepts of the Elliott Wave Principle. These concepts are unfolded, including the following aspects.

We have finished the section that covers advanced concepts of the Elliott Wave Principle. These concepts are unfolded, including the following aspects.

  1. Correlations, also known as Intermarket Analysis. In this section, we reveal how to use the relationship between markets.
  2. The use of technical indicators. This section divided two parts reveals two of the most popular oscillators used in the EW analysis.
    1. Awesome Oscillator (AO).
    2. Relative Strength Index (RSI).
  3. Corrective Patterns. Divided into three parts, expands the concepts discussed in the essential section.
    1. Flat Pattern.
    2. Corrective waves and the flag pattern.
    3. Analysis and trading with triangles.
  4. Markets and Speed. Every market vibes with speed. In this section unveiled into two parts shows how to analyze fast markets.
    1. Price and Speed relationship.
    2. How to Disclose the Speed.
  5. How to Create Spreads. In this section, we expose how we can create spreads to find strength and weakness between different markets.
  6. The Alternation Principle. This article shows how the market alternates across time.
  7. Forecasting with the Elliott Wave Principle. In this part, we present a way of how to realize a forecast and to set different scenarios using key concepts of the EW Principle.
  8. Examples. In this four-part section, we apply different concepts discussed in the real market to make forecasts.
    1. The USDJPY and its 3-years triangle.
    2. NZDUSD long term wave analysis.
    3. Dollar Index long term wave analysis.
    4. DAX and an Elliott Wave scenario planning.
Categories
Forex Daily Topic Point and Figure

Point & Figure: Profit Target and Stop-loss Settings Made Simple

 

 

Something new traders struggle with is trying to find appropriate profit targets and stop targets. Point & Figure charts make a process that is a struggle into something that is very, very easy. Two methods can be used to identify profit targets on a Point & Figure chart: Vertical Method and Horizontal Method. I am only going to show you the Vertical Method because the entire series I’ve done here has strictly been on the use of 3-box reversal Point & Figure charts.

The Horizontal Method can be found in Jeremy Du Plessis’s work. The Horizontal Method is more applicable to the most traditional form of Point & Figure – the 1-box reversal chart. There’s a formula for calculating the profit target on Point & Figure. Don’t get freaked about the word formula – the process is very simple.

Long Profit Target
Long Profit Target

Buy/Long Profit Target = (number of Xs in prior column * box size) * (reversal amount) + lowest O of the current O column.

Short Profit Target
Short Profit Target

Short Profit Target = (Number of Os in prior column * box size) * (reversal amount) – highest X of the current X column.

 

Stops

Regarding stops, I always stick with the reversal amount – so my risk is always, no matter the trade, 3-boxes worth. On my standard 20-pip box size Point & Figure charts, 60 pips are my max loss on any trade. Some authors suggest putting the stop one box below (or above) the reversal amount, but I’ve always stuck with the reversal amount being my stop.

The Blind Entry Trading System

I want to tell you something that might be a little mind-boggling. I’ve been teaching Point & Figure to another class this year, and we’ve focused on live testing the ‘blind entry’ trading strategy in Point & Figure – which is nothing more than taking every single multiple-top or multiple-bottom break without any other filter. We focused on the following pairs:

GBPUSD, AUDUSD, USDCAD, USDJPY, GBPJPY, EURGBP, EURUSD, and AUDJPY.

We did not use any profit targets. We exited trades only when the reversal column appeared. So our losses were always limited to just 60 pips on a 20-pip/3-box reversal Point & Figure chart. We traded from March 1st, 2019 through December 7th, 2019. The results below detail the net pips at the end of our trading period:

GBPUSD = +1,060 pips

AUDUSD = -60 pips

USDCAD = +200 pips

UDSJPY = +1060 pips

GBPJPY = + 2,620 pips

EURGBP = +480 pips

EURUSD = -280 pips

AUDJPY = +1,200 pips

Net Total pips = +6,280 (the average for the class was +5443 pips).

To put that into perspective, with a 0.1 (10,000 unit) Lot size, that’s a net $6,280.00. A full Lot would have equaled a net $62,800. I had one woman who traded an odd 3.33 Lots as her standard position size (I guess it is not that odd if you think about it). She led the pack with her real net pip count at +6,880 – with a 3.33 lot size that meant she made a net $229,104. I was and remain very envious of her performance – she should probably be teaching!

Sources:

Dorsey, T. J. (2013). Point and figure charting: the essential application for forecasting and tracking market prices (4th ed.). Hoboken, NJ: John Wiley & Sons.

Kirkpatrick II, C. D., & Dahlquist, J.R. (2016). Technical Analysis: The Complete Resource for Financial Market Technicians (Third). Old Tappan, NJ: Pearson.

Plessis, J.J. (2012). Definitive Guide to Point and Figure – a comprehensive guide to the theory (2nd ed.). Great Britain: Harriman House Publishing.

DeVilliers, V., & Taylor, O. (2008). Point and figure charting. London: Financial Times/Prentice Hall.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 20 – Top Trade Setups In Forex – GDP Figures in Highlights! 

On the forex front, the British pound slid 0.5% to a two-week low of $1.3017, posting a three-day decline. Official data showed that U.K. retail sales dropped 0.6% on month in November (+0.2% estimated), falling for a fourth straight month–the worst run since 1996. On the other hand, the Bank of England held its benchmark rate at 0.75% unchanged as expected.

On the forex front, the British pound slid 0.5% to a two-week low of $1.3017, posting a three-day decline. Official data showed that U.K. retail sales dropped 0.6% on month in November (+0.2% estimated), falling for a fourth straight month–the worst run since 1996. On the other hand, the Bank of England held its benchmark rate at 0.75% unchanged as expected.

On the forex front, the British pound slid 0.5% to a two-week low of $1.3017, posting a three-day decline. Official data showed that U.K. retail sales dropped 0.6% on month in November (+0.2% estimated), falling for a fourth straight month–the worst run since 1996. On the other hand, the Bank of England held its benchmark rate at 0.75% unchanged as expected.

The European Commission will release the eurozone’s December Consumer Confidence Index (-7.0 expected). In Germany, the GfK Consumer Confidence Index for January will be published (9.8 expected).

Economic Events to Watch Today

Let’s took at these fundamentals.

EUR/USD – Daily Analysis

The EUR/USD pair exhibit bearish bias to hit the low level of 1.1117 from the Tuesday high of 1.1175 ahead of United States data release. At the moment, the EUR/USD pair is currently trading at 1.1116 and consolidates in the range between the 1.1114 – 1.1126. The pair has dropped but still staying inside the one-week-old symmetrical triangle.

The EUR/USD currency pair’s weekly candle now has a long upper shadow, which is a significant clue of bulls losing steam above the resistance of the trendline dropping from September 2018 and June 2019 highs.

The currency pairs trendline resistance is currently seen at 1.1148. The pair had increased to a high of 1.1175 previously but dropped again below 1.1148 on the next day. As a result, the consecutive failure of buyers to beat the convincing break above the trendlines has supported the negative risks, which may increase if the United States data ignore past expectations. The data is scheduled to release today.

If the personal spending and Core PCE release unexpectedly come out better, they will validate the Federal Reserve’s recent decision to pause the rate cuts and push the greenback higher.

On the other hand, a big miss may fuel the greenback sell-off. Looking forward, the EUR/USD currency pair will turn bullish mainly if the pair beats the weekly close above the trendline hurdle at 1.1148.

    

Daily Support and Resistance

  • S3 1.1108
  • S2 1.1112
  • S1 1.1114

Pivot Point 1.1116

  • R1 1.1118
  • R2 1.112
  • R3 1.1124

EUR/USD– Trading Tips

On Friday, the EUR/USD continues to trade mostly sideways, while investors await the U.S. GDP figures. The EUR/USD is trading with slightly bearish sentiment, and it’s very likely to test the next support area around 1.1110 on the 4-hour chart. 

The bearish breakout of this level can trigger further selling until 1.1085. Conversely, the bullish bias can lead the EUR/USD to 1.1125 and 1.1160 resistance levels. Let’s wait for the sell trade below 1.1110 today. 

 

GBP/USD– Daily Analysis

The GBP/USD currency pair hit the bullish track and recovered to 1.3020, mainly due to optimism surrounding the Brexit due to the voting on the United Kingdom Prime Minister Boris Johnson’s WAB. As of writing, the GBP/USD currency pair is currently trading at 1.3022. The GBP/USD traders seem confident ahead of the House of Commons voting on the UK PM’s Brexit bill.

The European Union Withdrawal Agreement Bill (WAB) will allow the United Kingdom to leave the European Union on January 31 while it’s also arranging the stage for no transition period beyond December 2020. The bill will also allow more British judges to leave from the previous rulings of the European Union’s top court.

The U.K. Office for National Statistics will release final readings of third-quarter GDP (+1.0% on-year expected), current account (15.5 billion pounds deficit expected), and November public sector net borrowing excluding banking groups (6.1 billion pounds expected).

The voting result will be released at 15:00 GMT on Friday. Traders will likely watch the final figures of the United Kingdoms’ 3rd-quarter Gross Domestic Product (GDP) for new directions. According to the forecast, there will no change in the GDP figures on QoQ and YoY basis that are 0.3% and 1.0%, respectively.

Daily Support and Resistance

 

  • S3 1.2757
  • S2 1.29
  • S1 1.2955

Pivot Point 1.3044

  • R1 1.3098
  • R2 1.3188
  • R3 1.3331

GBP/USD– Trading Tip

The GBP/USD has broken the support mark of 1.3060, and currently, this level is expected to serve as a resistance for the GBP/USD. On the downside, the GBP/USD can exhibit further selling until the next target level of 1.2940.

The RSI and MACD have now crossed over 50 and 0 zone, suggesting odds of a bullish reversal in the GBP/USD pair. Consider staying bullish above 1.2995 and bearish below 1.3100 today. 

USD/JPY – Daily Analysis

The USD/JPY closed at 109.366 after placing a high of 109.685 and a low of 109.180. Overall the trend for USD/JPY on Thursday remained bearish after the Bank of Japan kept its rates unchanged on Thursday at minus -0.1% the pair USD/JPY dipped in the financial market. 

The BOJ voted 7 to 2 to keep its short-term interest rates at -0.1% and the long-term rates at 0%. According to the Central Bank of Japan, the economy was likely to continue on a moderate expanding trend. The impact of the global economic slowdown on domestic demand was expected to be limited in the future. Although the fears of global economic slowdown still prevail in the market.

Recently, the government of Japan implemented a $122B fiscal stimulus package to aid economic growth. Japanese debt levels highly criticized this idea, but it was a wise decision as the government implemented a consumer tax hike after that.

The global economic outlook was raised after the phase-one deal between the U.S. & China and the victory of Johnson in Britain elections. Bank of Japan revised its GDP forecast for next year to 1.4% from the previous prediction of 1.2%.

The positive gestures and statements in Bank of Japan’s monetary policy statement on Thursday weighed on USD/JPY prices.

Adding in the downward trend of pair USD/JPY was the U.S. economic data that day. At 18:30 GMT, the Current Account Balance for the 3rd Quarter of the U.S. declined to -124B from -122B expectations. The Unemployment claims from last week surged to 234K from expected 225K. The C.B. Leading Index also fell to 0.0%, and the Existing Home Sales dropped to 5.35M from 5.44M of expectations.

On the other hand, the U.S. House of Representatives voted in favor of passing the impeachment of Donald Trump and made him third U.S. president to be impeached. However, the U.S. Senate of Republicans is still to vote on this, and it is expected that they will not vote against Trump.

Daily Support and Resistance    

  • S3 108.56
  • S2 108.97
  • S1 109.17

Pivot Point 109.38

  • R1 109.58
  • R2 109.79
  • R3 110.21

USD/JPY – Trading Tips

The USD/JPY has already completed the 38.2% Fibonacci retracement around 109.200 level. Now, this level is supporting the safe-haven pair along with an immediate resistance around 109.350. 

The RSI and MACD are suggesting chances of further selling in the USD/JPY pair. The pair may trade bearish below 109.50 to target 109.200 and even below to 108.950 today. 

All the best!

Categories
Point and Figure

Point & Figure: Applied Trading Strategies and Theory

Of all the chart styles and trading styles I’ve used in my years of trading, Point & Figure is by far the least stressful and most profitable I’ve ever used. Point & Figure, for a trader, I believe, is the most stress-free form of charting available.

Bearish Catapult Pattern
Bearish Catapult Pattern

Of all the chart styles and trading styles I’ve used in my years of trading, Point & Figure is by far the least stressful and most profitable I’ve ever used. Point & Figure, for a trader, I believe, is the most stress-free form of charting available.

Of all the chart styles and trading styles I’ve used in my years of trading, Point & Figure is by far the least stressful and most profitable I’ve ever used. Point & Figure, for a trader, I believe, is the most stress-free form of charting available.

There is no need for economic reports or balance sheets. Point & Figure is concise, logical, and it eliminates guesswork and emotion. It is the most scientific and fact-based chart form. From an analysis perspective, I believe chart forms that include time, volume, and price are superior to Point & Figure (Japanese Candlesticks and American Bar Charts). From a trading perspective, Point & Figure is superior to all. I believe this because trading is an emotional career, and the more we can filter out the stimuli that cause emotional reactions, the better traders we become.

This section will review common patterns and strategies for Point & Figure charts. These are limited to 3-box reversal charts. I have debated whether to write about 1-box and 2-box reversal charts, but I have decided against it. The reason is that I do not use them, I stick with 3-box reversal charts only for Forex markets.

The following are chart patterns, as described in the books I’ve identified as sources at the end of these articles. Many of these patterns I’m going to show are from Dahlquist and Kirkpatrick’s phenomenal book, Technical Analysis – The Complete Resource for Financial Market Technicians (3rd Edition). If you want to get an understanding of how vital and powerful Point & Figure is, compare the size of the Point & Figure chapter against all the other sections in that book (consequently, that book is part of the required reading for the CMT certification.

I have ping-ponged the idea of skipping some of the patterns in Dahlquist’s and Kirkpatrick’s book because some of the patterns were determined to be ineffective in their cited research. The sources Kirkpatrick and Dahlquist’s reference showed pattern results in equity markets. Equity markets and Forex markets are not the same, so while some of the patterns described in Technical Analysis indicate they should be ignored, I am going to include them because they may work better in Forex markets. You will find this a constant throughout technical analysis literature: the positive expectancies of patterns, strategies, and theories have almost exclusively been tested in equity markets.

 

Trap Patterns

I am starting off our study with a pattern that you will frequently encounter. Trying to avoid them is near impossible, but because losses are extremely limited in Point & Figure, even successive traps generate minimal losses compared to gains. But I believe it is imperative to understand that traps do occur, they can be frequent, and you will have to get used to them. There are two types of traps, bull traps, and bear traps. Traps occur when a breakout from a multiple top or bottom creates an entry, but price changes direction, and the next column generates a trade entry on the opposite side of the trade.

Bull Trap Pattern
Bull Trap Pattern

Bull Trap: Bull traps occur when price breaks a multiple top and creates a buy entry, but then the X column reverses to an O column that creates a new short entry.

Bear Trap Pattern
Bear Trap Pattern

Bear Trap: Bear traps occur when price breaks a multiple bottom and creates a short entry, but then the O column reverses to an X column that creates a new buy entry.

 

Rising Bottoms

Rising Bottoms Pattern
Rising Bottoms Pattern

A rising bottom pattern may look like a regular double top pattern, but it is different. It is different because of the columns of Os in this pattern. The Rising Bottoms pattern has at least four columns with sequential higher lows. The last O column must have a higher low than the first column of Os, and the previous X column must have a higher low than the first X column. The long entry occurs when the double top is broken.

 

Declining Tops

Declining Tops Pattern
Declining Tops Pattern

The Declining Tops pattern is the inverse of the Rising Bottoms pattern. The Declining Tops pattern has at least four columns with sequential lower highs. The last X column must have a lower high than the first column of Xs, and the previous O column must have a lower high than the first O column. The short entry occurs when the double bottom is broken.

 

Split Tops and Bottoms

Split Bottom Pattern
Split Bottom Pattern
Split Top Pattern
Split Top Pattern

Split Tops and Bottoms generally occur in the form of Split Triple Tops and Split Triple Bottoms. Split Tops and Bottoms have a ‘gap’ in between the tops and bottoms. How many columns do you consider in the formation of a Split Top or Bottom? It is generally believed that 6 to 10 columns are appropriate for finding Split Tops and Bottoms. We trade Split Tops and Bottoms patterns the same way we trade any other multiple top or bottom.

 

Triangles

Triangles
Triangles

Triangles are common patterns you will find on Point & Figure charts. But it is important to remember that just because price breaks through a triangle, that doesn’t mean that we take an immediate entry on the break – we still have to wait for a multiple top or bottom to be broken.

 

Catapults

Bullish Catapult Pattern
Bullish Catapult Pattern

Catapults can be a somewhat confusing pattern, but they are compelling. The Catapult Pattern was one of the few patterns in Technical Analysis that generate equally positive returns on the short side of equity markets as it did on the long side. The strength of these patterns is related to the psychological component of trading. Catapults generally show up after a trendline break or after multiple top or bottom (at least a triple top/bottom or a split triple top/bottom). Catapults are most often pullback/throwback trades, and that is why they are so powerful.

 

Spike Patterns

Bearish Spike Pattern
Bearish Spike Pattern
Bullish Spike Pattern
Bullish Spike Pattern

Spike Patterns (along with Pole Patterns) are the only patterns that have a small amount of subjectivity and interpretation. Even Dalquist and Kirkpatrick could not identify consensus from other Point & Figure experts on what constitutes a Spike Pattern. A spike pattern is a massive column that is around 15 to 20 boxes in length. This is my absolute favorite pattern because it has such an enormous reward and minimal risk. This is also only one of two patterns (the other being the Pole Pattern), where the entry does not require a multiple top or bottom. Spike patterns are entered immediately on the reversal column.

 

Pole Patterns

Pole Pattern
Pole Pattern

Pole patterns are hands down the most subjective pattern in Point & Figure. The problems with identifying with what qualifies as a Pole comes down to broad interpretation. A Pole is very much like a Spike Pattern in that it’s a substantial column, but it is smaller than a Spike. Poles are any column that is less than sixteen boxes but also more significant than ‘normal’ size columns. One of the identifying factors of a Pole Pattern is the same as a Spike Pattern: they show up at the end of swings. Trading a Pole Pattern is relatively simple. All we do is measure the length of the Pole with a Fibonacci retracement tool (doesn’t matter where you start) and then enter long or short when price moves beyond the 50% level.

 

 

Sources:

Dorsey, T. J. (2013). Point and figure charting: the essential application for forecasting and tracking market prices (4th ed.). Hoboken, NJ: John Wiley & Sons.

Kirkpatrick II, C. D., & Dahlquist, J.R. (2016). Technical Analysis: The Complete Resource for Financial Market Technicians (Third). Old Tappan, NJ: Pearson.

Plessis, J.J. (2012). Definitive Guide to Point and Figure – a comprehensive guide to the theory (2nd ed.). Great Britain: Harriman House Publishing.

DeVilliers, V., & Taylor, O. (2008). Point and figure charting. London: Financial Times/Prentice Hall.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 19 – Top Trade Setups In Forex – Brace for BOE Interest Rate

The U.S. Dollar Index was up for a second day, rising 0.2% to 97.40. The British pound lost 0.3% to $1.3085. Official data showed that U.K. core CPI grew 1.7% on year in November (as expected). On the other hand, the Bank of England is expected to keep its benchmark rate at 0.75% unchanged later today. Also, November retail sales will be reported (+0.2% on month estimated).

The U.S. Dollar Index was up for a second day, rising 0.2% to 97.40. The British pound lost 0.3% to $1.3085. Official data showed that U.K. core CPI grew 1.7% on year in November (as expected). On the other hand, the Bank of England is expected to keep its benchmark rate at 0.75% unchanged later today. Also, November retail sales will be reported (+0.2% on month estimated).

The U.S. Dollar Index was up for a second day, rising 0.2% to 97.40. The British pound lost 0.3% to $1.3085. Official data showed that U.K. core CPI grew 1.7% on year in November (as expected). On the other hand, the Bank of England is expected to keep its benchmark rate at 0.75% unchanged later today. Also, November retail sales will be reported (+0.2% on month estimated).

The euro dropped 0.3% to $1.1115. The German Ifo Business Climate Index climbed to 96.3 in December (95.5 expected) from 95.1 in November.

Later today, the U.S. Labor Department will report initial jobless claims for the week ending December 14 (225,000 expected, 252,000 in the prior week). Existing home sales are expected to slightly decrease to an annualized rate of 5.44 million units in November (5.46 million units in October).

Economic Events to Watch Today

Let’s took at these fundamentals.

 

EUR/USD – Daily Analysis

The EUR/USD currency pair flashing green and hit the bullish track from the average support and picked up some buying mainly due to greenback weakness. Although, the currency pair did not beat the 200-day Moving Average so far. As of writing, the EUR/USD currency pair is currently trading at 1.1126 and representing 0.14% gains. By the way, the pair is now consolidating in the range between the 1.1113 – 1.1133.

President Donald Trump was accused by the U.S. House of Representatives on Wednesday night for the abuse of power. The House also approved a 2nd-charge that Trump obstructed a Congress investigation. The greenback came under pressure after the impeachment news hit the wires. 

It should be noted that the declines in the greenback were modest and will likely be reversed during Europe as the Senate, which is controlled by Trump’s Republican Party, possibly absolve to him of all charges. Moreover, the chances of Donald Trump vacating office are low. Looking forward, the Senate trial will likely start in January. 

With the German economy showing indications of bottoming out and heading into New Year with more confidence, there seem fewer chances that EUR traders will pick up the selling trend.

From a technical perspective, the currency pair is currently trading in no man’s land. A close above the 200-day average at 1.1151 is needed to revive the short-term bullish setup. On the flip side, a break below Wednesday’s low of 1.1115 would imply a short-term bearish reversal. 


Daily Support and Resistance

  • S3 1.1117
  • S2 1.1121
  • S1 1.1124

Pivot Point 1.1126

  • R1 1.1128
  • R2 1.113
  • R3 1.1134

EUR/USD– Trading Tips

Technically, the EUR/USD traded mostly sideways ahead of CPI, and German Business Climate figures. The EUR/USD is trading with a slightly bearish bias, and it’s very likely to test the bullish trendline on the 4-hour chart. The bullish trendline is expected to support the EUR/USD above 1.1125. Continuation of a bullish bias over 1.1125 can hold EUR/USD bullish unto 1.1160 and 1.1185. The EUR/USD’s next support lingers around 1.1095 today,

 

GBP/USD– Daily Analysis

The GBP/USD currency pair still found under pressure and hit the weekly lows despite the greenback weakness and waiting for fresh clues from the United Kingdom data/events which are scheduled to be released. As of writing, the GBP/USD currency pair is currently trading at 1.3081 and consolidates in the range between 1.3072 – 1.3091.

At the USD front, the greenback showed a broad-based weakness mainly due to the House Representatives, which voted to impeach President Trump. The House also approved a 2nd-charge that Trump obstructed a Congress investigation. Moreover, the ball will meet the Senate someday during early January for the opposition Democrats to make Donald Trump as the 3rd in the history to get impeached.

The GBP currency traders will keep their eyes on the November month Retail Sales ahead of the monetary policy meeting of the Bank of England and the British Queens speech setting out the Conservative government’s agenda for the coming year. The trader will also carefully observe the U.S. Philadelphia Fed Manufacturing Survey, Existing Home Sales, and Weekly Jobless Claims.

For now, BOE is likely to keep the rate unchanged at 0.75%. However, the markets are pricing a 65% probability of a rate cut by May 2020. 

Daily Support and Resistance

  • S3 1.295
  • S2 1.3019
  • S1 1.3049

Pivot Point 1.3089

  • R1 1.3118
  • R2 1.3159
  • R3 1.3229

GBP/USD– Trading Tip

The GBP/USD is trading with a slightly bullish bias now above 1.3178 as the pair has violated the 61.8% Fibonacci retracement level of 1.3240. Below the same mark, the 50 periods EMA is likely to provide resistance to the GBP/USD. 

The RSI and MACD are holding in the oversold zone, suggesting odds of a bullish reversal upon completion above the double bottom support level of 1.3095. Today, consider taking buying trades above 1.3100 and bearish trades below 1.3178. 

USD/JPY – Daily Analysis

The USD/JPY currency pair dropped from the weekly high after the United States House of Representatives voted to impeach President Donald Trump. As of writing, the USD/JPY currency pair s currently trading at 109.60 even after the status quo BOJ and remains stuck in the same range between the 109.56 – 109.59.

The Bank of Japan (BOJ) maintained the short-term interest rate at -0.1 and kept the 10-year yield target unchanged around 0%, as expected. The risk-off sentiment is expected to remain ahead. The United States’ ten-year treasury yields fell to 1.90%, whereas the S&P 500 Futures also decreases.

Looking forward, traders will keep their eyes on the monetary policy decision by the Bank of Japan (BOJ). Ahead of the releases, analysts at T.D. Securities said, “The Bank Of Japan will continue its last meeting of the year. This should move with little fanfare because the BOJ has made the necessary changes in October.

    


Daily Support and Resistance

  • S3 109.07
  • S2 109.3
  • S1 109.43

Pivot Point 109.53

  • R1 109.66
  • R2 109.76
  • R3 109.99

USD/JPY – Trading Tips

From the technical perspective, a breakout, if confirmed, would imply a resumption of the rally from the December low of 108.46 and may yield a rally to 110.00. On the flip side, range breakdown will likely allow a re-test of support at 109.20-109.00. 

On the technical side, the USD/JPY consolidates below 109.700 resistance level.

The 38.2% Fibonacci retracement level is supporting the USD/JPY pair around 109.200 level. While the RSI and MACD are suggesting chances of further selling in the USD/JPY pair. The pair may trade bearish below 109.53 to target 109.200 today. 

All the best!

Categories
Forex Basic Strategies Forex Trading Strategies

Trading The Morning Star Candlestick Pattern Like A Pro!

Introduction

Introduction

Introduction

Morning star is a bottom reversal pattern, and it primarily consists of three candlesticks that indicate the bullish sign. This pattern warns the weakness in an ongoing downtrend that, in turn, suggests the start of an uptrend. Traders observe the formation of a Morning Star pattern on the price chart, and then they can confirm it with other technical tools.

The Three Candlesticks Of Morning Star Pattern

  • Large Bearish Candle
  • Small Bullish or Bearish Candle
  • Large Bullish Candle

The most fundamental thing to remember is that the market should be in a downtrend to trade the Morning Star pattern. To confirm the downtrend, mark the lower lows and lower highs.

Large Bearish Candle is the first part of the Morning star reversal pattern. The bearish candle indicates the bears are in complete control, which means the continuation of the selling pressure. At this point in the market, we should only be looking for the sell trades as there is no sign of reversal yet.

Small Bullish/Bearish Candle is the second candle that begins with a bearish gap down. This candle indicates that the sellers fail to push the price lower, despite trying really hard. The price action ends up forming a quite small bullish/bearish or Doji candle. If this candle is a small bullish candle, it’s an early sign of trend reversal.

Large Bullish Candle is the third candle that holds the most significance because the real buying pressure is revealed in this candle. If this candle begins with a buying gap, and if buyers can push the prices higher by closing the candle even above the first red candle, it is a definite indication of a trend reversal.

Trading strategy – Morning Star Candlestick Pattern

As we know by now, the Morning star is a reversal pattern. It mainly indicates the bulls taking over the trend while the bears lose the grip. Most of the beginners tend to trade the Morning Star pattern stand-alone. But we do not recommend this as it is not reliable enough. Always pair this pattern with some other credible indicators, support resistance levels, or trend lines to make profitable trades.

Morning Star Pattern + Volume

In this strategy, we have paired the Morning Star pattern with the volume. The volume plays a significant role in pattern formations. If the first red candle shows a low volume, it is a good sign for us. Then, if the second candle is green and the volume rises, it indicates the buying pressure. Lastly, the long green candle’s volume must be high. The high volume on the last candle shows the confirmation of the upcoming buy trend. If the third bullish candle has low volume, then try avoiding that Morning Star Pattern because the volume is not indicating the bullish reversal. If you observe the third candle closing with high volume, take up the buying position and ride the uptrend until there are any indications of a trend reversal.

Confirm the downtrend on the trading timeframe

Confirmation is very important because, if there is no downtrend, there’s no point in trading the Morning Star pattern. You can confirm the downtrend on a higher timeframe or on your trading timeframe. As you can see in the below image, the overall trend of the CAD/CHF Forex pair was down.

Find out the Morning star pattern on your trading timeframe

As you can see in the below CAD/CHF chart, the market prints the Morning Star pattern by following all the rules of our strategy. The first red candle was with low volume, and the second one was a small red candle. Hence there is no indication to go long in this pair yet. The very next was a long green candle with high volume. This is a strong indication of a trend reversal.

Entry, Take Profit and Stop Loss

We should be entering the trade when the next green candle closes. There are so many different ways to book profit. We can close the position at any resistance area or supply-demand zone. In this trade, we hold our positions because we took the trade from the beginning of a new trend. You can also close your positions when the price goes near the higher timeframe’s significant resistance level.

Pairing this pattern with volume makes it more reliable to trade. So it is a good idea to place the stop loss just below the second candle. In the above picture, you can see that we have put the stop loss just below the second candle, and we have also booked the profit at the higher timeframe’s major resistance area.

Reliability of Morning Star Pattern

This pattern is very easy to identify on the price chart if you are an intermediate trader. Even novice traders can easily spot it on the chart with little practice. Morning Star pattern often gives us well-defined entries and good risk-reward ratios. The only limitation of this pattern is that, if the sellers are strong enough, the prices could go further down despite the formation of the Morning Star Pattern. Hence it is always recommended to combine this pattern with some other trading tools rather than trading it stand-alone.

We hope you find this article informative. Try trading this pattern when you see a perfect downtrend next time. Let us know how the results have been in the comments below. Cheers!

Categories
Forex Elliott Wave Forex Market Analysis

DAX Could Keep Making New Highs- An Elliott Wave Scenario Planning

The German index DAX 30 contains the 30 biggest German public companies traded in the Deutsche Böerse. In this article, we will review what to expect from the German index for the coming weeks.

The German index DAX 30 contains the 30 biggest German public companies traded in the Deutsche Böerse. In this article, we will review what to expect from the German index for the coming weeks.

The German index DAX 30 contains the 30 biggest German public companies traded in the Deutsche Böerse. In this article, we will review what to expect from the German index for the coming weeks.

The Big Picture

DAX 30, in its two-week chart, shows the price action progress of the index from the lowest level it touched in early March 2009. Once the DAX found buyers at the 3,585.8 points, the price rallied until 13,602 points when the German index completed the wave III labeled in black.


Since the March 2009’s low, the price moved in a bullish impulsive sequence that is still incomplete. The German index has already completed three waves of Primary degree, labeled in black. Currently, the price is running in its wave IV, also labeled in black.

The First Scenario

As we discussed in a previous article, scenarios allow us to analyze the likelihood of different “what if?” viewpoints.

The first possible scenario showed on the daily chart consists if wave IV is complete with the corrective move as an (A)-(B)-(C) sequence ended at 10,279.1 points.

Thus, a first approximation to the current path could be a possible ending diagonal pattern in progress. If this scenario is valid, the DAX should be moving in a wave (3) (labeled in blue), and we must assume that this wave is incomplete.

Consequently, the next leg should have a limited decline, and bringing the way for a new bullish movement as a wave (5).

The Alternative Count

The second scenario proposes an alternative count. In this case, the daily chart shows the price action moving in an incomplete wave (B), labeled in blue.

In this context, as the wave (B) is incomplete, the price action is running in an internal leg identified as wave C labeled in green. At the same time, wave C is incomplete and should finish the waves ((iv)) and ((v)) of Minute degree labeled in black.

According to the Elliott Wave Principle, under this scenario, DAX could be developing an irregular flat formation. This structure is characterized by following an internal sequence divided into 3-3-5, and the price tends to surpass the previous relevant high, in this case, located at 13,602 points.

If this scenario is valid, the price should develop a downward wave (C), which could drive to DAX to re-test the zone of the last Christmas low at 10,279 points.

The Conclusion

Both scenarios proposed to grant us the likelihood of a marginal upside and, then, a corrective move. However, the extension of the next path will confirm the Elliott wave structure that corresponds.

Probably, DAX will extend its gains over the 14,000 points, reaching a new all-time high before starting a deeper corrective move. This movement to the upside could emerge as a three or five wave structure, depending on which scenario is right, as stated above.

Categories
Forex Price-Action Strategies

H4-H1 Combination – An Opportunity Missed Just for an Inch

The H4-H1 is an action-packed combination. By drawing support/resistance on the and upon getting a reversal candle on the H4 chart, an entry is triggered considering H1 price action. However, things do not always go according to our expectations. In today’s lesson, we are going to demonstrate an example of an H4-H1 combination and find out whether it offers us entry or not. Let us get started.

The H4-H1 is an action-packed combination. By drawing support/resistance on the and upon getting a reversal candle on the H4 chart, an entry is triggered considering H1 price action. However, things do not always go according to our expectations. In today’s lesson, we are going to demonstrate an example of an H4-H1 combination and find out whether it offers us entry or not. Let us get started.

The H4-H1 is an action-packed combination. By drawing support/resistance on the and upon getting a reversal candle on the H4 chart, an entry is triggered considering H1 price action. However, things do not always go according to our expectations. In today’s lesson, we are going to demonstrate an example of an H4-H1 combination and find out whether it offers us entry or not. Let us get started.

This is the H4 chart. The chart shows that the price after having a rejection at a strong resistance zone heads towards the downside with extreme bearish pressure. The support zone is strong too. The last three candles are bearish, but they suggest that selling pressure may have decreased off a little. The last candle is a Spinning Top.

The combination of the last three candles ends up producing a Morning Star. This is one of the strongest bullish reversal candle combinations. The buyers are to flip over to the H1 chart for consolidation and H1 breakout candle to go long on the pair. Let us flip over to the H1 chart.

This is how the H1 chart looks. The chart produces several bullish candles consecutively, which suggests that it is the buyers’ territory. The resistance level is far enough to offer a lucrative risk-reward to the buyers as well.

Here it comes. The first candle for consolidation comes out as a bearish engulfing candle. Let us find out whether the price finds its support nearby or it heads towards the downside further.

It seems that the price may have found its support. It produces a Spinning Top again. If a bullish engulfing candle breaches the level of resistance, it will be an A+ buying signal. If another bullish candle breaches the level from where the last candle closes, it will be a good buying signal as well but may have relatively less buying pressure than the engulfing one. In both cases, the buyers are to calculate that the signal candle does not go too far up. Let us find out what happens next.

A very good-looking bullish Marubozu candle breaches the resistance. The buyers may want to trigger a long entry right after the candle closes. Would you trigger a long entry here? I let you think for a minute.

If yes, then you might have missed the line “In both cases, the buyers are to calculate that the signal candle does not go too far up.” It does, and it leaves only a little space for the price to travel towards the resistance. The risk-reward is not lucrative here at all.

An entry where almost everything looks perfect, we may still skip taking that for not fulfilling just one condition. It may frustrate us to some extent, but we have to deal with it professionally.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 18 – Top Trade Setups In Forex – Eyes On UK CPI!

On the forex front, the British pound plunged 1.6% to $1.3122, wiping out its gains since the election day last Thursday. Media reported that U.K. Prime Minister Boris Johnson might amend the withdrawal agreement bill to block any further extension of Brexit. Hence the prospect of a no-deal Brexit is still on the table.

On the forex front, the British pound plunged 1.6% to $1.3122, wiping out its gains since the election day last Thursday. Media reported that U.K. Prime Minister Boris Johnson might amend the withdrawal agreement bill to block any further extension of Brexit. Hence the prospect of a no-deal Brexit is still on the table.

On the forex front, the British pound plunged 1.6% to $1.3122, wiping out its gains since the election day last Thursday. Media reported that U.K. Prime Minister Boris Johnson might amend the withdrawal agreement bill to block any further extension of Brexit. Hence the prospect of a no-deal Brexit is still on the table.

Also, the U.K.’s official data showed that the jobless rate for the three months to October was steady at 3.8% (3.9% expected). Later today, investors will focus on U.K. consumer inflation data for November (CPI +1.4% on year expected).

Economic Events to Watch Today

Let’s took at these fundamentals.

EUR/USD – Daily Analysis

The EUR/USD currency pair remains in the red territory and hits the strong bearish track after got repeated rejection to cross the 200-day Moving Average resistance. As of writing, the currency pair is currently trading at 1.1133, representing a 0.14% declines on the day and consolidates in the range between 1.1131 – 1.1155.

The EUR/USD pair hit the high level of 1.1155 but failed to beat the 200-day Moving Average resistance. Looking forward, the currency pair will likely pick up further selling trend if the German data disappoints expectations, whereas if the German data beats expectations figures, the currency pair can beat the 200-day Moving average.

It should also be noted that the buyers failed to secure a daily close above the long-term average for the 4th-straight day on Tuesday because the range between the United States and German ten-year bond yields increased nearly 5-basis points to 218 basis points.

Looking ahead, the German IFO survey, scheduled to release at 09:00 GMT, is expected to show the expectations index increased to 93.0 in December from 92.1, according to the latest survey of analysts. 

As we recently mentioned that an above-forecast figure is needed to confirm last week’s ZEW survey, which showed the German economy has bottomed out and draws bids for the EUR currency. Moreover, an upbeat on expectations will likely yield a move above the 200-day MA at 1.1151.

The European Central Bank’s President, Lagarde, is scheduled to speak at 08:30 GMT. Lagarde is unlikely to sound dovish and will likely repeat the need for fiscal stimulus. 

Daily Support and Resistance

  • S3 1.1062
  • S2 1.1107
  • S1 1.113

Pivot Point 1.1153

  • R1 1.1176
  • R2 1.1198
  • R3 1.1243

EUR/USD– Trading Tips

Technically, the EUR/USD traded mostly sideways ahead of CPI, and German Business Climate figures. The EUR/USD is trading with a slightly bearish bias, and it’s very likely to test the bullish trendline on the 4-hour chart. The bullish trendline is likely to support the EUR/USD above 1.1125. Continuation of a bullish bias over 1.1125 can hold EUR/USD bullish unto 1.1160 and 1.1185. The EUR/USD’s next support lingers around 1.1095 today,

 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing red and hit the four-day lows of 1.309 down -0.30% on the day. The currency pair continues its bearish streak and still under pressure. That is mainly due to hard Brexit fears intensified after UK PM Johnson’s confirmed to the parliament that his office planned to ensure by law that the U.K.’s post-Brexit departure period will end in Dec 2020. 

As of writing, the GBP/USD currency pair is currently trading 1.3102 and consolidates in the range between the 1.3072 – 1.3135.

It should be noted that the departure uncertainty regarding Brexit was always considered as the risk faced by the GBP currency, but it was priced in sooner than anticipated. As a result, the soft Brexit premium is currently being priced out of GBP, and buyers have been sent back from the buying track.

At the greenback front, the U.S. Dollar (USD) benefited from the upbeat industrial production and housing market numbers along with the welcome comments from the Federal Reserve (Fed) officials. The greenback also got the support of trade-related positive statements from the Treasury Secretary Steve Mnuchin and Trade Representative Robert Lighthizer.

Looking forward, the GBP buyers will closely observe the November month inflation data, whereas the Fed speak will likely offer additional hints. In this regard, T.D. Securities said, “We look for CPI to edge a touch lower to 1.4% y/y in November (market 1.5%). Underlying this, we expect core CPI to hold unchanged at 1.7% y/y (market 1.6%) for the 3rd-month in a row. 


Daily Support and Resistance 

  • S3 1.2774
  • S2 1.2976
  • S1 1.3054

Pivot Point 1.3178

  • R1 1.3256
  • R2 1.338
  • R3 1.3581

GBP/USD– Trading Tip

The GBP/USD is trading bearish below 1.3178 as the pair has violated the 61.8% Fibonacci retracement level of 1.3240. Below the same mark, the 50 periods EMA is likely to provide resistance to the GBP/USD. 

The RSI and MACD are holding in the oversold zone, suggesting odds of a bullish reversal upon completion above the double bottom support level of 1.3095. Today, consider taking buying trades above 1.3100 and bearish trades below 1.3178. 

USD/JPY – Daily Analysis

The USD/JPY closed at 109.472 after placing a high of 109.632 and a low of 109.441. Overall the trend for USD/JPY pair remained bearish that day.

On the data side, at 2:00 GMT, the U.S. Department of the Treasury published the TIC Long-Term Purchases for October, and it showed a decline to 32.5B from expected 52.2B and weighed on U.S. dollar.

The Building Permits from the United States showed growth in November when released at 18:30 GMT. In the previous month, it was expected that 1.41M building permits would be issued. Still, according to the reports, the number of actual building permits in November exceeded the expectations and came in as 1.48M to support the U.S. dollar.

The number of U.S. residential buildings that began construction during November also exceeded the expectations and supported the U.S. dollar on Tuesday. It was expected that 1.34M house buildings would start its construction, but in actual 1.37M, housing starts.

At 19:15 GMT, the Capacity Utilization Rate from Federal Reserve was published, which showed that 77.3% of available resources were being utilized during November. The expected figure was almost the same 77.4% and did not affect the U.S. dollar. However, Industrial Production from the United States for November also increased to 1.1% from expected 0.8% and supported the U.S. dollar.

At 20:00 GMT, the JOLTS Job Openings for October showed growth to 7.27M from the expected 7.01M and supported the U.S. dollar. And at 20:01 GMT, the IBD/TIPP Economic Optimism for the month of December was surged to 57.0 from forecasted 54.2 and supported U.S. dollar on Tuesday.

Daily Support and Resistance

  • S3 109.14
  • S2 109.34
  • S1 109.42

Pivot Point 109.53

  • R1 109.62
  • R2 109.72
  • R3 109.92

USD/JPY – Trading Tips

On the technical side, the USD/JPY consolidates below 109.700 resistance level. The same level marks a triple top pattern has the USD/JPY faced a hard time violating it back on Dec 1, 13, and 16. 

The 38.2% Fibonacci retracement level is supporting the USD/JPY pair around 109.200 level. While the RSI and MACD are suggesting chances of further selling in the USD/JPY pair. The pair may trade bearish below 109.53 to target 109.200 today. 

All the best!

Categories
Forex Price-Action Strategies

Be Patient and Observant, You Will be Paid Back

Price action traders are to be extremely observant to find out entries. Charts sometimes may seem not to offer an entry soon. However, if traders are sharp, they will be able to find out entries from the charts that may look choppy or dead for the price action traders. In today’s lesson, we are going to demonstrate an example of that.

Price action traders are to be extremely observant to find out entries. Charts sometimes may seem not to offer an entry soon. However, if traders are sharp, they will be able to find out entries from the charts that may look choppy or dead for the price action traders. In today’s lesson, we are going to demonstrate an example of that.

Price action traders are to be extremely observant to find out entries. Charts sometimes may seem not to offer an entry soon. However, if traders are sharp, they will be able to find out entries from the charts that may look choppy or dead for the price action traders. In today’s lesson, we are going to demonstrate an example of that.

After being very bearish, the price gets caught within a rectangle. The price action has been choppy, and it does not seem like that the chart is going to offer an entry. Many traders may want to skip eying on the chart to find out an entry. Can you sniff something out of it? Have a look at the chart below.

With a bit of adjustment, we can draw horizontal support as well as resistance. Look at the last bullish engulfing candle. It forms right at the support level, where the price had bounced twice earlier. That was on the daily chart. The daily-H4 combination traders may want to look for long opportunities here. Since the resistance is not far away, let’s wait for a daily breakout.

Here it comes. The next candle breaches the level of resistance and closes well above the resistance level, so it is an explicit breakout. The buyers, then, must wait for consolidation to get a level of support and to set their stop loss below that level.

The next candle comes out as an Inside Bar closing within the breakout level. This fact must excite the buyers and make them wait to get a bullish engulfing candle to trigger a long entry.

This has been a copybook price action, which price action traders dream of. The last candle engulfs the previous candle. The buyers may want to trigger a long entry right after the candle closes. Stop loss may be set below the flipped support.

This is how the chart looks after triggering the entry. The way the price has been heading, it may keep going towards the last swing high. However, by locking some profit, the buyers are to keep an eye on the chart.

The chart produces an Inside Bar. It still favors buyers. However, traders are to make a decision here. They either close the whole entry or take out at least 50% profit and let the rest of it run. This is part of trade management. However, the lesson we have learned from here is we are to be patient and extremely observant to be able to find out entries. If we are observant, we will be able to find out entries even from the charts that do not look that good.

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 17 – Bitcoin below $7,000, investors buying the dip

Bitcoin, as well as the majority of the cryptocurrency market, had a significant price drop in the past 24 hours. The psychological resistance of $7,000 has been broken to the downside. Most cryptos stabilized for now, but no one knows where this price action will lead us. Bitcoin fell by 2.87% in the past 24 hours, and it is trading for $6.881 at the time of writing. Meanwhile, Ethereum lost a staggering 8.13%, while XRP fell 9.01%.

Bitcoin, as well as the majority of the cryptocurrency market, had a significant price drop in the past 24 hours. The psychological resistance of $7,000 has been broken to the downside. Most cryptos stabilized for now, but no one knows where this price action will lead us. Bitcoin fell by 2.87% in the past 24 hours, and it is trading for $6.881 at the time of writing. Meanwhile, Ethereum lost a staggering 8.13%, while XRP fell 9.01%.

Bitcoin, as well as the majority of the cryptocurrency market, had a significant price drop in the past 24 hours. The psychological resistance of $7,000 has been broken to the downside. Most cryptos stabilized for now, but no one knows where this price action will lead us. Bitcoin fell by 2.87% in the past 24 hours, and it is trading for $6.881 at the time of writing. Meanwhile, Ethereum lost a staggering 8.13%, while XRP fell 9.01%.

There were, however, cryptocurrencies that gained some value in the past 24 hours. The cryptocurrency that gained the most was Waves, which increased in price by 23.97%. On the other hand, the biggest loser of the day was EDUCare, which lost 16.92% of its value on the day.

Bitcoin’s dominance skyrocketed in the past 24 hours, as cryptocurrencies lost far more value than it did. Its dominance in percentage is currently 67.23%, which represents an increase of 1.14% when compared to the value it had yesterday.

The cryptocurrency market capitalization plunged due to the price drop of almost every single large cryptocurrency. Its total market value is currently $186.45 billion. This value represents a decrease of $7.09 when compared to the value it had yesterday.

What happened in the past 24 hours

The price drop that occurred was not a surprise for most people, though many expected it to be a bit less sudden and explosive. However, not everything is terrible.

Traders and long-term investors are buying into this dip, which suggests that they view the price drop as an opportunity to open their long positions or accumulate more Bitcoin.

Further proof of this can be found in the seemingly unaffected level of Bitfinex BTC/USD longs. The number of long positions that opened skyrocketed after the drop has happened, and it is still on the increase. On top of that, the significant rise in long positions started near the end of November.


_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin broke yet another key support as its price plunged below $7,000. The price is currrently trying to stabilize at around $6,850. It’s currently bound by the $7,000 line which now turned resistence, as well as the $6,640 support line.


Bitcoin’s volume soared during the price drop but quickly dwindled to its regular levels. RSI finally went into the oversold territory after hovering around it for many days. The key level of $7,000 moves to the “upside” key levels.

Key levels to the upside                    Key levels to the downside

1: $7,000                                           1: $6,640

2: $7,314                                           2: $6,505

3: $7,415

Ethereum

Ethereum also had a major price drop. However, this one was far bigger than the one Bitcoin had. Ethereum fell under another key support line. The pressure on the downside was so strong that the price fell over 8% in just 24 hours. However, it quickly found support after dropping below the key level. It is now stabilizing just above $130.


Ethereum’s volume is slightly below average when compared to the past couple of days if we take away the significant volume spike that occurred during the price drop. Its RSI value is deep into the oversold territory.

Key levels to the upside                    Key levels to the downside

1: $133.5                                             1: $130

2: $144.1                                           2: $128.1

3: $150.5

Ripple

The biggest loser out of the top3 cryptocurrencies by market cap was XRP. Not only it lost most of its value (over 9% on the day), but it also broke all of the known key support levels. Its price movement to the downside, as well as the support levels it may form, are an enigma for now. There certainly have been some levels that had some traction, but these possible support levels are from over two years ago, and it is still unknown if they are valid. All we know is that, for now, XRP stabilized and created an immediate support level at $0.19.


Key levels to the upside                    Key levels to the downside

1: $0.2025                                          1: $0.19

2: $0.207

3: $0.2117

Categories
Forex Market Analysis

Daily FX. Analysis, December 17 – Top Trade Setups In Forex – Eyes on UK Labor Market Figures! 

On Tuesday, the market trades with a risk-off sentiment as investors are still waiting for clarity about Brexit and Trade deal between the U.S. and China. The U.S. dollar was steady against other major currencies, with the ICE Dollar Index closing flat on the day at 97.15.

On Tuesday, the market trades with a risk-off sentiment as investors are still waiting for clarity about Brexit and Trade deal between the U.S. and China. The U.S. dollar was steady against other major currencies, with the ICE Dollar Index closing flat on the day at 97.15.

On Tuesday, the market trades with a risk-off sentiment as investors are still waiting for clarity about Brexit and Trade deal between the U.S. and China. The U.S. dollar was steady against other major currencies, with the ICE Dollar Index closing flat on the day at 97.15.

China’s official data showed that industrial production rose 6.2% on year in November (+5.0% expected), and retail sales grew 8.0% (+7.6% expected).

Economic Events to Watch Today

Let’s took at these fundamentals.

Economic Calendar by TradingView

 

EUR/USD – Daily Analysis

Today in the early Asian session, the EUR/USD currency pair flashing green and trading on the bullish track but failed to cross the 200-day moving average despite the fresh trade truce between the United States and China. The EUR/USD is presently trading at 1.1147, having faced rejection at the 200-day Moving Average at 1.1152. 

However, the EUR currency has repeatedly failed to close above the 200-day MA. For example, the Euro currency picked up a strong buying on Friday and climbed to a high of 1.12 only to end the day with moderate losses at 1.1118. 

Regarding U.S. economic data, the Empire Manufacturing Index posted 3.5 for December (below the 4.0 expected, up from 2.9 in November). The Markit U.S. Manufacturing Purchasing Managers Index (preliminary reading) declined slightly to 52.5 in December (below 52.6 expected) from 52.6 in November.

The monthly United States Housing Starts and Building Permits are scheduled for release at 13:30 GMT on Tuesday. The Eurozone Trade Balance (Oct), scheduled for release at 10:00 GMT, is unlikely to move markets. 

Daily Support and Resistance

  • S3 1.1079
  • S2 1.1111
  • S1 1.1127

Pivot Point 1.1143

  • R1 1.1159
  • R2 1.1175
  • R3 1.1207

EUR/USD– Trading Tips

Just like the rest of the forex pairs, the EUR/USD hasn’t made much progress on Monday despite a mixture of PMI data. The EUR/USD is trading with a slightly bullish above the bullish trendline, which is supporting the EUR/USD above 1.1125. Extension of a bullish bias above 1.1125 can keep EUR/USD optimistic until 1.1160 and 1.1185. The EUR/USD’s next support prevails around 1.1095 today,

 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing red and representing more than 60 pips decline to 1.3265, having hit the low of 1.3236 during the Asian trading hours. The bearish bias came mainly due to hard Brexit fears. As of writing, the GBP/USD currency pair is currently trading at 1.3295 and consolidates in the range between the 1.3236 – 1.3339. Looking ahead, the GBP/USD pair could come under pressure due to fresh Brexit concerns.

It should be noted that the victory of conservatives will help the United Kingdom Prime Minister Boris Johnson to pass the Bill to rule out European Union transition beyond 2020. The Departure Agreement Bill (WAB) is widely expected to be put for a 2nd reading in the House of Commons on this Friday.

Whereas, the Conservatives leader Boris Jonhson will not hesitate to repeat his promise regarding leave the region with deal or without a deal before 2020 ends. Despite that, the United Kingdom Prime Minster has repeatedly promoted the idea of the Canda-style free trade agreement, and UK PM will likely push for the same after the Bill gets the Parliaments’ approval.

Comments came from Robert Peterson that the PM Boris Johnson is committed to passing the Tory manifesto commitment to end the transition in just over a year from now. 

Looking forward, investors will seek more hints of the recent declines in the GBP from the political headlines. However, the traders will keep their eyes on the releases of the UK employment figures. A busy week of the UK calendar is worth watching ahead of the Bank of England policy meeting on Thursday. The consensus is for the unemployment rate to tick up to 3.9%, whereas wages growth eases a little to 3.4% YoY,” says Westpac ahead of the data release.

Daily Support and Resistance 

  • R3: 1.3722
  • R2: 1.3548
  • R1: 1.3441

Pivot Point 1.3374

  • S1: 1.3267
  • S2: 1.32
  • S3: 1.3025

GBP/USD– Trading Tip

The GBP/USD is trading bearish below 1.3362 as the pair seems to go for a retracement until 1.3240, which marks a 61.8% Fibonacci level. At the same mark, the 50 periods EMA is likely to support the GBP/USD. 

The RSI and MACD are holding in the buying zone, suggesting odds of a bullish reversal upon completion of 61.8% Fibonacci retracement. Today, consider taking buying trades above 1.3190 and bearish trades below 1.3274. 

USD/JPY – Daily Analysis

The USD/JPY currency pair is struggling to extend its recovery rally because the markets want more clarity about the fresh optimism surrounding the phase-one trade deal and Brexit concerns. As of writing, the USD/JPY currency pair is currently trading at 109.56 and consolidates in the range between 109.50 – 109.63. 

Even after the fresh trade truce of the Sino-US Phase-one deal, the United States and China trade relationships are still being termed as noisy ceasefire by the South China morning post.

On the other hand, ITV’s Robert Peterson thinks the risk of hard Brexit because the United Kingdom’s (UK) Prime Minister (PM) will soon forward the Bill that supports no transition delay beyond 2020.

Moreover, the risk tone gets heavier because the United States’ ten-year treasury yields decline to 1.87%, whereas the S&P 500 Futures losses 0.14% to 3,193 by the press time.

Apart from the trade/Brexit headlines, monetary policy meetings by the Bank of Japan (BOJ) and headline inflation will also entertain momentum traders during this week. Whereas the BOJ is not expected to change the current monetary policy, appreciation of the latest fiscal measures will likely support the Japanese yen (JPY) to strengthen further on Thursday. Moreover, Friday’s inflation data will probably keep exerting downside pressure on the Japanese currency.

The currency pair ignored the sluggish activity data from the United States during the Monday as risk-on sentiment increased due to optimism surrounding the United States and China trade deal. Looking forward, today’s United States Industrial Production, Fed speak, and housing market data can offer immediate direction to the pair movement.

Daily Support and Resistance

  • S3 108.91
  • S2 109.22
  • S1 109.39

Pivot Point 109.53

  • R1 109.7
  • R2 109.84
  • R3 110.15

USD/JPY – Trading Tips

On the technical side, the buyers await a clear break of the monthly high surrounding 109.75 to target 110.00 and May month high near 110.70. Meanwhile, 21-day Exponential Moving Average (EMA) near 109.00 holds the key to fresh declines towards the 108.45/40 support area.

The pair is heading towards the double top resistance level of around 109.700. Below this, the USD/JPY is likely to show a bearish correction of up to 38.2% level, which stays at 109.200. On the higher side, the bullish breakout of USD/JPY can lead the Japanese pair towards 110.300. The MACD and RSI are in support of the bullish trend. 

All the best!

Categories
Forex Videos

Forex Leading and Lagging Indicators – which Is Better & What Do They Do

https://youtu.be/xBZdIh4GtSw

https://youtu.be/xBZdIh4GtSw

Technical Analysis; The Difference Between Leading and Lagging Indicators

When it comes to technical analysis, there are literally dozens of indicators which are available to traders. Choosing the right one for you will depend on your trading style and methodology. Most new traders will go through a process of trial and error when it comes to choosing the correct technical indicators for them. However, it is critical that you know how they work and how they can affect your trading.

Technical indicators are tools and fall into two brackets: leading and lagging indicators. Lagging indicators capture the movements of historical price action data and plots this information onto a chart screen. Traders decipher the patterns and then use it to determine entry and exit points by accessing if a pair is overbought and likely to fall, all or if it oversold and likely to rise, or if it is sideways trading.

Example A


Example ‘A’ is an example of a lagging indicator; the Moving Average Convergence Divergence or MACD takes the average move of historical price action over a set period of time and plots the information onto a chart. In this chart of the GBPUSD pair with the 5-minute time frame, we can see that the price action of the pair is very similarly reflected in the MACD with its moving average, which both fluctuate around its 0 axes. Traders use the imagery to back up their theory of future price action.

Example B


Example ‘B,’ on the same pair and time frame, is of another lagging indicator, the Stochastic oscillator, which plots historical price action data and tells a trader when a pair is entering into overbought territory such as above the 80-line and when a pair maybe oversold such as below the 20-line. Again, traders use the data to help predict future reversals in price.

Example C


Example C, again on the same GBPUSD, a chart, is a simple moving average lagging indicator, which plots the average move of the previous price action, where, in this case, a continuous line is formed onto the chart of the average of the previous 14 candlesticks. As we can see, when price action falls underneath the moving average, it tends to trend lower, and it is also easy to identify on this chart that when price action moves above the moving average, a tren higher follows.

Example D


Example D is price action itself on the same chart as defined by our Japanese candlesticks, and where the price action itself is a leading indicator. Leading indicators are the most widely used by professional traders to help anticipate future price movements and help to define entry and exit points with much greater accuracy the lagging indicators. When traders use price action in the form of candlesticks, they study the size shape and patterns of the candlesticks to predict future movements.

Example E


Example E, on the same chart, is another leading indicator. These are support and resistance lines, Which Traders will draw onto the grass themselves at ware price action tends to find support which it is likely to move up from and resistance where the price is likely to fall from, in order to decipher future price action. As you will see from our screen-shot, these lines will often alternate between being levels of support and levels of resistance due to price action retracement.

Example F


Example F is another leading indicator. This is a screenshot from a forex broker’s clients’ positions table, which shows the net positions of how their traders are positioned on various currency pairs. Many brokers now offer this superb facility which will give traders added comfort when it comes to taking on trades, or act as a warning if the majority of traders on the position table are trading in the opposite direction.

Categories
Forex Elliott Wave Forex Market Analysis

Dollar Index Long Term Wave Analysis

The US Dollar Index (DXY) from last October shows signs of exhaustion of the bullish cycle that started in February 2016. What says us the Elliott Wave Principle about the next path of the US Dollar? In this article, we will discuss what to expect for the Greenback.

The US Dollar Index (DXY) from last October shows signs of exhaustion of the bullish cycle that started in February 2016. What says us the Elliott Wave Principle about the next path of the US Dollar? In this article, we will discuss what to expect for the Greenback.

The US Dollar Index (DXY) from last October shows signs of exhaustion of the bullish cycle that started in February 2016. What says us the Elliott Wave Principle about the next path of the US Dollar? In this article, we will discuss what to expect for the Greenback.

Fundamental Perspective

The Federal Reserve, during the last FOMC meeting, realized on December 11, decided to keep the interest rate at 1.75% by letting it unchanged for the second consecutive month.

The FED’s Chairman Jerome Powell, in his latest statement, indicated that the current monetary policy is adequate to sustain the expansion of economic activity in the United States. On the other hand, the labor market conditions remain stronger, and inflation continues in the 2% target.

In its projections for next year, the committee members do not visualize any further cut changes in the reference rate.

Technical Perspective

Dollar Index (DXY), in its weekly chart, shows the price action developing a downward corrective structure. This bearish structure began on January 03, 2017, when the DXY reached the level 103.82.

Until now, DXY has carried out two internal waves, which we identified as wave ((A)), and ((B)) labeled in black. In the weekly DXY chart, we observe that wave ((A)) progressed in five waves.

According to the Elliott Wave Principle, the formation developed by DXY should correspond to a corrective structure that presents the characteristics of a zigzag pattern. A zigzag formation is characterized by a 5-3-5 internal sequence.

The graph below shows the daily DXY chart, which reveals a bullish sequence that develops into three internal waves, labeled in blue as (A), (B), and (C), which corresponds to the complete movement of upper-degree, identified as wave ((B)).

Likewise, we recognize how the price developed a structure in the form of an ending diagonal, that in terms of the Elliott Wave Theory, appears typically in waves “5” or “C.”

On the other hand, the pierce and closing below the August 2019 low at 97.17, make us suspect that the price could be making a change from the upward cycle started in February 2018 to a downward trend.

This movement could start the third internal move of the corrective wave, which should be developed in five waves.

Our Forecast

The 4-hour chart shows DXY has completed its first bearish motive wave labeled as (1) in blue. Once its five internal segments has ended, the price bounded off from the level of 96.59 on December 12.

Short term, we expect a bullish rebound in three waves that could reach the zone between 97.94 and 98.44. From this zone, the Greenback could find sellers waiting to activate their short positions.

The long-term target is located in the zone of the 90 points as a psychological round-number level. Further, this zone is the area of the 2018’s lows. This target area coincides with the lower line of the downward channel.

The invalidation level of the bearish scenario is located at level 99.67, which corresponds to the highest level reached in early October 2019.

Categories
Forex Market Analysis

Daily FX. Analysis, December 16 – Top Trade Setups In Forex – Eurozone’s PMI Figure Drives! 

The US Dollar Index was broadly flat at 97.17. The euro slipped 0.1% to $1.1121. Later today, research firm Markit will post December eurozone Manufacturing PMI (47.3 expected) and Services PMI (52.0 expected). The USD/JPY edged up 0.1% to 109.38.

The US Dollar Index was broadly flat at 97.17. The euro slipped 0.1% to $1.1121. Later today, research firm Markit will post December eurozone Manufacturing PMI (47.3 expected) and Services PMI (52.0 expected). The USD/JPY edged up 0.1% to 109.38.

The US Dollar Index was broadly flat at 97.17. The euro slipped 0.1% to $1.1121. Later today, research firm Markit will post December eurozone Manufacturing PMI (47.3 expected) and Services PMI (52.0 expected). The USD/JPY edged up 0.1% to 109.38.

Regarding U.S. economic data, retail sales rose 0.2% on month in November (below the +0.5% expected, +0.4% in October). Import prices increased 0.2% on month (as expected, -0.5% in October).

Later today, the Empire Manufacturing Index for December (5.0 expected) and the Markit US Manufacturing Purchasing Managers’ Index (52.6 expected) will be reported.

Economic Events to Watch Today

Let’s took at these fundamentals.

AUD/USD – Daily Analysis

The AUD/USD currency pair seen unchanged and consolidates in the narrow trading range between the 0.6875 – 0.6878. The currency pair remains depressed despite the fresh optimism over the Sino-US trade deal. As of writing, the Aussie currency pair is currently trading at 0.6875.

The AUD/USD currency pair picked up a buying near 0.6775 following the consumer spending data, which represented a rise in retail sales by 8% year-on-year during November, crossing the forecasted growth of 7.6% by a big range.

Industrial production rose 6.2% compared to an expected rise of 5%, marking an improvement from October’s 4.7%. Moreover, the People’s Bank of China has injected 300 billion Yuan into the system via a one-year medium-term lending facility. 

The AUD/USD currency pair did not succeed to gain on its early positive move and saw a dramatic intraday turnaround on Friday. Moreover, the uncertainty regarding the US President Donald Trump’s decision to cancel the December 15 tariff-hike on Chinese imports weighed heavily on the China-proxy Australian dollar, causing a drop in AUD/USD pair around 75 pips from an intraday high level of 0.6938 the highest since July 26.

The bullish sentiment remains weak, possibly due to the reports that Beijing is planning to lower its 2020 gross domestic product target to 6% from the current year’s 6.5%. 

Looking forward, the worries of a deeper recession in China in 2020 will likely continue to overshadow the phase one US-China trade deal and send the AUD lower.

Daily Support and Resistance  

  • S3 0.6759
  • S2 0.6824
  • S1 0.685

Pivot Point 0.6889

  • R1 0.6915
  • R2 0.6954
  • R3 0.7019

AUD/USD– Trading Tips

The AUD/USD pair is hanging around 0.6900, trading mostly bullish despite staying in the overbought zone. The traded higher further above the 0.6865 mark, the 61.8% Fibo retracement level of its November slide. In the 4-hour chart, the 20 SMA has hastened north over the bigger ones, all of them under the current mark. In contrast, the technical indicators lead to the north in overbought territory, without indications of bullish exhaustion. The rally is set to remain on a break over 0.6930, the next resistance.

GBP/USD– Daily Analysis

The GBP/USD currency pair still found on the bullish track and remain supportive mainly due to the United Kingdom Prime Minister Boris Johnson win who promised to leave the European Union (EU) swiftly before January 31, 2020. 

The GBP/USD currency pair traded bullish at 1.3388 and representing sizeable gains of +0.50%, having hit the high of 1.3398. By the way, the pair consolidates in the range between 1.3337 – 1.3398.

Prime Minister Johnson will welcome 109 new Conservative lawmakers to parliament and will repeat his promise to increase funding to the state health service on the day.

Moreover, the GBP/USD currency pair is also supported by the increased expectations of an improvement in the UK’s manufacturing sector activity, as the Markit Preliminary Manufacturing PMI for December is seen arriving at 49.4 against. 48.9 previous. The country’s Services PMI is expected to reach at 49.6 against. 49.3 last.

At the greenback front, markets still unexcited despite the details of the US-China Phase One trade deal. The US dollar index now tests the 97 handles, retreating from Friday’s highs of 97.24.

The GBP currency buyers will keep up the buying because the UK looks to clear the Brexit departure Agreement in the parliament before Christmas. In contrast, the Bank of England (BOE) may signal a willingness to change course on the monetary policy, with the United Kingdom election out of the way.             

Daily Support and Resistance

  • S3 1.3025
  • S2 1.32
  • S1 1.3267

Pivot Point 1.3374

  • R1 1.3441
  • R2 1.3548
  • R3 1.3722

GBP/USD– Trading Tip

The GBP/USD is presently consolidating around at1.3457, placing around 19-month high to 1.3515 during the US session yesterday. The UK election exit polls foretelling a big win for the incumbent Prime Minister Boris Johnson. 

The GBP/USD pair’s 14-day relative strength index (RSI) is now floating around 80.47. I must say it’s the highest mark since January 2018. An above 70-reading shows overbought situations. Consider capturing retracement below 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the bullish track and representing some moderate gains mainly due to fresh trade optimism between the United States and China. As of writing, the currency pair is currently trading at 109.38 and consolidates in the range of 109.31 – 109.44.

Notably, the currency pair had some good 2-way price moves on Friday and was impressed by the full market risk-on sentiment, which turned out to be one of the major reasons that affected the Japanese yen’s as a perceived safe-haven status. 

However, the USD/JPY pair quickly reversed an early decline to sub-109.00 levels and recovered to multi-month highs in the wake of optimism of UK Parliamentary elections.

However, the bullish momentum failed near the 109.70 regions after the disappointing release of the United States’ monthly retail sales data, which kept the greenback buyers on the defensive.]The uncertainty regarding the United States President Donald Trump’s decision to cancel the December 15 tariff-hike on Chinese imports further helped to the pair’s intraday pullback of around 35-40 pips.

It should be noted that the USD/JPY currency pair finally closed unchanged for the day but succeeded in recovering some positive traction. That might have been due to the United States Trade Representative Robert Lighthizer’s comments on Sunday, saying that the phase-one Sino-US trade deal is done. Under the agreement, China said it would increase agricultural purchases due to the US’ decision not to attempt a new round of tariffs.

Daily Support and Resistance

  • S3 108.42
  • S2 108.92
  • S1 109.13

Pivot Point 109.42

  • R1 109.63
  • R2 109.92
  • R3 110.42

USD/JPY – Trading Tips

The USD/JPY rose 0.8% to 109.40 as investors’ risk appetite grew. The pair is heading towards the double top resistance level of around 109.700. Below this, the USD/JPY is likely to show a bearish correction of up to 38.2% level, which stays at 109.200. 

On the higher side, the bullish breakout of USD/JPY can lead the Japanese pair towards 110.300. The MACD and RSI are in support of the bullish trend. 

All the best!

Categories
Forex Price Action Point and Figure

Point & Figure Introduction: The Problem with Japanese Candlesticks

Problems with Japanese Candlestick Analysis

Problems with Japanese Candlestick Analysis

Problems with Japanese Candlestick Analysis

One of the big buzz words or methodologies used in trading over the past ten years has been the term and/or style called ‘Price Action Trading.’ It is also known as ‘Naked Trading’ or, much less known as ‘Dynamic Impulse Trading.’ Price Action Trading is a style and methodology that teaches students to utilize candlesticks charts with no lagging indicators or oscillators. Students learn to utilize very little in the form of any tools beyond trend lines, subjective horizontal support/resistance, and pattern recognition. Not surprisingly, many people fail at Price Action Trading. I would venture that out of all the methodologies taught to new traders and analysts, Price Action Trading with Japanese candlesticks causes more new trader accounts to go bust than almost any other trading style or system.

The problem with Price Action Trading using Japanese candlesticks gets exacerbated the faster the time frame used. Japanese candlesticks are, believe it or not, a very advanced form of analysis that requires a significant amount of study to interpret and apply today’s financial markets properly. Traditionally, the application of Japanese candlesticks did not occur on fast time frames. Instead, they were limited to longer time frames such as weekly and monthly charts, and those are timeframes where the analysis, interpretation, and execution of Japanese candlesticks have very few equals. To make Japanese candlesticks work on fast time frames in modern markets requires the use of a myriad of supporting tools such as oscillators and indicators. The use of oscillators and indicators with Japanese candlesticks is necessary is because Japanese candlesticks are three-dimensional: price, time, and volume. Point & Figure only records price.

 

Point & Figure Analysis

For the Price Action Trader, no chart style is purer than Point & Figure because Point & Figure records only price. In Point & Figure Analysis, time is not measured or used, and volume is anecdotal. That may seem anathema to many traders, but it makes perfect sense from the perspective of a Point & Figure user. Because Point & Figure only records price moves, it makes sense why volume is anecdotal and not significant. If you think about it, the volume itself isn’t relevant unless there is a corresponding price move. Price is the only thing that matters. One of the greatest authorities and written works of Technical Analysis is de Villiers and Taylor’s Point and Figure Charting. They make a compelling case for the weight and authority of this chart and analysis style.

  • Point & Figure is logical in its application.
  • Simple and easy to master.
  • Point & Figure is void of mystery, guessing, and complications caused by subjective analysis.
  • News, economic reports, and other sources of market noise are not necessary.
  • Losses are limited while profits accrue – easy stop and profit target calculations.
  • Point & Figure signals are clear and unambiguous.
  • The method avoids and dismisses manipulation.
  • Inside information not necessary.
  • Volume manipulations are pointless and irrelevant.
  • Solo traders outperform professional money, proprietary trading firms, and traditional buy and hold investors with this method.
  • Insignificant price moves are ignored.
  • Support and resistance easy to identify.

 

Sources:

Dorsey, T. J. (2013). Point and figure charting: the essential application for forecasting and tracking market prices (4th ed.). Hoboken, NJ: John Wiley & Sons.

Kirkpatrick II, C. D., & Dahlquist, J.R. (2016). Technical Analysis: The Complete Resource for Financial Market Technicians (Third). Old Tappan, NJ: Pearson.

Plessis, J.J. (2012). Definitive Guide to Point and Figure – a comprehensive guide to the theory (2nd ed.). Great Britain: Harriman House Publishing.

DeVilliers, V., & Taylor, O. (2008). Point and figure charting. London: Financial Times/Prentice Hall.

 

 

Categories
Forex Elliott Wave Forex Market Analysis

NZDUSD Long Term Wave Analysis

The NZDUSD pair has shown signs of recovery in recent weeks. Have we to think in the buy-side for the coming weeks? In this article, we will review the probable next movement from the oceanic pair.

The NZDUSD pair has shown signs of recovery in recent weeks. Have we to think in the buy-side for the coming weeks? In this article, we will review the probable next movement from the oceanic pair.

The NZDUSD pair has shown signs of recovery in recent weeks. Have we to think in the buy-side for the coming weeks? In this article, we will review the probable next movement from the oceanic pair.

Fundamental Perspective

The Reserve Bank of New Zealand (RBNZ), realized in November its last monetary policy decision, from where the policymakers kept the Official Cash Rate unchanged at 1%.

In the decision statement, Governor Adrian Orr stated that employment remains at high levels; however, inflation remains below the 2% target. Moreover, the RBNZ projections for the coming year 2020 pointed to stable interest rates at low levels so that inflation can be ensured to reach the target level.

The next meeting of the reserve will be in February 2020. As a consequence, the fundamental traders will have to closely monitor the evolution of macroeconomic data during the following two months.

Technical Perspective

From the technical point of view, the NZDUSD in its weekly chart moves sideways in a corrective process that found the first support in August 2015 at 0.61968.

During 2019, NZDUSD approached the lowest level of 2015, developing Elliott’s ending diagonal pattern, which found support at 0.62037 in early October.

According to the Elliott Wave Principle, a diagonal ending formation is an impulsive pattern that has an internal structure that is divided into 3-3-3-3-3. In turn, this formation can be found in a wave ‘5’ or ‘C’ within a corrective structure.

Once NZDUSD touched the level 0.62037, the pair found buyers and began to realize a bullish movement in three waves. The completion of this upward sequence makes us foresee the possibility of a new decline. Probably the next move will be in three waves.

Our Forecast

The NZDUSD pair in its 4-hour range shows the possibility of a corrective move to the area between 0.64647 and 0.64078. This zone could bring us the opportunity to incorporate us in the potential long-term next rally.

The invalidation level is placed at 0.62028, which corresponds to the lowest level reached by the NZDUSD in October 2019. Our long-term target is at 0.7558 level.

Finally, depending on the retracement level of the NZDUSD, the corrective sequence will reveal to us the strength or weakness for the next path.

Categories
Forex Course

Introduction – Forex Academy’s Forex Course 2.0

In the previous course, we started off by understanding what Forex Market is actually about and went on until the concepts related to margin trading. Thank you for the fantastic response to the Course 1.0. Now, its time to step up our learning a bit and move to the next level.

In the previous course, we started off by understanding what Forex Market is actually about and went on until the concepts related to margin trading. Thank you for the fantastic response to the Course 1.0. Now, its time to step up our learning a bit and move to the next level.

In the previous course, we started off by understanding what Forex Market is actually about and went on until the concepts related to margin trading. Thank you for the fantastic response to the Course 1.0. Now, its time to step up our learning a bit and move to the next level.

In this course, we shall be discussing two of the most important topics. They are

✫ Forex Brokers

✫ Types of Analysis

Forex Brokers

If we see back in the ’90s, it was pretty difficult to participate in the retail Forex market due to its high transaction costs. Also, there were many restrictions put up by the government to the people who wanted to participate in the Forex market. However, as time passed, the CFTC (Commodities Futures Trade Commission), a U.S. regulatory agency, decided to bring an end to these complications. So, they passed a couple of bills – the ‘Commodity Exchange Act’ and the ‘Commodity Futures Modernization Act,’ which opened doors for online Forex brokers to ease the process for retail traders.

Then, with the introduction to the world wide web, it became extremely easy for small retail traders to open a forex trading account. Moreover, with an exceptional demand, thousands of Forex brokers came up to benefit from the booming Forex industry as well.

Coming to the present day, we learned about the Margin trading facility provided by the brokers. Now it is time to understand the different types of Brokers in the foreign exchange market. Hence, in this course, we shall go over everything you need to know about Forex Brokers.

Types of Analysis

In the second installment of the course, we will understand a very vital topic, which is on Types of Market analysis. Broadly speaking, there are three ways to analyze the market.

✔︎ Technical Analysis – This analysis is the study of price movement using trading tools like charts and indicators.

✔︎ Fundamental Analysis – It is the analysis of currency by considering its social, political, and economic factors.

✔︎ Sentiment Analysis – Are you under the impression that Forex market analysis is all about numbers and math? That is true to a great extent. But, on top of all those complex numbers, Forex has a close relation with human psychology too. In this type of analysis, traders understand the sentiment of other traders and try predicting the future of the market.

In this course, we will present all the types of analyses mentioned above. By the end of this course, you will also be able to understand how to combine all of these analyses and make your trades more holistic. The format will be similar to that of Course 1.0. A concept will be explained clearly in less than 500 words, and at the end of the course, you can check your learnings by taking a quick 4 – 5 question quiz.

We will start Course 2.0 by understanding the types of Brokers existing in the Forex Market. Are you excited to learn more? Stay tuned for the most amazing, simple, and informative content. Cheers!

Categories
Forex Price-Action Strategies

Risk-Reward and Its Impact on the Price Behavior

Risk-reward is an essential factor in price action trading. When the price makes a breakout and produces a signal, the first thing traders are to calculate is risk-reward. It does not matter how the price heads towards a direction, significant higher high and lower low are to be calculated. These are what determine risk-reward. In today’s lesson, we are going to demonstrate an example of how risk-reward may have an impact on the market.

Risk-reward is an essential factor in price action trading. When the price makes a breakout and produces a signal, the first thing traders are to calculate is risk-reward. It does not matter how the price heads towards a direction, significant higher high and lower low are to be calculated. These are what determine risk-reward. In today’s lesson, we are going to demonstrate an example of how risk-reward may have an impact on the market.

Risk-reward is an essential factor in price action trading. When the price makes a breakout and produces a signal, the first thing traders are to calculate is risk-reward. It does not matter how the price heads towards a direction, significant higher high and lower low are to be calculated. These are what determine risk-reward. In today’s lesson, we are going to demonstrate an example of how risk-reward may have an impact on the market.

The above chart is a daily chart, in which the price action produces a Double Top along with an Inside Bar, and its neckline is not too far. The sellers are to wait for a breakout at the neckline and go short on the pair. Let us flip over to the H4 chart.

The H4 chart produces an Inside Bar as well as the reversal candle. However, the price heads towards the neckline with good bearish momentum. If the price makes an H4 breakout, the sellers may go short up to the last swing low on the H4 chart. The daily support, however, lies a bit further down.

The price is right at the neckline level. It is at a critical level since the last candle closes right at the neckline level. It could go either way from here. Let us see which way it heads.

A massive breakout takes place here. However, look at the last swing low. The price is adjacent to it. This means risk-reward is not lucrative at all. Traders must not sell from here on this chart.

It makes a breakout, which is fantastic. However, the black marked level is daily support. The sellers may take a short entry from here, but that is on the H4-H1 chart combination.

As expected, the price heads towards the daily support, and it produces a bullish reversal candle. It made such a strong bearish move, but the daily-H4 chart combination traders have not found any entry because of the risk-reward issue. If the daily-H4 combination chart traders found an entry, the bearish move would have been more consistent. Let us find out what happened next.

The price heads towards the level sellers were waiting for the price to make a breakout at first. This one is another inconsistent move on this chart. That means an inconsistent move may bring another inconsistent one. To sum up, we could conclude by saying that the risk-reward factor may make the price inconsistent to some extent.

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 13 – US health insurance giant using blockchain, crypto markets in the green after a week of price drops

The cryptocurrency market finally had a green day after a couple of consecutive days of being in the red. The majority of the cryptocurrencies ended up being in the green. However, some did not follow the general market direction and lost some value. Bitcoin managed to raise its price by 0.85% in the past 24 hours. Its price is currently $7,210. Meanwhile, Ethereum increased its value by 1.88%, while XRP fell 0.83%.

The cryptocurrency market finally had a green day after a couple of consecutive days of being in the red. The majority of the cryptocurrencies ended up being in the green. However, some did not follow the general market direction and lost some value. Bitcoin managed to raise its price by 0.85% in the past 24 hours. Its price is currently $7,210. Meanwhile, Ethereum increased its value by 1.88%, while XRP fell 0.83%.

The cryptocurrency market finally had a green day after a couple of consecutive days of being in the red. The majority of the cryptocurrencies ended up being in the green. However, some did not follow the general market direction and lost some value. Bitcoin managed to raise its price by 0.85% in the past 24 hours. Its price is currently $7,210. Meanwhile, Ethereum increased its value by 1.88%, while XRP fell 0.83%.

The cryptocurrency that gained the most Kyber Network, with daily gains of 21.4%. On the other hand, the crypto that fell the most was Bytecoin, which lost 9.27% of its value on the day.

Bitcoin’s dominance stayed at technically the same place as yesterday, as the market mostly moved together. Its dominance in percentage is currently 66.42%, which represents a decrease of just 0.1% of the value it had yesterday.

The cryptocurrency market’s market cap increased in the past 24 hours due to the individual cryptocurrency price rises. Its total value is currently $196.28 billion. This value represents an increase of $1.46 to yesterday’s value.

What happened in the past 24 hours

Anthem, US’s second-largest health insurance company, announced its plans to use blockchain technology for securing its members’ medical data. They would transfer the medical data of all 40 million members to the blockchain. This endeavor would be done over the next three years.

Anthem plans to use blockchain technology for a couple of reasons:

  • Giving patients secure access to their medical data;
  • Giving patients the possibility to share that data as they see fit.

The company is running a pilot test at the moment, which they performing by using a smaller sample size. These members can use a mobile app to scan a QR code which unlocks access to their health records to different healthcare providers for a limited amount of time.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin had a first green day after a week of downward movement. However, this price increase did not break any resistances and Bitcoin is still contained within a range. Its price is currently trading between the 38.2% Fib retracement which is standing at the price of $7,314 and 23.6% Fib retracement of $7,000.


Bitcoin’s volume fell slightly when compared to the value it had yesterday. On the other hand, its RSI value rose above the oversold “border” and is currently at 42.71. The key levels remain the same as there were no key levels broken – to the upside or downside.

Key levels to the upside                    Key levels to the downside

1: $7,314                                           1: $7,000

2: $7,415                                           2: $6,640

3: $7,565                                           3: $6,505

Ethereum

Ethereum also had a first green day after a few consecutive red days. However, ETH was much more productive than Bitcoin in this area. Its price rose slightly but managed to break its resistance of $144.1, turning it into a support level. This level is currently being tested but seems to hold up quite well.


Ethereum’s volume had two major spikes during the bullish move. Other than that, its volume is slightly lower than yesterday. Its RSI is slowly decreasing, but it’s still on higher levels than what it was 24 hours ago. The key level of $144.1 passed to the “downside” side.

Key levels to the upside                    Key levels to the downside

1: $150.5                                              1: $144.1

2: $155.8                                             2: $133.5

3: $161.1                                             3: $128.9

Ripple

Unlike Bitcoin and Ethereum, XRP did not have a good day. It actually lost some value in the past 24 hours. Its price is still contained within the trading zone guarded by the 38.2% Fib retracement line on the upside and 50% Fib retracement line on the downside. XRP’s price, however, tried to make a move to the downside and tested the support level of 0.2182. Its price is currently at this level, fighting to stay above the support line.


XRP’s volume is extremely low, while its RSI is approaching oversold levels fast.

Key levels to the upside                    Key levels to the downside

1: $0.222                                            1: $0.2182

2: $0.2267                                          2: $0.2145

3: $0.234                                            3: $0.2092

Categories
Forex Market Analysis

Daily F.X. Analysis, December 13 – Top Trade Setups In Forex – Borish Johnson’s Takes a Lead! 

Welcome to the last trading day of a week. The British Pound surged 2.1% to a six-month high of $1.3474. U.K. exit polls predicted that Prime Minister Boris Johnson’s Conservative party would win a majority in the House of Commons.

Welcome to the last trading day of a week. The British Pound surged 2.1% to a six-month high of $1.3474. U.K. exit polls predicted that Prime Minister Boris Johnson’s Conservative party would win a majority in the House of Commons.

Welcome to the last trading day of a week. The British Pound surged 2.1% to a six-month high of $1.3474. U.K. exit polls predicted that Prime Minister Boris Johnson’s Conservative party would win a majority in the House of Commons.

The euro advanced 0.5% to $1.1184. While the European Central Bank kept its monetary policy unchanged as expected, President Christine Lagarde said there are some indications of stabilization in the slowdown in the Eurozone’s growth and downside risks are less pronounced.

Economic Events to Watch Today

Let’s took at these fundamentals.

AUD/USD – Daily Analysis

The AUD/USD currency pair flashing green and hit the fresh one-month highs closer to the 0.690 levels. The AUD/USD currency pair is trading at 0.6909 and consolidates n the range between 0.6867 – 0.6910. The AUD/USD did not take any effect from the greenback strength and had continued its bullish rally.

The buying tone surrounding the China-proxy Aussie seemed rather unaffected by persistent risk regarding a phase one trade deal ahead of the December 15 deadline for the new U.S. tariffs on around $156 billion worth of Chinese imports.

At the Sino-US front, the U.S. President Donald Trump is yet to decide on the December 15 tariffs, though optimism continues on the back of news that negotiators were laying the groundwork for a preliminary deal to end the trade war.

Looking forward, Thursday’s U.S. economic docket, featuring the release of the Producer Price Index (PPI), will likely influence the USD price dynamics and produce some short-term trading opportunities during the early North-American session.

Daily Support and Resistance 

  • R3 0.7038
  • R2 0.6977
  • R1 0.6953

Pivot Point 0.6915

  • S1 0.6891
  • S2 0.6854
  • S3 0.6793

AUD/USD– Trading Tips

The AUD/USD pair is hanging around 0.6900, trading mostly bullish despite staying in the overbought zone. The traded higher further above the 0.6865 mark, the 61.8% Fibo retracement level of its November slide. In the 4-hour chart, the 20 SMA has hastened north over the bigger ones, all of them under the current mark. In contrast, the technical indicators lead to the north in overbought territory, without indications of bullish exhaustion. The rally is set to remain on a break over 0.6930, the next resistance.

GBP/USD– Daily Analysis

The British Pound surged 2.1% to a six-month high of $1.3474. U.K. exit polls predicted that Prime Minister Boris Johnson’s Conservative party would win a majority in the House of Commons.

The British Pound advanced piercingly overnight following the Conservative Party of Boris Johnson, who won a substantial majority in the General Election, and while the GBP has found a temporary resistance. Fundamentally, I do see the potential for further gains after sterling completes the bearish retracement. 

Besides this, the focus is on trade wars whereby an official announcement is expected to come from U.S. President Donald Trump. Bloomberg reported in recent trade that Trump would meet with his trade advisers at 19:30 GMT. U.S. Trade Representative Robert Lighthizer, White House economic adviser Kudlow and Treasury Secretary Mnuchin are expected to attend the meeting.

The latest reports are that the United States has considered offering a 50% reduction on $360 billion worth of Chinese imports, which raised market spirits, fulling higher benchmarks and gave an increase in U.S. Treasury bond yields. 

Daily Support and Resistance

  • S3 1.2969
  • S2 1.3071
  • S1 1.3133

Pivot Point 1.3173

  • R1 1.3235
  • R2 1.3276
  • R3 1.3378

GBP/USD– Trading Tip

The GBP/USD is presently consolidating around at1.3457, placing around 19-month high to 1.3515 during the U.S. session yesterday. The U.K. election exit polls foretelling a big win for the incumbent Prime Minister Boris Johnson. 

The GBP/USD pair’s 14-day relative strength index (RSI) is now floating around 80.47. I must say it’s the highest mark since January 2018. An above 70-reading shows overbought situations. Consider capturing retracement below 

USD/JPY – Daily Analysis

The USD/JPY currency pair was flashing green and climber from 108.60 to 109.30, hit the highest level for one-week mainly due to the latest trade headlines in which U.S. President Trump suggests an imminent deal with China. As of writing, the USD/JPY currency pair is currently trading at 109.36 and consolidates in the range between 108.45 – 109.44.

Fresh expectations regarding a deal between the United States and China on tariffs before the December 15 deadline supported equity markets. The Dow Jones reached new record highs and now is up 0.35%, off highs as the optimism eased. 

The United States bonds fell, pushing the yen lower across the board. The United States’ ten-year yield raised by more than 5% as it soared to 1.90% from 1.80% just in a few minutes. Other save haven assets like gold, also dropped significantly. 

More headlines related to trade may continue to flow, giving an impact on market sentiment. The rally of the USD/JPY was also supported by technical factors. The pair climbed above the 109.00 area, breaking a 7-day trading range. It also rose back above the 20-day moving average that stands at 108.80, level that could be seen now as the immediate support. The next support is the lower limit of the mentioned range around 108.40.

Daily Support and Resistance

  • S3 107.94
  • S2 108.28
  • S1 108.42

Pivot Point 108.61

  • R1 108.75
  • R2 108.94
  • R3 109.27

USD/JPY – Trading Tips

The USD/JPY rose 0.8% to 109.40 as investors’ risk appetite grew. The pair is heading towards the double top resistance level of around 109.700. Below this, the USD/JPY is likely to show a bearish correction of up to 38.2% level, which stays at 109.200. 

On the higher side, the bullish breakout of USD/JPY can lead the Japanese pair towards 110.300. The MACD and RSI are in support of the bullish trend. 

All the best!

Categories
Forex Videos

Forex Academy Education For Absolute Beginners Session Five – Becoming A Professional Trader

 

 

Forex.Academy Education For Absolute Beginners – Session Five

 

Thank you for joining Forex.Academy Education For Absolute Beginners – Session Five.
In session three, we demonstrated that by using technical analysis in forex trading will greatly stack the odds in your favour. And in session four, we covered the importance of how the study of a country’s economy, in the form of fundamental analysis, is also a key aspect that professional traders observe.


Another area which is of great importance is timing, both the time of day and timing when it comes to executing your trades. I am sure you will have been to a party that started at 8 p.m, and began fairly lively enough, and then picked up a little more an or so later as more people arrived, and by 11 p.m. when even more guests arrive, the party was in full flight. Forex trading also has it’s lively, or volatile times during the day, especially during the morning session of each of the respective countries’ time zones. For example, European institutions, who are the big guns and who mostly are the cause of the markets to move about, arrive at their desks at around 7 AM CET, followed by London at 7 AM GMT, and then the US markets open at 7 AM EST and they are followed by Chicago a couple of hours later, and then the Asian markets at around 11 PM GMT, and please allow for seasonal clock changes. The point is, the more people trading simultaneously, the more money in the system, and the likelihood for more volatility.
The market can also become extremely volatile around the time of economic data release of each country, as we discussed in section 4. Therefore new traders are advised to be receptive when it comes to trading around these times due to huge volatility and the possibility of huge movements or swings in the price of a currency pair.


The really cool thing about forex trading is that there are a number of tools that you traders can use to automatically stop trades at a chosen point to mitigate against losses. But the best friend for a new trader is a demo account, which allows novice traders to learn how to trade in real market conditions, but without risking their own funds. The bottom line is if you cannot trade and make money consistently on a demo account, you will not be able to make money trading on a real money account. Here at Forex.Academy, we recommend a good educational grounding, which we provide free of charge, and then we recommend practice, practice, practice.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 12 – Top Trade Setups In Forex – U.K. Voting and ECB in Play! 

 

 

The U.S. dollar declined versus other major currencies as the Fed signaled that interest rates could be stable at current levels through 2020. The ICE U.S. Dollar Index sank to 97.08, the lowest level since August.

The euro rose 0.4% to $1.1133. The European Central Bank is expected to keep its monetary policy unchanged later today.

As expected, the Federal Reserve maintained the rates after cutting them at three earlier meetings. Fed Chairman Jerome Powell stated that monetary policy is well-positioned for the expanding economy, where the jobs market is expected to remain strong and inflation moderate.

Economic Events to Watch Today

Let’s took at these fundamentals.

 

 

EUR/USD – Daily Analysis

The EUR/USD currency pair slightly recovered in the last hour in the wake of inflation data released from the United States, which made the EUR/USD pair weaker. As of writing, the EUR/USD currency pair is currently trading 1.1094 but virtually unchanged daily near the 1.1090 handles. 

The data published by the United States (U.S.) Bureau of Labor Statistics (BLS) on Wednesday showed that the core Consumer Price Index (CPI) in the United States stayed unchanged at 2.3% every year during November. Although these figures came in line with the market expectation, the initial reaction caused the U.S. Dollar Index to drop to a fresh session low below the 97.50 marks.

Despite this, the EUR/USD currency pair may not pick up bid further in the coming hours because traders are unlikely to take large bets before the Federal Reserve Open Market Committee monetary policy announcements. However, investors don’t see the Federal Reserve cutting rate again; the updated economic projections will provide fresh hints regarding the rating outlook in 2020. 

After the FOMC event, investors’ eyes will shift to the European Central Bank’s (ECB) meeting and President Lagarde’s first press conference on Thursday.

According to the ECB event, we will not see the steady bullish progress in the EUR currency because policy continuity should be the main takeaway. Lagarde’s style and sound is a wild card. Preventing an early misstep there, the slight declines we see to growth may be offset upgrades to next year’s inflation forecast.

At the Fed front, the Federal Reserve is expected to keep the Fed Funds rate stable at the 1.50 – 1.75% range. After cutting interest rates 3-times in a series, for now, market participants see no change today and also at the January meeting. Most members of the Federal Open Market Committee (FOMC) mentioned they think the current stance of policy appropriate. 

Looking forward, the Federal Reserve will announce its decision regarding monetary policy today at 19:00 GMT. Chairman Jerome Powell will read a statement and will hold a press conference at 19:30 GMT. 

Daily Support and Resistance

  • S3 1.102
  • S2 1.1043
  • S1 1.1054

Pivot Point 1.1066

  • R1 1.1076
  • R2 1.1089
  • R3 1.1111

EUR/USD– Trading Tips

The EUR/USD has crossed over its 5-month downtrend at 1.1113. The EUR/USD is trending higher but has not gained any support until now. The EUR/USD has next support near 61.8% Fibonacci support level of 1.1105.  

While the resistance stays around 1.1190, and the 1.1225 horizontal resistance mark strictly follows it. Considering the recent crossover on MACD, the pair may trade bearish below the 1.1100 level today. 

GBP/USD– Daily Analysis

The GBP/USD currency pair dropped but recovered a significant part of its early declines to weekly lows manly in the reaction to the latest election polls results. As of now, the GBP/USD currency pair is currently trading near the 1.3179 and consolidates in the narrow range between 1.3108 – 1.3188 after the Fed holding rates steady yet signaling that there will not be a change in rates in 2020, something quite to the contrary of Fed watchers.

The pair continued the previous session’s late pullback from over eight-month highs and saw some follow-through long-unwinding trade on Wednesday in the wake of the latest U.K. election poll, which tilted towards a hung parliament.

A closely watched YouGov’s poll based on the MRP model showed a narrowing lead for Prime Minister Boris Johnson’s Conservative Party, now expected to win a majority of 28 seats in the parliament, falling sharply from 68 last month.

The slight pick up in the greenback demand, despite the uncertainty of President Trump regarding the phase-one trade deal between the United States and China, further collaborated to the pair’s intraday slide to the 1.3100 neighborhood.

No:1 Key takeaways from FOMC statement and projections

No:2 The market has priced in virtually no chance of rate move through February.

No:3 IOER 1.55% vs 1.55% prior.

No:4 Fed drops language about ‘uncertainties about this outlook remain.’

No:5 The vote was unanimous.

No:6 The Committee will continue to monitor the implications of incoming information for the economic outlook, including global developments and muted inflation pressures, as it assesses the appropriate path of the target range for the federal funds rate.”

No:7 No changes in the economic outlook paragraph*

No:8 Says, “the current stance of monetary policy is appropriate.”

No:9 Leaves forecasts for GDP and inflation unchanged lowers 

unemployment.

No:10 The median forecast is for one rate hike in 2021 and one in 2022.

Looking forward, we are now counting down to the U.K. election vote for Thursday, where results are expected to come in from around 0200 GMT onwards. Pound Sterling has been improving because of yesterday’s YouGov outcome that proved the Conservative’s lead was narrowing. 


Daily Support and Resistance

  • S3 1.3056
  • S2 1.3104
  • S1 1.3124

Pivot Point 1.3153

  • R1 1.3173
  • R2 1.3202
  • R3 1.325

GBP/USD– Trading Tip

The GBPUSD is displaying a solid bullish bias as traders seem confident about the victory of the Conservative party and assume Boris Johanson to win the election. The GBP/USD may persist massively volatile today, and a day after, as the election result will start reaching out by tomorrow morning. On the higher side, the GBP/USD is expected to find resistance around 1.3265 and 1.3336. While the support can be seen near 1.3185 and 1.3110.

The RSI and MACD are in the bullish zone, signaling chances of a bearish correction, but then the Sterling will be found to do more upward movement. 

USD/JPY – Daily Analysis

The USD/JPY currency pair initially hit the bullish track and rose to 108.76 and the reversed falling to 108.57, the new daily bearish level after the decision of the Federal Reserve to keep the rate unchanged. As of writing, the USD/JPY currency pair is currently trading at 108.60, slightly lower as compared to previous before the statement.

The greenback dropped across the bard and hit the fresh bearish levels. The U.S. Dollar Index dropped under 97.30, the lowest level since November 4. The United States’ yields moved to the downside, and equity prices in Wall Street rose but remain under the highs. 

At the Sino-US front, the clock is ticking because we close in on the deadline on the so-called ‘phase- one’ deal and/or tariff delay by December 15. We are awaiting an announcement from U.S. President Donald Trump to come before the weekend’s deadline. Moreover, the news yesterday that tariffs would be delayed caused a short period of risk-on in the markets. Still, the news was unconfirmed, and Trump’s closest advisers tell the decision is finally depend on the president.

Daily Support and Resistance    

  • S3 108.06
  • S2 108.31
  • S1 108.43

Pivot Point 108.56

  • R1 108.68
  • R2 108.8
  • R3 109.05

USD/JPY – Trading Tips

On Thursday, the dovish FOMC and weaker U.S. dollar have driven sharp selling in the USD/JPY currency pair this week. For now, the pair is trading above 108.550, which is working as a double bottom support level.

A bearish breakout of this level can trigger selling until 108.250. The USD/JPY has already completed 81% retracement on three hourly charts, and this level can give some support to USD/JPY. Above this, the pair may find resistance around 108.900. Let’s wait for NFP to determine the further trend of USD/JPY. 

All the best!

Categories
Forex Videos

Forex Academy Education For Absolute Beginners Session Four – Becoming A Professional Trader

https://youtu.be/VB-iU3eVFm8

https://youtu.be/VB-iU3eVFm8

Forex.Academy Education For Absolute Beginners – Session Four

In session 3 we showed you the power of using technical analysis and how that enables traders to stack the odds in their favour when it comes to trading forex. Simply by adding a few technical indicators to your charts,, you will be able to identify recurring chart patterns and trends and make your trading decisions based on what these tools tell you about a currency pair, just like professional traders do all over the world.


However, if you are thinking about running off and opening a trading account and adding a couple of technical tools to your screens and start trading, you will be making the same mistake as many other novice traders. Because, although technical analysis is the backbone of currency trading, there are also other components that you must learn about before you dive in and risk your hard-earned cash.
The next key component which you must learn about is fundamental analysis. This is the study of a country’s financial status based on the money it has coming into its coffers in the form of taxes and its overall expenditure, including debt.

All of this will show whether a country is doing well, OK and as the market is expecting it to perform, or if it is doing badly. This, in turn, will affect the value of the currency of that country. And if we go back to session one, where we learned that all currencies are traded in pairs, new traders must understand that a country’s wealth is constantly changing and, therefore, the value of its currency – based on another country’s currency – will continually fluctuate.
What’s more, countries regularly release economic data regarding the status of their country, and this will include information such as the amount of people that are unemployed, the amount of income that a country generates, which is called it’s gross domestic product or GDP, and also other factors including the amount of spending power of its population and the country’s interest rates and future plans help the country in times of slowdowns, or to help slow down an economy if the national debt becomes too high.


And so it is essential to follow an economic calendar, which is freely available and to ensure that trading positions are not opened directly when such data is released, because the market can become volatile at these times.
Forex.Academy, Is a complete library on fundamental analysis, and do not worry, because you do not need to be an economist, but we will show you the absolute basic requirements that you should know in this ar

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 11 – NIKE patents blockchain-based system for their business, crypto markets in the slight red

The crypto market is consolidating and trying to find a price to stabilize. Most cryptocurrencies did end up in the red. However, the losses were quite negligible. If we look at the past 24 hours, Bitcoin’s fell by 0.84%. Its price is $7,238 at the moment of writing. Meanwhile, Ethereum lost 0.7%, while XRP fell 0.09%.

The crypto market is consolidating and trying to find a price to stabilize. Most cryptocurrencies did end up in the red. However, the losses were quite negligible. If we look at the past 24 hours, Bitcoin’s fell by 0.84%. Its price is $7,238 at the moment of writing. Meanwhile, Ethereum lost 0.7%, while XRP fell 0.09%.

The crypto market is consolidating and trying to find a price to stabilize. Most cryptocurrencies did end up in the red. However, the losses were quite negligible. If we look at the past 24 hours, Bitcoin’s fell by 0.84%. Its price is $7,238 at the moment of writing. Meanwhile, Ethereum lost 0.7%, while XRP fell 0.09%.

The biggest daily crypto gainer for the largest market cap cryptos is MINDOL, with gains of 67.83%. On the other hand, the biggest daily crypto loser is EDUCare, which lost 9.55% of its value.

Bitcoin’s dominance fell slightly in the past 24 hours. Its dominance sits at 66.3% at the time of writing. This value represents a decrease of 0.26% from yesterday’s value.

The cryptocurrency market’s market cap fell slightly in the past 24 hours. Its total value is currently $197.75 billion. This represents a decrease of $1.71 billion when compared to yesterday’s value.

What happened in the past 24 hours

Another good indicator of blockchain’s popularity is the number of companies trying to utilize it’s potential. Nike recently became one of these companies as they patented shoes that are tokenized as a non-fungible token. This tokenization will work on the Ethereum blockchain.

The patent thoroughly describes a digital asset for footwear as well as ways to use it. The document explained how Ethereum’s ERC721 or ERC1155 tokens are used to authenticate and transact a physical shoe.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin had another small price drop in the past 24 hours. Even though the drop seems negligable, its price actually fell under another support line. The price was consolidating between the $7,415 resistance and $7,314 Fib retracement line yesterday. However, the $7,314 line got broken and turned resistance. Bitcoin’s next support level would be $7,000.


Bitcoin’s volume was on an upswing during the price drop but normalized quite fast at lower levels. Its RSI value fell and is now very close to the oversold levels.

Key levels to the upside                    Key levels to the downside

1: $7,314                                           1: $7,000

2: $7,415                                           2: $6,640

3: $7,565                                           3: $6,505

Ethereum

Ethereum had almost the same red candle that moved the market down slightly as Bitcoin. However, its price recovered a bit better, and Ethereum created a few small green candles.

On top of that, the second-largest cryptocurrency by market cap didn’t break any support levels. Its price now trades between the $150.5 key resistance and $144.1 critical support level. After the price drop, the support level got tested and held up quite well.


Ethereum’s volume is at a reasonably normal level compared to the previous days. Its RSI almost hit the oversold territory but is currently on the upswing.

Key levels to the upside                    Key levels to the downside

1: $150.5                                             1: $144.1

2: $155.8                                            2: $133.5

3: $161.1                                            3: $128.9

Ripple

XRP’s chart is looking like it’s having an identity crisis, as bulls and bears are constantly fighting. As stated before, it’s underwhelming to say that XRP just broke its uptrend. Rather, the price drop looks like a downtrend. Still, there is good news for XRP after all. After its price dropped below $0.222, which was the next key support and the 38.2% Fib retracement line, bulls rallied and brought the price above it. That way, the $0.222 level still acts as an immediate support level.


XRP’s volume is currently extremely low, while it’s RSI value is closer to the bottom half of the range. No key levels changed as XRP didn’t break any of them.

Key levels to the upside                    Key levels to the downside

1: $0.2267                                          1: $0.222

2: $0.234                                            2: $0.2182

3: $0.2351                                          3: $0.2145

Categories
Forex Market Analysis

Daily F.X. Analysis, December 11 – Top Trade Setups In Forex – Brace for FOMC & Fed Rate!

The forex market extends trading sessions mostly with the mixed sentiments as the trader’s eye remains on the Fed Policy decision and CPI rate today. The FOMC will publish its policy statement, and Chairman Powell will be giving his comments on the policy standpoint. Ahead of this event, the U.S. Dollar Index is down 0.22% at 97.45 on Tuesday, supporting the pair stay relaxed above the 0.6800 handles. 

The forex market extends trading sessions mostly with the mixed sentiments as the trader’s eye remains on the Fed Policy decision and CPI rate today. The FOMC will publish its policy statement, and Chairman Powell will be giving his comments on the policy standpoint. Ahead of this event, the U.S. Dollar Index is down 0.22% at 97.45 on Tuesday, supporting the pair stay relaxed above the 0.6800 handles. 

The forex market extends trading sessions mostly with the mixed sentiments as the trader’s eye remains on the Fed Policy decision and CPI rate today. The FOMC will publish its policy statement, and Chairman Powell will be giving his comments on the policy standpoint. Ahead of this event, the U.S. Dollar Index is down 0.22% at 97.45 on Tuesday, supporting the pair stay relaxed above the 0.6800 handles. 

Today, the trader’s focus will stay on the U.S. Monetary Policy and CPI rate from the U.S. Let’s brace for it. 

Economic Events to Watch Today

Let’s took at these fundamentals. 

AUD/USD – Daily Analysis

The AUD/UD currency pair flashing green and rose to 0.6835, mainly due to the upbeat data from Australia and unexpectedly higher inflation figures from China. As of writing, the AUD/USD pair is currently trading at 0.6814 and consolidates in the range between the 0.6800 – 0.6837.

The currency pair struggled to maintain its recovery rally due to a lack of progress surrounding the United States and China trade war and fell to a fresh weekly low of 0.6800 before recovering modesty.

The National Australia Bank’s Business Conditions Index remained unchanged at 4 in November, but it beat the expectations of 2. On the other, the annual House Price Index for the third quarter came in at -3.7%, after a second quarter’s figure of -7.4%, which supported the Australian Dollar.

In the second half of the day, the Wall Street Journal (WSJ) reported that the U.S. and China’s trade negotiators are working toward delaying the December 15 tariff hike. That gave a boost to the market sentiment and trade-sensitive AUD.

During the Asian session on Wednesday, Westpac Consumer Confidence Index from Australia, which is expected to drop to -0.7% in December from 4.5% in November, will be keeping under the eyes. 

Following in the day, the FOMC will release its policy statement, and Chairman Powell will be delivering his remarks on the policy outlook. Ahead of this event, the U.S. Dollar Index is down 0.22% at 97.45 on Tuesday, supporting the pair stay relaxed above the 0.6800 handles.

While reviewing Wednesday’s FOMC meeting, “after three cuts in a series, we expect the Fed to remain on hold (target range 1.50-1.75%) when it meets next week,” said Danske Bank analysts. “FOMC members have made it clear that they think the ‘current stance of monetary policy is appropriate’ and that they now want to wait some time and see how everything plays out before acting again.”


Daily Support and Resistance

  • S3 0.6795
  • S2 0.6811
  • S1 0.6817

Pivot Point 0.6826

  • R1 0.6833
  • R2 0.6842
  • R3 0.6858

AUD/USD– Trading Tips

On Wednesday, the AUD/USD is consolidating mostly bearish after falling below 38.2% Fibonacci retracement at 0.6820. It has also completed 50% Fibonacci retracement at 0.6795. The AUD/USD pair is now trading around 0.6808, in between the upper limit of 0.6820 and a lower limit of 0.6795. 

 A bearish breakout of 0.6795 level can extend selling until 0.6775. The MACD is holding below 0, suggesting the chances of a bearish trend continuation in Aussie. Let’s look for buying above 0.6775 and selling below 0.6820level. 

 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing green and hit the seven-months high from the bearish level of 1.3132 to 1.3189 while heading toward the United Kingdom elections on Thursday, and the result of elections will be released early Friday morning. As of writing, the currency is currently trading at 1.3188 and consolidates in the range between the 1..3132 to 1.3197.

According to the current situation, the Tories are ready to win the U.K. election, which may put the Brexit deal to bed. Today, the United Kingdom’s economic data don’t take a front seat due to the election hype, despite flat figures for Gross Domestic Produce for October. 

The GDP figures have followed 2-consecutive monthly contractions, which means we have now seen 3-consecutive months of negative/zero m/m growth for the 1st-time since 2009.

It should be noted that after this week’s snap December election, the next difficulty for the United Kingdom markets is next week’s Bank of England decision. However, the United Kingdom data continues to fall at a moderate rate since the last BoE meeting, which drives the dovish sentiment regarding the next rate decision. 

Looking forward, the markets will keep their focus on the Federal Open Market Committee and the Federal Reserve after the interest rate decision. Rates are expected to remain stable at 1.50-1.75%, while patience rhetoric will follow previous Federal Reserve speeches and statements furnished with preconditions before rate cut again in the future. 

    

Daily Support and Resistance

  • S3 1.3056
  • S2 1.3104
  • S1 1.3124

Pivot Point 1.3153

  • R1 1.3173
  • R2 1.3202
  • R3 1.325

GBP/USD– Trading Tip

The cable pair holds a bullish tone, but it is showing some short-term bearish signals after being unable to stay on top of 1.3160. Nevertheless, the trend in the pair points clearly to the upside, and consolidation of the GBP/USD above 1.3180 would expose the pair towards 1.3200. The prices need to cross May month high near 1.3180 to target 1.3200 and 1.3270 figures to the north, declining to do so highlights Wednesday’s top surrounding 1.3120 as immediate support. 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the bullish track and reached 108.75, mainly due to the Wall Street Journal reported that the United States and China trade talks are working toward delaying the tariff hike. After fastening to a fresh daily bullish of 108.75, the pair USD/JPY currency pair reversed slightly and was last seen trading at 108.62, where it was up 0.05% on a daily chart.

The U.S. and Chinese trade negotiators are planning for a delay of a fresh round of tariffs set to impose on December 15, according to officials on both sides. The market reaction to this headline also provided the ten-year United States Treasury bond yield to cancel its daily losses and helped the S&P 500 futures to move into the positive territory, pointing out to a positive shift in the market sentiment.

Meanwhile, the U.S. Dollar Index remains to move sideways a little above the 97.50 marks to allow the risk perception to continue to drive the pair’s action.

At the starting of today, the NFIB Business Optimism Index in the U.S. increased to 104.7 during November from 102.4, but the Unit Labor Costs rose 2.5% in the 3rd-quarter to drop short of the market expectation for an increase of 3.3%. But, these readings were largely ignored by the market members ahead of the FOMC’s monetary policy announcements on Wednesday. 

Daily Support and Resistance

  • S3 108.06
  • S2 108.31
  • S1 108.43

Pivot Point 108.56

  • R1 108.68
  • R2 108.8
  • R3 109.05

USD/JPY – Trading Tips

On Wednesday, the USD/JPY is likely to trade sideways until the release of FOMC and U.S. inflation rates. The pair is trading above 108.550, which is working as a double bottom support level. A bearish breakout of this level can trigger selling until 108.250. The USD/JPY has already completed 81% retracement on three hourly charts, and this level can give some support to USD/JPY. Above this, the pair may find resistance around 108.900. Let’s wait for FOMC to determine the further trend of USD/JPY. 

All the best!

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 10 – JP Morgan launching its blockchain network in 2020

The crypto market has its first red day after a green weekend. Most cryptocurrencies ended up in the red. If we look at the past 24 hours, Bitcoin’s price decreased by 1.76%. It is now trading for $7,353. Meanwhile, Ethereum lost 0.43%, while XRP fell 2%.

The crypto market has its first red day after a green weekend. Most cryptocurrencies ended up in the red. If we look at the past 24 hours, Bitcoin’s price decreased by 1.76%. It is now trading for $7,353. Meanwhile, Ethereum lost 0.43%, while XRP fell 2%.

The crypto market has its first red day after a green weekend. Most cryptocurrencies ended up in the red. If we look at the past 24 hours, Bitcoin’s price decreased by 1.76%. It is now trading for $7,353. Meanwhile, Ethereum lost 0.43%, while XRP fell 2%.

The biggest top100 crypto gainer for today is Chainlink, with gains of 10.85%. On the other hand, the cryptocurrency that lost the most today was Matic Network, which lost 50.4% of its value.

Bitcoin’s dominance stayed at the almost exact place when compared to where it was yesterday. Its dominance is currently 66.56%, which represents an increase of 0.03% from yesterday’s value.

The cryptocurrency market’s market capitalization dropped in the past 24 hours. The market cap is currently at roughly $199.46 billion. This value represents an increase of $4.7 billion against the value it had on yesterday.

What happened in the past 24 hours

JPMorgan announced the launch of its blockchain-based payment network for the Japanese market in early 2020. The payment network is based on JPMorgan’s in-house blockchain platform, Quorum. The Interbank Information Network (IIN) wants to improve payment transactions as well as data sharing between banks.

Bloomberg’s report says that over 80 Japanese banks have a serious intent to join the platform. Out of the 365 total members that announced to join the platform, over 20% are Japanese banks.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

After a great weekend, Bitcoin came back to almost the exact same spot it was in before it. The biggest cryptocurrency managed to lost its gains and fall under the $7,415 resistance, which is now turned support. The price is now consolidating between the $7,415 resistance and $7,314 Fib retracement line which is now acting as support. The immediate support line got tested twice, but held up both times.


Bitcoin’s volume spiked during the price drop but is now normalizing at lower levels. Its RSI levels fell down from being close-to overbought and normalized as well.

Key levels to the upside                    Key levels to the downside

1: $7,415                                           1: $7,314

2: $7,565                                           2: $7,240

3: $7,828                                           3: $7,120

Ethereum

Ethereum followed Bitcoin once again, which became almost a daily occurrence whenever big moves happen. Ethereum bulls stepped in and brought the price above the resistance of $150.5 over the weekend. After that happened, Ethereum immediately had a small level retesting, but the real test was ahead (as we reported yesterday). As the bears gathered and pulled the price down, the $150.5 resistance did not hold up, and Ethereum went under it.


Ethereum’s volume is currently really low relative to the previous days. Its RSI is in the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $150.5                                             1: $144.1

2: $155.8                                            2: $133.5

3: $161.1                                            3: $128.9

Ripple

It’s underwhelming to say that XRP broke its uptrend. After a whole week of a steady increase in price, it dropped significantly and lost around 40% of its gains from the whole uptrend move. After a sudden burst towards the upside on Dec 8, the price reached $0.234 but quickly started falling due to bulls not having enough buying pressure. The downward-facing move continued, and XRP’s price dropped from $0.234 all the way down to $0.222. However, this key level held up, and the price stabilized, at least for the time being.


There was no volume increase when this price-drop happened, which is quite interesting. XRP’s RSI value also returned to the bottom half of the range.

Key levels to the upside                    Key levels to the downside

1: $0.2267                                          1: $0.222

2: $0.234                                            2: $0.2182

3: $0.2351                                          3: $0.2145

Categories
Forex Basics Forex Price-Action Strategies

A Story of a False Bullish Breakout

In today’s lesson, we are going to demonstrate an example of a short entry that is derived from a false breakout. It contains two lessons. Let us get started.

In today’s lesson, we are going to demonstrate an example of a short entry that is derived from a false breakout. It contains two lessons. Let us get started.

In today’s lesson, we are going to demonstrate an example of a short entry that is derived from a false breakout. It contains two lessons. Let us get started.

The price heads towards the North and makes an upside breakout. The buyers are to keep their eyes on the pair to go long upon consolidation and bullish reversal candle at the breakout level. Let us find out what happens next.

Wow! This is a copybook corrective candle, which closes right at the breakout level. A bullish reversal candle followed by a breakout at the highest high would get the buyers engaged in buying the pair.

The buyers might not have even thought about it. They are to let the sellers dominate in the pair, while sellers should wait for the breakout confirmation and a bearish reversal candle to go short on the pair. However, they have to calculate that the last swing low is not too far.

The price keeps going towards the South without having apposite consolidation. It consolidates just before the support. The price has been bearish but has not offered any short entry on this chart. Meanwhile, it has made another bearish breakout. The sellers shall be hopeful again. Look at the chart below.

This is an explicit breakout, and the next candle confirms it. The consolidation and the price breakout at the lowest low would be a signal to go short. Let see what the price does this time.

Price action traders have been waiting for this. The price consolidates and makes another breakout. By setting Stop Loss above the resistance, an entry may be triggered right after the last candle closes.

This is how it goes. The price produces consecutive four bearish candles. The very last candle comes out as an Inside Bar. Most traders may come out with their profit; some may still hold their trade by locking some profit.

 Lessons

We learned two lessons from here

  1. False breakout usually drives the price towards the opposite direction.
  2. Risk-reward is always a factor. It does not offer an entry within the first support since risk-reward is not lucrative. It offers an entry on the second breakout, where there is not support nearby.

The Bottom Line

In the beginning, it may sound too many things to remember in price action trading. It is right to some extent. However, if we practice hard, study with the recent price behavior on the chart with as many pairs as we can, surely it will get easy for us.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 10 – Top Trade Setups In Forex – Eyes on British GDP Figures! 

The market continues to trade mixed risk sentiment due to diminishing expectations of no interest rate cuts by the Fed and delay in the trade deal. The top White House Economic Adviser, Larry Kudlow, confirmed on Friday that the December 15 deadline to impose new tariffs on around $156 billion worth Chinese products remains in place.  

The market continues to trade mixed risk sentiment due to diminishing expectations of no interest rate cuts by the Fed and delay in the trade deal. The top White House Economic Adviser, Larry Kudlow, confirmed on Friday that the December 15 deadline to impose new tariffs on around $156 billion worth Chinese products remains in place.  

The market continues to trade mixed risk sentiment due to diminishing expectations of no interest rate cuts by the Fed and delay in the trade deal. The top White House Economic Adviser, Larry Kudlow, confirmed on Friday that the December 15 deadline to impose new tariffs on around $156 billion worth Chinese products remains in place.  

At the same time, he also said that the U.S. President Donald Trump is satisfied with the recent progress in trade discussions. Yet he is not looking to go with the current phase one trade deal. 

Today, the trader’s focus will stay on the British GDP and further events from the Eurozone. Let’s brace for it. 

Economic Events to Watch Today

Let’s took at these fundamentals.

 

EUR/USD – Daily Analysis

The EUR/USD currency pair continues its bullish moves mainly due to the greenback’s bearish reversal across the board and weaker United States Treasury yields. As of writing, the EUR/USD pair is trading near the 1.1064 and consolidates in the narrow range between the 1.1053 – 1.1078.

Besides, the currency pair picked up the fresh buying during the last hour, in the wake of the revived trade war between the United States and China. The dismal of China trade data also depressed the market mood.

The lowered demand for higher-yielding assets such as the Treasury yields pushed the U.S. dollar broadly lower. The USD index corrects Friday’s positive U.S. payrolls led upsurge to 97.84, now trading at session lows of 97.63, -0.15% on the day.

Even after the recent bullish moves, the currency pair still in the red zone because the greenback may remain supported by the stronger United States employment data that diminished the 2020 rate cut expectations by the Federal Reserve.

At the ECB front, the European Central Bank (ECB) President Largerde will deliver her first speech as a president regarding monetary policy during this Thursday. She will likely provide a hint about the ECB’s commitment to the recent stimulus package that included a rate cut and the restarting of the quantitative rate cut(Q.E.) program.

Meanwhile, the markets now await the Eurozone Sentix Investor Sentiment data, which is de during the European session today. Better-than-expected German Trade and Current Account data also collaborate with the positive tone around the shared currency.

Furthermore, the investor’s confidence in the Eurozone increased sharply in December, despite rising US-China trade tensions and the German slowdown, the latest data published by the Sentix research group showed on Monday.

The quote climbed to +0.7 in December from -4.5 in November and against a figure of -4.9 expected. The investors’ confidence hit the highest since March 2018.


Daily Support and Resistance

  • S3 1.093
  • S2 1.1
  • S1 1.1031

Pivot Point 1.107

  • R1 1.1101
  • R2 1.1141
  • R3 1.1211

EUR/USD– Trading Tips

The EUR/USD has disappointed in its first test of the 5-month downtrend at 1.1113. The EUR/USD is trending lower but has not gained any support until now. The EUR/USD has next support near 61.8% Fibonacci support level of 1.1040.  

While the resistance stays around 1.1070, and the 1.1075 horizontal resistance mark strictly follows it. Considering the recent crossover on MACD, the pair may trade bearish below the 1.1070 level today. 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing red and representing declines to 1.3135 from the highest level since early April of 1.3180 after the release of a new poll ahead of the snap December elections in the United Kingdom. The Cable experienced a slight bearish reversal on Monday and mostly traded at 1.3155/60, up 20 pips for the day. 

The GBP/USD currency pair was seen on the bullish track on Monday, but it remains under 1.3200. The GBP continues to be supported by the polls showing a top position of the Conservatives Party. Just minutes ago, the fresh opinion poll by ICM revealed that the United Kingdom Prime Minister Boris Johson’s Conservative Party remain unchanged at 42%. In contrast, support for the party rose by 1 point to 36%. The Tory slightly pushed lower the GBP in advance.

The reversal in the GBP/USD currency pair was limited as the volatility remain low, and the U.S. dollar continued to show slight bearish bias. 

Looking forward, the critical event in the U.S. will be the FOMC meeting on Wednesday. Analysts and traders are also focusing on trade progress as the December 15 deadline for hiking tariffs on Chinese goods remains in highlights. 


Daily Support and Resistance

  • S3 1.3004
  • S2 1.3069
  • S1 1.3103

Pivot Point 1.3134

  • R1 1.3168
  • R2 1.32
  • R3 1.3265

GBP/USD– Trading Tip

On the technical side, the cable pair holds a bullish tone, but it is showing some short-term bearish signals after being unable to stay on top of 1.3160. Nevertheless, the trend in the pair points clearly to the upside, and consolidation of the GBP/USD above 1.3180 would expose the pair towards 1.3200. 

The prices need to cross May month high near 1.3180 to target 1.3200 and 1.3270 figures to the north, declining to do so highlights Wednesday’s top surrounding 1.3120 as immediate support.

In the daily timeframe, the GBP/USD has an upward crossover on MACD. Lastly, the three white candles on the daily timeframe are suggesting bullish bias among traders. 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the five-days low below the 108.50 ahead of important macroeconomic events. The pair struggle to stage a recovery on Monday and was last seen trading at 108.49, a few pips above the 5-day low that it set at 108.43 in the last hour.

The economic figures showed that the business sentiment grew slightly during November with the Eco Watchers Survey’s Outlook and the Current indexes both coming out better than their October figures.

Looking forward, the trader will keep their eyes on the fresh progress surrounding the United States and China trade talks. If both sides could make a deal and sign the phase-one of the trade deal ahead of the United States tariff hike on Chinese imports on December 15, a relief rally will likely cause the Japanese Yen to lose interest as a safe-haven and support the pair gain bullish moves.

The U.S. Federal Open Market Committee (FOMC) will be publishing its monetary policy decisions on Wednesday. In contrast, the FOMC is not expected to make any changes to its policy rate. It will be interesting to see how the Fed estimates the positive Gross Domestic Product (GDP) and Nonfarm Payrolls (NFP) data. 

Last week on Friday, the U.S. Bureau of Labor Statistics reported that Nonfarm Payrolls increased by 266,000 during November to cross the market expectation of 180,000 and provided a boost to the U.S. Dollar Index. Consequently, the USD/JPY pair got bullish support. Meanwhile, the S&P 500 futures are virtually unchanged on the day, hinting that Wall Street is likely to open flat to reiterate the neutral market sentiment.


Daily Support and Resistance   

  • S3 107.85
  • S2 108.26
  • S1 108.44

Pivot Point 108.68

  • R1 108.85
  • R2 109.1
  • R3 109.51

USD/JPY – Trading Tips

On Tuesday, the demand for haven assets and weaker U.S. dollar has driven sharp selling in the USD/JPY currency pair this week. For now, the pair is trading above 108.550, which is working as a double bottom support level.

A bearish breakout of this level can trigger selling until 108.250. The USD/JPY has already completed 81% retracement on three hourly charts, and this level can give some support to USD/JPY. Above this, the pair may find resistance around 108.900. Let’s wait for NFP to determine the further trend of USD/JPY. 

All the best!

Categories
Candlestick patterns Forex Daily Topic

Candlestick Trading Patterns III – The Doji, The Most Critical Candle

The Doji

The Doji

The Doji

The Doji is a special candle, not only because of its striking appearance but also because it is one of the most vital signals in trading. This figure is so important that we need to understand it very well, as it is one of the safest trading signals when properly applied.

Fig 1 – A Doji on a chart

The Doji is characterized by having the open and close at the same level while standing out for its elongated upper and lower shadows. The figure of the Doji has a precise meaning. Buyers and sellers are in a state of mental indecision. The Doji is a powerful sign of trend change. The probability of a turn increases if in addition to the Doji:

  1. The next candles confirm the Doji’s signal
  2. The market is overextended
  3. The chart does not have many Doji.

The perfect Doji has the same open and close values. Nevertheless, if both levels are separated a few pips, and the candle can still be seen as a single line, it can be considered as Doji.

The Doji is a powerful signal to detect market tops. Steve Nison says that a dog is a sign of indecision by buyers, and an upward trend cannot be sustained by undecided traders. Nison also points out that, from his experience, the Doji loses some reversal potential during downtrends. That observation may apply to the stock market but is useless in pairs trading, as they are symmetric. In this case, a bullish trend of a pair is a bearish pare on the inverse pair and vice-versa. So a Doji will always have a similar meaning: The trend is compromised.  When trading commodities, indices, or stock ETFs the trader should take this into account, though.

In view that a Doji is such a powerful signal, it is better to act upon it. Better to attend a false signal than ignore a real one. Therefore, dojis are signals to close positions, since a Doji alone does not mean a price reversal.

The Northern Doji

The northern Doji is called a Doji that shows up during a rally. According to Mr. Nisson, ” The Japanese say that with a Doji after a tall white candle, or a Doji in an overbought environment, that the market is “tired.” Therefore, as said, a Doji does not mean immediate market reversal. It shows the trend is vulnerable.

 

FIg 2 – Down Jones Industrial Average showing northern Doji.

As we can see in the chart above, a Doji after a large candle, as in the first case, is followed by a gap and a drop to the base of a previous candle that surged after a gap.  The next Doji we see was an inside bar that just acted as a retracement and continuation. In the third case, we can see two Dojis, the second being a kind of hanging man with no head. In this case, we notice that the third bearish candle is the right confirmation of the trend reversal. It is not uncommon to observe tops depicting several small bodies, one of which is a Doji.

The Long-legged Doji

Fig 3 – Long-legged Doji in a SPY Daily chart.

We already know that a small body and long upper and lower shadows is called a high wave candle. If the figure doesn’t have a body is called “long-legged Doji,” and also called “rickshaw man.” As it happens with high-wave candles, it reflects great confusion and indecision.

Gravestone Doji

The gravestone Doji is the Doji that begins and ends at the low of the day. According to Stephen Bigalow, the Japanese name is set to represent “those who died in the battle.” Gravestone Dojis are a rarity.

Fig 4 – Long-legged Doji in the UK-100 Daily chart.

 

Dragonfly Doji

The Dragonfly Doji occurs when the price moves down since the open, and then it comes back and closes at the open. When it happens after an uptrend is a variant of a hanging man.

Fig 5 – Long-legged Doji in the DAX-30 Daily chart.

Conclusions

Dojis are important figures that warn trend reversals, especially if it happens at support or resistance levels.

Dojis need confirmation for trend reversals. When that happens, they create morning star and evening star formations. They also are followed by other small bodies, creating a flat top or bottom.

A safe precaution when encountering these figures while a trade is active is to close or reduce the position or, alternatively, tight the stops.

 

Sources:

Japanese Candlestick Charting Techniques, Second Edition, Steve Nison

Stephen Bigalow, Profitable Candlestick Signals

 

Categories
Forex Market Analysis

Gold Bounces Off Amid Safe Haven Appeal – What’s Next?

During the Asian and European sessions, the precious metal gold surged as traders hedged against a possible intensification in the U.S.-China trade conflict before a Dec. 15 deadline for fresh U.S. tariffs.

During the Asian and European sessions, the precious metal gold surged as traders hedged against a possible intensification in the U.S.-China trade conflict before a Dec. 15 deadline for fresh U.S. tariffs.

During the Asian and European sessions, the precious metal gold surged as traders hedged against a possible intensification in the U.S.-China trade conflict before a Dec. 15 deadline for fresh U.S. tariffs.

Overall, the precious metal remains under pressure in the wake of a stronger U.S. dollar. The Average Hourly Earnings from the United States Bureau of Labour Statistics was published, which showed a decline in November to 0.2% from the expectations of 0.3% and weighed on the U.S. dollar.

The Non-Farm Employment Change for November showed growth to 266K from expected 181K and supported the U.S. dollar. The Unemployment Rate of the United States also declined in November to 3.5% from previous & expected 3.6% and added in support of the U.S. dollar.

Besides, the Preliminary Consumer Sentiment from the University of Michigan also came in favor of the U.S. dollar as 99.2 against the expectations of 97.0. The Final Wholesale Inventories for October were also in favor of the U.S. dollar when released as 0.1% against the expectation of 0.2%. The Preliminary Inflation Expectations from the University of Michigan showed a drop this month to 2.4% from the previous 2.5%.


Gold – XAU/USD – Daily Technical Levels

Support      Resistance 

1,452.48      1,474.11

1,444.81      1,488.08

1,423.18      1,509.71

Pivot Point 1,466.44

Gold is likely to trade bullish above 1,459, which is working as a horizontal support level. The closing of Doji and Inside up bar patterns are suggesting chances of a bullish reversal in gold. 

It looks like gold is trying to capture a bullish retracement, and it has completed 23.6% Fibo corrections at 1,464. This level is now extending substantial resistance to gold. 

The bearish breakout of 1,459 can lead to gold prices towards 1,450. While bullish trend continuation can lead to gold prices to 1,471, I will be staying bearish below 1,466 today. Good luck! 

Categories
Forex Chart Basics Forex Daily Topic

Caution! A Big Round Number Ahead

In today’s lesson, we are going to demonstrate an event to find out what the price may do around the big round number. A big round number plays a significant role as far as traders’ psychology is concerned. The price usually gets volatile around a big round number. It may get tough for the traders to find out entries around the big round number. Let us now dig into USDCHF recent activities around the big round number 1.00000.

In today’s lesson, we are going to demonstrate an event to find out what the price may do around the big round number. A big round number plays a significant role as far as traders’ psychology is concerned. The price usually gets volatile around a big round number. It may get tough for the traders to find out entries around the big round number. Let us now dig into USDCHF recent activities around the big round number 1.00000.

In today’s lesson, we are going to demonstrate an event to find out what the price may do around the big round number. A big round number plays a significant role as far as traders’ psychology is concerned. The price usually gets volatile around a big round number. It may get tough for the traders to find out entries around the big round number. Let us now dig into USDCHF recent activities around the big round number 1.00000.

The price is heading towards the North with good bullish momentum. Look at the last candle. This is one good bullish candle, which states that the buyers are dominating the pair. Do you notice anything unusual here?

Here it is. The candle breaches through the level of 1.00000. As a trader, you must not miss such a big round number. Now that the price makes a breakout, you are to wait for the breakout confirmation and a strong bullish reversal candle to go long on the pair. This might be one of the best trades in your trading life if things go accordingly.

The price comes back in. However, it still looks all right for the buyers since if we consider the spikes at the last swing high. A bullish engulfing candle closing above the last bearish candle would be the buying signal. On the other hand, if it keeps going towards the downside, the sellers may take over the baton.

The price does not produce any bullish momentum. For the last four H4 candles, it could go either way. Traders are to wait patiently since this is the game around a massive round number.

Here it comes. It has now become sellers’ territory. The candle forms right at the level of 1.00000. The level could have been a level of support. It is now a level of resistance. The sellers on the minor charts keep going short; on this chart, they are to wait for consolidation and downside breakout to ride on the next bearish wave.

It consolidates and produces a sell signal after four H4 candles. The last H4 candle suggests it may be time for the price to consolidate again. An explicit bullish breakout at the level of 1.00000, did not work for the buyers. It could happen at any level, but when we deal with a massive round number, we happen to see it more often.

The Bottom Line

The market runs on many aspects, and traders’ psychology is one of them. Many traders set their Stop Loss and Take Profit at round numbers. Thus, the price may get extra volatility around a big round number. We may get breakout even on the H4 chart, which may turn out to be a fake breakout. We must remember this every time we see a big round number.

 

Categories
Forex Videos

Forex Academy Education For Absolute Beginners Session Three – Becoming A Professional Trader

https://youtu.be/R-5dYUd_5uE

https://youtu.be/R-5dYUd_5uE

Forex.Academy Education For Absolute Beginners – Session Three

 

Thank you for joining us for session 3 of forex trading for absolute beginners. Forex Academy has all your forex trading educational needs from complete novice through to professional trader, and it’s all free to our followers!

In session 1 and 2 we mentioned that Forex trading is very similar to gambling when trading with no understanding of how the market works, and where the odds can be stacked in your favor and where Forex trading becomes a profession when novice traders take the time to learn the ropes before opening a live trading account and diving in.
We also mentioned that Forex is mostly traded by using Technical Analysis, where traders use tools they drag onto their screen charts in order to visually see when markets are going up or down, and trade accordingly.

Example A


In Example A, we can see a line graph chart of the exchange rate of the British pound, with the black line showing the price moving up and down against the US dollar, AKA GBP:USD. On the face of it, it looks extremely erratic.

Example B

Let’s take a closer look in example B, where we have drawn some arrows showing the pair moving up and down, but it would be almost impossible to know when to trade.

Example C


But in example C, where we have changed the line graph for coloured bars, which are known as candlesticks, we can clearly see that the red candles help us to see when the price is moving down, and the green ones help us to identify with the price is moving up, such as in example D.

Example D

Example E


In example, E, we have added our first technical analysis indicator, which is called a stochastic oscillator. This tool tells traders when a pair may have gone too high or too low, which are also known as periods of overbought and oversold. It is clear to see that when the redline of the stochastic has moved to a high point and then crossed over the green, and they are both moving down, that the price of the pair moves lower, and when the green has crossed over the red after they have moved to a low, then the currency pair moves higher.
Here are just two simple tools that traders use to stack the odds in their favour.
But none of this would be any use at all without another aspect of trading, which we will discuss in session 4.

Categories
Forex Elliott Wave

Forecasting with the Elliott Wave Principle

The analysis and forecast process of any financial asset can support the decision process to take any positioning on the market. However, the time dedicated to developing it could increase the cost of the trade as this grows on time. In this educational article, we will review how to analyze and make a forecast by applying the main concepts of the Elliott Wave Principle.

The analysis and forecast process of any financial asset can support the decision process to take any positioning on the market. However, the time dedicated to developing it could increase the cost of the trade as this grows on time. In this educational article, we will review how to analyze and make a forecast by applying the main concepts of the Elliott Wave Principle.

The analysis and forecast process of any financial asset can support the decision process to take any positioning on the market. However, the time dedicated to developing it could increase the cost of the trade as this grows on time. In this educational article, we will review how to analyze and make a forecast by applying the main concepts of the Elliott Wave Principle.

The Elliott Wave Principle in a Nutshell

R.N. Elliott, in his work The Wave Principle, identified a nature’s law that governs everything, from nature to human socio-economic activities. Elliott comments that the financial markets are the most important socio-economic activity, so, when someone understands that law, he can get forecasts about the phenomena under study, the financial markets, in this case.

In this context, Elliott described that price moves in two types of movements impulses and corrections, and at the same time, the price tends to repeat some specific structures and sequences.

On the one hand, impulsive movements create trends and follow a sequence of five waves. On impulses, three waves move in the direction of the primary trend and two in the opposite direction.

On the other hand, a corrective movement consists of three waves; two of them will be in the opposite move to the main trend.

This eight-waves movement creates a cycle, and when it is complete, a new cycle of the same degree will start. In other words, when a five-waves and three-waves movement is complete, a new cycle of the same extension will take place.

Elliott gave intensive importance to corrections and told us the position of the market and the outlook. Elliott’s experience drove him to identify four main types of corrections as zigzag, flat, irregular, and triangles.

Making Simplifications

In the two latest articles, we discussed how we could simplify corrective patterns in the wave analysis using some chartist patterns as flags and triangles. Also, we commented on how it can help us in our study, reducing the time elapsed to develop a forecast and, finally, a trading plan.

The Analysis Process

The basic methodology to carry on the market analysis is to analyze from a higher to lesser time frame. In other words, we can start the study from a monthly range and finish in the hourly chart. Once we have identified the market structure, we begin to define scenarios that have a probability of occurrence. The scenarios are relevant to the analysis process because, using them, we can evaluate all possible price paths and decide which one of them is the most probable.

The Heating Oil Triangle

The following chart corresponds to Heating Oil in its weekly timeframe. In the figure, we observe the bullish sequence developed in three waves, which began on January 17, 2016, at $0.8552 per gallon. The energy commodity reached its highest level on October 03, 2018, at $2.4496 per gallon.

Once Heating Oil reached its high at $2.4496, the price started to make a bearish move, that found support at $1.6436 per gallon on January 02, 2019.

After that descent, the asset found buyers at $1.6436, Heating Oil’s traders started doing market swings. We can observe this as a triangle structure, as shown in the next daily chart.

According to the Elliott Wave Theory, we know that a triangle structure has five internal segments which follow a 3-3-3-3-3 sequence. However, there is the possibility that the triangle pattern does not build a fifth inner leg.

Now, let us identify some scenarios for the next path on Heating Oil.

  • Scenario 1:The price moves down and crosses the base-line of the triangle (dark orange arrow), with a first potential profit target at $1.6719, and a second target at $1.4339 per gallon.
  • Scenario 2 (blue arrow) considers that Heating Oil drops and, then, bounces off from the base-line, but does not surpass the previous high at $2.0994. From there, the price action begins a new bearish wave that would drive the energy commodity to $1.6719 per gallon.
  • Scenario 3 (black arrow), considers that the price overcomes the resistance determined by the upper-line of the triangle and the invalidation level at $2.1374.

Conclusion

As we discussed in this article, the time dedicated to analyze and forecast a financial market is a valuable resource that could increase or reduce the hidden cost of the potential trade. As occurs in mathematical models, valid simplifications can help the analyst to reduce the time to a decision process.

Flags and triangles are simple and basic formations that can ease the market study.

Finally, the formulation of different scenarios provides a wide range of options about the next potential paths of the price action. Also, these scenarios create different answers facing the question of what if the market does that?

Categories
Forex Market Analysis

Daily F.X. Analysis, December 09 – Top Trade Setups In Forex – Mixed Risk Sentiment In Play!

The U.S. dollar rebounded against other major currencies, as the ICE U.S. Dollar Index rose 0.3% to 97.68, halting a six-session losing streak. EUR/USD lost 0.4% to close at 1.1060. Germany’s industrial production declined 1.7% on month in October (+0.1% expected).

The U.S. dollar rebounded against other major currencies, as the ICE U.S. Dollar Index rose 0.3% to 97.68, halting a six-session losing streak. EUR/USD lost 0.4% to close at 1.1060. Germany’s industrial production declined 1.7% on month in October (+0.1% expected).

The U.S. dollar rebounded against other major currencies, as the ICE U.S. Dollar Index rose 0.3% to 97.68, halting a six-session losing streak. EUR/USD lost 0.4% to close at 1.1060. Germany’s industrial production declined 1.7% on month in October (+0.1% expected).

The U.S. Labor Department reported that the economy added 266,000 nonfarm payrolls in November (+180,000 expected, +156,000 in October). The jobless rate dropped to 3.5% from 3.6%, the lowest level since 1969. Meanwhile, the University of Michigan Sentiment Index (preliminary reading) rose to 99.2 in December (97.0 expected) from 96.8 in November.

Let’s took at these fundamentals.

Economic Events to Watch Today

EUR/USD – Daily Analysis

The EUR/USD currency pair is flashing red and representing marginal declines on the day, mainly due to the tension of the intensified trade war between the United States and China. As of writing, the currency pair is currently trading at 1.1055 and consolidates in the narrow range between 1.1053 – 1.1061.

As we know, the pair had closed above 1.1097 during the Thursday, canceling the lower highs setup on the daily chart and confirming the bullish reversal. The breakout was short-lived because the currency pair fell from 1.1110 to 1.1040 during the U.S. trading session in the wake of the Nonfarm Payrolls figure.

At the fed front, the traders priced out chances of 25-basis-points rate cut by the Federal Reserve rate cut in 2020 after the release of the upbeat United States employment report. While on the U.S. dollar front, the greenback may remain in buying mainly due to upbeat payrolls data and trade tensions.

The data released during the weekend showed China’s exports to the U.S. dropped by 23% in November, the most significant monthly decline since February. 

The depressing figures may convince the United States President Donald Trump that his trade war is creating desired results, and he will likely move forward with a tariff spike on $160 billion of Chinese goods.

At the Sino-US front, the tensions regarding the United States and China intensified trade war will likely keep the shared currency under pressure. Ultimately, the trade fears have pushed Germany, the Eurozone’s largest economy.

Daily Support and Resistance

  • S3 1.093
  • S2 1.1
  • S1 1.1031

Pivot Point 1.107

  • R1 1.1101
  • R2 1.1141
  • R3 1.1211

EUR/USD– Trading Tips

The EUR/USD has disappointed in its first test of the 5-month downtrend at 1.1113. The EUR/USD is trending lower but has not gained any support until now. The EUR/USD has next support near 61.8% Fibonacci support level of 1.1040.  

While the resistance stays around 1.1070, and it’s strictly followed by the 1.1075 horizontal resistance mark. Considering the recent crossover on MACD, the pair may trade bearish below the 1.1070 level today. 

GBP/USD– Daily Analysis

 The GBP/USD currency pair is flashing green and representing 0.10% gains on the day in the wake of weekend polls. As of writing, the GBP/USD currency pair is currently trading at 1.3146 and consolidates in the range of 1.3133 – 1.3151. 

The market traders seem very careful to continue the recent bullish streak beyond the 7-month high ahead of the snap December election in the United Kingdom.

Moreover, the weekend survey indicates that the ruling Conservative Party continues to maintain top position across all major surveys. However, the opposition Labour Party seems to cut the lead as far as data from ComRes and Deltapoll are concerned. 

The fresh news from the U.K. politics shows that the Prime Minister (PM) Boris Johnson agrees that there will be insignificant checks between the U.K. and Northern Ireland. The United Kingdom Prime Minister Boris Johson has been criticized many times for not coming in the General debates. Still, the recent one on Channel 4 looks to be suitable for the Tories. 

At the Sino-US front, the United States (U.S.) did not reduce the scope of fresh tariffs on Chinese goods that are up for December 15. The same thing keeps market players under pressure because phase-one talks are yet to provide any strong development.

The traders will keep their eyes on Thursday’s election, as well as monthly figures of Manufacturing Production, Industrial Production, and Gross Domestic Product will likely offer fresh direction to the cable pair.

Daily Support and Resistance

  • S3 1.3004
  • S2 1.3069
  • S1 1.3103

Pivot Point 1.3134

  • R1 1.3168
  • R2 1.32
  • R3 1.3265

GBP/USD– Trading Tip

On the technical side, the prices need to cross May month high near 1.3180 to target 1.3200 and 1.3270 figures to the north, declining to do so highlights Wednesday’s top surrounding 1.3120 as immediate support.

In the daily timeframe, the GBP/USD has an upward crossover on MACD. Lastly, the three white candles on the daily timeframe are suggesting bullish bias among traders. 

USD/JPY – Daily Analysis

The USD/JPY currency pair flashing red and found near the 108.58, in short, the pair stays moderately changed to Friday range despite the upbeat growth data from Japan. As of writing, the USD/JPY Currency Pair currently trading at 108.58 and consolidates in the narrow range between the 108.55 – 108.67.

The final figures of Japan’s 3rd-quarter (Q3) Gross Domestic Product (GDP) increased past-0.2% forecast and 0.1% preliminary expectations to +0.4% on QoQ basis. Though the annually figures matched no change expectations of 0.6%. Moreover, Japan’s Trade Balance on Balance of Payment (BOP) Basis for October crossed ¥1.1 B before a whooping ¥254 B.

Markets risk sentiment didn’t succeed in extending the previous gains because the traders look careful ahead of the critical week that includes the crucial central bank meeting and the general election in the United Kingdom. Moreover, recent polls of the British December snap election seem to keep the ruling Conservative Party at the top and decrease fears of the united kingdom political trauma.

At the Sino-US front, the United States tariffs of China are ready to happen on December 15, and the Trump administration wants a phase-one to turn the tariff’s switch off. However, China seems not in a mood to respect the U.S. and trade deal, even after supporting agricultural demand. Looking forward, traders may look for trade/political headlines for fresh impulse.

Daily Support and Resistance

  • S3 107.85
  • S2 108.26
  • S1 108.44

Pivot Point 108.68

  • R1 108.85
  • R2 109.1
  • R3 109.51

USD/JPY – Trading Tips

The boosted demand for haven assets and weaker U.S. dollar has driven sharp selling in the USD/JPY currency pair this week. For now, the pair is trading above 108.550, which is working as a double bottom support level.

A bearish breakout of this level can trigger selling until 108.250. The USD/JPY has already completed 81% retracement on three hourly charts, and this level can give some support to USD/JPY. Above this, the pair may find resistance around 108.900. Let’s wait for NFP to determine the further trend of USD/JPY. 

All the best!