Tag: Technical Analysis

Categories
Forex Videos

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

https://youtu.be/llluFYdKTWc

https://youtu.be/llluFYdKTWc

Forex.Academy Education For Absolute Beginners – Session One

Hello, and welcome to Forex Academy, your one-stop shop to complete education in foreign exchange currency trading, which is also known as Forex or FX.


The foreign exchange market is a global network of banks, financial institutions, governments, and retail traders who take advantage of the 5 trillion dollars that are traded every day in the foreign exchange market.

Many of the larger institutions buy and sell, or exchange currencies – which are always traded in pairs – and many other financial firms and also retail traders simply trade based on whether a currency pair is going up or down. If they place a buy trade and a pair goes up, they make money, and if they place a sell trade and the pair goes down, they also make money. And that is what happens most of the time, currency pairs go up and down against each other continually. And so traders bide their time and pick their moments to take on a trade.


Now while this may sound very daunting, if you think about it, you have probably been on holiday to a different country and spent some time shopping around online or at travel agents looking for the best currency exchange rate to give you more buying power on your holiday. In which case congratulations, you have already been trading currencies. I expect that a lot of you may have also enjoyed gambling at some time, perhaps at the roulette wheel in a casino, or playing cards such as Black Jack, and maybe you got lucky and made a little bit of money, however, typically the odds are stacked against you, and it’s a fact that the House always wins in the end.

But, what if you could go to a casino where the odds were stacked in your favor, of course, you would be very interested in that opportunity? Welcome to currency trading because if you take the time and effort to learn how to trade correctly, you can stack the odds in your favor when you trade currencies.

OK, the thought of spending a lot of time learning a new specialist subject might not seem like a lot of hard work, but if you think about it you will not strip down a car engine without first taking a mechanics course, and you wouldn’t take out a horse’s appendix without first going on a comprehensive vet’s course. And currency trading is no different. There is a lot to learn. However, the more you learn, the better trader you will become.

And here at Forex Academy, we have a wealth of education to pass on to you so that you can stack the odds in your favor and learn to trade currencies like a professional.

Categories
Forex Videos

Advanced Forex Education – Technical Analysis Trading With Confluence

https://youtu.be/v3Bzlu4y_uE

https://youtu.be/v3Bzlu4y_uE

Advanced learning on technical Analysis – trading with technical confluence

As a financial trader in the forex market, we are looking for evidence that underpins our trading decisions and ensures our decision making is correct and that, therefore, the tools we use are stacking the odds in our favour. When these technical tools are aligned, this is called technical confluence. This is where price action and technical indicators converge and help us to make informed decisions. The clearer the indication pointing to directional movements, the better idea we will have to trade-off of our technical analysis charts.

Technical confluence is when we have at least two technical elements on the same chart. And because we are not gamblers, traders look for confluence to strengthen the case before making trading decisions. However, different traders look at different technical signals over different time frames. And this is why trading is inherently risky. But the good news is that all traders are looking at the same price movement and assimilating the same economic data, and therefore, all that we can do is take this into consideration and look for the best high probability setup we can achieve.
Let’s look at some technical confluence trading opportunities.

 

Example A

 

Example A is a 5-minute time frame chart of the USDJPY pair, with price action as denoted by Japanese candlesticks. It looks like initially, the market was trading sideways and then took on a bullish momentum around the middle of our chart. Let’s try and identify if technical indicators foresaw the push higher.

Example B


In example B, we have drawn a line of resistance and a line of support which confirms consolidation or sideways trading, and this is confirmed by at least two attempts to push through these areas in both directions.

Example C


In example C, we have added a relative strength index (RSI) which is a technical indicator used in the analysis of the historical strength or weakness of a currency pair based on the opening and closing prices over a set amount of candlestick, in this case 14, and is defined as being weak when it hits the 30 line and strong when it reaches the 70 line. Price often reverses or pulls back from these key levels.
Our RSI initially touches the 30-line at the extreme left of our chart and then begins a slow ascent. At position 5 our RSI is showing most of its momentum to the upside, and price action is also maintaining its momentum to the upside and towards our area of resistance. Price action continues upwards and punches through the area of resistance, and this then becomes an area of support. Price action continues in a bullish tone from this point. This was a trade opportunity and was confirmed by price action and the RSI, plus our support and resistance lines. Therefore, this area of confluence presented a bullish trade signal to buy at position 5 with a stop loss just below our original support line.

Example D


In example D, we have now identified the low of the move at point 1 and the high of the move at point 2. The area at point 2 would suggest to our earlier buyers that price action might be topping out here and for two technical reasons: Firstly our RSI almost touches the 70-line, and also our candlesticks have pierced the Bollinger bands, which we just added, and where we know that if this happens there is a 90% chance that price action will revert back inside the bands. Price action does level off to a certain extent before pulling back lower, and this is highlighted by our descending RSI line.

 

Example E


We also identified that price action is fading to the upside on this chart by introducing the stochastic oscillator, as in example E. We can see that while price action momentum continues upwards from point A to point C, the stochastic is overbought at point B and at point D it fails to reflect the high of the price action at point C, and this shows divergence, and where divergence tells us the market is slowing.

Possibly traders began to sell the pair at point A, being seen as overbought and that the subsequent price action began to lose momentum as volume begins to dry up from the bulls.

This is another good example of confluence where at least two technical indicators are working together stack the odds in our favour. It also helps us to identify areas where other traders began to close down or exit their previous buying trades in fear of a reversal in price action. And so it is wise to consider where other traders may be bailing out of their trades and that therefore this presents options to close trades and look for reversal setups.
Topping out here and for two technical reasons: Firstly our RSI almost touches the 70-line, and also our candlesticks have pierced the Bollinger bands, which we just added, and where we know that if this happens, there is a 90% chance that price action will revert back inside the bands. Price action does level off to a certain extent before pulling back lower, and this is highlighted by our descending RSI line.

Categories
Crypto Market Analysis

Daily Crypto Review, Dec 6 – Cryptocurrencies will replace FIAT by 2030

We can see that the crypto market did not have many currencies move significantly in the past 24 hours. However, most of the market ended up in the green. If we look at the past 24 hours, Bitcoin’s price went up 0.52% and is now trading at the price of $7,402. Meanwhile, Ethereum managed to gain 1.48%, while XRP gained 2.54%.

We can see that the crypto market did not have many currencies move significantly in the past 24 hours. However, most of the market ended up in the green. If we look at the past 24 hours, Bitcoin’s price went up 0.52% and is now trading at the price of $7,402. Meanwhile, Ethereum managed to gain 1.48%, while XRP gained 2.54%.

We can see that the crypto market did not have many currencies move significantly in the past 24 hours. However, most of the market ended up in the green. If we look at the past 24 hours, Bitcoin’s price went up 0.52% and is now trading at the price of $7,402. Meanwhile, Ethereum managed to gain 1.48%, while XRP gained 2.54%.

The biggest gainer amongst the top100 cryptocurrencies by market cap for today is HedgeTrade, which managed to gain 48.72% on the day. The biggest loser of the day was iExec RLC, which lost 5.69% of its value.

Bitcoin’s dominance decreased a tiny amount as the market managed to gain a bit more in value than what Bitcoin gained. Its dominance is currently 66.44%, which represents a decrease of 0.3% from yesterday’s value.

The cryptocurrency market managed to increase in total market capitalization yet again. As the individual cryptocurrency values increased, so did the overall market cap. The market cap is sitting at $201.08 billion at the moment of writing. This value represents an increase of $2.16 billion against yesterday’s value.

What happened in the past 24 hours

Deutsche Bank researched how cryptocurrencies will do in 2030. They concluded that the demand for alternative currencies will rise and that digital currencies will eventually replace cash. This research was done for the “Imagine 2030” report.

Deutsche Bank strategist Jim Reid pointed out that crypto has solutions for many challenges the existing fiat system has encountered in recent years. On top of that, he said that crypto  itself poses one of the problems fiat has at the moment. He then said that people’s heightened demand for dematerialized means of payment and anonymity could possible bring more people to cryptocurrencies.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin spent the whole day trying to pass its key resistance line of $7,415. almost every 4 hour candle managed to break the price but ultimately ended up below the line. If bulls don’t step up their game, Bitcoin’s price will remain under the key resistance level for the time being. If it happens, we could see a spike in volume followed by a sudden upward-faced spike.


Bitcoin’s volume is slightly lower than yesterday, while its RSI is slowly going towards overbought. This could indicate that bulls have a limited time when they can make a strong push to the upside before being crushed by the bears coming to the market.

Key levels to the upside                    Key levels to the downside

1: $7,415                                           1: $7,240

2: $8,000                                           2: $7,120

3: $8,425                                           3: $6,620

Ethereum

Ethereum is on the other side of the coin when compared to Bitcoin. While Bitcoin is trying to push above its resistance, Ethereum is trying to save its price from falling below its support. Ethereum moved back to the $147 line, and it is still unsure whether the price will stay above it or whether it will drop further down. However, Ethereum has many small support points that ended up being well-respected by the market.


 

Key levels to the upside                    Key levels to the downside

1: $156.8                                             1: $144.1

2: $161.1                                            2: $133.5

3: $163.4                                            3: $127

Ripple

XRP spent the past few days rallying its bulls, which resulted in a major attempt to the upside yesterday and another one today. While today’s move was not so explosive, it was much healthier. The 0.02267 resistance was strong again, and XRP failed to reach above it, but it did make some daily gains nevertheless. The green 38.2% Fib retracement line ended up being well-respected by the market, and the price managed to consolidate near it. However, it is unknown whether this line will play any role in the short future as XRP is moving down at the moment of writing.


XRP’s volume is much higher when compared to the previous days. Its RSI slowly gained momentum to the upside until the consolidation phase, where it settled down a bit.

Key levels to the upside                    Key levels to the downside

1: $0.222                                            1: $0.2185

2: $0.2267                                          2: $0.214

3: $0.234                                            3: $0.209

Categories
Forex Market Analysis

Daily F.X. Analysis, December 06 – Top Trade Setups In Forex – Brace for Nonfarm Payroll! 

The British pound extended its gains on expectations that Brexit uncertainty could be cleared when the ruling Conservative Party wins a majority in the December 12 general election. GBP/USD charged 0.4% higher to 1.3157, a fresh 7-month high. EUR/GBP declined 0.2% to 0.8438, which was last seen in May 2017.

The British pound extended its gains on expectations that Brexit uncertainty could be cleared when the ruling Conservative Party wins a majority in the December 12 general election. GBP/USD charged 0.4% higher to 1.3157, a fresh 7-month high. EUR/GBP declined 0.2% to 0.8438, which was last seen in May 2017.

The British pound extended its gains on expectations that Brexit uncertainty could be cleared when the ruling Conservative Party wins a majority in the December 12 general election. GBP/USD charged 0.4% higher to 1.3157, a fresh 7-month high. EUR/GBP declined 0.2% to 0.8438, which was last seen in May 2017.

The U.K. Society of Motor Manufacturers and Traders reported that new car registrations declined 1.3% on year in Nov. (-6.7% in Oct.).

The euro rose 0.2% to $1.1104. The eurozone’s third-quarter GDP growth (final reading) posted at 0.2% on quarter (as expected) and 1.2% on year (as expected). Also, the eurozone’s retail sales declined 0.6% on month in Oct. (-0.5% expected) but rose 1.4% on year (+2.2% expected).

Economic Events to Watch Today

Let’s took at these fundamentals.

 

  

EUR/USD – Daily Analysis

The EUR/USD currency pair flashing green and found above the November 21 high of 1.1107 despite the depressed German Factory Orders data. As of writing, the currency pair consolidates in the range of 1.1102 – 1.1110. The 14-day relative strength index is also representing bullish sentiment with an above-50 print.

The EUR/USD currency pair will be unlikely to take the significant declines even if the industrial production figures release below expectations. On the other hand, the positive data from the United States (NFP) may stop supporting the bullish technical setup. Changes in industrial production are widely followed as a primary indicator of strength in the manufacturing industry.

Looking forward, the Eurozone’s manufacturing hub Germany release Industrial Production figures for October at 07:00 GMT. The data was expected to show the factory activity increased at a seasonally adjusted rate of 0.1% month-on-month in October, but the actual data fell to -1.7%. Evidently, the EUR/USD is trading under pressure since it’s release. 


Daily Support and Resistance

  • S3 1.104
  • S2 1.1068
  • S1 1.1086

Pivot Point 1.1097

  • R1 1.1115
  • R2 1.1126
  • R3 1.1155

EUR/USD– Trading Tips

On Friday, the traders are waiting for the U.S. Non-farm Payroll and Employment change figures to drive the next movement in the market. 

The EUR/USD has next support is near mid-1.1050 and is strictly followed by the 1.1075 horizontal support mark. Considering the recent crossover on MACD, the pair may trade bullish above the 1.1070 level today. On the upper side, resistance stays around 1.1140 and 1.1170. 

GBP/USD– Daily Analysis

The GBP/USD currency pair hit the seven-month high and found near the 1.3160 ahead of the United States nonfarm payroll. As of writing, the currency pair consolidates in the range of 1.3153-1.3163. 

The recent polls of the United Kingdom December election maintain the ruling Conservative Party on the top place, Prime Minister Boris Johson seems to be stuck recently as the Tory leaders again reject to take part in ITV and BBC debates.

On the other hand, optimism surrounding the trade deal by the UK Chancellor Sajid Javid and ex-Brexit Party members’ who seem to push to vote Tories seem to play their roles. Moreover, the pairs’ bullish sentiment could also be attributed to the greenback weakness. 

Markets seem inactive and cautious because all eyes stay on the Novembers’ employment data from the United States. As a result, the United States’ ten-year treasury yields, and most of the Asian stocks stay modestly changed. 

Ahead of the U.S. jobs report, U.K. Halifax House Prices will likely entertain the traders. Notably, we expect payrolls to increase by a solid 200k in November, which is higher than the previous month’s 128k release. If this happens, the GBP/USD may face headwind to target the next resistance level of 

Daily Support and Resistance

  • S3 1.3021
  • S2 1.3082
  • S1 1.312

Pivot Point 1.3143

  • R1 1.3181
  • R2 1.3204
  • 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 dropped from the 108.97 to 108.66 overnight, mainly due to the positive headlines which came from the United States and China trade. This helped the United States stocks to survive further gains. 

As of writing, the currency pair is trading near the 108.70 and consolidates in the range of 108.66-108.78. Recently the risk appetite was healthy, and investors were trading based upon the set of positive news during this week from the United States. Although, without any positive response from China, markets were afraid to take any action ahead.

Before the headlines, there were upbeat tones from the United States President Donald Trump, who said that the United States is having meetings and trade talks with China. Something may happen regarding the December 15 tariff, but we are not discussing currently.

As for U.S. yields, the two-year Treasury yields increased slightly from 1.56% to 1.60%, ten-year yields rose from 1.76 to 1.82%. “Markets are pricing a near to zero chance of rate cut at the Fed’s December 11 meeting but a terminal rate of 1.25%.

Looking forward, the trader will keep their eyes on the coming Nonfarm Payrolls. Nov Nonfarm Payrolls are expected to rise 185k and report that the unemployment rate is likely to stay at 3.6%. Average hourly earnings are expected to hold at 3.0%, still down from the 3.2% beforehand.


Daily Support and Resistance

  • S3 108.12
  • S2 108.46
  • S1 108.61

Pivot Point 108.81

  • R1 108.95
  • R2 109.15
  • R3 109.49

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!

Categories
Forex Basic Strategies

No Breakout Confirmation or No Consolidation Means No Entry

Price Action traders crave for the breakout. Breakout is one of the most important components of price action trading. However, there is another equally important thing, which is breakout confirmation. Since the Forex market is very action-packed, it is often found that the price does not come up to the breakout level to confirm the breakout. It consolidates and produces a reversal candle to offer entry. The question is, does it always consolidate and offer an entry.

Price Action traders crave for the breakout. Breakout is one of the most important components of price action trading. However, there is another equally important thing, which is breakout confirmation. Since the Forex market is very action-packed, it is often found that the price does not come up to the breakout level to confirm the breakout. It consolidates and produces a reversal candle to offer entry. The question is, does it always consolidate and offer an entry.

Price Action traders crave for the breakout. Breakout is one of the most important components of price action trading. However, there is another equally important thing, which is breakout confirmation. Since the Forex market is very action-packed, it is often found that the price does not come up to the breakout level to confirm the breakout. It consolidates and produces a reversal candle to offer entry. The question is, does it always consolidate and offer an entry.

Let us find out.

The price headed towards the South and seems to have found its support. It has been heading towards the North now. The price is at the last swing high. Thus, the buyers are to wait for an upside breakout and breakout confirmation to take a long entry.

The price makes a breakout, but at the time of confirmation, it comes back in. Thus, the breakout is void. It goes towards the upside again. This time it gets rejected from the last swing high. Thus, the price does not make any breakout here.

This time it does. A huge bullish engulfing candle breaches the last swing high. That is a Double Top resistance as well. The buyers are to wait for the price to come back at the breakout level and get a bullish reversal candle right there. Alternatively, it may consolidate somewhere in between the highest high and the breakout level.

It keeps going up. Let us not give up but keep eyeing on the pair. It has gone too far up. It may not come back at the breakout level. It may rather consolidate. Let us find out what it does.

It keeps going towards the North. There is no sign of consolidation yet. A swing high on the chart is evident, which is nearby. As things stand, risk-reward is getting less lucrative.

As expected, the price has found its resistance before the level of the last swing high. The price action gets choppy. Traders are to wait for the price to give them the next direction. In a word, price action traders do not keep this kind of chart on their watch list.

The Bottom Line

A chart looked extremely good and was about to give us an entry ended up being a choppy chart. What more frustrating is it went towards the desired direction, but it did not offer us entry. Some traders may think it would be good if an entry is taken. At least some pips can be achieved. Please note, do not even think about it. After breakout, the price must confirm the breakout or consolidate. To sum up the whole equation, no confirmation or no consolidation means no entry.

Categories
Candlestick patterns Forex Daily Topic

Test your knowledge about Candlesticks

After our discussion about short-bodied candlestick in our article

After our discussion about short-bodied candlestick in our article

After our discussion about short-bodied candlestick in our article

Candlestick Trading Patterns II – Everything you need to know about Single Candlestick Signals

Here you can test your newly acquired knowledge about the matter. If you haven’t read it, please do so before the quiz.

 

 

[wp_quiz id=”51631″]

 

 

Reference: The Candlestick Course – Steve Nison

Categories
Forex Basic Strategies

Is Drawing One Trendline Enough?

The Trendline is an excellent trading tool that the price action traders love using on their charts. Drawing trendline as accurate as it can get and adjustment with spikes are two factors that traders are to look after before using trendline. Another factor trendline traders often need to do is drawing multiple trendlines on the same chart. In this lesson, we are going to demonstrate an example of that.

The Trendline is an excellent trading tool that the price action traders love using on their charts. Drawing trendline as accurate as it can get and adjustment with spikes are two factors that traders are to look after before using trendline. Another factor trendline traders often need to do is drawing multiple trendlines on the same chart. In this lesson, we are going to demonstrate an example of that.

The Trendline is an excellent trading tool that the price action traders love using on their charts. Drawing trendline as accurate as it can get and adjustment with spikes are two factors that traders are to look after before using trendline. Another factor trendline traders often need to do is drawing multiple trendlines on the same chart. In this lesson, we are going to demonstrate an example of that.

The chart shows that the price after finding its support at the trendline heads towards the North and makes a new highest high. Thus, this is a valid trendline. Ideally, the buyers are to wait for the price to come back to the trendline again and to produce a bullish reversal candle to go long on the pair. Let us proceed to find out what happens next.

The price does not come at the trendline. It finds its support well above the trendline and heads towards the North again. This is annoying, is not it? Do not get annoyed. Concentrate on the chart. Do you see anything interesting? Have a look at the next chart.

We can draw another trendline on the same chart since the price has a bounce and makes a new highest high. Traders are to wait again for the price to come back at the trendline and to produce a bullish reversal candle to offer them a long entry.

Wow, this time, the price comes at the trendline and produces a bullish reversal candle. Traders have been waiting for such price action. By flipping over to the next chart and an upside breakout, traders may grab some green pips.

The chart shows that the price comes back near the trendline’s support again, then heads towards the North. It consolidates hard on the minor charts, as it seems. The point here is that the price does not come at the first drawn trendline or produces a bullish reversal candle. It comes at the second drawn line, and this time, it creates the bullish reversal candle right at the trendline’s support. It heads towards the North and may have offered entry as well.

The Bottom Line

In most cases, the price does not come at the first drawn trendline. It has the tendency to come at the second drawn trendline more. It is often seen that the price obeys the third drawn trendline as well. Thus, if we are to trade on the trendline, we may keep an eye on the chart to draw a trendline as many times as we need to.

Categories
Forex Daily Topic Forex Elliott Wave

Analysis and Trading with Triangles

In our previous article, we discussed how we could simplify the zigzag and flat pattern by the chartist figure known as a flag. In this educational article, we will see how triangles can be used in wave analysis.

In our previous article, we discussed how we could simplify the zigzag and flat pattern by the chartist figure known as a flag. In this educational article, we will see how triangles can be used in wave analysis.

In our previous article, we discussed how we could simplify the zigzag and flat pattern by the chartist figure known as a flag. In this educational article, we will see how triangles can be used in wave analysis.

The Background

Within the Elliott wave theory, triangles represent one of the three basic corrective formations. Similarly, in traditional technical analysis, triangles represent consolidation and continuation formations of the trend.

Elliott defined triangles as a formation that have an internal structure subdivided into five waves following a 3-3-3-3-3 sequence. At its time, Elliott identified two triangle variations, which are classified as expansive or contractive.

In general terms, triangles represent the market indecision or the balance between the buying and selling forces.

The following chart shows the model of the triangles in their contractive and expansive variants, under the Elliott Waves theory and Traditional Technical Analysis perspective.

According to the point of view of the traditional technical analysis, we can observe that the triangle pattern is not forced to have five internal segments, as in Elliott’s wave theory. In consequence, a truncated zigzag or truncated flat structure could be simplified by a triangle pattern.

The Trading Setup

The trade configuration of a contracting triangle pattern has the following characteristics:

  • Entry Level: A buying (or selling) position will be activated if the price exceeds and closes above the swing of the previous top.
  • Profit Target: The first profit target level will take place at 78.6% of the Fibonacci expansion, while the second will be at 100%, and finally, the third profit target level will be at 127.2%.
  • Protective Stop: The invalidation level of the trade setup will be located below the lowest swing of the triangle pattern.

The trade configuration of an expansive triangle pattern has the following properties:

  • Entry Level: The trade will be activated if the price exceeds the height of the expanding triangle.
  • Profit Target: The first profit target level will be at 100% of the Fibonacci expansion. The second profit target level will be at 127.2%.
  • Protective Stop: The level of invalidation will be located below the lowest low of the expansive triangle pattern.

Examples

The following chart corresponds to the AUDUSD pair in its 12-hour timeframe. We can observe that the price action developed an expanding triangle formation, which began from mid-May 2019 and culminated in mid-July 2019.

From the chart, we detect that the expanding triangle reached its highest level at 0.70821, which corresponded to a false breakout. Subsequently, the price action resolved the next movement with a drop that took it to plunge until 0.66771.

The sell-side entry was activated once the price closed below the lowest level of the expanding triangle at 0.68317. Once activated the sales position, the price reached the first target at 0.67080.

Another possibility of entry that could be considered would be the closing below the last relevant swing, that is, the closing below 0.69105. This option could provide the trader with a higher profit compared to the risk taken compared to the original entry setup.

The next example corresponds to Silver in its daily chart. From the figure, we observe that the price made a record high early July 2016, reaching $21,225 per ounce, after this, the price action performed a corrective movement, once its found support, Silver built a tight contractive triangle.

After breaking below $18,715, Silver activated a bearish scenario that drove the price to fall to the third bearish target at $15.66 per ounce.

After having fulfilled the third bearish target, the price fell and reached $18.435 on April 17, 2017, where Silver began to build a contractive triangular structure that lasted until the end of June 2018.

Once the downward break of the long-lasting triangle occurred, we see that the price made a limited downward movement, which did not yield below $14 per ounce.

Conclusion

Based on the discussion of this article, we can conclude that regardless of the corrective structures that have three or five internal waves, these can be simplified as triangular patterns. Also, we can observe that a corrective wave or a short-range narrow triangle is likely to have an extended move that, in terms of Elliott’s wave theory, could correspond to an extended wave.

On the other hand, extensive triangular formations, or of a wide range, could lead the price to move in a range not as broad as in the previous case.

Finally, in the last example, we recognize how the alternation principle works in Elliott’s wave theory. Just as the first observed triangle is simple, and has a short duration, and the second corrective formation is extensive and complex.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 05 – Top Trade Setups In Forex – Get Ready for European GDP! 

On the forex front, the British pound bounced 0.9% to $1.3103, the highest close since May. Polls suggested a majority-win by Prime Minister Boris Johnson’s Conservative Party in the general election to be held next week, which could clear political uncertainty over Brexit. Meanwhile, the Markit UK Services PMI for November (final reading) was released at 49.3 (48.6 expected).

On the forex front, the British pound bounced 0.9% to $1.3103, the highest close since May. Polls suggested a majority-win by Prime Minister Boris Johnson’s Conservative Party in the general election to be held next week, which could clear political uncertainty over Brexit. Meanwhile, the Markit UK Services PMI for November (final reading) was released at 49.3 (48.6 expected).

On the forex front, the British pound bounced 0.9% to $1.3103, the highest close since May. Polls suggested a majority-win by Prime Minister Boris Johnson’s Conservative Party in the general election to be held next week, which could clear political uncertainty over Brexit. Meanwhile, the Markit UK Services PMI for November (final reading) was released at 49.3 (48.6 expected).

The euro closed a few pips lower at $1.1077. The Markit Eurozone Services PMI for November (final reading) posted 51.9 (51.5 expected).

Economic Events to Watch Today

Let’s took at these fundamentals.

  

EUR/USD – Daily Analysis

The EUR/USD currency pair hit the multi-week highs just above the 1.1100 level, mainly due to the poor ADP data result. As of writing, the currency pair currently trading near the 1.1090 and consolidates in the range between 1.1067 – 1.1115.

The ADP showed the US US private sector added ‘just’ 67K jobs during last month, coming in well below estimates whereas the November’s print was also changed a tad lower to 121K (from 125K).

Looking forward, all eyes will be on I.S.M. Manufacturing for November, which is due to come out later in the NA session.

Eventually, the pair has stuck above the critical barrier at 1.1100 due to the continuous weak sentiment in the greenback and the intensified Sino-US trade war. 

IHS Markit reported that today’s data signals 0.1% GDP growth in the last quarter of the year, with manufacturing creating a notable resistance. While today’s figures steadied a bit from the previous reading, the numbers are at the lower end of what’s been reported over the last five years.

On the technical side, the EUR/USD pair is increasing 0.19% at 1.1102 and faces the next hurdle at 1.1161 (200-day SMA), followed by 1.1179 (monthly high Oct.21) and finally 1.1186 (61.8% Fibo of the 2017-2018 rally). On the other hand, a breakdown of 1.1040 (55-day SMA) would target 1.0989 (low monthly Nov.14) en route to 1.0925 (low Sep.3).

Daily Support and Resistance    

  • S3 1.0883
  • S2 1.097
  • S1 1.1025

Pivot Point 1.1057

  • R1 1.1112
  • R2 1.1145
  • R3 1.1232

EUR/USD– Trading Tips

The European traders are waiting for the GDP and Retail Sales data, which is due in a couple of hours. With an improved level of uncertainty, the greenback is getting weaker, which is why the EUR/USD is trading steadily in a narrow range. 

The EUR/USD has immediate support is near mid-1.1050 and is closely followed by the 1.1075 horizontal support mark. Considering the recent crossover on MACD, the pau may trade bullish above the 1.1070 level today. 

.

GBP/USD– Daily Analysis

The GBP/USD currency pair remains to flash green and hit the seven-months highs near the 1.3100 in the last trading hour. That happens after the incoming polls have hit a majority for the United Kingdom Prime Minister Boris Johnsons ruling Conservatives Party at the upcoming snap election, which is listed to occur on December 12.

It should be noted that the bullish sentiment in the pair did not take any effect by the weakness in the greenback, supported by a sharp intraday upward movement in the US Treasury bond yields and some positive trade-related headlines. Moreover, the report came that the United States and China are moving closer to a deal before the December 15 tariff due data.

The GBP/USD currency pair will likely be trying to improve the 1.3100 round-figure marks, although slightly overbought sentiments on intraday charts warrant some attention before initiating any new bullish positions. Market traders now look forward to the US economic docket, highlighting the release of ADP report and ISM Non-Manufacturing PMI, for some short-term impetus.

Daily Support and Resistance    

  • S3 1.2823
  • S2 1.2876
  • S1 1.2908

Pivot Point 1.2929

  • R1 1.2961
  • R2 1.2982
  • R3 1.3035

GBP/USD– Trading Tip

The GBP/USD’s bullish trend continues to dominate the market, and the pair is consistently heading north to test the initial resistance level of 1.3195. A bullish breakout of this mark can drive buying until 1.3335, the double top resistance level. 

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. 

AUD/USD– Daily Analysis

The AUD/USD pair flashing red and currently trading near the bearish range of 0.6853, mainly due to the intensified trade tension between the United States and China.

As of writing, the currency pair failed to continue its recent bullish streak and unfortunately came under pressure, as we know the pair registering 2-consecutive days of bullish streak in the wake of softer Austrian macro data.

Apart from this, Australia’s GDP growth slowed to 0.4% during the 3-months to September as compared to the previous quarter’s upwardly revised figures of 0.6% and worse than 0.5% expected.

At the Sino-US front, the overall sentiment on the AUD/USD currency pair affected mainly by the United States and China trade deal uncertainty. It should be recalled that the United States President Donald Trump said that the trade deal with China would likely not happen in 2020. As well as, the US US Congress on Tuesday overwhelmingly approved a bill condemning China’s mass detention of ethnic Muslims and called for sanctions against some officials responsible.

The AUD/USD currency pair left its recent bullish moves, and bearish sentiment remained strong so far, despite the weak greenback. Because investors continue to digest the latest trade developments, the greenback buyers remained on the defensive track, avoid a modest uptick in the US US Treasury bond yields.

Daily Support and Resistance    

  • S3 0.6699
  • S2 0.6752
  • S1 0.6785

Pivot Point 0.6806

  • R1 0.6839
  • R2 0.6859
  • R3 0.6913

AUD/USD– Trading Tips

The AUD/USD is trading slightly bearish to achieve 38.2% Fibonacci retracement at 0.6820. Over this, the Aussie has produced a series of bearish candles that are suggesting chances of a sell-off in Aussie. 

The AUD/USD may trade with a bullish bias above 0.6820 to aim 0.6850 and 0.6868 while the next support prevails around 0.6800. 

All the best!

Categories
Candlestick patterns Forex Daily Topic

Candlestick Trading Patterns II – Everything you need to know about Single Candlestick Signals

This article is to be dedicated to single candlestick key figures. The majority of patterns are created by more than one candle, but some particular candlestick shapes are key figures to gauge the market sentiment and spot reversals.

This article is to be dedicated to single candlestick key figures. The majority of patterns are created by more than one candle, but some particular candlestick shapes are key figures to gauge the market sentiment and spot reversals.

This article is to be dedicated to single candlestick key figures. The majority of patterns are created by more than one candle, but some particular candlestick shapes are key figures to gauge the market sentiment and spot reversals.

In every one of them we will deal with the following aspects:

  • Identification of the candlestick
  • Marker psychology interpretation
  • Criteria and use

Key Single Candlestick Figures:

  • Doji
  • Spinning top
  • High Wave Candlestick
  • Hammer
  • Hanging man
  • Shooting star

The Japanese traders call the real body “the essence of the price action.” A scientist might call it the Signal part of the message, while the shadows are the nose of the market. The relation between the body and the shadows delivers unique insights into the sentiment of the traders. Shadows show the fight between buyers and sellers to control the price. A large body and small shadows denote that one of the sides has won the battle during that interval. A short body with large shadows after an extended trend indicates the winning herd is losing steam.

Spinning tops and high wave candles

Fig 1 – Spinning tops and High Wave candles

A spinning top is a visual clue for a candle with a tiny body. The color of the body does not matter.  A spinning top without a body is called Doji, such as the second one in the figure above. The fourth one is very close to it too.

Market sentiment in spinning tops

A the smaller the body, the larger the fight between bulls and bears. It shows that no one had control of the price during this period, as the sellers pressure the price down and buyers up, a small body means no one could outweigh the other party. The demand is counteracted by fresh supply,  and vice-versa, so the market is unable to move.

High Wave Candles

Steve Nison also mentions a close relative to the spinning top, called High Wave Candle. High Wave candles also have very small bodies, but to qualify as High Wave, the formation must also have large shadows on both sides. Shadows need not be of the same size, but they must be large.

Market sentiment in a High Wave Candle

According to Mr. Nison, If indecision is the crucial sentiment on spinning tops, High Wave candles represent “downright confusion.” That is evident because, in the same period, the market goes from the euphory of an extended high to the fear of a large drop, and then to close very near to its opening value. That means total confusion.

Trends and spinning tops

A large white body is like a green light for bulls in an uptrend. A large red body is also a green light to sell. But finding a spinning top in an uptrend means that the buyers do not have the complete control of the price. Therefore, such tops are a warning sign that the trend might be ending. Spinning tops acquire more importance when the price is overextended or close to resistance levels.

Spinning tops during ranging markets do not have any power to warn a trend change, as these stages are too noisy, and filled with lots of small bodies, anyway. Therefore, spinning tops and high waves during horizontal channels have no trading value.

Hammers, Hanging Man, and Shooting stars

Three special cases of spinning tops are the Hammer, the Hanging Man, and the Shooting Star.

Hammer

Fig 2 – Hammer

The hammer has a small real body and a large lower shadow. It is the equivalent of a reversal bar.  The price went from the open to the bottom, then it recovered and closed near or at the high of the session. The color of the body has less importance, although a close above the open has more upside implications. The signal is confirmed with a followthrough candle next to it.

Criteria:
  • The occurrence is after a lengthy downward movement, and the price is overextended.
  • The real body is at the upper top of the trading range
  • The shadow must be two times the length of the body. The longer, the better.
  • No upper or just a tiny shadow
  • Confirmation with a strong bullish candle, next
  • A large volume on the candle confirms a bottom.

 

Hanging Man

Fig 3 – Hanging Man

The hanging man has a similar shape of the hammer, but it shows up after an uptrend. The Japanese named that way because it is similar to the head and body of a man hanging by the neck.

Criteria:
  • The occurrence is after a significant upward move, and/or the price overextended.
  • The body is at the upper end of the trading range.
  • The lower shadow at least two times the height of the body. The color is not essential, but a bearish finish is preferred. the longer the shadow, the better
  • Tiny or no upper shadow.
  • Confirmation with a large bearish candle
  • High volume on the candlestick is indicative of a potential blowoff.
Shooting star

Fig 4 – Shooting Star

The shooting star is a top reversal candlestick and is the specular image to the hanging man.  In the case of a shooting star, it began great for buyers, but after the euphory of new highs, it came to the deception of the selling pressure with no demand to hold the price.  The close happens at the lower side of the trading range. A bear candle next confirms the trend change.

Criteria:
  • The upper shadow should be two times the height of the body. The larger, the better.
  • The real body is at the bottom of the trading range.
  • Color is less important, although a  red candle implies more bearishness.
  • Almost no lower shadow.
  • A large volume would give more credibility to the signal.
  • A  bear candle next is the confirmation of the change in the trend.

 

Reference: Steve Nison: The Candlestick Course

Profitable Candlestick Trading, Stephen Bigalow

 

 

Categories
Forex Basics Forex Daily Topic

A Breakout Brings More Momentum than any Other Trading Factor

A Breakout Brings More Momentum than any Other Trading Factor

A Breakout Brings More Momentum than any Other Trading Factor

A Breakout Brings More Momentum than any Other Trading Factor

A bearish engulfing candle at a Double Top or consolidation resistance is an excellent signal to go short. However, if a bearish engulfing candle closes right within the support level, it sometimes may create an upside momentum on the minor charts. In today’s article, we are going to demonstrate an example of that.

The price heads towards the North with strong bullish momentum. Ideally, traders are to look for opportunities to go long here upon consolidation, followed by upside breakout. The last candle comes out as a bearish candle. It may consolidate and make an upside breakout as things look. Let us go to the next chart to find out what happens next.

The pair produces a bearish engulfing candle. Several rejections and a bearish engulfing candle suggest that traders may want to go short on the pair. If they’re going to go short from here, they are to flip over to the H1 chart since it is an H4 chart. For a reason, I am not showing the H1 chart since the H4 chart itself tells the story that I want to share. Let us look at the H4 chart with another equation.

The candle closes right at a level where the price has bounced earlier. This is an explicit support level, which may play an essential part in the minor charts. Soon we find out how the pair reacts from here.

Look at the last candle. The candle comes out as a bearish engulfing candle. However, look at the upper shadow. It goes up to the consolidation resistance. With some brokers, because of the high spread factor, some traders’ Stop Loss may be swept away. The last candle, after having a strong rejection at around the resistance level, closes below the support. The sellers are to flip over to the H1 chart, wait for consolidation and bearish breakout to go short on the pair.

Again, I am presenting the H4 chart to show the next price movement.

The price does not look back this time. It heads towards the South with strong bearish momentum. The H1 chart may have offered some entries, as well. What lesson do we get from these examples?

  1. In an H4-H1 combination, after an H4 reversal candle, traders are to flip over to the H1 chart to take an entry.
  2. The last swing high or swing low on the H4 chart is to be counted.
  3. If the reversal candle closes right within the last swing high or swing low, it may push the price towards another direction, produce spike and sweep away our Stop Losses.
Categories
Forex Market Analysis

Daily F.X. Analysis, December 04 – Top Trade Setups In Forex – Eyes on US ADP Report! 

The market trades risk-off sentiment as the U.S. China trade war continues to play. The U.S. House of Representatives passed the Uighur Act, a bill to condemn the Chinese government for its mass internment of Uighur Muslims in Xinjiang. China has denounced the U.S. movement and has warned to take revenge.

The market trades risk-off sentiment as the U.S. China trade war continues to play. The U.S. House of Representatives passed the Uighur Act, a bill to condemn the Chinese government for its mass internment of Uighur Muslims in Xinjiang. China has denounced the U.S. movement and has warned to take revenge.

The market trades risk-off sentiment as the U.S. China trade war continues to play. The U.S. House of Representatives passed the Uighur Act, a bill to condemn the Chinese government for its mass internment of Uighur Muslims in Xinjiang. China has denounced the U.S. movement and has warned to take revenge.

It should be noted that the intensified political tensions will likely complicate the trade deal matters. As a consequence, the shared currency will likely struggle to pick up secure buying.

Economic Events to Watch Today

Let’s took at these fundamentals.

  

EUR/USD – Daily Analysis

The EUR/USD currency pair flashing red and representing marginal declines, mainly due to renewed trade tension between the United States and China. As of writing, the currency pair currently trading at 1.1079, having hit a high level of 1.1094 in the overnight trading hours. For now, the breakout may remain elusive if the key U.S. data releases ignore expectations by a big range, which is scheduled to release on the day.

The EUR/USD currency pair surged 0.58% on Monday, confirming its most significant single-day rise since September 17. The sharp rise neutralized the immediate bearish setup but failed to draw stronger buying pressure, leaving the pair below the November 21 high of 1.1097. A close higher is needed to confirm a bullish breakout.

However, that seems complicated due to fading optimism regarding the trade deal between the United States and China. President Donald Trump said that he would likely delay a trade deal with China until after the 2020 presidential election.

The U.S. House of Representatives passed the Uighur Act, a bill to condemn the Chinese government for its mass internment of Uighur Muslims in Xinjiang. China has denounced the U.S. movement and has warned to take revenge.

It should be noted that the intensified political tensions will likely complicate the trade deal matters. As a consequence, the shared currency will likely struggle to pick up strong buying.

Daily Support and Resistance

  • S3 1.0883
  • S2 1.097
  • S1 1.1025

Pivot Point 1.1057

  • R1 1.1112
  • R2 1.1145
  • R3 1.1232

EUR/USD– Trading Tips

With an increased level of uncertainty, the dollar is getting weaker, which is why the EUR/USD is on hold despite entering the overbought zone. At the moment, the pair is holding right below a strong triple top resistance level of 1.1090, having formed a series of bullish and bearish candles. 

Below this level, we can expect a slight retracement in the EUR/USD until 1.1060 and 1.1038. Conversely, the bullish breakout can lead EUR/USD prices towards 1.1120.

GBP/USD– Daily Analysis

The GBP/USD currency pair hit the 6-week high and taking rounds to 1.3000 on the day, mainly due to recent polls raid chances of the ruling Conservatives Partys victory in December snap election. As of writing, the cable currency pair is currently trading at 1.2994 and consolidates in the range of 1.2992-1.3004 ahead of key data.

However, the recent polls that showed the reducing lead of the Tories against the opposition Labour Party, the recent survey from the YouGov and Kantar signal increased the popularity of the Converaitce Party. 

At the Sino-US front, the chances of the United States and China phase-one trade deal getting reduce day by day. The United States President recently warned the deal might happen till late-2020 while the U.S. House announced sanctions on the senior Chinese diplomats.

Additionally, the Independent’s news that Hundreds of protesters march to Buckingham Palace over the U.S. President Trump NHS fears might have exerted additional pressure on the trading sentiment. As a result, stocks in Asia and S&P 500 Futures keep in the red zone.

Today, the traders are preparing for the key U.K. Services Purchasing Managers’ Index (PMI), anticipated to continue unchanged at 48.6, as well as the U.S. Markit Services PMI and ISM Non-Manufacturing PMI. Whereas the U.S. Markit data could reprint 51.6 figure, it’s ISM counterpart might decline to 54.5 from 54.7. Moreover, the US ADP Employment Change, forecast 140K against 125K prior, will likely offer additional pressure on market watchers.

Daily Support and Resistance

  • S3 1.2823
  • S2 1.2876
  • S1 1.2908

Pivot Point 1.2929

  • R1 1.2961
  • R2 1.2982
  • R3 1.3035

GBP/USD– Trading Tip

The GBP/USD is trading outside of the normal trading range, which was extending resistance around 1.2956. Now the same level is likely to work as a support. Traders may look for bearish retracement below 1.3000 psychological trading levels, but later, buying can be seen above 1.2965.

USD/JPY – Daily Analysis

The USD/JPY currency pair came under pressure and hit the multi-day low of 108.65, mainly due to fading optimism of the United States and China trade deal, as in result kept the JPY strong in the wake of risk-off sentiment. As of writing, the USD/JPY currency pair consolidates in the range between the 108.48 – 108.67.

Looking forward, Japan’s Jibun Bank Services Purchasing Managers’ Index (PMI) for November, expected 50.4 against 49.7, is likely to offer fresh direction to the pair during initial Tokyo open. However, the trader’s eyes will be on this week’s U.S. employment data and trade war headlines for fresh impulse.

Because of the lack of major catalysts from Japan, Friday’s key monthly jobs report from the U.S. is now getting more attention. As a consequence, today’s ADP Employment Change for November, forecast 140K against 125K earlier, will be closely observed for fresh direction. 

Concerning Friday’s employment numbers, the headlines Nonfarm Payrolls (NFP) is expected to increase from 128K to 180K, whereas Unemployment Rate and Average Hour Earnings (YoY) will likely remain unchanged at 3.6% and 3.0% respectively.

    

Daily Support and Resistance

  • S3 107.65
  • S2 108.42
  • S1 108.7

Pivot Point 109.2

  • R1 109.48
  • R2 109.98
  • R3 110.76

USD/JPY – Trading Tips

The USD/JPY currency pair flashing green and hit the bullish level of 109.19 from the 5-day low despite the broad risk-off sentiment. As of writing, the pair is consolidating in the range between the 108.95 – 109.20.

At the moment, the USD/JPY is trading with a strong bearish bias, and we may see a bullish reversal in USD/JPY somewhere around 108.800 level today. Below this, the pair can go after 108.500 level.

On the technical side, the USD/JPY has shown a dramatic dip until 108.950, the 50% Fibonacci retracement level. The pair has violated the bullish channel, which was supporting the safe-haven pair around 109.350. 

All the best!

Categories
Candlestick patterns Forex Daily Topic

Candlestick Trading Patterns I – The Story

The Financial markets are an exciting place for many people, attracted by dreams of infinite wealth. However, these markets are one of the most complicated environments on earth. The fact that millions of people exchange assets in financial markets makes them very difficult to predict, as each of the participants has its own vision, interests, and objectives.

The Financial markets are an exciting place for many people, attracted by dreams of infinite wealth. However, these markets are one of the most complicated environments on earth. The fact that millions of people exchange assets in financial markets makes them very difficult to predict, as each of the participants has its own vision, interests, and objectives.

The Financial markets are an exciting place for many people, attracted by dreams of infinite wealth. However, these markets are one of the most complicated environments on earth. The fact that millions of people exchange assets in financial markets makes them very difficult to predict, as each of the participants has its own vision, interests, and objectives.
That is why traders are always investigating the best tools to allow them to detect market sentiment in every situation.

Fundamental versus Technical

In the past, fundamental analysis was the only tool that allowed investors to detect whether a value was overvalued or undervalued. That gave them the keys to future trends, and to be able to overtake other investors with less information.
Then, at some point, the theory arises that the analysis of price history shows everything necessary for an informed investment. According to this theory, launched by Charles Dow, the price is already included in the fundamental analysis, since the chart is the trace left by investors about the consensus value of the good.

That said, there is a consensus that fundamental analysis is still necessary to detect the macro trend and to position the buying and selling actions in favor of the primary trend, while technical analysis is essential to generate the timing of trading activities.

Fig 1- Old NY Stock Exchange price table and Average chart. Source (https://pix-media.priceonomics-media.com/blog/1230/image04.png)

Chartism was encouraged in the early 1970s and 1980s by the emergence of personal computers, which allowed graphs to be automatically generated, instead of manually drawn, and also analyzed in time frames shorter than the daily.

The OHLC Chart

The technical analysis popularized the use of OHLC graphs that not only indicated the closing value of each interval but also gave the opening, maximum, and minimum data. This allowed chartists to observe the range of movements of the period and obtain an assessment of the volatility.

Fig 2- OHLC Chart in its classical B&W style.

The use of OHLC charts was a big advancement in the analysis of the price action. Soon analysts began to define profitable patterns such as reversal bar, key reversal bar, Doble and triple tops and bottoms, head and shoulders pattern round bottoms, Cup and handle, and many more.

Candlestick Charts

A centuries-old hidden way to analyze the markets came from Japan helped by Steve Nison’s studies of candlestick charting methods. According to him, centuries back, Japanese merchants were at the bottom of Japan’s social scale, well below soldiers, artisans, and farmers. But a prominent merchant began rising in status by the XVIIth century. His name was Munehisa Homma. At that time rice was a medium of exchange. Feudal Lords would store it in Osaka’s warehouses to, then, exchange the receipts when it was convenient for them, thus, becoming a de-facto futures market. Homa’s trading techniques, which included analysis through a primitive form of candlestick charts to gauge the psychology of the marker would earn him an immense fortune.

Fig 3- Candlestick Chart in its modern colorful style.

The major advantage of a candlestick chart over an OHLC chart is the ability to assess at a glance the overall trend and, also many hints about the current sentiment or psychological mood of the trader collective. Color is key to assess the current trend. Also, large bodies signify genuine momentum, short bodies and large wicks mean indecision and fight between buyers and sellers to control the price action.

Candlestick Patterns

Many of the western analysis methods can be applied also to candlestick charts, but these Japanese charts have brought a brand new batch of new patterns to assess market turns and continuations.  We will try to cover most of them, including obviously all major trading candlestick patterns such as Morning and evening stars, haramis, engulfing, three soldiers, and so on.

To refresh your basic knowledge of candlesticks, we recommend the following articles:

https://www.forex.academy/all-you-need-to-be-introduced-to-trading-charts-part-1-line-bar-and-candlestick-charts/

https://www.forex.academy/facts-about-candlesticks-you-never-knew/

https://www.forex.academy/dissection-of-candlestick/

https://www.forex.academy/candlestick-charts-and-its-advantages-in-financial-trading/

 

 

Categories
Forex Videos

Free Forex Course Part 3 of 3 – Into The Hardcore Of Technical Analysis

https://youtu.be/0qdFcQCLD2Q

https://youtu.be/0qdFcQCLD2Q

Into the Hardcore of Technical Analysis – Session three

In this session, we will continue with the moving average, convergence, divergence, or MACD indicator, as seen in example ‘A,’ this time we are looking at a USDJPY chart with a 5-minute time frame.

Example A

We have color-coded our MACD, which consists of a histogram, as denoted by the green and red stripes, which move above and below the 0-axis, which is also known as the centerline. And also two moving averages, which also move above and below 0-axis. Some MACD indicators do not support two MA’s, preferring a single MA, but they are supported in our version. The basic idea is that when the histogram has formed a peak and then moves towards the 0-axis, followed by the two moving averages crossing over and also moving towards the 0-axis, this gives a trader an indication that a pair is about to reserve direction. Traders also use this to gauge convergence and divergence, which also helps them to establish if the market is running out of steam and about to reverse.
In positions 1, 2, and 3, we can see that the moving averages of the MACD mimic, or converge with the 13 and 26 period moving averages around the price action. This is a clear indication that the MACD is in sync and, therefore, reliable at this stage.

Example B


In example ‘B’ of the same chart, we will take a look at divergence in closer detail. At position 1, the price action is moving lower at area ‘a,’ and the MACD histogram is keeping in pace with it at area ‘b.’ Price action then continues to move lower under both sets of moving averages; in itself, an indication of a bearish continuation, and again we see a low at area ‘c’ which coincides with a lower peak on the histogram at area ‘d.’ Everything is working in unison at this stage. However, at position 2, price action begins to flatten out at area ‘e,’ and although this coincides with area ‘f’ on the MACD histogram, the second push lower in price action at area ‘g’ is not matched at area ‘h’ on the histogram. This is now an area of divergence, where the indicators are moving away from one another, and tells traders that the push lower is fading and may be about to reverse. And which it clearly does, subsequently.

Example C


Traders also look for divergence in the moving averages of the price action chart and in MACD, as per example ‘c,’ because they also constantly throw up areas of divergence which traders need to constantly monitor for clues as to trend continuation and slowdowns and reversals.

Example D


Example ‘d’ is another area of divergence that traders keep an eye out for, as we can see in positions 1 and 2, where price action remains above its own set of moving averages, but where the histogram falls below its own moving averages. This can often signal that price action may be about to pull back.

Example E


In example e, we can see that the overall activity of the MACD is above the 0 axis, and this is When studying your charts, keep a keen eye open for areas when the histogram and its MA’s cross above or below the 0-axis, as many traders often use this as a signal to enter the market The MACD is also useful in telling traders about momentum. It does this by depicting how far the histogram and moving averages are away from the 0-axis. The further the distance, the greater the momentum.

Example F


In example ‘f,’ we return to our daily time frame chart of the EURUSD pair. And where we look at another favorite indicator, the Bollinger bands. This indicator is placed over the price chart and consists of a moving average, together with an upper and lower band. These bands are based on a statistical two standard deviations from the mean price. As standard deviations are a measurement of volatility, the bands adjust themselves to volatility in the markets, depending on the current volume.
When markets become more volatile, the bands widen, and when the markets are consolidating or less volatile, the bands begin to contract and move closer to the average price.
It is estimated that over 90% of price action will remain within the Bollinger bands. Therefore traders look for opportunities to go short or long in order to bring the price action back within the Bollinger bands. They are also trying to gauge when price action will begin to pick up, and thus force the bands open and this will result in extra volatility.

Tools that can help a trader to depict reversals in price action to coincide with the Bollinger bands would be momentum indicators, and stochastics, which shows when the market is overbought and oversold. When these tools combine together, they can be very powerful in a trader’s armory,
supportive of the overall trend, which is bullish.

Categories
Forex Elliott Wave

Corrective Waves and the Flag Pattern

Is it possible to simplify the wave analysis and compare it with classic chartist patterns? Identifying Elliott Wave patterns can seem confusing, especially if you are looking to differentiate between a flat or a zigzag pattern. In this educational article, we will look at some of Elliott’s patterns and compare them to traditional chartist figures.

Is it possible to simplify the wave analysis and compare it with classic chartist patterns? Identifying Elliott Wave patterns can seem confusing, especially if you are looking to differentiate between a flat or a zigzag pattern. In this educational article, we will look at some of Elliott’s patterns and compare them to traditional chartist figures.

Is it possible to simplify the wave analysis and compare it with classic chartist patterns? Identifying Elliott Wave patterns can seem confusing, especially if you are looking to differentiate between a flat or a zigzag pattern. In this educational article, we will look at some of Elliott’s patterns and compare them to traditional chartist figures.

The Normal Zigzag, Flat and the Flag Pattern

In the Elliott wave theory, the zigzag and the flat pattern are formations built by three internal waves. At the same time, depending on the strength of the corrective move, these could be more or less profound. The following figure shows the comparison between a normal corrective wave, which can be a zigzag or flat, and the flag pattern.

If we remember the wave theory, a zigzag pattern follows a 5-3-5 sequence, and the flat structure, a 3-3-5 internal subdivision. However, both formations can be simplified as a three-legs formation. Now, as we can see in the previous figure, the normal Zigzag and Flat structures can be simplified by a flag pattern.

The flag pattern is a chartist figure that represents a pause of the market trend and usually resolves as a continuation of the previous movement. The same situation occurs with the zigzag and flat pattern.

The flag pattern is spotted by a descending (or ascending) move, which connects in a tight range, its highs, and lows within a parallel channel.

The following chart exposes a series of flag formations detected on the GBPJPY cross in its 12-hour range.

On the figure, we observe that Flag patterns are commonly found in financial markets. According to Thomas Bulkowski’s publication, the flag pattern has a break-even or failure rate below 4%, which converts it as a “pretty nice” pattern to trade.

Flag Pattern Trade Setup

The flag trade setup is similar to the zigzag of flat configuration.

  • Entry: The trade is triggered once the price surpasses the end of wave “B,” or the previous swing high or low.
  • Protective Stop: The trade will be invalid if the price drops below the low of the flag.
  • Target: We will determine the profit target level using the Fibonacci expansion tool. The first target will be at the 100% level, as a second target at 127.2%, and the third profit target level will place at 161.8%

Putting All-together

The following chart illustrates the GBPCHF in its 8-hour range. In early January 2019, the cross developed a rally from 1.2248, which drove to the price until 1.2573. Once reached this high, the price action formed a corrective move in three waves. The bullish position was activated once price action surpassed the previous swing at 1.2524.

After the breakout, the price rallied over the three profit targets proposed. Note how the price runs when the flag pattern is tight and high, and the difference when the flag is broad in terms of price and time.

Conclusion

From the analysis realized, we conclude that a corrective structure as a normal zigzag or flat formation can be simplified as a flag pattern. This simplification could aid the traders in reducing the time analysis elapsed to the decision process before to place an order.

The confidence level of this pattern as a continuation figure could contribute to reducing the risk in the trading process.

Categories
Forex Psychology

What Wastage of Time!

The H4-H1 combination is one of the best combinations to trade for intraday traders. The H4 chart is the most consistent intraday chart in the Forex market. The H1 chart integration with the H4 chart offers many reliable entries. However, it is often seen that the H4 chart doest its part, but the signal never comes on the H1 chart. In today’s lesson, we are going to demonstrate an example of an H4-H1 chart combination, which is about to give us entry, but it ends up not producing a trading signal. Let us find out how the story goes.

The H4-H1 combination is one of the best combinations to trade for intraday traders. The H4 chart is the most consistent intraday chart in the Forex market. The H1 chart integration with the H4 chart offers many reliable entries. However, it is often seen that the H4 chart doest its part, but the signal never comes on the H1 chart. In today’s lesson, we are going to demonstrate an example of an H4-H1 chart combination, which is about to give us entry, but it ends up not producing a trading signal. Let us find out how the story goes.

The H4-H1 combination is one of the best combinations to trade for intraday traders. The H4 chart is the most consistent intraday chart in the Forex market. The H1 chart integration with the H4 chart offers many reliable entries. However, it is often seen that the H4 chart doest its part, but the signal never comes on the H1 chart. In today’s lesson, we are going to demonstrate an example of an H4-H1 chart combination, which is about to give us entry, but it ends up not producing a trading signal. Let us find out how the story goes.

The price after being bullish on the H4 chart, it has several rejections at a level. The last bearish candle gets rejected at a Double Top resistance. The sellers are to flip over the H1 chart and wait for the H1 consolidation and H1 bearish breakout to go short. However, it is an Inside Bar. It may not attract the sellers that much. Let us proceed to the next chart.

This is the H4 chart, as well. The price does not head towards the South on the H1 chart. It rather produces an H4 bullish candle followed by an H4 bearish engulfing candle. This time it may attract more sellers to be keen on selling opportunities. They are to flip over to the H1 chart again. Let us have a look at how the H1 chart looks.

This is the H1 chart. The last candle comes out as a bearish engulfing candle. The sellers are to stick with the chart to wait for consolidation and to get a breakout to go short. The waiting game starts.

The price keeps going towards the South without having any consolidation. Since the sellers do not find new resistance, thus there is no entry for them yet. Let us not give up but wait for consolidation.

The consolidation starts, but it does not make any H1 breakout to make the new lowest low. It rather finds a level of support where it has several bounces. It is a ‘Double Bottom’ support. The way things look now, it may head towards the North if the price breaches the neckline. All anticipations and hopes have gone in vain. Some traders may think, “what wastage of time.”

If you think it is a wastage of time, you are far away from being a professional trader. 70% of your trade setup like this may end up not offering an entry. Never think it is a waste of time. Take it easy. Each potential setup does not offer an entry. Concentrate and find out more setups in other pairs. It must be round the corner.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 03 – Top Trade Setups In Forex – Dollar Weakens Over ISM Manufacturing PMI 

The global financial markets are trading the weaker dollar sentiment in the wake of worse than expected ISM manufacturing PMI data. On the news, the Euro gained 0.5% to $1.1079, the largest percentage gain since September 17. The Markit Eurozone Manufacturing PMI (final reading) for November was released at 46.9 (46.6 expected). Similar PMIs for Germany and France were posted at 44.1 (43.8 expected) and at 51.7 (51.6 expected), respectively. While the Markit U.S. 

The global financial markets are trading the weaker dollar sentiment in the wake of worse than expected ISM manufacturing PMI data. On the news, the Euro gained 0.5% to $1.1079, the largest percentage gain since September 17. The Markit Eurozone Manufacturing PMI (final reading) for November was released at 46.9 (46.6 expected). Similar PMIs for Germany and France were posted at 44.1 (43.8 expected) and at 51.7 (51.6 expected), respectively. While the Markit U.S. 

The global financial markets are trading the weaker dollar sentiment in the wake of worse than expected ISM manufacturing PMI data. On the news, the Euro gained 0.5% to $1.1079, the largest percentage gain since September 17. The Markit Eurozone Manufacturing PMI (final reading) for November was released at 46.9 (46.6 expected). Similar PMIs for Germany and France were posted at 44.1 (43.8 expected) and at 51.7 (51.6 expected), respectively. While the Markit U.S. 

The Manufacturing Purchasing Managers’ Index (PMI) posted a final reading of 52.6 (52.2 expected and in preliminary reading), the Institute for Supply Management’s (ISM) Manufacturing PMI declined to 48.1 (49.2 expected) from 48.3 in October. Construction spending declined 0.8% on month in October (+0.4% expected, -0.3% in September).

Economic Events to Watch Today

Let’s took at these fundamentals.

Economic Calendar by TradingView


 

 EUR/USD – Daily Analysis

The EUR/USD currency pair climbed 0.58% very sharply during the Monday, representing its most significant single-day upward movement since September 17. As of now, the currency pair is currently trading near the 1.1076. Notably, the outlook will likely shift to the bullish track if the currency pair crosses the November 21 figures high of 1.1097. That would confirm a double bottom breakout on the daily chart and create an opportunity for 1.12.

The breakout could be possible if we look at the dismal of the United States data, which was released on Monday. The Institute for Supply Management said its manufacturing index dropped to 48.1% in November from October’s 48.3%, confirming the 4th-straight month of contraction.

At the greenback front, as we know that the U.S. Dollar already shows losses in the wake of the weak data, and the focus will likely shift to the on-going trade tensions; in that case, the breakout will likely remain elusive.

The United States President Donald Trump administration said late Monday it is planning to impose tariffs up to 100% on around $2.4 billion of French goods in return to take revenge on France’s decision to impose a tax on digital services.

Looking forward, the Eurozone producer price index is scheduled to release at 10:00 GMT, and the US ISM-NY Business Conditions Index (Nov) will hit the wires at 14:45 GMT. These data sets rarely have a big impact on the currency markets. Although, the EUR may take hints from a speech by European Central Bank’s (ECB) member Benoir Coeure scheduled at 17:30 GMT.

On the bearish side, the November 29 low of 1.0981 is the level to beat for sellers. At press time, the pair is trading at 1.1075, representing little change on the day.

Daily Support and Resistance

S3 1.0883

S2 1.097

S1 1.1025

Pivot Point 1.1057

R1 1.1112

R2 1.1145

R3 1.1232

EUR/USD– Trading Tips

The EUR/USD pair concluded the day over 1.1065, the 38.2% retracement level on 4-hour chart. Weaker ISM manufacturing data from the U.S. economy is driving bearish bias for the EUR/USD pair ahead of NFP data, which is due on Friday. 

The EUR/USD has reached the triple top resistance area of 1.1085, which is keeping the Euro on hold below this area. Although the closing of candles below this level is suggesting chances of a bearish bias, the RSI and MACD value is still in the bullish zone. These may drive more buying in the EUR/USD currency pair. In the case of a bullish breakout of 1.1085, the EUR/USD may lead towards a 1.1120 trading level. 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing red and shifted from the recovery track to bearish track mainly due to greenback recovery. As of writing, the GBP/USD currency pair is currently trading at 1.2940. Moreover. The reason behind the cable pairs pullback could also the recent changes in the United Kingdom politics and careful trading ahead of the United States President Trumps London visit for the North Atlantic Treaty Organization summit.

Tory leader has recently been fired by the opposition or the media, which in turn might have reduced the scope of the Conservatives holding the British rule after the December election.

At the greenback front, the U.S. Dollar was found on the strong bearish track on Monday because the United States President Donald Trump announced a measure that shows the world’s largest economy’s preference for trade protection. Apart from this, the United States and China trade war regarding Hong Kong also leaving pressure on the greenback. Freshly, China announced sanctions over the US Non-Government Organization (NGO).

Looking forward, the United States President Donald Trump will visit London tomorrow for the NATV summit. By the way, traders are not expecting something from this meeting, but the United Kingdoms opposition parties will keep their eyes on the meeting between the United States and United Kingdom leaders to increase their earlier claims that the United Kingdom Prime Minister has plans to sell National Healthcare System to the United States.

On the economic calendar, the final figures of November month U.K. Construction Purchasing Managers’ Index (PMI) will be watched for fresh directions.

Daily Support and Resistance

    

S3 1.2823

S2 1.2876

S1 1.2908

Pivot Point 1.2929

R1 1.2961

R2 1.2982

R3 1.3035

GBP/USD– Trading Tip

The British pound was up for a second session as it edged up 0.1% to $1.2939. The Markit U.K. Manufacturing PMI (final reading) for November came in at 48.9 (48.3 expected). On Tuesday, the GBP/USD is trading with a strong bullish trend as it already has violated the symmetric triangle pattern at $1.2935. 

The symmetric triangle pattern typically breakout on either direction, but the weaker dollar causes a bullish trend in the GBP/USD. For now, the GBP/USD pair may find next resistance around 1.3015 along with immediate support around 1.2970 and 1.2930.  

On the 4-hour timeframe, the RSI and MACD are holding are still signaling bullish bias. Thus, let’s consider taking buying trades above 1.2950 to target 1.3010 today. 

USD/JPY – Daily Analysis

The currency figures marked the highest losses on Monday, mainly due to headlines from the United States flashed challenges to the global trade system. As well as, another reason behind the pairs bearish trend was downbeat data from the United States.

The United States and China phase-1 deal or steel tariff on South American economies, not to forget possible trade negative measures against the European Union, the United States ran the trade show during the Monday.

Moreover, the US ISM manufacturing numbers stayed in the contraction region for the 4th-consecutive month and increased uncertainties on the strength of the world’s largest economy.

At the data front, the market’s risk aversion hit Wall Street on the 1st-trading day of the month while the United States’ ten-year Treasury yields increased by 4-basis points to 1.82%. However, the latest figures seem to change with the S&P 500 Futures be quietly on the positive side with the U.S. government bonds on the waiting mood for fresh directions.

The United States President Donal Trump continues his hate factor for the Federal Reserve monetary policy, as Trump said that the Federal Reserve should lower rate and loosen, making us competitive with other countries, and manufacturing will SOAR. The greenback is very strong as compared to others. Whereas the Federal Reserve policymakers are on the blackout session, negative data from the United States keep decreasing the chances of any monetary policy stabilization due to conflicting comments from the United States President Donald Trump.

Additionally, a repeat of the November news that the Japan government is considering 25 Trillion Japanese yen (JPY) economic stimulus package, as per the NHK, recently crossed the wires while supporting the pair.

Daily Support and Resistance

    

S3 107.65

S2 108.42

S1 108.7

Pivot Point 109.2

R1 109.48

R2 109.98

R3 110.76

USD/JPY – Trading Tips

The USD/JPY currency pair flashing green and hit the bullish level of 109.19 from the 5-day low despite the broad risk-off sentiment. As of writing, the pair is consolidating in the range between the 108.95 – 109.20.

On the technical front, the USD/JPY has shown a dramatic dip until 108.950, the 50% Fibonacci retracement level. As we can see in the chart above, the pair has violated the bullish channel, which was supporting the safe-haven pair around 109.350. 

At the moment, the USD/JPY is trading with a strong bearish bias, and we may see a bullish reversal in USD/JPY somewhere around 108.800 level today. Below this, the pair can go after 108.500 level.

All the best!

Categories
Forex Chart Basics

An Inverted Hammer at a Double Bottom

The Double Bottom is a pattern, where the buyers eagerly wait to get a bullish reversal candle at. Typically, a Bullish Engulfing Candle, a Bullish Pin Bar,  a Bullish Truck

The Double Bottom is a pattern, where the buyers eagerly wait to get a bullish reversal candle at. Typically, a Bullish Engulfing Candle, a Bullish Pin Bar,  a Bullish Truck

The Double Bottom is a pattern, where the buyers eagerly wait to get a bullish reversal candle at. Typically, a Bullish Engulfing Candle, a Bullish Pin Bar,  a Bullish Truck Rail are considered the strongest bullish reversal candle pattern. Usually, a Bullish Inside Bar and an Inverted Hammer are the weakest reversal pattern. In today’s lesson, we demonstrate an example of how a Daily Inverted Hammer candle offers a long entry.

This is the daily chart. It shows that the price has been roaming around within two horizontal levels. It is at the support and produces an Inverted Hammer. An Inverted Hammer is a bullish reversal candle but not a very strong one. Look at the upper shadow. It suggests that the price has a strong rejection at a level of resistance.

To some extent, it signifies intraday buyers’ less confidence. However, it is the daily chart, and the bullish reversal candle forms right at a double bottom’s support. Thus, let us flip over to the H4 chart to find out whether it offers us an entry.

The H4 chart shows that the price is on consolidation. The last candle looks ominous for the buyers. Nevertheless, traders on this chart combination are to look for long opportunities as long as the support holds the price. Let us go to the next chart to find out what happens.

The price finds its support and produces two consecutive bullish candles. One of them breaches the resistance and closes well above the resistance. A long entry may be triggered here by setting the Stop Loss below the consolidation support.

The price heads towards the North with good bullish momentum after triggering the breakout. The last candle on this chart comes out as a bearish candle with some gap. The buyers may consider closing the entry and come out with the total profit. On the other hand, some traders may want to take partial profit and ride on the wave up to the resistance. Have a look at the chart below.

The price may go up to the marked resistance level since this is the last swing high. If we consider the risk-reward, it is an amazing trade. The reward is about five times the risk. Do you remember how it started, though? It began with a Daily Inverted Hammer Candle (relatively weaker bullish reversal) at a Double Bottom’s support. Yes, this is what support of Double Bottom can do.

Categories
Forex Videos

Free Forex Course Part 2 of 3 – Into The Hardcore Of Technical Analysis

https://youtu.be/e0Vtef7xsEY
Into the Hardcore of Technical Analysis – Session two
In session one, we spoke about one of the most common mistakes new traders make, which is to overload

https://youtu.be/e0Vtef7xsEY
Into the Hardcore of Technical Analysis – Session two
In session one, we spoke about one of the most common mistakes new traders make, which is to overload

Into the Hardcore of Technical Analysis – Session two

In session one, we spoke about one of the most common mistakes new traders make, which is to overload their screens with technical indicators. It is advisable that traders do not clog up the screens with indicators. In the last session, we also looked at the importance of price action as a leading indicator, moving averages, trendlines, the momentum oscillator, the stochastic oscillator, and the significance of divergence to help ascertain when a Forex pair might be running out of steam and looking to reverse a trend.

Example A


In this session, we will be looking at some more indicators that professional traders favor.
Example ‘A’ is a daily chart of the EURUSD pair with three sets of moving averages applied. The moving average is a lagging indicator, which means it plots a line on a chart based on the historical price action based over a set amount of time frames. In the charts, we are using a 200-period moving average, a 50 MA, and a 14 MA. These are fairly typically used by professional traders on a daily chart. Traders can choose a simple moving average, which plots a constant line of the average of the highs and lows or weighted and also exponential moving averages, which have slightly different computations in order to help smooth the average price indicator.

Example B

Let’s take a more in-depth look at our chart with example ‘B’ and with just the three moving averages added to it and try to establish the price action story. At position 1, price action moves below the 200 moving average, some traders see this as an important technical moving average, and indeed we see a large bearish candlestick which punches through the 200 MA, and where the total amount of pips in this single move was 92.
The shock of this move causes consolidation and uncertainty at position ‘2’, and where an area of support is formed, as defined by the line, we drew in at position ‘A.’
Traders then pick up the downward momentum and where position ‘A’ now forms an area of resistance and where line ‘B’ acts as an area of support. After a period of consolidation and sideways trading, the support line ‘B’ is breached at position ‘4’, and our trend continues lower to the candlestick at position ‘5’, which is a reverse hammer. This is where we see price reverse and continue up to the 50 period MA, which acts as an area of resistance at position ‘6’, and where price action subsequently continues to fall, and where the 13 period MA acts as an area of resistance. Although there is some indecision at point ‘7’, each of the three moving averages is moving lower on the chart, and traders continue to look for selling opportunities in order to push the pair lower.

At position ‘8’ we see a reversal candlestick formation and our trend begins to the upside where price action finds our 13 and 50 MA’s acting as an area of support and after two attempts to push the pair higher at position ‘10’ price action fails to breach the 200 moving average which then acts as an area of resistance, and we see further decline in price action.

Example C

Another example of a commonly used indicator is the moving average convergence divergence or MACD, as seen in example ‘C.’ The indicator consists of a histogram, as denoted by the green and red stripes, which move above and below a 0-axis. And also two moving averages, which also move above and below the 0-axis. The basic idea is that when the histogram has formed a peak and then moves towards the 0-axis, followed by the two moving averages crossing over and also moving towards the 0-axis, this gives a trader an indication that a pair is about to reserve direction. Traders also use this to gauge divergence, which also helps them to establish if the market is running out of steam and about to reverse.

Example D


Let’s return to our chart and example ‘D,’ where we have added some vertical lines to help us ascertain where the MACD has been useful in identifying trade setups. Firstly, at position 1, our histogram has fallen away and moves towards the 0-axis, with the moving averages crossing over and also moving lower. This follows our bearish candlestick punching through the 200 MA. This is a clear signal to traders that a possible downtrend has formed and will continue.
However, at position 2, our point of reference line cuts through the middle of two low points in the price action, but when we look at our histogram the two low peaks, the second low is not lower than the first respective to the downward move. The second peak is higher than the first. This is a divergence between the MACD and price action and warns traders that the market may be running out of steam. Indeed we see a pullback in the pair to the 50 MA. The 50 MA then acts as an area of resistance, with the peak of the histogram forming an arch and where the moving averages are below the 0-axis. This tells traders the price action is still bearish. At position ‘4’, the moving averages have crossed over and are moving higher, and the histogram is moving upwards too and above the 0-axis, and price action climbs above the 13 and 50 period moving averages.

Categories
Forex Videos

Free Forex Course Part 1 of 3 – Into The Hardcore Of Technical Analysis

https://youtu.be/KHyT2HUht2Y

 
Into the Hardcore of Technical Analysis
One of the most common mistakes new traders make is to overload their screens with technical indicators. And where they were

https://youtu.be/KHyT2HUht2Y

 
Into the Hardcore of Technical Analysis
One of the most common mistakes new traders make is to overload their screens with technical indicators. And where they were

 

Into the Hardcore of Technical Analysis

One of the most common mistakes new traders make is to overload their screens with technical indicators. And where they were looking for signals, they end up clogging up the screens with indicators. The problem with having too many is that they often send conflicting messages. This means that they cannot see the wood for the trees!.

There are literally dozens of technical indicators available to traders nowadays, including leading and lagging indicators. An example of a lagging indicator would be a moving average, and an example of a leading one would be price action itself. Some indicators tend to identify opportunities in range-bound markets; others identify opportunities in trending markets.

Leading indicators, including price action, work especially well during periods of sideways market movements.

In a sideways moving market, lagging indicators are almost useless because the market has no clear direction. They can often provide random indications. None of these indicators can make valid predictions about future market movements. Because some indicators are lagging – which is to say they show where the market’s historical price action – the higher the time frame, the more laggy the indicator.
When developing a successful trading strategy, it is wise to use a combination of price action and technical analysis. This is because technical analysis does outline some very good statistical observations in the market. As such, price action will often trade very uniquely around technical areas of interest and can reveal indications of future price movements.

 

Example A


In example A, which is a 1-hour time frame of the USDCAD pair, we have a host of information already on the chart as provided by price action in the form of our favored Japanese candlesticks, the blue moving average indicator, and some comments and lines we have drawn onto our chart.
We can see that on the left of the chart, that price action attempted to break above our area of resistance on three occasions. Where we see the ‘triple top’ failed attempt to break above the area of resistance, and where subsequently bulls threw the towel in, and bears gained the stronghold, as denoted by our engulfing bearish candle.
The moving average offered very little guidance during this period of sideways trading activity. However, when price action fails to break through and remain below the support level after a few occasions, price action then starts to trend upwards, and this is where the moving average becomes more useful.
In this chart alone, we have areas of support and resistance, increases in volume, and trend lines, which are all critical components of technical analysis.

Example B


In example B, we return to our chart; however, this time, we have added a momentum indicator which shows the location of the close relative to the high-low range over a set period of time. In this case, the last 14 candles which are displayed on the chart as an average line.

Example C


In example C, we can see that momentum was falling lower when price action hit our triple top area of resistance at position 1. Therefore, the momentum indicator was a red flag for buyers and an opportunity for sellers at this point. When an indicator fails to keep up with price action, such as in this setup, it is known as divergence.

Example D


Example D shows another very widely used indicator: the stochastic oscillator. The basic premise is that when the two moving averages move above the key 80 level, an asset is said to be overbought, and when they move below the key 20 level, an asset is said to be oversold.

Example E


We return to these charts, in example E, where we have cleared away some of the clutter. If we draw a line from position 1 to position 2, we can see that our stochastic has breached the 80-line, showing that price action is overbought, and we see a pullback in price action. At position 3, where our momentum indicator was running out of steam at this point, we also see our stochastic is overbought at position 4, and subsequently, we see price action retreat lower in the form of our engulfing candlestick.

Divergence is also commonly observed when using the stochastic oscillator. We can see that position A to position B is an area of being oversold, and while price action moves higher, it is followed by a sharp move lower at position C. But the overall movement of our stochastics at point D is higher than our low at point B, showing divergence between the indicator and price action and warning traders that bearish price action is running out of steam, and where the subsequent move is higher.
Not every trade is exactly the same, and therefore no matter how many times you use a successful setup, it will not produce winning trades 100% of the time.

Categories
Forex Market Analysis

Daily F.X. Analysis, December 02 – Top Trade Setups In Forex – ISM Manufacturing PMI In Focus! 

The U.S. Dollar Index rose edged down to 98.27 from 98.33 during the previous week. The euro edged up 0.1% to $1.1015. Official data showed that November consumer prices in

The U.S. Dollar Index rose edged down to 98.27 from 98.33 during the previous week. The euro edged up 0.1% to $1.1015. Official data showed that November consumer prices in

The U.S. Dollar Index rose edged down to 98.27 from 98.33 during the previous week. The euro edged up 0.1% to $1.1015. Official data showed that November consumer prices in the eurozone increased 1.0% on year in November (+0.9% expected), and October jobless rate was at 7.5% (as expected, 7.6% in September). 

The U.S. stocks closed lower while ending November with the most significant monthly gain since June. The Dow Jones Industrial Average fell 112 points (-0.4%) to 28051, the S&P 500 lost 12 points (-0.4%) to 3140, and the Nasdaq Composite was down 39 points (-0.5%) to 8665.

Economic Events to Watch Today

Let’s took at these fundamentals.

 

EUR/USD – Daily Analysis

The EUR/USD currency pair hit the bearish track and continue to flashing red despite the positive China manufacturing data. As of writing, the EUR/USD currency pair currently trading near the 1.1018, representing slight declines on the day and consolidates in the range of 1.1015-1.1028.

The Caixin PMI, which surveys the small and medium-sized export-oriented units, increased to 51.8 in November from October’s 51.7 to record the fastest expansion in 3-3-years. While the official PMI released on Saturday also printed well above 50 to mark the first expansion in 13 months.

As in result, the risky assets getting bids due to data. For example, Japan’s Nikkei surged by1% in Asia, and the NZD/USD pair rose to a one-month high. Even so, the EUR currency is struggling.

Looking ahead, the EUR/USD currency pair may take bids if the European Central Bank (ECB) President Christine Lagarde’s pushes European leaders to boost spending, indirectly hinting low chances of more monetary stimulus in the foreseeable future. Notably, the Lagarde’s testimony is scheduled to happen at 14:00 GMT.

The market’s focus will shift to the U.S. data on the North American session. The US ISM Manufacturing PMI (Nov), due at 15:00 GMT, is forecasted to print at 49.4 against 48.3 in October. An above-50 print may put pressure on EUR/USD.

The final German and Eurozone PMI numbers scheduled to release in Europe may not have a big impact, unless they carry a significant upward or downward revisions to the preliminary figures released on November 22.

    

Daily Support and Resistance

  • S3 1.0915
  • S2 1.0962
  • S1 1.099

Pivot Point 1.1009

  • R1 1.1037
  • R2 1.1056
  • R3 1.1103

EUR/USD– Trading Tips

Traders are strengthening the downside bias amid positive NFP forecast, which is due to release later this week. The EUR/USD disrupted the tight trading range of 1.1016 – 1.0992 to trade near the 1.1020 trading level. 

At the moment, the EUR/USD’s now consolidating in a narrow trading range of 1.1030 – 1.1015. A bullish breakout of 1.1030 can lead the EUR/USD prices towards 1.1055, and on the lower side, 1.0985 endures the final support.

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing red and representing 0.10% losses. As of writing, the cable pair is currently trading at 1.2915 and consolidates in the narrow range between 1.29107 and 1.2918 at the start of the week, mainly due to series of United Kingdom election polls which doing limited to affect a leading Tory sentiment.

The GBP currency was seen stronger in the recent times in the wake of Brexit Party promising not to stand against the Tories in voters where there is a sitting Tory MP, underpinning the probability of a Tory majority after the quick threat of no-deal Brexit.

The investors are now keeping their eyes on the election outcomes. Still, the market will likely hold the risks of talks between the United Kingdom and the European Union, which may cover any quick bullish move in the GBP on a Tory victory.

At the Sino-US front, doubts over the phase-one deal between the United States (U.S.) and China are weighing on the greenback, whereas recently, actual activity data from China adds strength to the risk sentiment.

Looking forward, the market will keep their eyes on the U.S. main event in the U.S. nonfarm payroll jobs report. We expect employees to increase by 200k in November, after the above-consensus 128k October print.

All traders will keep their eyes on the trade and political headlines November month Purchasing Managers’ Index (PMI) data from the U.S., and the U.K. will likely offer intermediate moves. Including, U.K. Manufacturing PMI, anticipated 48.3, will be the first to observe ahead of the U.S. Markit and ISM activity indices. 

Estimates suggest the Markit PMI remain unchanged at 52.2, but ISM Manufacturing PMI may rise to 49.9 from 45.5.

Daily Support and Resistance

  • S3 1.2784
  • S2 1.285
  • S1 1.2889

Pivot Point 1.2917

  • R1 1.2955
  • R2 1.2984
  • R3 1.3051

GBP/USD– Trading Tips

The cable pair is currently trading at 1.2915 and consolidates in the narrow range between 1.29107 and 1.2918 at the origin of the week, mainly due to series of United Kingdom election polls which doing limited to affect a leading Tory sentiment.

On Friday, the GBP/USD continues to above the suggested support level of 1.2880. The pair has formed neutral candles above this level as traders are waiting for a fundamental reason to get in the market. 

On the 2-hour timeframe, the RSI and MACD are holding near 50 and 0, suggesting neutral bias among investors. Therefore, we may see a slightly bearish trend in the GBP/USD below 1.29400 area until a 38.2% Fibonacci retracement level of 1.2900. Consider staying bullish above 1.2900 today to target 1.2945/65. 

USD/JPY – Daily Analysis

The USD/JPY currency pair hit the 6-months high 109.70; this is the highest level since May 30, by the way, the safe-haven currency Japanese Yen came under pressure after the upbeat China manufacturing data and uptick in the United States equity index futures.

As of writing, the USD/JPY currency pair is currently trading at 109.70, the highest level since May 30, and the S&P 500 futures are reporting a 0.30% rise.

As we all well aware that President Donald Trump signed the Hong Kong Democracy Bill. China criticized the move because interference into its internal matters regarding Hong Kong, China warned to take revenge.

However, China did not take any revenge so far, and that may support the risk assets. Moreover, the data released over the weekend showed China’s manufacturing sector unexpectedly increased in November. The purchasing managers’ index (PMI) for China’s manufacturing sector inched up to 50.2 in November from 49.3 in October. A reading above 50 indicates expansion.

At the greenback front, the U.S. dollar stayed little changed on Monday in Asia after the release of reliable economic data in the U.S. the previous week. The U.S. Dollar Index traded marginally higher early in the day, up 0.03% to 98.20 by 8:41 PM ET (01:40 GMT).

Looking forward, the initial indications of a turnaround in the world’s 2nd-largest economy support further upside in the risk assets and the USD/JPY pair. The Caixin China manufacturing PMI, which focuses on the small and medium-sized export-oriented units, printed above the estimate of 51.5 soon before press time.

Meanwhile, the bullish movement will likely weaken if the focus shifts to the negative news regarding the United States and China trade talks because the report came earlier today that the optimism between the United States and China decreased about the phase-one deal.

    

Daily Support and Resistance

  • S3 108.98
  • S2 109.25
  • S1 109.38

Pivot Point 109.53

  • R1 109.65
  • R2 109.8
  • R3 110.07

USD/JPY – Trading Tips

The USD/JPY is consolidating at 109.425, and it has just begun to trade in the overbought zone as the RSI and MACD are stuck in the overbought territory. On the 4 hour graph, the USD/JPY has created a Doji and Spinning top, which typically implies chances neutral bias in the USD/JPY. On the downside, the USD/JPY may drop towards 38.2% Fibonacci retracement until 109.150. Besides Fibonacci, the bullish channel is also supporting the USD/JPY at the same level. So look for taking a sell trade below 109.700 today to target 109.200 and buying above 109.300 to target 109.700. 

All the best!

Categories
Forex Elliott Wave

How to Use ETFs to Create Spreads

Exchange-Traded Funds, or better known as ETFs, are investment instruments that are traded in a centralized market. In this educational article, we will see how we can use them to

Exchange-Traded Funds, or better known as ETFs, are investment instruments that are traded in a centralized market. In this educational article, we will see how we can use them to

Exchange-Traded Funds, or better known as ETFs, are investment instruments that are traded in a centralized market. In this educational article, we will see how we can use them to create negotiating opportunities.

Exploring Markets and Diversification

In financial markets, there are virtually unlimited possibilities for investment. Decisions such as what to buy? What to sell? As well as the geographical region, level of risk, liquidity of the market or assets, expected profitability, among other aspects, are factors that an investor can face when planning his future investment.

Use of Intermarket Spreads

In simple words, a spread is a strategy on which the investor buys one market and sells another market simultaneously. For example, in the currency market, an investor could buy a contract of €100,000 and simultaneously sell a 100,000 euro on pounds sterling. In other words, this trade is equivalent to go long in the EUR/GBP spread.

Creating a Spread with ETFs

We can create different spreads according to the market in which we are interested in investing. To this end, the decision criteria will be those ETFs with higher liquidity. The following tables represent ETFs that are associated with commodities, particularly Gold and Silver.

Table 1 – ETFs Based on Gold

Table 2 – ETFs Based on Silver

From tables 1 and 2, we see that ETFs GLD and SLV record the largest size in each group. Consequently, they will be used for the construction of the GLD/SLV spread.

The GLD/SLV spread in its daily chart shows both precious metals developing a corrective structure as a B wave. Therefore, the Gold/Silver spread could see a new low. In other words, we expect a decline in GLD and an upside in SLV.

The following example shows the spread between SPY and QQQ in its daily chart. The ETF SPY is characterized by replicating the S&P 500 index, while QQQ replicates the NASDAQ 100 index.

In the spread graph SPY/QQQ, we detect that the price is developing an Ending Diagonal structure in a bearish cycle. Also, although QQQ continues to push downwards in front of the SPY, it should be noted that this pattern is an exhaustion formation. Thus, it is likely that these markets reverse soon. In this case, the positioning strategy would be a long position in SPY and another short position in QQQ.

Conclusion

After the analysis made here, you may see that everything traded, including pairs, can be considered as spread bets between an asset the underlying payment method. It is just that, considering the relative stability of fiat money it makes more sense to use the term spread when exchanging two volatile assets, as one of the main objectives of spread bets is to tame the overall market volatility since the investor is selling and buying volatility at the same time.

According to what here is exposed, the creation of spreads can help explore the strength/ weakness situation between markets. Likewise, the exercise could help to make decisions on which assets to choose. It should be emphasized that before entering a market, the  spread’s price action must confirm the movement that is predicted.

Finally, this type of analysis can be extended to the futures market between futures contracts with different or similar expirations. This kind of analysis can also be applied in the stocks market, bonds, etc.

Categories
Forex Psychology

Having the Mindset to Deal with a Frustrating Situation

Patience is one of the most essential components of Forex traders. Traders are to keep patience in every single second. Before triggering an entry, a trader is to find out

Patience is one of the most essential components of Forex traders. Traders are to keep patience in every single second. Before triggering an entry, a trader is to find out

Patience is one of the most essential components of Forex traders. Traders are to keep patience in every single second. Before triggering an entry, a trader is to find out a trend, key levels, momentum, news events, etc. After all this hard work, he may not be able to take the entry. It is frustrating, but for Forex traders, it is a usual thing. A trader must accept it simply. In today’s lesson, we are going to demonstrate an example of that.

The price heads towards the South; it consolidates and heads towards the North. The price breaches a level of resistance, which the buyers are to keep an eye at for a bullish reversal. Let us proceed to find out how the next chart looks.

The buyers were waiting for the red-marked level to hold the price and produce a bullish reversal. If the level had held the price and pushed the price towards the North breaching the highest high, the buyers would have taken a long entry. They must have waited eagerly, but all went in vain.

The price headed towards the South further and found its support. After finding the support, it heads towards the North again. On its way, it makes a breakout at the highest high of the last bearish wave. The buyers are to keep an eye on this pair again to find a long entry. To take the long entry, the price is to come back at the breakout level, to produce a bullish reversal candle, and to breach the highest high of the last wave.

This time it looks good. A candle closes within the level of support. The buyers are to keep an eye to get a bullish reversal candle first. This means they have to be patient again. Let us proceed to find out what happens next.

The level produced a bullish reversal candle, but it did not breach the highest high. It instead came down and breached the support level. In a word, all efforts have gone in vain. What wastage of time!

                   The Bottom Line

If you want to take trading seriously as a business or a consistent source of income, you must not think that it is a wastage of your time. It is an investment. Traders must be patient and not be frustrated when opportunities are lost or do not come as per expectation. They must deal with it professionally.

The bad thing is it does not come with practice or experience. The good thing is it is all about mindset. Even a beginner may have a mindset to deal with a situation like this, whereas it might frustrate a trader with five years of experience. We must remember that if it frustrates too much, it hurts trading performance.

 

Categories
Forex Market Analysis

Daily F.X. Analysis, November 29 – Top Trade Setups In Forex – Brace for European Inflation Report! 

The U.S. dollar steadied against most major currencies on Thanksgiving day, with the ICE Dollar Index closing relatively unchanged on the day at 98.32. The euro edged up 0.1% to

The U.S. dollar steadied against most major currencies on Thanksgiving day, with the ICE Dollar Index closing relatively unchanged on the day at 98.32. The euro edged up 0.1% to

The U.S. dollar steadied against most major currencies on Thanksgiving day, with the ICE Dollar Index closing relatively unchanged on the day at 98.32. The euro edged up 0.1% to $1.1012. Official data showed that the eurozone’s Economic Confidence Index rose to 101.3 in November (101.0 expected) from 100.8 in October. Later today, November CPI (+0.9% on-year expected) and October jobless rate (steady at 7.5% expected) will be reported.

The German Federal Statistical Office will release November jobless rate (steady at 5.0% expected) and October retail sales (+0.2% on month expected).

Economic Events to Watch Today

Let’s took at these fundamentals.

 

EUR/USD – Daily Analysis

The EUR/USD currency pair found on the bearish track and representing 1.27 decline on the monthly opening rate of 1.1151. As of writing, the currency pair is trading near 1.10.

The EUR/USD currency pair is moving bearish at the end of November, having surged 2.33% during October. So, that was the most significant monthly increase since January 2018. However, the currency pair has come under pressure, pouring cold water over the optimism generated by October’s 2.3% gain.

On the other hand, Consumer spending, as represented by retail sales, is anticipated to have increased at an annualized rate of 1.1% in October, having increased by 3.4% in the previous month. The retail sales data is scheduled to release at 07:00 GMT.

Meanwhile, the data due at 08:55 GMT is expected to show the economy added 5,000 jobs in November, and the unemployment rate continued steady at 5%. The Post-German data, the focus would shift to the Eurozone consumer price index and the jobless rate, scheduled for release at 10:00 GMT. 

The EUR currency may come under the selling pressure and hit the bearish track if the German jobs data disappoint expectation. As we know, Germany is already facing bearish pressure from the external sector. If the labor market cools sharply, the consumers will likely shift on the purse saving mood, leading to a deeper economic recession.

On the other side, the EUR/USD currency pair will likely find love if the key data crosses the forecast figures. Notably, the gains could be short-lived due to the United States and China trade tensions. As we all well aware that President Donald Trump signed the Hong Kong Democracy Bill earlier this week, irritating China. That could hurt the trade matters.

Daily Support and Resistance

    

  • S3 1.0958
  • S2 1.098
  • S1 1.099

Pivot Point 1.1002

  • R1 1.1012
  • R2 1.1024
  • R3 1.1046

EUR/USD– Trading Tips

The EUR currency outlined a sideways trading pattern, which is signifying neutral bias among traders, and that’s mostly due to the limited volatility ahead of the weekend. However, traders are strengthening the downside bias put forward by the lower high at 1.1097 established on November 21.  

The 14-day relative strength index is proposing bullish bias, but it’s directing lower now as it’s valued may cross below 50. Let’s look for bearish trades below 1.1020 level today to target 1.1099 and 1.0960.

GBP/USD– Daily Analysis

The GBP/USD currency pair is consolidating in the narrow range of 1.2910-1.2917. The pair got support from the polls showing continued fame of the ruling Conservative Party. Moreover, probably the reason behind the lack of more strength is the stepping back of the United Kingdom Prime Minister Boris Johnsons from certain debates.

After the YouGov’s poll of a clear lead of the ruling Tory Party over the opposition Labour Party, accusations on the United Kingdom Prime Minster raised as he stepped back from the debate on channel4 and is yet to confirm an interview with BBC’s Andrew Neil, as per the Independent. Whereas the opposition leaders have started using rude words and media support the reaction, probably due to this, they will lose their fame ere the December snap election.

The Conservative’s boss was recently criticized by the opposition Labour Party leader Jeremy Corbyn regarding selling the National Healthcare Systems (NHS) to the United States, citing leaked government papers. The decreasing chances of another strong poll supporting the Troy leadership and the greenback recovery are the major catalyst to drive trading volume in the GBP/USD pair.

So far, the market risk sentiment is still directionless, with the United States’ ten-year Treasury yields taking rounds to 1.77% with Asian equities flashing mixed signals.

Looking ahead, the half-day trading session in the U.S. and shortage of data and events will likely keep the market unactive. However, political and trade headlines will entertain the traders.

    

Daily Support and Resistance

  • S3 1.2698
  • S2 1.2794
  • S1 1.2857

Pivot Point 1.2891

  • R1 1.2954
  • R2 1.2987
  • R3 1.3083

GBP/USD– Trading Tips

On Friday, the GBP/USD continues to above the suggested support level of 1.2880. The pair has formed neutral candles above this level as traders are waiting for a fundamental reason to get in the market. 

On the 2-hour timeframe, the RSI and MACD are holding near 50 and 0, suggesting neutral bias among investors. Therefore, we may see a slightly bearish trend in the GBP/USD below 1.29400 area until a 38.2% Fibonacci retracement level of 1.2900. Consider staying bullish above 1.2900 today to target 1.2945/65. 

USD/JPY – Daily Analysis

 The USD/JPY currency pair is flashing red and hit the session low near the 109.46, having hit the high of 109.60 three hours ago. As of writing, the currency pair is consolidating in the day’s range of 109.47-109.59.

The USD/JPY currency pair is stepping back, possibly following the slow descent of the S&P 50 futures. The index futures were down 0.10% in early Asia and are currently reporting a 0.26 decline. Bank of Japan’s (BOJ) Governor Kuroda was out on the wires a few minutes before press time asking for structural changes. Kuroda told Parliament that structural reforms must accompany fiscal and monetary stimulus measures to heighten the economy’s long-term growth potential and added that the central bank’s ultra-loose policy is aimed at boosting inflation to 2% and not monetize debt. 

Governor Kuroda’s comments are not surprising because the central bank has little capacity to stimulate, having run an expansionary monetary policy for more than 6-years. 

Looking forward, the Japanese Yen will likely continue to gain ground, because equities may trade risk-averse in the wake of the decision by President Trump to sign the Hong Kong Democracy Bill. 


Daily Support and Resistance

  • S3 108.42
  • S2 108.92
  • S1 109.24

Pivot Point 109.42

  • R1 109.74
  • R2 109.93
  • R3 110.43

USD/JPY – Trading Tips

The USD/JPY is consolidating at 109.425, and it has just begun to trade in the overbought zone as the RSI and MACD are stuck in the overbought territory. On the 4 hour graph, the USD/JPY has created a Doji and Spinning top, which typically implies chances neutral bias in the USD/JPY.  

On the downside, the USD/JPY may drop towards 38.2% Fibonacci retracement until 109.150. Besides Fibonacci, the bullish channel is also supporting the USD/JPY at the same level. So look for taking a sell trade below 109.700 today to target 109.200 and buying above 109.300 to target 109.700. 

All the best!

Categories
Forex Basic Strategies

The H4-H1, an Action-Packed Combination

In today’s lesson, we are going to demonstrate an example of the H4 and the H1 chart combination for taking entries. Both are intraday charts. A large number of traders

In today’s lesson, we are going to demonstrate an example of the H4 and the H1 chart combination for taking entries. Both are intraday charts. A large number of traders

In today’s lesson, we are going to demonstrate an example of the H4 and the H1 chart combination for taking entries. Both are intraday charts. A large number of traders do the job using those two charts. Thus, it is an excellent combination to trade in the Forex market.

Let us get started.

This is an H4 chart. The chart shows that the price heads towards the North. On its way, it made an upside breakout, which may play a vital role in pushing the price towards the North further. Despite having a long lower shadow, the last candle comes out as an Engulfing candle. The price may start its correction this time.

As expected, the price comes down to the flipped support and produces a bullish engulfing candle. The last swing high is far enough to offer a 1:1 risk-reward. However, we do not take an entry right after the candle H4 closes. We rather switch over to the H1 chart.

This is how the H1 chart looks. It shows that the price starts having correction by producing a Doji candle. An engulfing bullish candle closing above the Doji candle is the signal to go long here. Let us wait for a Marubozu bullish candle.

This is one good-looking Marubozu bullish candle. However, it closes right at the resistance zone. Risk-reward is 100:0 here. We must wait for an H1 consolidation and breakout towards the upside to take a long entry.

Here they come. The price consolidates and produces an H1 bullish candle, which closes above the resistance. Traders may trigger a long entry right after the candle closes by setting stop loss below the last support. The H1 chart does not show any resistance nearby. Thus, the price may head towards the North with good bullish momentum. It may get us 1:2 risk-reward or even more. Usually, the price reverses once 1:1 risk-reward is achieved. Let us find out what happens here.

The price consolidates much earlier than our expectations. Our reward is not achieved. Thus, we keep holding our position. We are risking a loss here. However, we must keep our patience.

The price makes another upside breakout and heads towards the North. The wave gets us our expected reward and starts having a pullback. If we have not set our take profit, we may manually close it; or we may use a trailing stop loss. We will demonstrate some examples of using trailing stop loss in this combination in upcoming lessons.

The Bottom Line

The H4-H1 combination is an eventful combination. A Trader needs to have skill, expertise, experience, and patience to handle it. Once he learns it well, it may have his hands full in making money by trading.

Categories
Forex Market Analysis

Daily F.X. Analysis, November 28 – Top Trade Setups In Forex – Happy Thanksgiving! 

The U.S. dollar kept trading within a tight range on Wednesday, amid thin trading before the Thanksgiving holiday. The ICE Dollar Index closed broadly flat on the day at 98.31.

The U.S. dollar kept trading within a tight range on Wednesday, amid thin trading before the Thanksgiving holiday. The ICE Dollar Index closed broadly flat on the day at 98.31.

The U.S. dollar kept trading within a tight range on Wednesday, amid thin trading before the Thanksgiving holiday. The ICE Dollar Index closed broadly flat on the day at 98.31.

The British pound rose 0.5% to $1.2930. A U.K. election poll showed that the Conservative would retain a majority of seats in the parliament. The euro fell 0.1% to $1.1005, while USD/JPY gained 0.3% to 109.38. 

The Federal Reserve released the Beige Book, which stated that economic activity expanded modestly, the outlook remains positive, and growth is expected to continue into next year. Besides, theU.S. economic data, third-quarter GDP growth was revised to 2.1% (1.9% expected and previously estimated), and durable goods orders increased 0.6% on month in October (-0.9% estimated).

Economic Events to Watch Today

Let’s took at these fundamentals.

 

EUR/USD – Daily Analysis

The EUR/USD currency pair consolidates on the uncertain track and may face a hard time defending crucial support until the German inflation data blows past predictions, weakening dovish ECB expectations. Today, the German inflation data is scheduled to release at 13:00 GMT.

As of writing, the EUR/USD currency pair seems set for a possible break below 1.0994, which is the 61.8% Fibonacci retracement of the rally from 1.0879 to 1.1179.

At the USD front, the greenback got the support mainly due to the 3rd-quarter gross domestic product was updated higher to 2.1% from 1.9%, in the wake of positive consumer spending data. The Fed’s preferred measure of inflation, which strips out volatile food and energy prices, soared higher to 2.1% from 1.9% in the 2nd-quarter. The inflation gauge exceeded an expectation of 1.7%.

It must be noted that the upbeat data of the U.S. may push the greenback further high on the day. Traders will be likely to sell dollars over increases uncertainty as President Trump’s decision to sign the Hong Kong Democratic Bill has irritated the Dragon Nation, and fears have increased regarding side effects on the trade deal. This is evident from the 0.25% drop in the S&P 500 futures seen at press time.

Looking forward, the breakdown will likely remain elusive manly if the preliminary German consumer price index for November crosses expectations by a considerable range, creating the opportunity for the European Central Bank head Christine Lagarde to maintain her neutral-to-hawkish stance for some time.

On the flip side, the CPI is anticipated to drop 0.6% month-on-month in November, having increased by 0.1% in October. The EUR/USD currency pair may plan a notable bounce from $1.10 if the inflation figure crosses estimates by a significant margin.


Daily Support and Resistance

  • S3 1.0958
  • S2 1.098
  • S1 1.099

Pivot Point 1.1002

  • R1 1.1012
  • R2 1.1024
  • R3 1.1046

EUR/USD– Trading Tips

On the technical side, the EUR currency charted a bearish engulfing candle yesterday, strengthening the downside bias put forward by the lower high at 1.1097 established on November 21. On the technical side, indicating the route of least resistance is to the bearish. The 14-day relative strength index is suggesting selling conditions with as the RSI value holds below 50, and the daily MACD histogram is again printing deeper bars below the zero line, a sign of strengthening bearish momentum. Let’s look for staying bullish above or bearish below 1.1000 level today to target 1.1055 on the upper side and 1.0985 on the lower side. 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing green and hit the 4-day high to 1.2920, mainly due to the ruling Tory party, which will keep the helm of the United Kingdom with a vast majority. The YouGov Poll on the MRP model is highly appreciated for its forecasts regarding the United Kingdom’s result since they forecasted a suspended parliament in 2017. 

The poll suggests Conservatives gain 359 seats against the opposition Labour Party’s 211 seat estimate. Apart from this, It also shows that 43% of vote share will be allocated to the ruling Tories against Jeremy Corbyn-led Labour Party’s 32% expected share, which in turn indicates an 11-point lead of the Prime Minister (PM) Boris Johnson led Conservatives over the Labour Party.

On the other hand, the GBP/USD currency pair is found under pressure during the Asian session today. The GBP currency has initially fallen mainly due to expectations that the Tory announcement might leave a negative impact on the ruling party popularity ahead of the December Snap election. But now the GBP/USD is likely to find enough support below at the 1.2900 regions to bounce yet again. 

A report came from the Guardian’s journalist Owen Jones that the British Prime Minister Boris Johnson’s Conservatives have a significant majority over the Labour Party in the YouGov’s MRP poll.

Looking forward, the traders will just have limited data to trade as the United States enjoys thanksgiving holiday. Therefore, trade and political headlines will keep the market active.


Daily Support and Resistance

    

  • S3 1.2698
  • S2 1.2794
  • S1 1.2857

Pivot Point 1.2891

  • R1 1.2954
  • R2 1.2987
  • R3 1.3083

GBP/USD– Trading Tips

On Thursday, the GBP/USD has hit our previously suggested target level of 1.2880; in fact, it soared further to trade around 1.2940 level. Currently, the pair has entered the overbought zone, as we can see on the 2-hour timeframe, the RSI and MACD are holding near 70 suggesting chances of a bearish correction.

Therefore, we may see a slightly bearish trend in the GBP/USD below 1.29400 area until a 38.2% Fibonacci retracement level of 1.2900. Consider staying bullish above 1.2900 today to target 1.2945/65. 

 USD/JPY – Daily Analysis

The USD/JPY currency pair flashing red and dropped by 0.13% to 109.38, mainly due to fears regarding United States President Donald Trump’s decision to sign the Hong Kong bill. It may irritate China and could drop a negative impact on the trade talks. 

As a result, the safe-haven currency Japanese Yen has picked up buying. The USD/JPY pair is currently trading at 109.38, representing a 0.13% drop on the day. The pair has dropped more than 20 pips in the last 90 minutes or so. 

The U.S. President Trump signed the Hong Kong Human Rights and Democracy Act in early Asia, reaffirming support for Hong Kong’s pro-democracy protests after the majority of the City’s districts turned in favor of pro-democracy candidates with record voter turnout this week.

It must be noted that China has repeatedly warned the U.S. administration not to interfere in their internal affairs. Therefore, President Trump’s move will likely hurt the relationship with China at a time when both sides are trying to reach a “phase one” trade deal.

Looking forward, deeper declines could be in the offing if the Asian and European equities turn risk-averse concerning the latest political developments. 

At the USD front, the greenback found on the buying track during the United States trading hours on Wednesday, mainly due to official data, which showed the U.S. gross domestic product (GDP) increased 2.1% in the 3rd-quarter, driven by strong consumer spending. Notably, the pair hit a 6-month high of 109.61 before dropping on Trump’s decision to sign Hong Kong Democracy bill. 

Daily Support and Resistance

    

  • S3 108.42
  • S2 108.92
  • S1 109.24

Pivot Point 109.42

  • R1 109.74
  • R2 109.93
  • R3 110.43

USD/JPY – Trading Tips

The USD/JPY is trading at 109.425, and it has just entered the overbought zone as the RSI and MACD are stuck in the overbought territory. On the 4 hour chart, the USD/JPY has formed a tweezers top, which typically suggests chances of a bearish bias trend in the USD/JPY. 

On the downside, the USD/JPY may drop towards 38.2% Fibonacci retracement until 109.150. Besides Fibonacci, the bullish channel is also supporting the USD/JPY at the same level. So consider taking a sell trade below 109.500 today to target 109.200. 

All the best!

Categories
Crypto Market Analysis

Daily Crypto Review, Nov 28 – Another bull rally despite China crypto-business crackdown

The cryptocurrency market had another great day. After a day of consolidation that the industry had yesterday, the past 24 hours have been quite bullish. Most cryptos ended up in

The cryptocurrency market had another great day. After a day of consolidation that the industry had yesterday, the past 24 hours have been quite bullish. Most cryptos ended up in

The cryptocurrency market had another great day. After a day of consolidation that the industry had yesterday, the past 24 hours have been quite bullish. Most cryptos ended up in the green, and some of them even broke their old key levels. If we take a look at today’s prices, Bitcoin went up %4.84, and it is now trading at $7,484. Ethereum gained 3.12%, while XRP went up 3.13%.

Of the top100 cryptocurrencies by market cap, the biggest gainer is Siacoin, with an explosive gain of 33.82% on the day. The biggest losers of the day were Silverway and Molecular Future, which lost 14.83% and 4.84% of their value, respectively.

 

The most recent jump in price was disproportional when we take into consideration all cryptocurrencies. Bitcoin’s dominance has increased more than 0.5% when compared to the value it had yesterday as it gained more value than the rest of cryptocurrencies. Its dominance is currently 66.52%.

The cryptocurrency market as a whole now has a market capitalization of $203.87 billion, which represents a significant increase when compared to the value it had yesterday.

What happened in the past 24 hours

China is showing its teeth with its latest crypto-crackdown. As reported, at least five local exchanges had to stop their operations or announce that they will no longer serve domestic users this month. Chinese regulators issued a series of warnings and notices as part of a cleanup of cryptocurrency trading.

The latest wave of shutdowns and restrictions in the crypto industry represent the biggest cleanup of the sector since September 2017.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin did not spend much time consolidating its price as the bulls seemed to have made a decision to move the price up. After consolidating above 7,000, the bulls pushed Bitcoin above $7,415. This move was successful and Bitcoin has now made this key level its support.


Bitcoin’s volume was on the levels it was at during the sell-offs, which happened a few days ago. Its RSI level is currently more near overbought than near oversold territory.

 

Key levels to the upside                   Key levels to the downside

1:  $8,000                                          1: $7,415

2: $8,425                                           2: $6,620

3: $8,640                                

Ethereum

Ethereum bulls also had their run but left Ethereum right on the key level of $153. Ethereum is now trying to decide whether its price will stay above this line or below it. However, whether the price ends up above or below $153, the bullish move was successful as this key level was not the only one that the price passed to the upside.


Ethereum’s RSI is now approaching overbought territory, while its volume has decreased heavily after the move has ended.

Key levels to the upside                    Key levels to the downside

1: $167.8                                            1: $127

2: $178.6

3: $185

XRP

XRP was another cryptocurrency that had a bull rally in the past 24 hours. However, its price is still not stable enough that we can say that this move was completely successful. After consolidating at around $0.21, XRP’s price shot up to $0.227 it is now trading at. However, with no key resistance levels broken and no real support levels formed, this move hasn’t brought XRP out of the limbo yet.


XRP’s RSI is slowly increasing while its volume is declining slightly.

Key levels to the upside                   Key levels to the downside

1: $0.235                                           1:  $0.202

2: $0.245

3: $0.266

Categories
Forex Market Analysis

Descending Triangle In AUD/USD – Brace to Trade Breakout! 

The AUD/USD currency pair sidelined near the 0.6788, despite the fifth-consecutive quarterly drop in Australian Construction Work, having hit the low of 0.6782 during the European session. 

The bearish trend

The AUD/USD currency pair sidelined near the 0.6788, despite the fifth-consecutive quarterly drop in Australian Construction Work, having hit the low of 0.6782 during the European session. 

The bearish trend

The AUD/USD currency pair sidelined near the 0.6788, despite the fifth-consecutive quarterly drop in Australian Construction Work, having hit the low of 0.6782 during the European session. 

The bearish trend in Aussie came after the Westpac Banking Corp announced on Wednesday in its forecast that the Reserve Bank of Australia (RBA) is expected to lower interest rates twice until it reaches 0.25% by June 2020. Later they will go for launching quantitative easing (Q.E.), 

The Construction figures for the (Q3) appeared in at -0.4% – the fifth straight quarterly drop. The numbers add to the gross domestic product, which will be released next week. However, the actual figure was unexpectedly better than the 1% decline. 

On the other hand, the United States President Donald Trump continues its hopes of a phase-one deal with China even after the media releases from Beijing that blamed the U.S. for unfair behavior. Moreover, the greenback stays on the bullish track across the board because investors still trust on the U.S. dollar during the risk-on sentiment.

Thus, the stronger dollar and weaker Aussie is causing bearish trends in the AUD/USD pair. 

Technically, the AUD/USD pair is trading sideways within a narrow trading range of 0.6800 – 0.6765. That’s the descending triangle pattern, which is keeping the pair in a consolidation. Mostly, this kind of pattern violates on the lower side, and if this happens, we may see AUD/USD prices going towards 0.6735.


Daily Support and Resistance

  • S3 0.6718
  • S2 0.675
  • S1 0.6763
  • Pivot Point 0.6781
  • R1 0.6795
  • R2 0.6813
  • R3 0.6844

Today, consider taking sell positions below 0.6800 until 0.6765, and then if 0.6765 also gets violated, we will have a chance to add further selling until 0.6735. All the best! 

Categories
Forex Basic Strategies

Trading With The Bollinger Band %B Indicator

Introduction
If you have experience trading with the Bollinger Bands indicator, you will find it easy to trade with the Bollinger Band %B indicator. The only difference is that, in

Introduction
If you have experience trading with the Bollinger Bands indicator, you will find it easy to trade with the Bollinger Band %B indicator. The only difference is that, in

Introduction

If you have experience trading with the Bollinger Bands indicator, you will find it easy to trade with the Bollinger Band %B indicator. The only difference is that, in this indicator, you can identify the relationship between the price and the bands with at most clarity.

What is the Bollinger Band %B indicator?

It is basically a technical indicator that quantifies the price of an asset with respect to the upper and lower limits of Bollinger Bands. We have derived 6 relations between the price and the indicator.

  • The %B is at zero when the currency pair is at the lower band.
  • % B will be at 100 when the currency pair is at the upper band.
  • The indicator is above 100 when the price of the currency pair above the upper band.
  • It is below zero when the price goes below the lower band.
  • The %B is above 50 when the price goes above the middle band.
  • And it is below 50 when the price goes below the middle band.

The Bollinger band %B uses the 20-day simple moving average (SMA) as the default parameter, just like the Bollinger Bands. This indicator is available on most of the trading platforms and terminals.

Bollinger Band %B formula

%B = (Price – Lower Band) / (Upper Band – Lower band)

Things to know

Before understanding the strategy, it is necessary to know a few things about the indicator as these concepts will be used in every step of the strategy. Below is the chart of a forex pair with the Bollinger Band %B indicator plotted to it.

  • The upper dashed line represents the 100% level of the %B indicator also known as the upper band.
  • The lower dashed line represents the 0% level also known as the lower band of the indicator.
  • The area in between the two dashed lines is known as the middle band.

These bands help us in identifying different trading opportunities. Hence, one needs to know about it before knowing the strategy.

The Strategy

Step 1: Identify the major trend

To identify the overall trend of the market, the trader needs to shrink the chart and determine the trend.

An uptrend is defined as a series of higher highs and higher lows, while a downtrend is defined as a series of lower lows and lower highs. In this strategy, we have taken the example of a downtrend, as shown in the figure. One can also see lower lows and lower highs in the above chart.

Let us see how the strategy works.

Step 2: Find the price where %B is above 100 or below 0 in the currency pair.

In this step, we are looking for the price where the indicator is above the upper band or below the lower band. This extreme price action is said to continue for long after taking a suitable entry.

A sell setup is formed when the indicator crosses below the lower band, and a buy setup is formed when the indicator crosses above the upper band. This strategy is almost reverse of other strategies (as oversold indicates buying in other strategies).

The above chart shows the crossing of the indicator below the lower band, which is apt for a sell trade. Just because the price is below the dashed line, we cannot take an entry immediately.

The next step is to find a pullback and then make an entry. We will then see how and where to take profits.

Step 3: Take an entry only at a suitable pullback.

By suitable pullback, we mean the opposite color candles should not be swift candles and should not make higher highs. If this happens, the current trend can be weak and may not sustain. The %B indicator can also assist us with the same, as the indicator should move slowly after crossing the lower band. If the indicator reacts and moves fast, it means the pullback is strong and could also result in a reversal. Finally, an entry can be taken after the close of at least two pullback candles.

The below figure explains the above paragraph clearly.

Step 4: Determining how to take profit

In this strategy, we follow a rule-based system for making profits which are again based on our indicator. A trader needs to cover his position after the indicator crosses the lower band once again and goes above the dashed line. This style of taking profit is different than in other strategies where it is based on a fixed percentage. This way of taking profits ensures that a trader is trading based on rules and guidelines which is a disciplined approach.

The below figure explains how profit is taken and the position is covered.

When the indicator goes above the 0% (lower band) level after crossing below, it means profit can be taken now and the trade can be closed.

Step 5: Place a protective stop

Stop-loss is a mandatory and essential part of risk management, hence it needs to determined before entering a trade. For this strategy, stop-loss is placed above the high of the pullback which makes it an optimal place. The stop-loss, in this case, is very small which increases the risk to reward ratio (RR) considerably.

Here is exactly where it is recommended to put the stop loss.

The final trade setup would look something like this 👇

This results in a minimum of 2:1 RRR.

Final words

This is one of the easiest strategies which can be learned by new and experienced traders. It makes use of simple Bollinger bands added with a %B indicator. This indicator can also be combined with several other technical indicators and trading systems, but this alone, too, has a very good level of accuracy.  Now, we have to follow the money management principles to take the best trades and make huge profits from the same strategy. For this, you can also refer to our money management article series, which talks on various risk management topics. Cheers!

Categories
Forex Videos

Master Advanced Technical Analysis – Candlesticks part 2

https://youtu.be/B7nrjaEV_Ws
Advanced Technical Analysis – Candlesticks part 2
This article is a continuation from part 1, where we learned that the Japanese candlestick is the most widely used technical

https://youtu.be/B7nrjaEV_Ws
Advanced Technical Analysis – Candlesticks part 2
This article is a continuation from part 1, where we learned that the Japanese candlestick is the most widely used technical

Advanced Technical Analysis – Candlesticks part 2

This article is a continuation from part 1, where we learned that the Japanese candlestick is the most widely used technical tool used by traders across the globe. Japanese candlesticks were invented in the early 15th century by the Japanese government of the time. They were used to record price movements on Japan’s rice exchange. At this time, rice was not only the primary dietary staple, but it was also a unit of exchange. Candlesticks are used in trading most of the asset classes. However, they are a particular favorite in the Forex community.

 

Example A


Example A is the Morning Star set up. We can see that this is a reversal pattern formation of the Evening Star from part one. This three candlestick formation, as seen as A, B, and C, features a descending candlestick at position A, followed by a spinning top, B, which usually denotes a possible change in direction, followed by an ascending candlestick C, and where this is the beginning of the upward move in this example. Keep an eye out for these three candlestick formation setups in the form of the Morning and Evening Star, which usually means that a change in trend is imminent.

Example B


In Example B we have a downward trend which ends with a spinning top, and then a triple formation of the A, B, C, ascending candles which is known as three white soldiers and typically shows the end of a bearish trend, and confirmation that a strong uptrend is underway.

For the three white soldiers to be confirmed the first candlestick at position A, must be a reversal candlestick, and candlestick be the second candlestick should be bigger than candlestick A. Also, candlestick C should be at least the same size as B, with small or no shadows.

Example C


Example C, is a bearish reversal, and helps traders to define a downward trend. The A, B, C, formation is known as Three Black Crows. For this formation to be confirmed, the first candlestick at position A needs to be a reversal, and candlestick B must be larger than candlestick A, with small or no shadows. And where candlestick C, should be at least the same size or bigger than candlestick B, with small or no shadows.

Example D


Example D shows some examples of spinning tops. These candlesticks will typically have long legs and short bodies and tell traders that there is a lack of volume and liquidity in the market. These types of candlesticks can often be found when the market is consolidating, through a lack of direction, and where traders are waiting for a new time zone to open, or perhaps the release of economic data, and therefore, this type of candlestick should be treated with caution.
The second type of candlesticks we can see are known as Doji. These are considered by traders as neutral. They show very thin trading conditions, with a lack of volatility, and offer no clues as to future directional trends.

Example E


Example E, is the bullish White Marubozu. This will always have a large ascending body with no shadows. It tells traders that a large amount of liquidity has gone into the market during this particular time frame and that it was a strong move and was possibly caused by a breakout, or due to an economic or fundamental news release. This type of candlestick would usually be found during an upward trend and would suggest that the buyers have control and that, therefore, a continuation to the upside is very much on the cards. On the flip side, the bearish, Black Marubozu candlestick is directly opposite to its white counterpart and tells traders that the sellers are currently in control and that a continuation to the downside may follow.

Example F


Example F, is of a standard bullish line candlestick, which tells traders that buyers are mostly in control during this time frame. There is a little bit of pullback from the top and the bottom, as defined by the shadows, but overall a good amount of liquidity has gone into the market during this time frame, and this is therefore considered to be a strong move to the upside. The standard, bearish line, just below, is a strong bearish candle and tells traders that a reasonable amount of liquidity is going into the market during this time frame and that the sellers are mostly in control. The standard bullish and bearish candlesticks are favored by traders because they confirm liquidity is present, and they typify a continuation in trend.

Example G


In example G, we can see umbrella shapes, the first of which is a hanging man, because it is formed at the top of a trend, and is the same shape as a hammer. The second shape is a hammer, but which is defined by it appearing at the bottom of a trend. These shapes often depict a change in direction
While candlestick shapes and formations give traders and wealth of information and are extremely useful in predicting trends, periods of consolidation, and showing the possible end of a trend, they are, at the end of the day, just technical indicators and are not 100% reliable. Therefore they should be used with caution and in conjunction with other technical tools in order to increase the odds in a trader’s favor. Always remember the smaller the real body, the weaker the trend, and that this will typically reflect consolidation in the market, when uncertainty exists, and perhaps where traders are squaring positions or looking for a potential reversal or a correction. Lengthening shadows usually show the existence of weakness in a trend and also tell traders that a possible reversal in trend is on the horizon.

Categories
Forex Market Analysis

Daily F.X. Analysis, November 27 – Top Trade Setups In Forex – U.S. GDP In Play! 

The U.S. Dollar Index was little changed on Tuesday, closing relatively flat on the day at 98.25. The euro gained 0.1% to $1.1022. The German GfK Consumer Confidence Index edged

The U.S. Dollar Index was little changed on Tuesday, closing relatively flat on the day at 98.25. The euro gained 0.1% to $1.1022. The German GfK Consumer Confidence Index edged

The U.S. Dollar Index was little changed on Tuesday, closing relatively flat on the day at 98.25. The euro gained 0.1% to $1.1022. The German GfK Consumer Confidence Index edged up to 9.7 in December (9.6 expected and in November).

On the fundamental’s front, the Conference Board Consumer Confidence Index plunged to 125.5 in November (127.0 expected) from 126.1 in October. Wholesale inventories rose 0.2% on month in October (as expected), while new home sales fell to an annualized rate of 733,000 units (705,000 units estimated) from 738,000 units in September. Let’s took at today’s trade setups. 

Economic Events to Watch Today

Let’s took at these fundamentals.

EUR/USD – Daily Analysis

The EUR/USD currency pair flashing red and hit the record lows to trade below the seven months lows. At the moment, the currency pair is currently trading at 1.1015.

The reason behind decreased uncertainty could be the recent progress in the United States and China trade deal, which is likely to resolve issues. 

For now, the focus is likely to be on the U.S. data Q3 GDP, Personal Spending (Oct), Durable Goods Orders (Oct), Weekly Jobless Claims. The 3rd-quarter annualized GDP is forecasted to be unchanged at 1.9%. The economy increased by 2% and 3.1% in the 2nd and the 1st quarter as well.

With that being said, a prolonged period of low volatility often paves the way for a big move on either side. The level of uncertainty will drop if both nations reach a trade agreement. This ultimately can drive a significant drop in the common currency against the U.S. dollar. 

Daily Support and Resistance

  • S3 1.0959
  • S2 1.0988
  • S1 1.1001
  • Pivot Point 1.1017
  • R1 1.103
  • R2 1.1045
  • R3 1.1074

EUR/USD– Trading Tips

On the technical side, indicating the route of least resistance is to the bearish. The 14-day relative strength index is suggesting selling conditions with as the RSI value holds below 50, and the daily MACD histogram is again printing deeper bars below the zero line, a sign of strengthening bearish momentum. The double bottom pattern on the 4-hour chart is extending support to the direct currency pair. Let’s look for staying bullish above or bearish below 1.1000 level today to target 1.1055 on the upper side and 1.0985 on the lower side. 

GBP/USD– Daily Analysis

The GBP/USD currency pair found on the bearish track and still on the backfoot while dropping 1.2850, mainly due to showing depreciation in the ruling Conservative Party lead. The greenback strength leaves a negative impact on the GBP/USD currency pair.

The Tory announcement is already under criticism for its lack of defense, failure to mention promises on the National Healthcare System (NHS), and Brexit’s deadline is keeping the political depression for the ruling party. The Independent says that former senior judge blames the United Kingdom’s (U.K.) ‘s current Prime Minister for his reckless private life.

On the other hand, the United States President Donald Trump continues its hopes of a phase-one deal with China even after the media releases from Beijing that blamed the U.S. for unfair behavior. The greenback stays on the bullish track across the board because investors still trust the U.S. dollar during the risk-on sentiment.

For now, there is no significant data and event is scheduled to release from the United Kingdom, the United States economic calendar is full of critical figures ranging from the 2nd-version on 3rd-quarter (Q3) Gross Domestic Product (GDP) to October month Durable Goods Orders. The markets will keep their eyes on the U.S. Personnel Income and Spending, coupled with the Core Personal Consumption Expenditure Index.

Ahead of the data, T.D. Securities anticipates the Core PCE to stay around 0.7% YoY whereas also expecting Durable Goods Orders to recover to -1.0%.

Daily Support and Resistance

  • S3 1.2748
  • S2 1.2818
  • S1 1.2859
  • Pivot Point 1.2887
  • R1 1.2928
  • R2 1.2956
  • R3 1.3025

GBP/USD– Trading Tips

On Wednesday, the GBP/USD is now heading lower to test the triple bottom support area of 1.2820. The cable seems to close a tweezers bottom pattern on the 2-hour chart, which is famous for driving a bullish trend in the market. So here we can expect GBP/USD to trade bullish above 1.2820 to target 1.2880 later today. 

 

USD/JPY – Daily Analysis

The USD/JPY currency pair found on the bullish track, extending its recent recovery rally. As of writing, the currency pair currently trading at 109.15. The USD/JPY pair hit the two-weeks high during the Asian session mainly due to the positive headlines which came out from the United States and China regarding trade deal.

The pair closed beyond 200-day Simple Moving Average (SMA) for the first time since early November because the market’s risk sentiment further improved. Traders, the primary reason behind such a drop in uncertainty is increasing expectations that the United States (U.S.) and China will soon sign an initial, or phase-one, trade deal.

Elsewhere, the new trade headlines came from the United States President Donald Trump that we are very close to making a deal with China. The South China Morning Post’s (SCMP) story highlights the Commerce Secretary’s order to protect telecommunication networks and their supply chains from national security warnings. Though, the same fails to get much of the attention.

At the Fed front, the positive comments from the Federal Reserve (Fed) Chairman Jerome Powell and Governor Lael Brainard also supported the USD/JPY currency pair. Notably, the Federal Reserve (Fed) Chairman Jerome Powell praised the current economic status and the present monetary policy, whereas Governor Brainard said that the economic risk outlook still weak, but the sentiment seems to be improving. 

Traders did not give much focus on the comment from the President of the Federal Reserve bank of Dallas, Robert Kaplan, that the United States economy has a good opportunity to grow by 25 in the coming year. Still, unfortunately, the growth in the 4th-quarter is going to be weak.

The 2nd version of the 3rd-quarter US Gross Domestic Product (GDP) and October month Durable Goods Orders will be closely observed in the U.S. economic calendar as well as the comments from the Bank of Joana board member Makoto Sakurai, and trade headlines can be kept for intermediate direction.

Daily Support and Resistance

  • R3: 109.38
  • R2: 109
  • R1: 108.77
  • Pivot Point 108.61
  • S1: 108.39
  • S2: 108.23
  • S3: 107.84

USD/JPY – Trading Tips

The USD/JPY is trading at 109.100, and it has just violated the horizontal resistance area of 109. The closings of bullish candles above 109 mark are suggesting further buying until 109.300 and 109.450. Besides, the MACD and RSI are still holding in the bullish zone. Consider taking buying trades over 109 to target 109.35 today. 

All the best!

Categories
Forex Basic Strategies Forex Daily Topic

A Story of an Early Exit

Risk-Reward is a factor, which every successful trader takes care of. Before choosing a chart to take an entry, the first thing that is to be considered is the trend

Risk-Reward is a factor, which every successful trader takes care of. Before choosing a chart to take an entry, the first thing that is to be considered is the trend

Risk-Reward is a factor, which every successful trader takes care of. Before choosing a chart to take an entry, the first thing that is to be considered is the trend, then the risk-reward factor. Once we have set our Take Profit and Stop Loss level, we shall leave the entry either to hit the Stop Loss or the Profit Target. However, today, we are going to demonstrate an example of an early exit.

This is an H4 chart. The chart shows that the price has found its support as well as a resistance zone. After having a final rejection, it makes a move towards the downside. Then, it heads towards the North now (see the next image). Another rejection and bearish reversal candle at the resistance zone may produce a short entry.

The last H4 candle is bullish. However, the candle closes within the resistance zone. It may go either way. The buyers may get an upside breakout; the sellers may get a bearish reversal. Let us proceed to find out what happens next.

In the above chart, we can see one good-looking bearish Marubozu candle. The candle suggests that the sellers may wait for consolidation and downside breakout to take a short entry. The candle forms at a Double Top resistance as well. The price may consolidate around the neckline level.

As expected, the price starts having correction around the neckline level. It needs to find its resistance and produce an H4 bearish reversal candle along with a breakout at the neckline.

Here it comes. The last candle engulfs all the candles by closing below the neckline. An entry may be triggered right after the candle closes. The price has enough space to travel down to the red-marked line, which allows an excellent risk-reward. However, there is a support level in between, that may hold the price for a while.

The price heads towards that level with good bearish momentum. The way it has been going, it may hit the red-marked level within four/five H4 candles. This means one more trading day may be required to hit the original Take-Profit level.

The in-between level is a vital level, which produces the H4 bullish reversal candle. The price has reacted several times at that level earlier. Usually, we must stick with our original Profit-taking target. However, it is also legit to close our entry right after the last candle closes. A question may be raised “why do we close our entry here?”

Reasons for Early Exit

There are two reasons

  1. The support level is significantly strong
  2. The current bar is the last H4 Friday’s candle, which means the market closes once the candle is finished.

The Bottom Line

When using the Weekly and the Daily charts, traders are to let their opened positions to reach the target during the weekend. However, intraday traders should consider closing their floating trade before the week’s end. Mondays often start with a big gap, which may hurt intraday Stop Losses.

 

Categories
Forex Daily Topic Forex Stop-loss & argets

Masteting Stop-Loss setting: How about using Kase Dev-Stops?

The stop-loss setting is a crucial component to the long-term success of a forex and crypto trader. The market forces cannot be adapted to the wishes of traders. Successful traders

The stop-loss setting is a crucial component to the long-term success of a forex and crypto trader. The market forces cannot be adapted to the wishes of traders. Successful traders

The stop-loss setting is a crucial component to the long-term success of a forex and crypto trader. The market forces cannot be adapted to the wishes of traders. Successful traders must accept that fact instead of fighting it for the sake of being right. “What cannot be cannot be, and, furthermore, it is impossible,” said some time ago, a well-known politician in a phrase that did not pretend to be comical. But it states a clear fact: Fight against the markets is like Don Quixote fighting Windmills.

In previous articles, we explained John Sweeney’s MAE method, and also average true range-based stop-loss settings. In this article, we are going to talk about Cynthia Kase’s Dev-Stops.

Cynthia Kase is a well-known and successful futures trader, speaker, and author of several books on trading and technical analysis. She conceded high importance to stop settings. Cynthia says something undeniable to most of us, Technical literature has mostly focused on entries, and almost nothing on entries besides some words on stop-loss or trailing stops. She says that this is like teaching how to drive a car but without explaining where the brake pedal and how to press it.

In her book “Trading with the Odds,” she explains that this situation is mostly due to greed and fear. Traders don’t like to lose, and most of them don’t know when to get out of a trade. Also, she explains that fear of losing causes people to hang on their losses in the hope the market will turn and recover them. Another explanation for this situation is that the beginning of technical analysis was on the stock market, and no company wants its stock downgraded from buy to hold or, worse, to sell. As opposed to Forex, only a handful of people make money shorting stocks, so exits are much less critical on the stock market.

Stops based on fear and greed

Most traders want to squeeze out the most of a trade. Therefore, they decided to use the highest possible leverage. To reduce the dollar risk, they desire to put it as close as possible to the entry-level. But, as said earlier, using obvious levels of support/resistance and set the stop order just two or three pips below is absurd. Better send your money directly to the charity, since they will make much better use of it than the institution that is going to collect your hard-earned money for free.

Risk is imposed by the market

The critical point is not to impose our conditions on the market, but read what the market is telling us in terms of Risk. In trading, Risk is proportional to volatility. Your dollar risk is the amount the price can move against you in a given interval, times your position size.

Volatility is measured using the Range and also by the standard deviation of prices on an annualized basis. One standard deviation of the price holds 68$ of all the potential price movement if we assume prices are dispersed in a gaussian distribution. That means that a price that goes against a trade by one standard deviation it will encompass 34% of the observations (the other 34% would go in the direction of your trade). The problem with using volatility is that a yearly measurement of the price variations does not help with sudden short-term volatility changes. That’s the reason for using ATR instead.

The concept of the threshold of Uncertainty

A trade is a bet on a market trend. We think a particular trend is in place. Ideally, the direction is a straight line between one initial level and a final level. If we think of the short-term price wiggles as random noise, we adapt our trade by placing our stops far enough away from the trend mean to include noise. The magnitude of the noise means we don’t want to exit at the minimum turn against the trade. The trader needs to devise a way to follow the trend while getting out when it ends. 

 The Kase Dev Stops

Using a fixed multiplier for the True Range is an initial approximation. In our article of true range, we used a fixed 2X multiplier to set our stop order away from the market noise. Kase’s Dev Stop uses what she calls the skew of the volatility, the measure at which a range can spike in the opposite direction as a multiplier of the range measure. That makes the Dev-stop an adaptative trailing stop. Dev Stops is a well-known indicator in TradingView. Also, it is available for downloading at the MQL5.com site for your Metatrader workstation. 

Chart 1 – Kase Dev-Stops in a GBPUSD 4H chart.

We can see in Chart 1 that four lines follow the price action. The first one is the mean line and the 1, 2, and 3 standard deviation (SD) lines of a two-bar reversal. As we can see, the 3rd standard deviation is seldom touched, being the 2-SD the conservative method, and the 1-SD the preferred aggressive method. In the case of using 1SD, it is advisable for a reentry plan, or create mental stops that would trigger if the close happens below the 1SD Dev-stop line.

As it should be the norm when learning a new method, it is strongly advisable to backtest it first to assess which SD line works better with your particular asset and objectives. Also, after backtesting your optimal solution, it is prudent to trade it using a demo account. There we could also assess the costs and benefits of the method by adding the brokerage costs.

Reference: Trading with the Odds, Cynthia A. Kase. 1996, The McGraw-Hill Companies Inc.

 

Categories
Forex Videos

Master Advanced Technical Analysis – Candlesticks part 1

https://youtu.be/t-lHKatM5xw

 
Candlesticks part 1
The Japanese candlestick is the most broadly used technical tool by traders across the globe. Japanese candlesticks were developed in the early 15th century

https://youtu.be/t-lHKatM5xw

 
Candlesticks part 1
The Japanese candlestick is the most broadly used technical tool by traders across the globe. Japanese candlesticks were developed in the early 15th century

 

Candlesticks part 1

The Japanese candlestick is the most broadly used technical tool by traders across the globe. Japanese candlesticks were developed in the early 15th century by the Japanese government of the time. They were employed to register price changes in Japan’s rice exchange. At this time, rice was not only the main dietary staple but also a unit of exchange.
Candlesticks are used in trading most of the asset classes. However, they are a particular favorite in the Forex community.

Example A


In example ‘A’, we can see two candlesticks, they consist of 4 price inputs, open, low, high and close and which are defined by a real body which displays the open and close, and a lower shadow and an upper shadow which show the overall high and low of that particular timezone.
The left-hand candlestick, with the white body, denotes an ascending candlestick. The candlestick has opened, and at some point moved to the low, it has then moved higher, above the open value of the exchange rate and thus creating the solid body. The candlestick then moves to the high, before falling back to the close, and where it has left a shadow, or wick on the top.

The second candlestick is a descending one. It usually opens at the point where the previous candlestick closes. This time the real body is black. At some point, the candlestick has moved higher, before falling back below the opening value of the exchange rate, and thus now leaving a solid body, before eventually moving to the low point and subsequently moving higher to the close, and thereby leaving a lower shadow, or wick at the bottom. Candlesticks can be color coded to suit. But this is the basic of candlestick trading traders look for patterns when studying technical analysis, and these offer short-term signals that identify relationships between supply and demand. They also help traders to identify areas of support and resistance, which are also called floors and ceilings, and these are areas where price action tends to find it difficult to breakthrough.

Example B


Example ‘B’ shows two completely different candlesticks. Each of them provides a trader with information about activity within that particular time frame. The black candlestick on the left is a bullish candlestick, where the open and close are far away from each other and where the close is near the top of the overall movement during that time frame. This tells traders that this was a bullish move, where a considerable amount of liquidity has pushed the exchange rate higher and that the subsequent move may well continue to the upside.
The white candlestick on the right, however, shows a long shadow at the top and a long shadow at the bottom, with a small body and where the opening price is close to the closing price. This candlestick is known as a spinning top and tells traders that there is a lot of indecision during this time frame. Neither buyers nor sellers were particularly in control during this time frame. Therefore traders will be cautious because this candlestick also represents a consolidation of price action and where no real trend has been defined.

Generally speaking, in a bullish or upward trend, traders will see more black candlesticks than white. And in a bearish or downward trend, they would expect to see more white candlesticks than black. In a consolidating or sidewards moving trend, traders would expect to see an even amount of black and white candlesticks, which would be bouncing off of areas of support and resistance.

Example C


Example C, shows a bearish trend, and where the last candlestick, which is known as Takuri line set up and is very similar to the hammer, has pushed all the way down to a critical support area before buyers have come in and bought it all the way back to its closing level. Therefore it has left a long shadow, which is bigger than the body. Traders will see this as a potential trend reversal and take the necessary steps to close all or part of their bearish trend and wait to see what happens in the subsequent time frame.

Example D

In the example ‘D,’ we have a bullish trend, where are the three ascending candlesticks are fairly large in size with relatively small shadows, followed by a candlestick with a long shadow either side of a small body, and which is known as a spinning top.
Although the closing price is above the opening, and therefore an ascending candlestick, because the body is small, it tells traders that there is indecision at this point and that therefore, there could be a reversal in price action.
The next candlestick is a bearish candlestick, which confirms that the previous upward trend could be over, and this is followed by a bearish engulfing candlestick which gets its name because it involves at least the first two candlesticks in the upward trend. The A, B, C, positioning of a bullish candle, followed by a spinning top and then a bearish candle, is known as an Evening Star formation.

Categories
Forex Market Analysis

Daily FX Brief, November 26 – Major Trade Setups – Stronger Dollar Rules the Market

The U.S. Dollar Index rose 0.3% on the day to 98.27, lifted by stronger-than-expected U.S. economic data. The euro slid 0.3% to $1.1024. The Markit eurozone Manufacturing PMI posted 46.6

The U.S. Dollar Index rose 0.3% on the day to 98.27, lifted by stronger-than-expected U.S. economic data. The euro slid 0.3% to $1.1024. The Markit eurozone Manufacturing PMI posted 46.6

The U.S. Dollar Index rose 0.3% on the day to 98.27, lifted by stronger-than-expected U.S. economic data. The euro slid 0.3% to $1.1024. The Markit eurozone Manufacturing PMI posted 46.6 in November (46.4 expected, 45.9 in October), while Services PMI declined to 51.5 (52.4 expected) from 52.2.

The sentiment was lifted after Chinese President Xi Jinping called for Beijing and Washington to strengthen communications.

Regarding U.S. economic data, the Markit U.S. Manufacturing Purchasing Managers’ Index (preliminary reading) posted 52.2 in November (51.4 expected, 51.3 in October). The University of Michigan Consumer Sentiment Index (final reading) came in at 96.8 (95.7 expected).

Economic Events to Watch Today

Let’s took at these fundamentals.

EUR/USD – Daily Analysis

The EUR/USD currency pair looking flat and consolidates in the narrow range of 1.1012 / 1.1016. Looking forward, this pair will likely hit the 4-day winning rally mainly due to the hints came regarding a rate cut from the Federal Reserve President Jerome Powell on Monday that interest rates are unlikely to increase anytime soon.

Notably, Powell’s comments indicate the Federal Reserve is likely to hold rates steady for some time until the inflation spikes well above 2 percent.

Therefore, the markets will likely offer the greenback and supporting the EUR/USD currency pairs to hit the bullish level for the first time after November 19. As we know, the currency pair found oo the bearish track yesterday to confirm the 4th-consecutive daily decline.

While Powell’s comments may weigh over the U.S. dollar, the upside in the common currency looks limited, courtesy of weaker Eurozone and German PMIs released last Friday.

Whereas on the other hand, the Federal Reserve President Jerome Powell’s comments could leave the pressure on the greenback, the bullish move in the EUR currency looks limited in the wake of weaker Eurozone and the German PMIs released last Friday.

At the Sino-US front, the report came that the United States and China have reached on the solving trade deal and reduced the risk appetite sentiment in the market. That is visible from the flat action in the Chinese Yuan and the Australian dollar currency. Whereas, the futures on the S&P 500 are also trading in a sideways manner. 

    

Daily Support and Resistance

S3 1.1036

S2 1.1056

S1 1.1067

Pivot Point 1.1076

R1 1.1087

R2 1.1095

R3 1.1115

EUR/USD– Trading Tips

The EUR/USD traded as we forecast to drop to 1.1010 level after forming a bearish hammer candle during the previous week. For the moment, the EUR/USD is trading at 1.1020 level and has developed a bullish engulfing pattern on the 2-hour chart. It’s suggesting strong chances of a bullish reversal until 1.1040 and 1.1060 the 38.2% and 61.8% Fibonacci resistance areas. Let’s consider staying bullish above 1.1015 level today to target 1.1060. 

GBP/USD– Daily Analysis

The GBP/USD currency pair sidelined and consolidates in the narrow range near the 1.2900 mainly due to traders takes clues from the trade news and Federal Reserve Chairman Jerome Powell diverting markets attention off from the United Kingdoms matters.

At the Sino-US front, the report came that the official from the United States and China discussed the multiple ways to resolve the trade deal matter over the phone call raised the chances of the phase-1 deal between the world’s biggest nations. Traders are ignoring the rising uncertainty regarding the 2nd-phase deal.

Moreover, the United States Federal Reserve Chairman Jerome Powell crossed wires while delivering the speech at the Providence Chamber of Commerce Annual Meeting in Rhode Island. The Fed avoided giving any fresh hints regarding future monetary policy. By the way, his positive preference for household spending ruled out the negative comments regarding global trade and jobs increase.

As well as, the greenback increases its recent rally, whereas the risk sentiment stays almost positive due to the United States’ 10-year treasury yields and major stock indices.

In the United Kingdom (U.K.), the ruling Conservatives and the opposition parties are at each other after the Tory leader, Boris Johnson, released the party’s announcement during the weekend. Whereas the Labour Party is struggling to detect mistakes in the Tory promises, ordering from National Healthcare System (NHS) to Defence, the Liberal Democrats (LibDems) doubts the Prime Minister (PM) Boris Johnson led to party’s ability to offer smooth Brexit before the Christmas.

There is no significant data and event for decorating the economic calendar, so the traders will keep their eyes on the U.S. catalysts to plan near-term trading bias. Moreover, the 2nd-tier housing and manufacturing data will join Consumer Confidence and speech from the Fed Governor Lael Brainard.

Daily Support and Resistance

S3 1.2651

S2 1.2756

S1 1.2794

Pivot Point 1.2862

R1 1.29

R2 1.2967

R3 1.3073

GBP/USD– Trading Tips

On Tuesday, the GBP/USD has opened higher to 1.2865 following a massive fall to 1.2822 on Friday, which would yield consolidation ahead of another bearish wave from 1.2985 extends to 1.2775. Lets us reckon Nov’s low of 1.2769 as it supports the GBP/USD around the same level if 1.2825 level gets violated. Consider staying bearish below 1.2875 level today to target 1.2825 

 

USD/JPY – Daily Analysis

The USD/JPY closed at 108.917 after placing a high of 108.975 and a low of 108.596. Overall the movement for USD/JPY remained Bullish that day.

China said on Sunday that it would seek to improve protections for intellectual property rights, including raising the upper limits for compensation for rights violations. 

China rolled out plans to strengthen its rules on copyrights, patents, and trademarks. This subject has been one core sticking point in more than a year of trade negotiations with the United States.

It was reported that by 2022, China would be making progress in issues that have affected intellectual property rights enforcement, such as low compensation, high costs, and the difficulty of proof. And that a better system of protection should be placed by 2025.

The rules around Intellectual property rights have been a major complaint against China and have been boosting the dispute between the most significant economies from the year. It was reported by US International trade Administration in 2018 that the estimated Intellectual Property theft has cost American businesses up to $600 billion a year.

The unauthorized access to a wide range of commercially valuable business information, technical data, trade secrets, and proprietary internal communications by the Chinese Government has been a burden on US commerce. In response to this, the need to address intellectual property rules came out against China by Trump administration, which led to increased tariffs on thousands of products and cast uncertainty on business activity across the globe.


Daily Support and Resistance

R3: 109.38

R2: 109

R1: 108.77

Pivot Point 108.61

S1: 108.39

S2: 108.23

S3: 107.84

USD/JPY – Trading Tips

The USD/JPY is trading at 108.700, and it has just violated the triple top resistance area of 108.600. The closings of bullish candles above 108.600 level are extending support to the safe-haven currency USD/JPY. With this, the market opens further room for buying until 109.090 for the USD/JPY pair. Besides, the MACD and RSI are still holding in the bullish zone. Consider taking buying trades over 108.650 to target 109 today. 

All the best!

Categories
Forex Market Analysis

USD/CAD Completes 50% Retracement – Investor’s Eye Triple Top! 

The USD/CAD closed at 1.32993 after placing a high of 1.33014 and a low of 1.32542. Overall the movement of pair remained Bullish that day.

At 18:30 GMT, the

The USD/CAD closed at 1.32993 after placing a high of 1.33014 and a low of 1.32542. Overall the movement of pair remained Bullish that day.

At 18:30 GMT, the

The USD/CAD closed at 1.32993 after placing a high of 1.33014 and a low of 1.32542. Overall the movement of pair remained Bullish that day.

At 18:30 GMT, the Core Retail Sales from Canada came in favor of Canadian Dollar as 0.2% against the expectations of -0.1%, and the Retail Sales also supported the Loonie when came in as -0.1% against the expectations of -0.3%.

The Stronger than expected Retail Sales & Core Retail Sales data from Canada gave the impression of a robust Canadian economy in this time of global slowdown. The stronger Canadian Dollar pushed USD/CAD prices to the low of 1.32524 on Friday.

However, the pair USD/CAD got support from Strong US Dollar on Friday after the release of PMI from the United States. At 19:45 GMT, the Flash Manufacturing PMI of the United States showed an increase to 52.2 from the expectations of 51.5 for November. The Flash Services PMI was also increased to 51.6 for November from October’s 50.6. 

Stronger than expected PMI was very beneficial in raising the dropped USD/CAD on Friday. However, the upward trend for the pair continued and was further supported when the Consumer confidence from the University of Michigan was seen as favoring the USD. At 20:00 GMT, the Revised UoM Consumer Confidence Sentiment also raised to 96.8 from the expectations of 95.8.

The Crude Oil prices on Friday also dropped due to increased selling pressure by profit-taking activities of the traders who bought Crude Oil after the news of OPEC cut extension on Thursday. The fall in crude oil prices pressed the Commodity-linked Loonie, and hence, USD/CAD was further raised to place a high of 1.33014 at the ending day of the week.


USD/CAD – Daily Technical Levels

Support Resistance 

1.3269     1.3318

1.3237     1.3335

1.3187     1.3385

Pivot Point 1.3286

The commodity currency USD/CAD has completed 50% Fibonacci retracement at 1.3258. On the 2 hour graph, the pair has closed bullish engulfing candle, which is signaling bullish bias among traders. 

For the moment, the USD/CAD is facing strong support at 1.3290, along with a resistance at 1.3325. At the same time, the pair is also trading in a bullish channel, which is keeping the USD/CAD trading sentiment bullish.  

Consider staying bullish above 1.3286 with a stop loss below 1.3250 and take profit around 1.3325. All the best! </span

Categories
Forex Videos

Trading Volatility In Forex – How To Make Over 100 Pips In A Single Trade #Newstrader

https://youtu.be/UgDRKYue2_k
Trading Volatility
The forex market will typically ebb and flow in line with technical analysis, especially during the times of economic releases, or in the run-up to potential

https://youtu.be/UgDRKYue2_k
Trading Volatility
The forex market will typically ebb and flow in line with technical analysis, especially during the times of economic releases, or in the run-up to potential

Trading Volatility

The forex market will typically ebb and flow in line with technical analysis, especially during the times of economic releases, or in the run-up to potential market-moving commentary from governing policymakers.

Depending on the nature of economic data releases, which are usually tiered between, low, medium and high risk, and where the latter would include gross domestic product or GDP, interest rate decisions, and employment statistics, the market can often be subdued just before high-risk announcements, and then extremely volatile afterwards.

During periods of extreme volatility, currency pairs can often spike 50 to 100 pips in a matter of minutes. This will occur because big institutions pull their bids and offers, and large orders begin to fill the vacuum, and where many of the big players and retail traders will be stopped out of their trades. Markets need time to analyze data and trade accordingly. This can be problematic for retail traders who are not properly equipped with professional analysts to help filter out components of the news, which might push a pair in either direction or to decipher if the data is already in the price.
As prices blip and spreads tend to widen during high-risk announcements, it becomes extremely difficult to gauge entry and exit points. In fact, it is almost impossible for the human mind to be able to know how to make informed trading decisions while under so much pressure during times of extreme volatility.
So how do traders trade high volatility events?

Example A


Well, in example ‘A,’ which is a 1-hour chart of the USDCAD pair, and where we have been following the pair from its low of 1.3187 to a recent high of 1.3314. There is a high-risk event later today in the form of Bank of Canada data releases, including consumer price index – year on year – and which will typically involve a great deal of volatility in price action upon its release. We have determined that the pair is overbought, and gone short at 1.3309 and where the pair came into profit almost immediately. We have also protected the trade by bringing our closeout order in front of our entry price at 1.3306 and which essentially gives us a free trade. We cannot lose on this one.

We have set our take profit at 1.3209, which is close to the bottom of the previous low and which would give us a profit of over 100 pips should it be executed. However, in the run-up to the data release, we now have the flexibility of managing this position by bringing our protective close out lower as we get closer to the data event, in case the figure is below market expectations and the Canadian dollar loses ground with the pair moving higher.
If the numbers are strong, we are in a position to follow – what should be a strengthening of the Canadian dollar, and hence the pair is moving lower and then drag our protective close out lower and bag as many pips as we can.

Example B


Example B is a calendar event highlighting the data release which will occur subsequent to our trade set up. And or trade platform is the Metatrader MT4.

Another way traders will set up a trade is via the use of limit orders. These orders can be placed above or below the market price and where they will automatically buy or sell a pair at a predetermined level, close to, or after data release events. These can be a great way of gaining access to high-risk events but should always be used with carefully thought out stop losses. Some traders will even place limit orders to both buy and sell a pair after a high-risk event on the basis that at least one trade will be executed. Again, this is an extremely risky strategy as it is possible to have both trades executed consecutively, and both trades stopped out as the market whipsaws post the event.

Here at Forex.Academy we recommend next new traders study their economic calendar closely and do not trade a couple of hours before, or after, big data release events. Try to observe other regular times of extra volatility, such as the opening of new time zones and during times of thin volume such as public holidays.

Categories
Forex Psychology

Experiencing a Losing Trade

A losing trade hurts. Beginners find it tough to encounter losing trades. However, in the Forex market, losing is inevitable. The market is so action-packed that even an experienced trader

A losing trade hurts. Beginners find it tough to encounter losing trades. However, in the Forex market, losing is inevitable. The market is so action-packed that even an experienced trader

A losing trade hurts. Beginners find it tough to encounter losing trades. However, in the Forex market, losing is inevitable. The market is so action-packed that even an experienced trader often makes mistakes. Sometimes, even a good entry may not get us any profit. In today’s lesson, we are going to demonstrate an example of a good entry, which ends up being a losing trade in the end.

The price heads towards the North and makes a pullback. Traders are to wait for an upside breakout to take a long entry. A bullish Engulfing candle follows a Doji candle. As things stand, the buyers are to take the control soon upon an upside breakout.

Things are different now. The price comes down instead, by making a Double Top. It starts having the correction as well. Consolidation and bearish breakout shall attract the sellers to go short on the pair. Let us see the next chart.

The chart shows that the price is having a correction, where it had a bounce earlier. The equation is very simple here. A bullish reversal attracts the buyers, and a bearish breakout attracts the sellers to go short.

It makes a bearish breakout. The breakout candle looks good. As far as price action and candlestick pattern are concerned, this is an A+ short entry. Concentrate on the marked Stop Loss and Entry levels.

The next candle comes out as a bullish candle. The price may take out some of our entries because of the spread factor. With some brokers, traders pay more spread. Some of our trade (the same entry) may still survive. However, let us not get into this argument but proceed to the next chart. The following chart has an interesting scenario to present.

This should conclude the argument. The price hits the Stop Loss and heads towards the South again. The entry looks to be an A+ entry, but it has ended up bringing us a loss. As usual, beginners with average knowledge of price action may think that something must be wrong with his strategy.

This is not the case. An entry like this would bring us profit at least on 70% occasions. It hurts more since the candle, which hits our Stop Loss itself a strong bearish candle. This is how this market plays. We have to accept it. We must not let our losing trades occupy our thoughts. It is a game of probability of winning and losing. With knowledge, experience, and hard work, a trader can increase the likelihood of winning for sure.

Categories
Forex Market Analysis

Daily FX Brief, November 25 – Major Trade Setups – Stronger Dollar In Play! 

The U.S. Dollar Index rose 0.3% on the day to 98.27, lifted by stronger-than-expected U.S. economic data. The euro slid 0.3% to $1.1024. The Markit eurozone Manufacturing PMI posted 46.6

The U.S. Dollar Index rose 0.3% on the day to 98.27, lifted by stronger-than-expected U.S. economic data. The euro slid 0.3% to $1.1024. The Markit eurozone Manufacturing PMI posted 46.6

The U.S. Dollar Index rose 0.3% on the day to 98.27, lifted by stronger-than-expected U.S. economic data. The euro slid 0.3% to $1.1024. The Markit eurozone Manufacturing PMI posted 46.6 in November (46.4 expected, 45.9 in October), while Services PMI declined to 51.5 (52.4 expected) from 52.2.

The sentiment was lifted after Chinese President Xi Jinping called for Beijing and Washington to strengthen communications.

Regarding U.S. economic data, the Markit U.S. Manufacturing Purchasing Managers’ Index (preliminary reading) posted 52.2 in November (51.4 expected, 51.3 in October). The University of Michigan Consumer Sentiment Index (final reading) came in at 96.8 (95.7 expected).

  

Economic Events to Watch Today

Let’s took at these fundamentals.

 

EUR/USD – Daily Analysis

The EUR/USD currency pair flashing red and will likely hit the bearish level below 1.10 on the day if the German IFO data ignore expectations. 

As of writing, the EUR/USD currency pair dropped from 1.1058 to 1.1014. At the end of the week, the EUR/USD was seen trading as a bearish at 1.1097, in the wake of mixed German PMIs and the dismal Eurozone PMIs. It should be noted that European Central Banks President Christianne Lagarde said the global economic uncertainty is high and asked for a fiscal boost, as required.

The recent bearish high setup will likely retest of 1.10. The pairs bearish sentiment is likely to be stronger due to the fading United States and China’s optimism. Whereas the United States and China phase-one trade deal seems not to happen soon, by the way, both nations struggling to reach on a positive outcome. Notably, the German economy has paid a heavy price for the year-long trade tensions.

The greenback found on the bullish track in the wake of unexpectedly better U.S. Markit PMIs and a bullish revision to the University of Michigan consumer sentiment.

According to the situation, there are very low reasons for the shared currency traders to take a buying under the single currency on the day, and the support at 1.10 will be likely to be failed if the German IFOs miss expectations, which is scheduled to release 09:00 GMT.

That German economy is suffering recession risk is generally accepted by now. So, the forward-looking IFO – Expectations (Nov) index will take priority over the Business Climate and the Current Assessment number. The Expectation index is seen reading at 92.5 against 91.5 in October.

Daily Support and Resistance

S3 1.0894

S2 1.0967

S1 1.0993

Pivot Point 1.104

R1 1.1066

R2 1.1113

R3 1.1187

EUR/USD– Trading Tips

The EUR/USD traded as we forecast to drop to 1.1010 level after forming a bearish hammer candle during the previous week. For the moment, the EUR/USD is trading at 1.1020 level and has developed a bullish engulfing pattern on the 2-hour chart. It’s suggesting strong chances of a bullish reversal until 1.1040 and 1.1060 the 38.2% and 61.8% Fibonacci resistance areas. Let’s consider staying bullish above 1.1015 level today to target 1.1050. 

GBP/USD– Daily Analysis

The GBP/USD currency pair found on the bearish track and currently trading at 1.2850. The Cable pair got the support from the polls showing a hike in Tory support for the December snap election before losing ground due to doubts arising from the ruling party’s latest announcement.

During the weekend, the United Kingdom Prime Minister Boris Johnson released the ruling Conservative Party’s announcement that offers many austerity measures apart from smooth Brexit. Notably, the party’s commitments regarding a National Healthcare System (NHS) budget by £33.9 billion by 2023-24, an offer of 50,000 nurses and not to increase rates of income tax, national insurance or VAT till the next five years took significant attention.

However, the latest series of polls keep the Conservatives at the front seat with more than 10% points of a lead over other parties.

The GBP/USD currency pair was found on the strong bearish track on Friday, mainly due to preliminary figures of activity number keep portraying the markets Brexit fears. On the other side,

the same conflicts with the United States statistic that kept the U.S. dollar.

At the greenback front, the strong buying in the greenback came mainly due to optimism surrounding the United States and China trade deal after the United States President Donald Trump said that the trade deal with China is very close. Although the confidence remains under check with the Donald Trump administration’s willingness to take a good look at the Hong Kong bill, which in turn could resume the conflict between the U.S. and China, whereas also negatively affecting the trade negotiations.

The United Kingdom CBI Distributive Trade Survey and the United States Chicago Federal Reserve National Activity Index, as well as the US Dallas Fed Manufacturing Index, will keep under the spotlight. Moreover, the market will keep their eyes on the trade and political headlines for fresh impulse.

Daily Support and Resistance

S3 1.2651

S2 1.2756

S1 1.2794

Pivot Point 1.2862

R1 1.29

R2 1.2967

R3 1.3073

GBP/USD– Trading Tips

On Monday, the GBP/USD has opened higher to 1.2865 following a massive fall to 1.2822 on Friday, which would yield consolidation ahead of another bearish wave from 1.2985 extends to 1.2775. 

Lets us reckon Nov’s low of 1.2769 as it supports the GBP/USD around the same level if 1.2825 level gets violated. Consider staying bearish below 1.2895 level today. 

 

USD/JPY – Daily Analysis

The USD/JPY currency pair is flashing green and found on the bullish track despite few headlines during the weekend regarding geopolitical themes that have kept markets on alert. At of writing, the USD/JPY currency pair is currently trading at 108.66 and consolidates in the narrow range of 108.63 and 108.69.

The market’s focus, as described in this week’s Asia open. Recap of latest progress as risk-on tones appear with trade wars and Brexit. The fresh news is slightly more favorable for risk appetite, possibly reducing the Japanese yen’s progress for the time being with USD/JPY moving between 108.48 and 108.76 on Friday.

Meanwhile, the U.S. dollar is bid on its right after dome promising data from Friday. U.S. November flash Markit PMIs contrasted with the European and U.K.’s releases, beating expectations manufacturing climbed to 51.6 (vs. est. 51.0, prior 50.6), and services rose to 52.5 (est. 51.4, prior 51.3).

For the U.S. calendar, we have the Producer Price Index and Consumer Price Index data, which analysts at T.D. Securities said suggest core PCE inflation could remain steady at 1.7% YoY in October, even after a notable MoM increase in healthcare prices. On the other hand, headline PCE likely rose a tenth to 1.4% YoY. Separately, we expect personal spending to advance 0.2% MoM for a 3rd-consecutive month in October, with a firm increase in services spending leading the upside.

Daily Support and Resistance

S3 108.11

S2 108.37

S1 108.51

Pivot Point 108.62

R1 108.77

R2 108.88

R3 109.13

USD/JPY – Trading Tips

The USD/JPY is trading at 108.700, and it has just violated the triple top resistance area of 108.600. The closings of bullish candles above 108.600 level are extending support to the safe-haven currency USD/JPY. With this, the market opens further room for buying until 109.090 for the USD/JPY pair. Besides, the MACD and RSI are still holding in the bullish zone. 

Consider taking buying trades over 108.650 to target 109 today. 

All the best!

Categories
Forex Elliott Wave

Dollar Index and the Alternation Principle

In our article “Impulsive Waves Construction – Part 1,” we introduced the concept of “alternation.” In this educational article, we’ll apply this concept to the Dollar Index Analysis.
The

In our article “Impulsive Waves Construction – Part 1,” we introduced the concept of “alternation.” In this educational article, we’ll apply this concept to the Dollar Index Analysis.
The

In our article “Impulsive Waves Construction – Part 1,” we introduced the concept of “alternation.” In this educational article, we’ll apply this concept to the Dollar Index Analysis.

The Alternation Principle

Just as the Wave Principle obeys a law, alternation is also the law of nature. We can observe this law both in the universe as human activities. Just as the seasons of the year or the phases of the Moon alternate, socio-economic activities also alternate.

There is probably no other activity that has devoted as many resources to its study as financial markets. An example where we can observe the principle of alternation is in the U.S. Dollar Index.

Application in the Dollar Index

The U.S. Dollar Index (DXY), in its daily chart, illustrates the bullish sequence he developed since it found buyers on February 16, 2018, and drove to the price from 88.25 until 99.67 on October 01, 2019.

From the chart, we can observe how DXY performed the rally in two stages. In each phase, we see how the advance alternates in both price and time. In particular, the first rally was run in 180 days and advanced by about 9.9%. The second tranche lasted 376 days and increased by 6.22 percent.

Our reader can observe the same situation in the daily chart of the EURGBP cross, which was discussed in the educational article “How to analyze a fast market using the Elliott Wave Principle.”

Looking at the second chart, our reader can appreciate how price and time alternate their relationship in the EURGBP cross.

Alternation and the Analysis Process

An approach to simplify the analysis process consists of identifying different parts of the movement developed by the market and analyze it part by part. The next DXY daily chart illustrates this process.

The following 4-hour chart exposes the advance developed by the Dollar Index once it found buyers at level 88.25.

From the chart, we observe a first impulsive upward movement labeled ((i)) in black, which developed five waves of a lesser degree. Once DXY completed the first wave, the price corrected by a wave ((ii)), which is divided into three internal segments labeled as (a), (b), and (c) in blue.

Within the corrective structure, alternation over time can be distinguished. For example, the wave (a) in blue ended in 23 bars, the wave (b), in turn, was developed in 57 bars. Finally, the wave (c) took 26 bars to finish. This time difference reflects the principle of alternation in terms of simplicity and complexity of each segment that composes the price movement.

The following chart shows how the action of the price alternates in the waves (ii) and (iv) in blue. In the wave (ii), the corrective movement of DXY developed in 43 bars, while the wave (iv) was completed in only 19 bars.

Conclusions

Based on the case studied, we can recognize how the principle of alternation is reflected in the financial markets and different temporalities. This application in different time frames allows us to identify the concept of “market fractality.”

On the other hand, we can observe how the market alternates not only in a price dimension but also in time. In other words, the progress of the market must be studied concerning both price and time.

Finally, if the range of a movement is narrow and has a relatively long duration, the next move will likely be broad in terms of price motion and shorter in length.

Categories
Forex Videos

How To Trade Ranging Markets – Maximise Your Forex Profits

https://youtu.be/jSte235_pCs

 
Trading Ranging Markets
A range-bound market is one in which price action bounces between a specific high and a specific low on a technical chart. The high

https://youtu.be/jSte235_pCs

 
Trading Ranging Markets
A range-bound market is one in which price action bounces between a specific high and a specific low on a technical chart. The high

 

Trading Ranging Markets

A range-bound market is one in which price action bounces between a specific high and a specific low on a technical chart. The high acts as a major resistance level and which is defined by at least two attempts to breach a certain exchange rate, and where this has failed and then price action goes on to fail during subsequent attempts.

The opposite applies to a specific low, which acts as a level of support, and whereby at least two attempts have been made to breach this level and where both attempts have failed, and where subsequent attempts have also failed. Price action then continues to range between such highs and lows.

Example A


Example A is a 1-hour chart of the EURUSD pair between 16th to the 22 August 2019 and where price action, as denoted by our red and green candlesticks, bounces between the two levels of support and resistance.

Example B

In example B, we have added eight positions of interest to traders and where price action came very close to our support and resistance levels on five occasions and where the levels were temporarily breached on three occasions at positions 4, 8, and 9, only to be reversed shortly after.

The price action range is approximately 42 pips from the high to the low. The consecutive amount of pips that could have been gained by selling and buying between the high and low equals 245 pips. This is a considerable amount.
This is a classic example of a range-bound – or sideways trading – market during this 6-day trading period. Traders are always looking to reduce risks from their trade setups, and therefore it makes sense to try and establish range-bound markets, because these offer an extra layer of security due to the support and resistance lines which, when established, act as an extra visual layer of comfort.

These levels of support and resistance usually occur after a large price action move and where the price is effectively consolidating because traders have no real ideas as to the future direction of the exchange rate of a particular currency pair. This can also happen between periods of economic data releases, or, while traders wait for events such as interest rate decisions, or forward guidance on monetary policy to be announced by the respective governments.
Another thing to consider is that the Forex market never trades in a linear fashion, that is to say, that it does not move in straight lines. Market performance usually coincides with current daily news events and where this causes volatility and change in price action, which leads to short price action shocks. And where these moves typically spend a lot of time retracing, and this is usually due to traders considering price action to be overbought or oversold within the various timeframes.
Markets do not necessarily range in a horizontal fashion; they can also range in upwards or downwards trends as well.

Example C

Example C is a one hour time frame of the EURUSD pair, and after a difficult to decipher price action movement to the left of the image, at position A and B we have the beginnings of a downward range, or trend, that would have offered up to 200 pips to traders who spotted the opportunity.

Example D

In example D, a range-bound price action is confirmed, and levels of support and resistance are identified at position A, B, C, and D, and therefore should price action continues below the support line at position 1 – where we might have bought the pair, or higher than our resistance line at position 2, where we might have gone short, we would then have confirmation that the trend had finished. However, because we have placed our trend lines on the chart, we can place tight stop losses a few pips above or below our lines in order to reduce risk.
And so, if you are looking to trade range bound markets, make sure that your time frame has established at least two attempts of support and resistance and then pick your moment carefully to buy from support levels and sell from areas of resistance.

Always be mindful that range-bound price action does not go on forever, traders will be sitting on the sidelines waiting for the price to breach support and resistance areas and where extra volatility can creep into the market while traders trade away from them.

Categories
Forex Market Analysis

USD/CAD Completes 38.2% Fibo Retracement – Retail Sales Surpries!

The USD/CAD closed at 1.32846 after placing a high of 1.33249 and a low of 1.32694. Overall the trend for USD/CAD remained Bearish that day. Last month, the Central Bank

The USD/CAD closed at 1.32846 after placing a high of 1.33249 and a low of 1.32694. Overall the trend for USD/CAD remained Bearish that day. Last month, the Central Bank

The USD/CAD closed at 1.32846 after placing a high of 1.33249 and a low of 1.32694. Overall the trend for USD/CAD remained Bearish that day. Last month, the Central Bank of Canada held its Interest rates at 1.75% as expected and left the door open to a potential cut in later months. The Bank of Canada has not changed its monetary policy since October 2018, even its counterpart Banks, including the Federal Reserve of United States, has lowered its interest rates.

On Thursday, Stephen Poloz, the Governor of Central Bank of Canada, said that Canada’s monetary conditions were about right in the current economic situation, which has been challenged throughout by global trade tensions. He added that the central bank of Canada was watching whether the trade uncertainties affect the confidence of the economy in order to decide its future plans. In his views, the monetary conditions were about right in given situations.

He also compared the Canadian economic state with American and said that Federal Reserve cut its rates three times and was now down to where the Canadian rates were. He further added that Bank of Canada was concerned that the Canadian economy relies heavily on exports, and the global trade disputes, including the US-China trade war, were affecting it.

Stephen Poloz also mentioned about the new models that Bank of Canada was built on understanding the significant consequences climate change could impose on financial stability. The positive comments about the Canadian economy from Poloz gave strength to the Canadian Dollar and weighed on USD/CAD prices on Thursday.
On Data front, the ADP Non-Farm Employment change from Canada came in as -22.6K against the previous 25.7K.

Furthermore, the Crude Oil WTI prices rose on Thursday amid the hopes of OPEC cut extension and supported the rising Commodity Linked Currency – Loonie, which added in the Bearish trend of USD/CAD.

The downward trend of USD/CAD was also supported by the weak macroeconomic data from the American side on Thursday. At 18:30 GMT, the US Unemployment Claims for this week exceeded the expectations of 215K and came in as 227K and gave pressure to US dollars. At 20:00 GMT, the CB Leading Index came in as -0.1%, which was as expected. The Existing Home Sales also gave pressure to US Dollars when it came in as 5.46M against the expectations of 5.49M.

Besides, the Canadian retail sales data has just come out, and it may drive sell-off in the USD/CAD pair in the wake of optimistic data. Retail sales surged by 0.2% vs. a drop of 0.1% during the previous month.


USD/CAD- Daily Technical Levels
Support Resistance
1.326 1.3315
1.3237 1.3348
1.3182 1.3403
Pivot Point 1.3293

Technically, the USD/CAD has a complete 38.2% retracement at 1.3274, but the MACD histogram is holding below 0 levels suggesting further selling bias. The bearish breakout pattern can trigger a sell-off until 50% and 61.8% Fibo level of 1.3260 and 1.3240 level. Let’s consider staying bearish under .13293 level today. All the best!

Categories
Forex Basics Forex Daily Topic

Attributes of the Signal Candle Not to be Ignored

After choosing a pair to trade, traders wait for the signal candle at the desired zone/level to take an entry. The attributes of the signal candle are important. Ideally, a

After choosing a pair to trade, traders wait for the signal candle at the desired zone/level to take an entry. The attributes of the signal candle are important. Ideally, a

After choosing a pair to trade, traders wait for the signal candle at the desired zone/level to take an entry. The attributes of the signal candle are important. Ideally, a signal candle is to be a Marubozu candle, barely having an upper or lower shadow, and longer than other candles around. In today’s lesson, we are going to show an example of how attributes of a signal candle affect the market. Let us proceed.

The price after being bearish finds its support. A long consolidation suggests that a breakout towards either side makes the chart lively again. An upside breakout and the confirmation offer good risk-reward considering the last swing high. A downside breakout seems even more rewarding. Let us find out which way the breakout takes place.

It is an upside breakout. The breakout candle looks fantastic. Buyers are to wait for consolidation and breakout at the highest high to go long on the pair. However, buyers shall calculate that the last swing high is not too far away now.

The price continues its bullish journey towards the last swing high, and it consolidates. Flipped support is to be adjusted here considering the Inside bar. However, an upper shadow at the previous swing high holds the price as well up to the Inside bar. The last candle comes out from the zone, though. Look at its attributes

  • It is a bullish engulfing candle
  • It breaches the resistance zone
  • It is a Bullish Marubozu candle

Many of us may trigger an entry here by setting Stop Loss below the lowest low of the candle. Let us find out what happens next.

The price comes down again. It may have swept away many Stop Losses. Thus, the last entry gets the buyers loss. What do you think about the last candle?

  • It is a bullish engulfing candle
  • It breaches the resistance zone
  • It is a Bullish Marubozu candle and
  • It breaches the last swing high

 

Traders may want to trigger an entry here. Let us go to the next chart to see how it goes.

This time it works excellently well. A question may arise here: what the difference is between these two candles?. The only difference that can be observed is, “It breaches the last swing high.”

The Bottom Line

We have demonstrated an example today and learned a lesson. Traders are to be immaculate in making a decision, and they have to calculate every single aspect that is related to the trading decision.

 

Categories
Forex Market Analysis

Daily FX Brief, November 22 – Major Trade Setups – Who’s Up for ECB and PMI Data?

The U.S. Dollar Index edged up 0.1% on the day to 97.96, as investors remained prudent over the prospects of a U.S.-China trade deal. The U.S. President Donald Trump mentioned

The U.S. Dollar Index edged up 0.1% on the day to 97.96, as investors remained prudent over the prospects of a U.S.-China trade deal. The U.S. President Donald Trump mentioned

The U.S. Dollar Index edged up 0.1% on the day to 97.96, as investors remained prudent over the prospects of a U.S.-China trade deal. The U.S. President Donald Trump mentioned that China is not stepping up in trade negotiations, while the Wall Street Journal reported that China’s chief trade negotiator Liu He had invited his U.S. counterparts for more talks.

The U.S. Labor Department reported that initial jobless claims amounted to 227,000 for the week ended November 16 (218,000 expected, 227,000 in the prior week). Existing home sales grew to an annualized rate of 5.46 million units in October (5.49 million units expected, 5.36 million units in September).

Economic Events to Watch Today

Let’s took at these fundamentals.

 

EUR/USD – Daily Analysis

The EUR/USD currency pair flashing green and will likely hit the bearish track if the new European Central Bank President Christine Lagarde sounds dovish in her first policy speech. So, let’s see what will happen.

As of writing, the EUR/USD currency pair currently trading near 1.1063, showing a 0.12% increase in the trading hours, by the way, the pair hit the high of 1.1097 yesterday. The new European Central Bank President Christine Lagarde will be giving her first big policy speech at a banking conference in Frankfurt. She avoided talking regarding the monetary policy during her last November 4 speech in Berlin.

It should be noted that the dovish comments may send the EUR/USD currency pair near the bearish level of 1.10. The EUR currency will likely cancel the next bearish move if the Lagarde sounds hawkish regarding the policy and calls for more effort on the fiscal front.

On the other hand, the recent report came that many board members held against the previous President Draghi’s decision to add further stimulus in September. So, Lagarde has limited opportunities to raise expectations for more stimulus. Moreover, Germany avoided recession in the 3rd-quarter.

According to the forecast, the chance of Lagarde sounding neutral-to-hawkish is high. However, the resulting increases in the EUR will likely to be canceled if the preliminary Eurozone and German PMI, scheduled for release after Lagarde’s speech, disappoint expectations. The final figures for Germany’s 3rd-quarter GDP, recorded at 07:00 GMT.

Daily Support and Resistance

S3 1.0981

S2 1.1026

S1 1.1044

Pivot Point 1.107

R1 1.1089

R2 1.1115

R3 1.116

EUR/USD– Trading Tips

The currency pair created a bearish hammer candle on Wednesday, indicating the bullish move from its recent lows below 1.10 has run out of steam and sign of an aggressive bearish move. However, a bearish reversal will be confirmed if the EUR/USD pair closes below the candle’s low of 1.1053 (a hammer) on Thursday. Also, a close above 1.1081 would negate the bearish hammer and signal a resumption of the recovery rally.

GBP/USD– Daily Analysis

The GBP/USD currency pair found on the bullish track the first time after the starting of the week due to a variation in the market trade sentiment. While the pair is currently taking bids to the 1.2920.

The recent recovery could partially be attributed to the silence before taking a decisive turn in the US-China trade tussle. As per the Reuters, the United States (U.S.) may delay December 15 tariff hikes while the CNBC’s news of China still having U.S. trade negotiators on their invitation list triggered risk recovery. Even so, the U.S. Navy’s claim of “Freedom of Navigation” in the South China Sea was harshly criticized by Beijing.

We may say that the recent recovery in the GBP/USD currency pair inspired by the silence before happening any positive activity in the United States and China trade deal. Moreover, the chances that the United States will likely delay the increased tariff on Chinese goods. In contrast, China invited the United States negotiators, recently trying to restore the sentiment of the market. 

However, uncertainties still surrounding the United States and China trade deal because China now awaits the United States President Donald Trumps to proceed with the Hong Kong bill after congress passed the much-criticized bill.

On the economic calendar, Markit is scheduled to release preliminary readings of the U.K.’s Manufacturing and Services Purchasing Manager Index (PMI) figures, whereas the US PMIs and Michigan Consumer Sentiment Index will also enhance the line.

On the other hand, the month brings the first flash PMIs for the U.K. For the manufacturing PMI, we look for a bit of a pullback to 49.3 (market: 48.8), as election uncertainty weighs on sentiment. Notably, the Chances for Sino-US trade deal and hard possibilities of hard Brexit should support the PMI above its lows from the summer.

Daily Support and Resistance

S3 1.277

S2 1.2847

S1 1.2878

Pivot Point 1.2924

R1 1.2955

R2 1.3001

R3 1.3078

GBP/USD– Trading Tips

On the technical side, bears look for a daily closing below 21-day Simple Moving Average (SMA) level of 1.2880 to try for monthly low surrounding 1.2770, until then 1.3000 and 1.3015 will stay on buyers’ radars. 

On a shorter timeframe, the GBP/USD is trading with a bullish bias at 1.2930. The bullish trend is mostly triggered due to the Three White Soldiers pattern, which is suggesting a strong buying trend in the GBP/USD pair. On the upper side, the immediate target is likely to be 1.2960. 

USD/JPY – Daily Analysis

The USD/JPY currency pair is sideways near the 108.60 and consolidates in the narrow range of 408.46 and 108.70 because markets want more transparency on the trade deal between the United States and China. 

At the Sino-US front, the chances that the United States will likely delay the increased tariff on the Chinese goods. In contrast, China invited to the United States negotiators, as delivered by the South orning Post and the Wall Street Journal, recently trying to retore the sentiment of the market. However, uncertainties still surrounding the United States and China trade deal because China now awaits the United States President Donald Trumps to proceed with the Hong Kong bill after congress passed the much-criticized bill.

Finally, the greenback drifted a little higher, whereas the United States’ two-year Treasury yields bounced off 1.55% to 1.60%. The ten-year yields rose from 1.71% to 1.78%. Markets are pricing a terminal funds rate of 1.20% (vs. 1.63% currently).

U.S. stocks closed modestly lower with the Dow Jones Industrial Average, DJIA, losing 54.8 points, or 0.2%, to 27,766.29 while the S&P 500 dropped back 4.92 points, or 0.2%, to 3,103.54. The Nasdaq Composite index fell 20.52 points, or 0.2%, to 8,506.21, having closed at its highest levels at the start of the week.

At the Japan front, the Japan October Consumer Price Index was expected to tick up fractionally, to 0.3% YoY overall, 0.6% YoY ex-fresh food & energy. 

Daily Support and Resistance

S3 108.11

S2 108.35

S1 108.48

Pivot Point 108.59

R1 108.72

R2 108.83

R3 109.07

USD/JPY – Trading Tips

The USD/JPY is trading at 108.500, just below the bearish trendline, which is extending resistance at 108.700 area. The closing od Doji candle below 108.700 level saying a lot about investors’ sentiment. On the other hand, the MACD and RSI are still holding in the bullish zone. 

Due to different sentiments, we should keep a close eye on 108.550 level today as the USD/JPY can trade bearish below and bullish above this level. On the lower side, the target remains 108.250, while 109 remains the bullish target. 

All the best!

Categories
Forex Market Analysis

Gold’s Bullish Channel In Test – Can We See a Breakout?

On Thursday, the gold prices y eased from the last session’s two-week high after a report that China has invited top U.S. negotiators for a new round of face-to-face talks

On Thursday, the gold prices y eased from the last session’s two-week high after a report that China has invited top U.S. negotiators for a new round of face-to-face talks

On Thursday, the gold prices y eased from the last session’s two-week high after a report that China has invited top U.S. negotiators for a new round of face-to-face talks, and is seeking to reach a primary trade treaty with the United States.

Safe-haven demand is also dominating the market as it was further disturbed after the U.S. Senate passed a bill against China and in favor of Hong Kong on Wednesday. Both the U.S. House and Senate signed the Bill via a veto-proof majority. 

According to the act, annual certification of Hong Kong’s autonomy would be required, and punishment will be imposed on Beijing against suppressing protestors. China demanded the United States to stop interfering in its internal affairs and said that it would retaliate.

Later, on Wednesday, FOMC October’s Meeting minutes were released and showed that there would not be any further rate cut this year. 

The holding of monetary policy and rate cuts by federal reserve was already expected, so it didn’t make much impact on the precious metal gold. 

Minutes revealed that most officials of Federal Reserve were against the 4th rate cut this year. Some officials supported rate cut but also said that it was a close call. 

Officials were concerned that some banks had decreased the capital buffers when they should be rising. Minutes also revealed that risks to the economic outlook remained tilted to the downside. Many officials said that rate cut was warranted due to global weaknesses and trade uncertainty.


XAU/USD – Technical Levels

Support    Resistance 

1,465.41    1,478.36

1,459.2      1,485.1

1,446.25    1,498.05

Key Trading Level: 1,472.15

On the technical side, gold prices are trading within a bullish channel, which is supporting the XAU/USD above 1,466 level. The MACD and RSI are holding below 0 and 50, respectively, suggesting changes of a bearish breakout. If this happens, gold prices may drop further until the 1,456 level. Therefore, consider taking sell positions below 1,465 level today. 
cript>

Categories
Forex Basics Forex Daily Topic

Using Trailing Stop: An Art to Be Learned by Traders

Using a trailing stop is a way to lock a profit in trading, at least with some profit. A floating profit trade may not always hit its Take-Profit level. Thus

Using a trailing stop is a way to lock a profit in trading, at least with some profit. A floating profit trade may not always hit its Take-Profit level. Thus

Using a trailing stop is a way to lock a profit in trading, at least with some profit. A floating profit trade may not always hit its Take-Profit level. Thus, traders use Trailing Stop to lock-in some profits and let it run to hit the target. Otherwise, some trades may result in a loss instead.

In today’s lesson, we are going to demonstrate an example of that.

The price heads towards the North with good bullish momentum. The buyers are to wait for price correction and bullish reversal candle to go long on the pair. Let us proceed to the next chart to find more about the correction.

The correction looks very bearish. However, a flipped support level holds the price. Thus, it is going to be an interesting battle between the bull and the bear. Let us find out who wins. Does it make a downside breakout or a bullish reversal candle?

The chart produces a bullish reversal candle. We can see that this is an Inside Bar, which is the weakest reversal candle. A flipped support creates a bullish reversal candle but does not make any breakout. The buyers are to flip over to the trigger chart to get consolidation and breakout to go long on this. This is the daily chart. Let us flip over to the H4 chart.

The H4 chart looks suitable for the buyers. The level of support produces a bullish engulfing candle. It has started the price correction. An upside breakout from a good level of support is the signal to trigger a long entry.

The price goes upward and consolidates. Upon finding support, the last candle breaches the level of resistance. Setting Stop Loss below the level of support, an entry may be triggered right after the last candle closes. The Take Profit shall be placed at the highest high of the previous bearish wave.

The price continues to go towards the upside for a while. It has started having consolidation. The price has found its support. An upside breakout is to push the price towards the North further. On the other hand, a downside breakout may push the price towards the South and even change the whole equation. Thus, the buyers are to move their Stop Loss. Have a look at the chart below.

The buyers shall move their Stop Loss below the level of support and hope it makes another upside breakout to hit the Take Profit. Let us find out what happens next.

This is what Forex trading is all about. You never know what exactly happens next. The price comes down. It would hit the Stop-Loss, where it was set at the very outset. By using Trailing Stop, the buyers have made some profit. Otherwise, they would have to encounter some loss.

The Bottom Line

Using Trailing Stop is an art. It needs a lot of practice to be master at it. Without knowing how to use it properly, it may hurt a trader instead. Since it is an important trading feature to save us from encountering a loss with a profit trade, a trader must study/work hard on this.

Categories
Forex Market Analysis

Daily FX Brief, November 21 – Major Trade Setups – ECB Ready to Shake the Market

The U.S. Dollar Index kept trading within a tight range, closing flat at 97.83. The euro and the British pound were little changed at $1.1079 and $1.2929, respectively. The USD/JPY slipped 0.1% to 108.46. The USD/CAD advanced 0.3% to 1.3307. Official data showed that Canada’s consumer prices grew 1.9% on year in October (as expected).  […]

The U.S. Dollar Index kept trading within a tight range, closing flat at 97.83. The euro and the British pound were little changed at $1.1079 and $1.2929, respectively. The USD/JPY slipped 0.1% to 108.46. The USD/CAD advanced 0.3% to 1.3307. Official data showed that Canada’s consumer prices grew 1.9% on year in October (as expected).  […]

The U.S. Dollar Index kept trading within a tight range, closing flat at 97.83. The euro and the British pound were little changed at $1.1079 and $1.2929, respectively. The USD/JPY slipped 0.1% to 108.46. The USD/CAD advanced 0.3% to 1.3307. Official data showed that Canada’s consumer prices grew 1.9% on year in October (as expected). 

Later today, existing home sales are expected to post a growth of 2.0% on month to a yearly rate of 5.49 million units in October. The Leading Index is likely to slip by 0.2%. Besides, the U.S. unemployment claims for the week ended November 16 is anticipated to fall to 218,000 from 225,000 in the prior week.

Economic Events to Watch Today

Let’s took at these fundamentals.

 

 

EUR/USD – Daily Analysis

The EUR/USD pair is found on the bearish territory and created a bearish hammer candle ahead of Europan Central Bank minutes. That might anticipate that members stand divided on which course to take, in short, there could be seen the opposite sentiment as compared to earlier.

It should be noted that the market turned into the risk-off in Aisa, in the wake of political and trade uncertainty. The report came that the fair trade deal between the United States and China will likely shift into next year. Moreover, traders are also worried that resumed political tensions between the United States and China will likely damage the global economy and could complicate matters on the trade front.

On the other hand, Beijing warned the United States to do not interfere in this matter. The risk-tone also weighs down amid on-going protests in Hong Kong and Israel. 

At the ECB front, the EUR currency will likely take a buying if the ECB meeting minutes exhibits growing resistance to the massive easing package announced by the former President Draghi in September.

Daily Support and Resistance

S3 1.1012

S2 1.1041

S1 1.1057

Pivot Point 1.1069

R1 1.1085

R2 1.1097

R3 1.1126

EUR/USD– Trading Tips

The currency pair created a bearish hammer candle on Wednesday, indicating the bullish move from its recent lows below 1.10 has run out of steam and sign of an aggressive bearish move. However, a bearish reversal will be confirmed if the EUR/USD pair closes below the candle’s low of 1.1053 (a hammer) on Thursday. Also, a close above 1.1081 would negate the bearish hammer and signal a resumption of the recovery rally.

GBP/USD– Daily Analysis

The GBP/USD currency pair turned to green and taking round near the 1.2930, mainly due challenges to Tories recede. After the ITV debate between the United Kingdom, Prime Minister Boris Johnson, and the opposition Labour Party leader Jeremy Corbyn immediate votes challenges to Tories. The latest surveys from the Savanta Comres says that about one in five Labour voters is considering backing the Tories. 

The market has recently stayed under pressure because the United States and China trade dispute escalated, whereas the House of Representatives passed the Hong Kong bill. Risk-tone stays slow with the United States ten-year treasury yield and the Asian stocks both flashing red signals.

Whereas a shortage of significant data/events will likely keep trade/political headlines concerning the U.S. and China in the light, news from the U.K. and 2nd-tier Housing and manufacturing data from the U.S. could offer intermediate progress. 

Daily Support and Resistance

S3 1.283

S2 1.2872

S1 1.2897

Pivot Point 1.2913

R1 1.2939

R2 1.2955

R3 1.2997

GBP/USD– Trading Tips

On the technical side, bears look for a daily closing below 21-day Simple Moving Average (SMA) level of 1.2880 to try for monthly low surrounding 1.2770, until then 1.3000 and 1.3015 will stay on buyers’ radars. 

On a shorter timeframe, the GBP/USD is trading with a bullish bias at 1.2930. The bullish trend is mostly triggered due to the Three White Soldiers pattern, which is suggesting a strong buying trend in the GBP/USD pair. On the upper side, the immediate target is likely to be 1.2960. 

USD/JPY – Daily Analysis

The USD/JPY currency pair increased its moderate recovery from the 50-day Moving Average support manly due to the China Vice Premier and trade negotiator Liu He stated that he is hopeful about reaching a phase-1 trade deal. 

As of now, the USD/JPY currency pair is currently trading at 108.49, representing a 0.13% decline on the day, having bounced from the 50-day moving average support of 108.28 in the last one hour.

It must be noted that Liu He is showing optimism on trade, but few traders seem to avoid going long on the JPY trades, helping the pair to show a slight recovery. However, the futures on the S&P 500, are still reporting a 0.22% decline. Moreover, the Asian equities are down with Japan’s Nikkei reporting a 1% drop.

Whereas, the United States’ ten-year treasury yield is also showing no sign of life. The Treasury yield is currently trading at two-week lows near 1.73%.

Basically, the equity and bond market are not looking so impressed by the Premier Liu He’s comments and continue to worry about declining the trade certainty due to intensifying political tension.

Therefore the USD/JPY currency pair will likely fall back to the 50-day average at 108.28. However, if the equities recover, the pair will probably move into the positive region above 108.60.

Daily Support and Resistance

S3 107.78

S2 108.17

S1 108.39

Pivot Point 108.57

R1 108.78

R2 108.96

R3 109.35

USD/JPY – Trading Tips

The USD/JPY is trading at 108.500, just below the bearish trendline, which is extending resistance at 108.700 area. The closing od Doji candle below 108.700 level saying a lot about investors’ sentiment. On the other hand, the MACD and RSI are still holding in the bullish zone. 

Due to different sentiments, we should keep a close eye on 108.550 level today as the USD/JPY can trade bearish below and bullish above this level. On the lower side, the target remains 108.250, while 109 remains the bullish target. 

All the best!

Categories
Forex Course

24. Fundamentals Of Margin Trading

Introduction
Margin, which allows for Leverage trading, is one of the crucial reasons why most of the traders prefer trading Forex. It is an aggressive form of trading where traders

Introduction
Margin, which allows for Leverage trading, is one of the crucial reasons why most of the traders prefer trading Forex. It is an aggressive form of trading where traders

Introduction

Margin, which allows for Leverage trading, is one of the crucial reasons why most of the traders prefer trading Forex. It is an aggressive form of trading where traders take more risk while expecting an additional reward. Here, traders increase their bet by borrowing funds usually from their brokers. Thereby leverage trading allows a trader to trade with more funds than they actually have in their account. Leverage trading exists in the stock market, as well. The internal working of margin in both the markets is not quite the same, but the overall concept is the same.

Leverages is typically represented in ratios or with an ”X” next to it. For instance, the notation of two times leverage would be 2:1 or 2x. There are several other terminologies such as balance, realized and unrealized P/L, used margin, equity, etc. which are involved in margin trading. And to trade in a margin account, having knowledge about these terms is vital. So, in this lesson, some basic concepts and working of the margin trading shall be discussed.

Margin Account

A margin account, also referred to as a leverage account, is a trading account offered by a forex broker, which lets their clients trade large quantities without investing the total required amount. In a margin account, the forex broker acts like a loan lender who lends cash to its customers for taking positions in the market.

How does margin trading work?

Let us assume that a trader has deposited some amount into his account. The broker sets a margin percentage for the client. This margin percentage typically is between 1-2%. In forex, it is not the case that this account balance is used for taking a position. But, it is used up by the brokers as security deposits. Here, if the broker sets a margin percentage to 1%, then 1% of the trade value is utilized by the broker as a security deposit. So, a trader takes a position worth $100,000, then only $1,000 is used up, and the broker lends the rest 99% of the amount. This is the basic working of a margin account. There are many other terms involved in it, which shall be discussed in the subsequent lessons.

Benefits and Shortcomings of Leverage Trading

Initially, margin trading might seem very beneficial. To an extent, this is true, but there are disadvantages to it as well. Below are some of the advantages and disadvantages of margin trading.

Advantages

🟢 Ability to multiply a trader’s trade size

With margin trading, minimal capital is no more an issue because one can take larger positions even with a smaller investment.

🟢 Significant short-term gains

As margin accounts allow traders to take bigger positions, one can grow their account balance exponentially, even in the short-term.

Disadvantages

🔴 High risk

The market has two directions. So, though a trader trades on a margin, it does not mean that the trade will perform in their forecasted direction. A trader can make high profits and can even lose a significant amount of money. Hence, trading with margin involves high risk. And it is not recommended for novice traders.

🔴 The requirement of the minimum account balance

Trading in a margin account requires the user to maintain the minimum balance specified by the broker. If a user fails to maintain the minimum balance, then the trader is forced to close their positions.

This concludes the introduction of margin trading. In the next lesson, the terminologies involved in margin trading shall be discussed.

[wp_quiz id=”49218″]
Categories
Forex Market Analysis

Daily FX Brief, November 20 – Major Trade Setups – Eyes on U.S. FOMC Meeting Minutes! 

The U.S. dollar was steady ahead of the release of the latest Federal Reserve monetary policy meeting due later today. The Dollar Index closed broadly flat at 97.82. While media

The U.S. dollar was steady ahead of the release of the latest Federal Reserve monetary policy meeting due later today. The Dollar Index closed broadly flat at 97.82. While media

The U.S. dollar was steady ahead of the release of the latest Federal Reserve monetary policy meeting due later today. The Dollar Index closed broadly flat at 97.82. While media reported that the U.S. and China are discussing the size of tariff rollbacks, President Donald Trump cautioned to force higher tariffs in case a deal is not reached.

Economic Events to Watch Today

Let’s took at these fundamentals.

Economic Calendar by TradingView

 

EUR/USD – Daily Analysis

The EUR/USD is flashing red and will likely slip from its recovery rally, and today’s close will decide the next direction. As of writing, the currency pair fluctuating in the bearish range of 1.1084-1.1063 and representing declines on the day within yesterday’s bullish and bearish range of 1.1090 and 1.1048. 

On the technical side, the EUR/USD pair created an inside bar candlesticks pattern today. Moreover, a close above the inside bar’s high of 1.1084 is needed to improve the recovery rally from 1.0989. While a close below the inside bar’s low of 1.1063 would suggest a bearish reversal.

On the other hand, the United States ten-year yields hit the two-week low of 1.763% and have dropped almost 20-basis-points since the topping out at 1.972% on November 7. Apart from Yields, the United States and China trade concerns are sending the risk assets danger.

It should be noted that the market flow may stand in favor of sellers if the FOMC’s 29-30 October meeting sounds hawkish. The meeting is scheduled to happen at 29-30 October19:00 GMT.

However, the hawkish tone has to be strong because, as we know, the financial markets have confirmed that the rate cuts by the Federal Reserve will not deliver until June of 2020.

According to Germany’s influential BDI industry association’s Managing Director Joachim Lang, manufacturing production in Europe’s economic powerhouse is anticipated to decrease by 4% this year.

Daily Support and Resistance

S3 1.1036

S2 1.1056

S1 1.1067

Pivot Point 1.1076

R1 1.1087

R2 1.1095

R3 1.1115

EUR/USD– Trading Tips

The EUR/USD displayed bearish behavior after testing the resistance mark of 1.1090. Today, the EUR/USD pair has violated the upward channel, which supported the pair around 1.1080 level, and it’s now extending it towards 1.1050 level. Consider taking sell positions below 1.1075 today with the aim of 1.1040. 

GBP/USD– Daily Analysis

The GBP/USD pair hit the bearish track for the second consecutive day and representing 0.19% declines on the day, mainly due to uncertainties surrounding the Tory leader’s public favor after the ITV debate. By the way, the cable pair is currently trading at 1.2915.

At the broadside, the ITV debate, which happened between the Tory and the opposition Labor leaders, seemed peaceful as both parties showed a relaxed attitude during holding to part and of Brexit and 2nd referendum, respectively. At the end of the debate, the survey surprise the GBP/USD pairs traders because the United Kingdom Prime Minister Boris Johson got only 51% votes in his favor whereas, on the other hand, the opposition party leader Jeremy Corbyn got 49% votes. 

In addition to the recent polls of the ITV’s debate, the uncertainties over the UK PM’s refrain from publishing the news of Russian interference into the Brexit referendum and delaying the corporate tax forms also simulate challenges to the Tory administration.

At the greenback front, another reason behind the GBP/USD pairs weakness is that the U.S. Dollar extended its gains and offer more weakness to the GBP/USD pairs mainly due to the favorable housing market data from the United States. It also helped the US Dollar strength the United States Federal Reserve policymaker John C. Wiliams continued support for the current monetary policy also supported the U.D. buyers.

At the Sino-US front, the greenback extended its recovery streak on the day due to the risk-off arisen by the United States and China trade war regarding the Hong Kong bill. The risk-tone also weighs down amid on-going protests in Hong Kong and Israel. As a consequence, the U.S. 10-year treasury yields drop to 1.75%.

Looking forward, all the market’s eyes will be on the Feral Open Market Commmetiiees latest monetary policy meeting, which is scheduled to happen on 29-30 October, whereas the trade and political headlines will likely keep the trader entertaining.

Daily Support and Resistance

S3 1.2816

S2 1.2876

S1 1.2901

Pivot Point 1.2935

R1 1.296

R2 1.2995

R3 1.3055

GBP/USD– Trading Tips

The GBP/USD is consolidating in a sideways range of 1.2970 – 1.2890 as bearish bias dominates despite weakness in the U.S. dollar. The GBP/USD pair may face double top resistance at 1.2975 on the 4-hour chart. While support stays at 1.2890 level today. Below this, the GBP/USD may head towards 1.2855. 

The leading indicators such as a MACD and RSI, are holding in the selling zone, suggesting chances of more selling. Consider staying bearish below 1.2935 today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair representing marginal declines and having hit the low of 108.36, the pair is currently trading at 108.50. As of writing, the pair is fluctuating in the range of 108.38/57, mainly due to weakness in the Treasury yields and lack of fresh impulse in the trade war and Brexit.

On the green side, the USD/JPY currency pair has recovered from session lows but remains on the defensive below 109.07 despite the weakness in the Treasury yields.

At the Sino-US front, the greenback extended its recovery streak on the day due to the risk-off arisen by the United States and China trade war regarding the Hong Kong bill, and Beijing warned the United States to do not interfere in this matter. The risk-tone also weighs down amid on-going protests in Hong Kong and Israel. As in consequence, the U.S. 10-year treasury yields drop to 1.75%.

At the Brexit front, the ITV debate, which is happened between the Tory and the opposition Labor leaders, seemed peaceful because both parties showed a relaxed attitude during holding to part and of Brexit and 2nd referendum, respectively. However, at the end of the debate, the United Kingdom Prime Minister Boris Johson got only 51% votes in his favor, whereas, on the other hand, the opposition party leader Jeremy Corbyn got 49% votes. 

Meanwhile, the Fedspeak came with New York Federal Reserve president Williams announced that the economy is in a “good place.” The U.S. 2-year Treasury yields roundtripped between 1.59% to 1.62%, while the 10-years initially rose from 1.80% to 1.83% but was then sent back to 1.78%. 

Daily Support and Resistance

S3 107.84

S2 108.23

S1 108.39

Pivot Point 108.61

R1 108.77

R2 109

R3 109.38

USD/JPY – Trading Tips

The USD/JPY is trading at 108.40, as the bearish engulfing candle on the 2-hour chart is suggesting a strong bearish bias for the pair. Closing of another bearish candle will confirm bearish setup and the safe-haven currency pair USD/JPY may drop towards 108.200 today.  

On the higher side, resistance stays at 108.600 level. 

All the best!

Categories
Crypto Market Analysis

Daily Crypto Review, Nov 20 – KPMG values Bitcoin-based companies less this year, Cryptocurrency markets in consolidation

The cryptocurrency market was mainly consolidating in the past 24 hours. Most cryptocurrencies gained and lost values that were not significant enough to cover. If we take a look at

The cryptocurrency market was mainly consolidating in the past 24 hours. Most cryptocurrencies gained and lost values that were not significant enough to cover. If we take a look at

The cryptocurrency market was mainly consolidating in the past 24 hours. Most cryptocurrencies gained and lost values that were not significant enough to cover. If we take a look at the past 24 hours, Bitcoin went down 0.45%, and it is now trading at $8,113. Ethereum lost 0.25%, while XRP gained 1.65%.

Of the top100 cryptocurrencies by market cap, the biggest gainer is Crypterium, with 21.06% daily gain. The biggest loser of the day was Aurora, which lost 9.37% of its value.

Bitcoin’s dominance remained at the pretty much the same place from the last time we checked the markets. Its dominance now sits at 65.87%.

The cryptocurrency market as a whole now has a market capitalization of $224.9 billion, which represents a slight decrease when compared to the value it had yesterday.

What happened in the past 24 hours

There was no big fundamental news that could impact the market positively or negatively today. Small price movements showed that no technical or fundamental indicators gave any signals.

Big Four auditing firm KPMG released its 2019 Fintech100 ranking. KPMG lists the top100 fintech firms in the world each year. This year, the list saw a drop in Bitcoin and crypto-related companies.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin had a pretty slow day in the past 24 hours. After yesterday’s price drop, the price stabilized above $8,000 resistance line. This support key level seems to have been respected as bulls started to buy Bitcoin at this price point and stopped bears from taking over completely.


Bitcoin’s volume is continuing to gradually decrease from the big drop in price. Its RSI level is in the oversold territory for some time now.

Key levels to the upside                   Key levels to the downside

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

2: $8,820                                           2: $8,000

3: $9,120                                         

Ethereum

As Ethereum broke another support key level, it is currently stuck in a price limbo. The price broke the $178.6 key support level and is currently trading just below it. There are currently no attempts of Ethereum going back above this key level.


The key level of $178.6 moved to the upside as the price went below it. It is likely that Ethereum won’t manage to go above this level in the short future as its volume and bull presence, in general, are not there.

Key levels to the upside                   Key levels to the downside

1: 178.6                                             1: $167.8

2: $185

3: $193.5

XRP

XRP had quite a turbulent day. Its price fell to its key support level of $0.245, but bulls kicked in and kept the price above it. XRP is currently trading in the middle of the range, stuck between the 0.245 support line and the 0.266 resistance line.


The key levels still remain the same as they were as XRP didn’t pass any key levels up or down.

Key levels to the upside                   Key levels to the downside

1: $0.266                                           1: $0.245

2: $0.285

3: $0.31