Tag: trading

Categories
Forex Assets

Analyzing The USD/KRW Forex Currency Pair

Introduction

Introduction

Introduction

USDKRW is the abbreviation for the US Dollar against the South Korean Won. This pair comes under the branch of emerging currency pairs. Here, the US Dollar, being on the left, is the base currency, and the KRW is the quote currency.

Understanding USD/KRW

The market price of this determines the value of KRW equivalent to the US $1. It is quoted as 1 USD per X KRW. So, if the market price of USDINR is 1199.70, these many units of the quote currency are required to purchase one unit of the base currency.

Spread

The algebraic difference between the bid price and the ask price is referred to as the spread. This is the primary source through which brokers generate their revenue. The spread varies from broker to broker and also the way through which they execute the trades.

ECN: 24 pips | STP: 25 pips

Fees

A fee is nothing but the commission that you pay to the broker on each trade. It is similar to that one that is paid to stock market brokers. Below is the fee on ECN and STP accounts.

ECN – 5-10 pips | STP – 0 pips

Slippage

Slippage is the variation in the price that was intended by the trade and price that was executed by the broker. Market volatility and the broker’s execution speed are the sole reasons for slippage to occur.

Trading Range in USD/KRW

A trading range is a table of volatility values in different timeframes. It shows the minimum, average, and maximum pip movement in USDKRW.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can assess a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

USD/KRW Cost as a Percent of the Trading Range

This an application to the above range table. Here, we determine the variation in the costs for changing volatility and a set of timeframes. With this, we can figure out the ideal times of the day to enter and exit this currency pair.

ECN Model Account

Spread = 19 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 24 + 3 = 30

STP Model Account

Spread = 20 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 25 + 0 = 28

The Ideal way to trade the USD/KRW

Though the Forex market is a 24-hour market, it is not really ideal to trade anytime during the day. This is due to the changes in the costs as the volatility changes.

From the table, we can observe that the cost percentage values are higher in the minimum column and comparatively lower in the maximum column. This means that the costs are high during less volatile markets, and low for highly volatile markets. So, choosing the right time to trade is dependent on the type of trader you are.

For instance, if a trader is concerned about the costs and ignorant of the volatility, then he may trade the market during high volatilities. But, if you’re a trader who’s concerned about both the factors, then you may trade during those times when the volatility of the market is around the average values. This will provide you with decent volatility with pretty low costs as well.

There is another way through which one can lower their cost much more. And this is through taking trades using limit orders instead of market orders. Considering the above-mentioned example, the total cost now would be reduced by three pips.

Categories
Crypto Videos

Trading Forex & Crypto With The Golden & Death Cross – Don’t miss These Indicators!

https://youtu.be/LwsupnFKraQ

https://youtu.be/LwsupnFKraQ

How to make money in crypto by utilizing Golden and Death cross

Whether you want to use them or not, you will need to understand how moving averages work in order to understand some more advanced indicators. However, trading by using only moving averages is not uncommon and can be extremely profitable. Today, we will be talking about the Golden cross and the Death cross. These two occurrences are quite rare but powerful signals that traders are looking for.
They occur when the short-term and long-term moving averages cross. When the cross is to the upside, we are talking about the Golden cross. If the cross is to the downside, it’s called the Death cross.

Both Golden and Death crosses have predicted some of the worst economic downturns of the 20th century. As an example, the Death cross predicted bear markets in 1929, 1938, 1974, and 2008. When talking about cryptos, they are very popular as they underscore the strength and potency of the primary trend. This, in turn, enables traders to navigate the chaos that is the crypto market.

Golden cross

The Golden cross is an event that occurs when a short-term moving average crosses over a long-term moving average to the upside. This occurrence signals to traders that they can expect a strong bullish move.
There are two main requirements for a golden cross to be a good indicator of a move:
It has to spell an end to a sharp downtrend due to seller exhaustion.

The short-term moving average has to rise above the long-term moving average (traders typically use the 50-period for short and 100-period or 200-period for long moving averages).
As seen on the picture and highlighted in green, a Golden cross occurred on the daily BTC chart in March 2019, signaling a strong move to the upside and away from the low of $3,122.
Starting March 12, 2019, BTC price rose by as much as 260%, from $3,859 all the way up to near $14,000 on June 26.
The Golden cross is more accurate when analyzing long time frames.

Death cross

The death cross is the complete opposite of the Golden cross. This occurrence has two main requirements for it to be a true Death cross:
A death cross is created as an end to a bull trend due to long-term buyer exhaustion.
It shows up when the short-term moving average crosses beneath a long-term moving average (traders typically use the 50-period for short and 100-period or 200-period for long moving averages).
As seen in the picture, BTC showed greater bearish conditions on March 30, 2018, as the 50-day moving average crossed below the 200-day moving average. Following this Death cross came a 54% decline in value, namely from $6,850 all the way down to the bottom of $3,122 by December 15.
The Death cross is best identified when looking at longer time frames (just like the Golden cross).

Conclusion

Golden and Death crosses are great ways to determine trend changes on larger time frames. However, as with all indicators, they’re not always perfect. However, they are respected by the traders and, therefore, very valuable in the crypto trading community.

Categories
Forex Videos

Break The Brokers & Conquer The Forex Market By Trading Triangles!

https://youtu.be/RReTL0bZlqk

https://youtu.be/RReTL0bZlqk

Triangle Formations

Triangle formations are another key tool used by technical traders to gauge potential price action moves based on triangle patterns that form on their charts.

Such patterns regularly occur and where traders will draw the patterns on their screens themselves rather than using a technical tool to do the job for them. The triangles can then be used areas of support and resistance around these triangle formations in order to trade from.
So what is a triangle, or wedge as it is sometimes referred to as? It literally is what appears to be a triangle based on price action, where traders will identify these areas by drawing lines onto their screen charts, such as in example A.

Example A

Here we can see a low point and a high point, as marked on the chart, and where are we have drawn two lines which act as resistance and support, the rules of which require that price action must touch both lines on at least on two occasions, which they do at positions 1 and 2.3 and 4, and where price action goes through a period of consolidation and becomes wedged to a point that it must eventually break from, either lower or break higher. In this situation It breaks higher from the triangle, and where the previous area of resistance at its furthermost point goes on to become an area of support, from where bulls come in and drive price higher.

Example B


Example B is an ascending triangle formation. It offers bullish setups and where the main characteristics are price action moving higher, with a flat top, which is confirmed by at least two attempts of price action to move higher than the area of resistance. Here we can see that the price action trend is higher and where price action is largely following our support line until price action flattens off and where we see resistance forming at the furthest most point of the wedge. Traders will be looking for a break higher or a break lower from the wedge. In this situation, we have a break higher and a continuation with the overall upward trend.

 

Example C


Example C is a descending triangle. This shape offers bearish setups. Again we have at least two confirmed attempts to breach the area of support and at least two attempts to move higher than our area of resistance and where the overall trend is moving lower until price action eventually breaks lower from the furthermost point of our triangle shape.
Other shapes in this category include falling or descending wedge formations, where price action is contained within two narrowing lines and is identified by lower highs and lower lows such as, in example D.

Example D


Also, a rising or ascending wedge, where price action again is contained in two narrowing lines, but this time identified by higher highs and higher lows, such as in example E.

Example E


In both wedge-shapes, traders will be looking for a break out as the lines narrow and where the breaks usually prove to be good entry points for trading the opposite direction as the previous trends run out of steam.

 

Example F


Slightly more complex are the symmetrical triangle shapes as in example F, and where we would identify lower tops and higher bottoms with an almost flag-like appearance, and where we can see our confirmed area of support and resistance is breached and where price action eventually moves lower and where our initial area of support becomes an area of resistance.

We would usually look for our initial breakout from the first area of price action to reach the peak of the initial high. However, the shape is considered neutral with no real particular bias.
The next shape is a bullish Pennant and is defined by an initial upward trend with a triangle shape based on a slightly ascending support line with a confirmed area of resistance with lower highs and where we would expect a breach higher from this triangle shape formation such as in example G.

 

Example G


Our final shape in this series is the expanding wedge, which, as the name would suggest, is an area of price action that expands as it moves forward, as in example H. This might typically occur as extra volume enters the market after a period of tight consolidation.

 

Example H

Categories
Forex Daily Topic Forex Price Action

A Business of Glorious Uncertainty

Trading on the daily-H4 chart combination often brings more reward than our initial expectation. Typically, traders aim to earn 1R. However, it may even bring up to 5R. In today’s lesson, we are going to show an example of this.

Trading on the daily-H4 chart combination often brings more reward than our initial expectation. Typically, traders aim to earn 1R. However, it may even bring up to 5R. In today’s lesson, we are going to show an example of this.

Trading on the daily-H4 chart combination often brings more reward than our initial expectation. Typically, traders aim to earn 1R. However, it may even bring up to 5R. In today’s lesson, we are going to show an example of this.

This is a daily chart. The price heads down with good bearish momentum. The last candle is a spinning top. In a strong bearish daily trend, a spinning top does not suggest that the trend may change. However, the H4-daily traders’ strategy is different. They are to flip over to the H4 chart and wait for consolidation followed by a bullish breakout, to go long on the pair. Let us flip over to the H4 chart.

The H4 chart looks good. The chart produces two bearish candles consecutively. The buyers are to wait for a bullish engulfing candle closing above consolidation resistance to go long. The chart suggests that the buyers shall stick with the chart.

It consolidates more and produces a bullish engulfing candle. However, the candle closes within consolidation resistance. They are to wait for more. Look at the last candle. It seems like it is going to have a deep consolidation again.

This time the chart produces a bullish engulfing candle closing well above consolidation resistance. The buyers could trigger a long entry right after the candle closes and set the stop loss below the signal candle’s lowest low.

The trade does not go as per buyers’ expectations. It takes time to hit the target. However, the candle breaches through the take-profit level, closing as a strong bullish candle. The buyers may consider taking a partial profit and let the rest of the trade run. Let us find out what happens next.

This time the price heads towards the North with extreme bullish pressure. It travels about five times the distance of the buyers’ initial target. Assume, by taking partial profit, how much more a trader can earn. This is the beauty of trading on the daily-H4 combination. Since the daily chart is involved here, the price often heads towards daily support/resistance. This brings traders more profit if they deal with their trade accordingly. Another interesting point here to be noticed, despite producing an excellent bullish engulfing candle, the price does not head towards the North with good bullish momentum. On the other hand, once it hits the target level by producing another bullish Marubozu candle, it keeps going towards the North with extreme bullish momentum. This is why trading may be called a business of glorious uncertainty.

 

Categories
Forex Course

71. Basics Of Simple Moving Average

Introduction

Introduction

Introduction

In the previous lesson, we understood the definition of Moving Average, their importance, and the significance of ‘length’ in MAs. We also learned the correct way of choosing the ‘length’ while using Moving Averages. In the upcoming articles, we shall see and understand the different types of moving averages. Let’s start off by learning the first type – Simple Moving Average (SMA).

Simple Moving Average

The SMA is a very simple Moving Average that is calculated by the summation of the last ‘n’ period’s closing prices and then by ‘n.’

Let us understand the above formula with an example.

When we plot 10 ‘period’ SMA on a 1-hour chart, we add the closing prices of the last 10 hours, and then divide it by 10. Similarly to plot a 5 ‘period’ SMA on a 4-hour chart, we need to add the closing prices of the candles in the last 20 hours and then divide that number by 5. These calculations are coded and embedded in the form of indicators. These indicators will be available in almost all of the trading platforms. All we need to do is to pick the indicator from the tools bar and plot them on the charts by selecting the appropriate period and timeframe.

In the below chart, we have potted three different SMAs on the chart. This chart represents the 1-hour time frame of a currency pair. As we see, longer the period of SMA, more it lags behind the price. This explains the reason why the 60 ‘period’ SMA is farther away from the 30 ‘period’ SMA; because the 60-period SMA adds up the last 60 periods and divides it by 60 as mentioned above.

When the period of an SMA is large, it reacts slowly to the price movement. Essential, SMA shows the overall sentiment of the market at any given point in time. However, SMA should always be used to find the direction of the market in the near future but not take trades based on this information alone.

Instead of looking at the current price of the market, we need to have a broader view and predict the direction of the future price movement. Using SMA, we can say if the market is in an uptrend, downtrend, or if it is moving sideways.

One major drawback of SMAs is that they are vulnerable to spikes. So, during the calculations, the prices of the currency pair, which is of no significance (high or low of spike), will be added up and shown by the SMA line. The reason behind less significance to the prices of spikes is because they give false signals, and we might think a new trend is developing, but in reality, it is just a failure of the price.

The below figure shows how the SMA would be when there are too many spikes in the chart. As we can see, the 10 ‘period’ SMA is not uniform and is not able to show the direction of the market in the occurrence of spikes.

Conclusion

The SMA should be plotted to know the market trend when it is not clear. It can also be used to forecast the price movement in the near future. It is very important to combine this indicator with a trading strategy as it can never produce the results when used standalone. In the next lesson, we shall introduce another type of moving average and see how it can solve the issues we face with SMA.

[wp_quiz id=”65345″]
Categories
Forex Market Analysis

Gold on a Bearish Mode, Coronavirus Continues to Outbreak! 

On Friday, the precious metal gold trades bearish, falling from 1,635 to 1,624 support level. It seems like traders are doing profit-taking ahead of the weekend. The bearish trend in gold continues despite a drop in stock prices. 

On Friday, the precious metal gold trades bearish, falling from 1,635 to 1,624 support level. It seems like traders are doing profit-taking ahead of the weekend. The bearish trend in gold continues despite a drop in stock prices. 

On Friday, the precious metal gold trades bearish, falling from 1,635 to 1,624 support level. It seems like traders are doing profit-taking ahead of the weekend. The bearish trend in gold continues despite a drop in stock prices. 

Global share prices directed for the most critical week since the world financial crunch in 2008 as traders braced for the disease to shift a pandemic and swiftly spread around the globe. Most of the selling triggered after mainland China had 327 new confirmed cases of infections on Thursday, the National Health Commission announced on Friday. 

Besides, Iran reported that its death toll climbed to 26, by far the highest figures outside China, and the total number of infected people held at 245, which also include several senior officials.


Gold – XAU/USD – Daily Technical Levels

Support Resistance 

1633.48 1658.64

1621.83 1672.15

1596.67 1697.32

Pivot Point 1646.99

On the technical side, the precious metal gold is trading at 1,623 level after violating the double bottom support area of 1,633 level. Looking at the leading technical indicators, the XAU/USD’s MACD has crossed below 0, which is suggesting chances of bearish trend continuation. 

Gold may find immediate support around 1,612 for now, and below this, the 61.8% will remain in focus, which may extend support around 1,602 level. Today, we can look for selling trades below 1,626 area. Good luck!   

Categories
Forex Course

70 – Introduction To Moving Averages

Introduction

Introduction

Introduction

After understanding various applications of the Fibonacci indicator, it’s time to learn about the next best indicator in technical analysis – Moving Average. MA is one of the most popular indicators in the technical trading community. This indicator, just like the Fibonacci Indicator, has a lot of applications and is commonly used by traders for different reasons.

A moving average smoothens the price movements and its fluctuations by eliminating the ‘noise’ in the market. By doing this, MAs shows us the actual underlying trend. A moving average is computed by taking the average closing price of a currency for the last ‘X’ number of candles. There are many moving averages depending on the number of periods (candles) considered.

Below is how a 5-Period Moving Average looks on the price chart.

One of the primary applications of the Moving Average indicator is to predict future price movements with high accuracy. As we can see in the above chart, the slope of the line determines the potential direction of the market. In this case, it is a clear uptrend.

Every Moving Average has its own level of smoothness. This essentially means how quickly the MA line reacts to the change in price. To make a Moving Average smoother, we can easily do so by choosing the average closing prices of many candles. In simpler words, higher the number of periods chosen, smoother is the Moving Average.

Selecting the appropriate ‘Length’ (Period) of a Moving Average

The ‘length’ of the Moving Average affects how this indicator would look on the chart. When we choose an MA with a shorter length, only a few data points will be included in the calculation of that MA. This results in the line overlapping with almost every candlestick.

The below chart gives a clear idea of a small ‘length’ Moving Average.

The advantage of a smaller length moving average is that every price will have an influence on the line. However, when a moving average of small ‘length’ is chosen, it reduces the usefulness of it, and one might not get an insight into the overall trend.

The longer the length of the moving average, the more data points it ll have. This means every single price movement will not have a significant effect on the MA line. The below chart gives a clear idea of a long ‘length’ moving average.

On the flip side, if too many data points are included, large and vital price fluctuations will never be considered making the MA too smooth. Hence we won’t be able to detect any kind of trend.

Both situations of choosing ‘lengths’ can make it difficult for users to predict the direction of the market in the near future. For this reason, it is crucial to choose the optimal ‘length’ of the Moving Average, and that should be based on our trading time frame and not any random number.

Conclusion

Moving Averages generate important trading signals and especially when two MAs are paired with each other. They give both trend continuation and reversal signals with risk-free trade entries. A simple way of reading the MA line is as follows – A rising MA indicates that the underlying currency pair is in an uptrend. Likewise, a declining MA means that the currency pair is in a downtrend.

In the next article, we will be learning two critical types of moving averages – Simple Moving Average and Exponential Moving Average, along with their applications on the charts. Stay Tuned!

[wp_quiz id=”65304″]
Categories
Forex Assets

Understanding The USD/INR Forex Currency Pair

Introduction

Introduction

Introduction

USD/INR is the abbreviation for the US Dollar against the Indian Rupee. This Asian pair is classified as an emerging currency pair. Here, the US Dollar is the base currency, and the INR is the quote currency.

Understanding USD/INR

The price in the market determines how much the Indian Rupee worth with respect to the US Dollar is. It is quoted as 1 USD per X INR. So, if the market price of USDINR is 71.46, then around ₹71 is required to purchase $1.

Spread

Spread in foreign exchange, is the difference between the bid and the ask price of the currency pair. This is the primary way through which brokers generate revenue. Spread is typically decided by the brokers itself. And it varies based on the type of execution model implemented by the brokers.

ECN: 19 pips | STP: 20 pips

Fees

Out of the two types of execution models, there is a fee, only on ECN accounts. Typically, there is no fee on STP accounts. However, this is compensated by higher spreads.

Slippage

Slippage is the difference between the price demanded by the user and the price he received by the broker. There is always this difference when orders are executed by the market. There are a couple of reasons for its occurrence.

  • Broker’s execution speed
  • Market’s volatility

Trading Range in USD/INR

The minimum, average, and maximum volatility of the currency pair in different timeframes are represented in the below trading range table. These values help us calculate the profit or loss that can be made in a given amount of time. Hence, this table is a great risk management tool.

 Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can determine a significant period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

USD/INR Cost as a Percent of the Trading Range

The costs as a percent of the trading range are the representation of the variation of the costs for different volatilities and timeframes. Understanding this cost variation helps in determining the ideal times of the day to trade this currency pair, which shall be discussed in the subsequent sections.

ECN Model Account

Spread = 19 | Slippage = 3 |Trading fee = 3

Total cost = Slippage + Spread + Trading Fee = 3 + 19 + 3 = 25

STP Model Account

Spread = 20 | Slippage = 3 | Trading fee = 0

Total cost = Slippage + Spread + Trading Fee = 3 + 20 + 0 = 23

The Ideal way to trade the USD/INR

Before getting into it, let’s first comprehend the below tables. The greater the values of the percentage, the greater is the cost of the trade. Similarly, the lower the values, the lesser is the total cost of the trade. Also, costs are inversely proportional to the volatility of the market.

From the above tables, we can ascertain that the values are higher in the min column, and gradually increases in the up to the max column. This means that the costs are high when the volatility of the market is low. The costs are neither too high nor too low for average volatility. Hence, if you are a trader who requires moderate volatility and low costs, then you may trade when the volatility of the market is around the average values.

Note: The current volatility of the market can be obtained from the ATR indicator.

There is another way through which one can considerably reduce their costs. By executing trades via limit/stop orders instead of market orders, the slippage on the trade will be waived off from the total costs. This brings down the costs significantly. For example, if the slippage on the trade is five pips, then five pips will be reduced in calculating the total costs on the trade.

Categories
Forex Price-Action Strategies

Do Not Ignore Significant Levels of Support/Resistance

Price action trading is considered one of the most effective and easiest ways of trading. Traders are to follow a few rules and be disciplined to be a successful price action trader. One of the most important factors is marking the support/resistance zone/level. If a trader draws support/resistance zone/level; accordingly, trade management gets easy for him. In today’s lesson, we are going to demonstrate an example of how important it is to mark support/resistance levels on our trading chart and manage trade accordingly.

Price action trading is considered one of the most effective and easiest ways of trading. Traders are to follow a few rules and be disciplined to be a successful price action trader. One of the most important factors is marking the support/resistance zone/level. If a trader draws support/resistance zone/level; accordingly, trade management gets easy for him. In today’s lesson, we are going to demonstrate an example of how important it is to mark support/resistance levels on our trading chart and manage trade accordingly.

Price action trading is considered one of the most effective and easiest ways of trading. Traders are to follow a few rules and be disciplined to be a successful price action trader. One of the most important factors is marking the support/resistance zone/level. If a trader draws support/resistance zone/level; accordingly, trade management gets easy for him. In today’s lesson, we are going to demonstrate an example of how important it is to mark support/resistance levels on our trading chart and manage trade accordingly.

This is a daily chart. The chart shows that the price after being very bullish produces two bullish candles consecutively. The first candle comes out as a bearish engulfing candle as well.  Thus, major intraday charts’ traders may flip over to their charts and look for short opportunities. However, before we proceed, we must mark significant levels that may work as a level of support. Think about the levels that you may mark as the level of potential support. If you are done, proceed to the next chart.

These two levels may work as a level of support. The line below is the most significant level on this chart because this is the lowest low, and this is where the trend starts. The line above is quite significant since it produces a double bottom earlier. There are levels where the price reacted earlier. Thus, they may work as flipped support. However, two marked levels are crucial as far as this chart is concerned.

The chart produces a bullish reversal candle right at the marked level. It has been extremely bearish. The second last candle comes out as a strong bearish candle as well. Price action traders usually keep their eyes on a chart like this to go short upon breakout. That does not happen here. It produces a bullish inside bar. The chart is still the sellers’ paradise. Nevertheless, it is a bullish reversal candle, and it may change the whole equation on this chart. To have a better idea, let us zoom out the same chart.

The chart now tells the whole story. Do you recognize these two marked levels now? The sellers shall plan about trade management before the price hits such levels. It is often seen the price makes a big anti-trend move after reaching such levels. The reason is many traders/ big traders set their take profit at such level. Once they get out of the market with their profit, the price goes another way around, causing an abrupt opposite move. This may make traders lose money and lose profit. Let us make sure we learn how and where to mark the support/resistance zone/level and manage our trade accordingly.

Categories
Crypto Market Analysis

Daily Crypto Review, Feb 28 – CFTC approaching stablecoin projects; Crypto market preparing for a move

The crypto market pretty much stayed at the same place price-wise in the past 24 hours. Bitcoin is currently trading for $8,758, which represents a 0.41% decrease on the day. Meanwhile, Ethereum lost 0.77% on the day, while XRP lost 0.11%.

The crypto market pretty much stayed at the same place price-wise in the past 24 hours. Bitcoin is currently trading for $8,758, which represents a 0.41% decrease on the day. Meanwhile, Ethereum lost 0.77% on the day, while XRP lost 0.11%.

The crypto market pretty much stayed at the same place price-wise in the past 24 hours. Bitcoin is currently trading for $8,758, which represents a 0.41% decrease on the day. Meanwhile, Ethereum lost 0.77% on the day, while XRP lost 0.11%.

Swipe took the position of today’s most prominent daily gainer, with gains of 19.28%. On the other side, DxChain Token lost 9.85% on the day, making it the most prominent daily loser.

Bitcoin’s dominance increased in the past 24 hours as some altcoins dropped in price more than it did. Its value is now 64.53%, which represents a 0.45 difference to the upside when compared to the value from when we last reported.

The cryptocurrency market capitalization stayed in pretty much the same place in the past 24 hours. It is currently valued at $249.09 billion, which represents a decrease of $0.92 billion when its value is compared to the value it had yesterday.

What happened in the past 24 hours

One of Switzerland’s biggest stock exchanges, SIX Swiss Exchange, announced a partnership with Omniex, a US-based firm that specializes in developing trading platforms for institutional investors, mainly targeting the cryptocurrency market.

The partnership will provide SIX and its clients with a way to include crypto to their business.

Honorable mention

Stablecoins 

American financial regulators had a sitdown with three major stablecoin projects in an effort for them to better understand the industry.

The CFTC Advisory Committee organized and held a public meeting in hopes of learning more about stablecoins, crypto insurance, custody practices as well as cybersecurity. JPM Coin, MarkerDao and Paxo had their representatives attend the event, discussing different aspects of stablecoins.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin spent the past 24 hours trading at pretty much the same level. However, while there was seemingly not much price movement, Bitcoin made one attempt of breaking $8,825, which it did for a while. However, the price quickly pulled back and Bitcoin is almost exactly where it’s at 24 hours ago.


Bitcoin’s volume dropped to average levels after yesterday’s spike. It’s RSI level is currently on the line the oversold territory and regular value range.

Key levels to the upside                    Key levels to the downside

1: $8,825                                           1: $8,650

2: $9,115                                           2: $$8,535

3: $9,250                                            3: $8,250

Ethereum

Ethereum’s was also pretty stagnant over the past 24 hours. Its price attempted to reach the $240 mark but did not manage to get to it before bears took over again and put an end to the move. Ethereum fell to its previous prices and even attempted to break $225.5 to the downside. While its price is currently above this support level, it is unknown how long that will hold.


Ethereum’s volume is extremely low at the moment, while its RSI level is in the lower part of the value range.

Key levels to the upside                    Key levels to the downside

1: $240                                                1: $225.5

2: $251.3                                            2: $217.7  

3: $259.5                                             3: $198

Ripple

XRP performed the best out of the three biggest cryptos once again. However, this time, it was not by much. Its price tried to move above the $2454 level but failed to do so. As a result, XRP started dropping in price and pulled back to the $0.235 support. It is currently trading just above this support level.


XRP’s volume is slightly elevated, but nothing compared to yesterday’s volume. Its RSI level is in the lower part of the value spectrum.

Key levels to the upside                    Key levels to the downside

1: $0.2454                                          1: $0.235

2: $0.266                                            2: $0.227

3: $0.285                                             3: $0.221

Categories
Forex Market Analysis

Daily F.X. Analysis, February 28 – Top Trade Setups In Forex – Brace for U.S. Economic Events!

On the forex front, the U.S. Dollar Index dropped 0.6% on the day to a three-week low of 98.39, as the European Central Bank played down the impact of the coronavirus outbreak. Meanwhile, Chicago Federal Reserve Bank President Charles Evans said the Fed “must be prepared to rely on unconventional tools” in the event of a recession.

On the forex front, the U.S. Dollar Index dropped 0.6% on the day to a three-week low of 98.39, as the European Central Bank played down the impact of the coronavirus outbreak. Meanwhile, Chicago Federal Reserve Bank President Charles Evans said the Fed “must be prepared to rely on unconventional tools” in the event of a recession.

On the forex front, the U.S. Dollar Index dropped 0.6% on the day to a three-week low of 98.39, as the European Central Bank played down the impact of the coronavirus outbreak. Meanwhile, Chicago Federal Reserve Bank President Charles Evans said the Fed “must be prepared to rely on unconventional tools” in the event of a recession.

Economic Events to Watch Today 

  

 

EUR/USD – Daily Analysis

The EUR/USD surged 1.1% to 1.1001. European Central Bank President Christine Lagarde said the Coronavirus was not yet at the stage where monetary policy response is required. On the other hand, official data showed that the Eurozone’s Economic Confidence Index climbed to 103.5 in February (102.8 expected) from 102.6 in January.

The dollar has traded near a three-month high against the Euro as worries over the outbreak of Coronavirus has driven sharp volatility in the market, mostly driving dollar prices higher. 

The Euro has tried to rally higher during the Asian trading session on Thursday but continues to encounter resistance above. We are in a strong downtrend, and the EUR/USD is exhibiting correction of that downtrend as it could lead the EUR/USD prices towards the next target level of 10925. 

The German Federal Statistical Office will report February jobless rate (steady at 5.0% expected) and CPI (+1.7% on-year expected). France’s INSEE will post final readings of 4Q GDP (+0.8% on-year expected) and February CPI (+1.5% on-year expected).

Daily Support and Resistance

  • S1 1.092
  • S2 1.0842
  • S3 1.0799

Pivot Point 1.0963

  • R1 1.1041
  • R2 1.1084
  • R3 1.1162

EUR/USD– Trading Tips

The EUR/USD is consolidating near 1.1016, as the pair seems to go further higher after violating the 61.8% Fibonacci retracement at 1.0970. Chances of further buying in the EUR/USD remains pretty high until 1.1020 and 1.1065. The pair may find immediate support around 1.09540, which is mostly extended horizontal support level. The MACD and RSI still remain on the bullish side and are signaling odds of more buying in the pair. The EUR/USD may find resistance around 1.1020 and 1.1065, so let’s look for bullish trends above 1.0963.

GBP/USD– Daily Analysis

The GBP/USD erased early gains to close down 0.1% at 1.2888. The British government said it might start planning for a no-deal Brexit if a trade deal with the European Union is not apparent by June.

The U.K. government is expected to publish a negotiating mandate for the future relationship with the European Union. James Slack, the Prime Minister’s spokesman, told reporters: “At the end of this year we will regain in full our political and economic independence.” On the other hand, it is reported that the government might delay its budget decision, which is scheduled for March 11, amid uncertainty over the economic outlook.

The outbreak of the Coronavirus has directed some traders to think central banks will be required to go after dovish monetary policy to support the economy against the potential threat of a coronavirus. The Sterling is still trading with a bearish bias as the interest rate cut sentiment from 0.75% to 0.50% remains pretty solid. 

Prime Minister Boris Johnson’s Tories succeeded December’s election, extending his hold on parliament and pushing some Brexit risk, the Sterling was trading near 83 pence per Euro, and it also gained some support against the U.S. dollar.

In the U.K., the Nationwide Building Society will publish its house price index for February (+0.4% on month expected).

Daily Support and Resistance

  • S1 1.2850
  • S2 1.2812
  • S3 1.2764

Pivot Point 1.2898

  • R1 1.2936
  • R2 1.2984
  • R3 1.3022

GBP/USD– Trading Tip

On Friday, the GBP/USD continues trading with a mixed bias, following a narrow trading range of 1.2980 – 1.2880. As we can see on the 4-hour chart above, the Cable has formed a descending triangle pattern which is supporting the Sterling around 1.2880. It’s one of the most crucial trading levels as a violation of this can open further room for selling until 1.2795 area. Alternatively, the GBP/USD has the potential to go after 1.3070 if it manages to trade above 1.2960 support. The MACD and RSI are holding in the selling zone, supporting bearish bias for the GBP/USD pair. Let’s look for selling trades below 1.2966 and bullish above the same level today. 

USD/JPY – Daily Analysis

The USD/JPY extended its decline to 109.30. This morning, government data showed that Japan’s jobless rate rose to 2.4% in January (steady at 2.2% expected), while industrial production grew 0.8% on month in January (+0.2% expected) and retail sales climbed 0.6% (-0.1% expected).

The Coronavirus is growing in the Middle East, Europe, and another area of the world, as Brazil verified its initial case in Latin America, while other regions of China found to lower their emergency response level as the number of new cases recorded there proceeds to reduce.

The Greenback is now trading with a slightly bearish bias amid forecasts that the U.S. Federal Reserve may lower the interest rates this year to control downside influence on the economy produced by China’s coronavirus outbreak.

The U.S. official data showed that the fourth-quarter GDP (second reading) grew 2.1% on the quarter (as expected). Durable goods orders (preliminary reading) declined 0.2% on month in January (-1.4% expected). The number of initial jobless claims rose to 219,000 in the week ended February 22 (212,000 expected). Consequently, the USD/JPY is trying to gain support in the wake of positive economic data. 

Daily Support and Resistance

  • R3: 113.5
  • R2: 112.2
  • R1: 111.46

Pivot Point 110.9

  • S1: 110.16
  • S2: 109.6
  • S3: 108.29

USD/JPY – Trading Tips

The USD/JPY continues with its bearish momentum on Friday in the wake of weakness in the U.S. dollar and stronger Japanese yen. The USD/JPY pair is holding trading dramatically bearish at 108.875, and it has high odds of going towards the next support level of 108.338. We can see on the 4-hour chart above, the USD/JPY has formed a bearish engulfing pattern below 109.650, which may trigger further selling until 108.338. We need to keep an eye in the USD/JPY as the closing of candles above 108.338 level can help us secure a buy trade with a take profit of around 109.650.  

All the best for today! 

Categories
Forex Basic Strategies

Identifying & Trading The Bullish & Bearish Gartley Pattern

Introduction

Introduction

Introduction

We have discussed three of the most used Harmonic patterns in the previous strategy articles, and they are AB=CD, Butterfly, and Bat patterns. In today’s article, let’s learn how to trade one of the oldest Harmonic patterns – The Gartley. Trading harmonic patterns is one of the most challenging ways to trade but equally rewarding. There are traders across the world who highly believe in these patterns because of their accuracy in identifying trading signals, and the high RRR trades they offer.

The Gartley is one of the most commonly used harmonic patterns as it works very well on all the timeframes. IT is also one such pattern that frequently appears on the price charts. H.M Gartley introduced this pattern in his book ‘Profits in the Stock Market’ in the year 1935.

This pattern is also known as the Gartley 222 pattern because H.M Gartley introduced this pattern in the 222nd page of his book. There are both bearish and bullish Gartley patterns, and they appear depending on the underlying trend of the market. The Gartley pattern is made up of 5 pivot points; let’s see what these points are in the below section.

5 Pivot Points of The Garley Pattern

Just like other harmonic patterns, H.M Gartley used five letters to distinguish the five separate moves and impulses of the Gartley pattern.

  • The letter X represents the start of the trend.
  • The letter A represents the end of the trend.
  • The letter B represents the first pullback of the trend.
  • The letter C represents the pullback of the pullback.
  • The letter D represents the target of the letter C.

Gartley Pattern Rules

‘X-A’ – This is the very first move of the pattern. The wave XA doesn’t fit any criteria, so it is nothing but a bullish or bearish move in the market.

‘A-B’ – The Second move AB should approximately be at the 61.8% level of the first XA move. So if the XA move is bearish, the AB move should reverse the price action and reach the 61.8% Fib retracement level of the XA.

‘B-C’ – The goal of the BC move is to reverse the AB move. Also, the BC move should end either at 88.6% or 38.2% Fibonacci retracement level of XA.

‘C-D’ – The CD move is the reversal of the BC move. So if the BC move is 38.2% of the AB, CD move should respond at 127.2% level of BC. If BC move is at the 88.6% level of the AB move, the CD move should be at the 161.8% Fib extension level of BC.

‘A-D’ – This is the last but most crucial move of the Gartley pattern. Once the CD move is over, the next step is to measure the AD move. The Last AD move will show us the validity of the Gartley Pattern on the price chart. The pattern is said to be valid if this move takes a retracement approximately at the 78.6% Fib level of the XA move.

Below is the pictographic representation of the Gartley Pattern

 Gartley Pattern Trading Strategy 

Trading The Bullish Gartley Pattern

In the below NZD/USD weekly chart, we can see that the market is in a clear uptrend. We have then found the swing high and swing low, which is marked by the point X & Point A. We then have four swing-high & swing-low points on the price chart that binds together to form the Gartley harmonic pattern.

Always remember that every swing high and low must validate the Fibs ratios of the Gartley pattern. These levels can be approximate as we can never trade the market if we keep waiting for the perfect set-up. There are indicators out there where the Fibonacci levels are present in them by default. We generally use TradingView, and in this charting software, the below-used indicator can be found in the toolbox, which is present on the left-hand side.

Please refer to the marked region in the chart below. The first XA leg is formed just like a random bullish move in the market. The second AB move is a bearish retracement, and it is at the 61.8% Fib level of the XA move. Furthermore, the BC is a bullish move again, and it follows the 88.6% Fib level of the AB move. The CD leg is the last bearish move, and it is respecting the 161.8% Fib level of BC.

Now we have identified the bullish Gartley pattern on the price chart. We can take our long positions as soon as the CD move ends at the 161.8% level. The next and most crucial step of our strategy is to find the potential placement of our stop-loss. The ideal region to place the stop-loss is just below point X. If the price action breaks the point X, it automatically invalidates the Gartley pattern.

However, stop-loss placement depends on what kind of trader you are. Some aggressive traders place stop-losses just below the entry while some use wider stops. We suggest you follow the rules of the strategy and use point X as an ideal stop-loss placement.

B, C & A points can be considered as ideal areas for taking your profits. We suggest you go for higher targets in the case of the formation of a perfect Gartley pattern. Overall, placing a ‘take-profit‘ order depends on your previous trading experience also. Because, if you come across any ideal candlestick patterns in your favor while your trade is performing, you can extend your profits. We can also combine this pattern with other reliable technical indicators to load more positions in our trades.

Trading The Bearish Gartley Pattern

Below is the EUR/GBP four-hour chart in which we have identified the bearish Gartley pattern. In the highlighted region, we can see the formation of the bearish XA leg like a random bearish move. The second leg is AB – a bullish retracement stopping at the 61.8% level of the XA move. Furthermore, the BC move is bearish again, and it respects the 88.6% Fibs level of the AB move. CD is the final bullish move, and it is respecting the 161.8% Fibs level of BC.

As soon as the price action completes the CD move, we can be assured that the Gartley pattern is formed on our price chart. We can also see the formation of a Red confirmation candle indicating us to go short in this Forex pair. We have taken our short positions at point D and placed our stop-loss just above point X.

We have three targets in total, and they are points B, C, and A. Within a few hours, the price action hits the B point, which was our first target. Moreover, the price pulled back at point C, but we were safe in our trade as our stop-loss was placed above point X. Our final target was at point A, which is achieved within four days.

Conclusion

The Gartley pattern is wholly based on mathematical formulas and Fibonacci ratios. Remember to take the trades only when all the mentioned Fib levels are respected. If you have no experience with harmonic patterns, you must master this pattern on a demo account first and then use them on the live markets. We are saying this because it requires a lot of patience and practice to identify and trade these patterns.

We hope you understood how to identify and trade the Gartley Harmonic Pattern. If you have any questions, let us know in the comments below. Cheers!

Categories
Forex Psychology

Trading Psychology: Learn the Art of Getting Over a Floating Losing Trade

In today’s lesson, we are going to show an example of a trade setup, which tests our psychology and ask us a big question. This situation is something that often happens with traders trading on the major pairs. We try to find out the answer to what we shall do in such a situation.

In today’s lesson, we are going to show an example of a trade setup, which tests our psychology and ask us a big question. This situation is something that often happens with traders trading on the major pairs. We try to find out the answer to what we shall do in such a situation.

In today’s lesson, we are going to show an example of a trade setup, which tests our psychology and ask us a big question. This situation is something that often happens with traders trading on the major pairs. We try to find out the answer to what we shall do in such a situation.

This is a daily chart. The price finds its support after being bearish for a long time. It produces a bullish engulfing pattern followed by another bullish candle. Using the daily-H4 combination, traders shall flip over to the H4 chart to get consolidation and a bullish reversal candle to go long above the last swing high. Let us flip over to the H4 chart.

The H4 chart suggests that the buyers may take control soon. A massive bullish engulfing candle followed by an inside bar bearish candle may attract the buyers to go long upon getting another bullish engulfing candle. The buyers are to keep their eyes on this chart since the chart may produce the signal candle anytime.

It does not produce the signal candle immediately. However, after a while, it produces a bullish engulfing candle closing above the last swing high. This is an A+ trade setup as far as the daily-H4 chart combination trading is concerned. The price makes a deep consolidation and produces the signal candle afterwards. This is what breakout traders love to see. A long entry may be triggered right after the last candle closes. Let us proceed to the next chart to find out what happens afterwards.

This must be painful for the buyers. The trade setup looks very good, but things have not been going as expected. The price comes back within the consolidation zone. This looks ominous for the buyers. Since this is an H4 chart, the buyers have the opportunity to look after their trade. They may ask themselves whether they should keep the entry or close it manually? I let you think about it for a minute.

If your answer is the buyers shall close the trade manually, you may not be right. The reason behind this is, once a trade is floating on a loss, traders shall leave it and let it finds its own way. If it hits the stop loss, let it hit it. Traders are to calculate this risk well before they take entry. If a trade is running on profit but acts unusual or gets sluggish at a significant level of support/resistance, that might be a different case. Although the chart suggests that most probably, the price is going to hit stop loss, the buyers shall hold the entry and concentrate on other pairs. If a trader wants to survive in this market for a long time, he must acquire this skill of getting over on a floating losing entry and concentrating on a new trade setup.

Categories
Crypto Market Analysis

Daily Crypto Review, Feb 27 – “Craig Wright is a disgrace”; $150 million worth of BTC positions liquidated

The crypto market dropped severely as bear pressure continued throughout the day. Bitcoin is currently trading for $793, which represents a 4.45% decrease on the day. Meanwhile, Ethereum lost 5.76% on the day, while XRP lost 3.07%.

The crypto market dropped severely as bear pressure continued throughout the day. Bitcoin is currently trading for $793, which represents a 4.45% decrease on the day. Meanwhile, Ethereum lost 5.76% on the day, while XRP lost 3.07%.

The crypto market dropped severely as bear pressure continued throughout the day. Bitcoin is currently trading for $793, which represents a 4.45% decrease on the day. Meanwhile, Ethereum lost 5.76% on the day, while XRP lost 3.07%.

Aion took the position of today’s most prominent daily gainer, with gains of 17.23%. On the other side, Swipe lost 16.79% on the day, making it the most prominent daily loser.

Bitcoin’s dominance remained in the same place in the past 24 hours. Its value is now 64.08%, which represents a 0.03 difference to the downside when compared to the value from when we last reported.

The cryptocurrency market capitalization a lot of its value over the past 24 hours. It is currently valued at $250.01 billion, which represents a decrease of $11.61 billion when its value is compared to the value it had yesterday.

What happened in the past 24 hours

Binance CEO Changpeng Zhao recently tweeted about Craig Wright, the Bitcoin SV (BSV) founder. He made it clear that he did not trust the self-proclaimed Bitcoin (BTC) creator, and called him a fraud.

Zhao said that Wright is not only hurting his own reputation, but rather the reputation of the cryptocurrency industry as a whole. “He claims to be the creator of Bitcoin, Satoshi Nakamoto, which is a lie. He hurts the credibility of Bitcoin and is a disgrace to our entire industry.”

Honorable mention

Bitcoin 

According to the data provided by the analytics website Skew, over $150 million worth of Bitcoin got liquidated on the trading exchange BitMEX on Feb 26. This is the biggest liquidation in 2020.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin spent the past 24 hours spiraling down below $9,000. The largest cryptocurrency dropped in price fast and decisively as the bear pressure was high and many longs liquidated. However, ever since the bounce off of the $8,650 support, Bitcoin seems to have been going up slightly.


Bitcoin’s volume was increased during the price drop, during its normal or slightly lower than that at the time of writing. It’s RSI level is currently in the oversold territory.

Key levels to the upside                    Key levels to the downside

1: $8,825                                           1: $8,650

2: $9,115                                           2: $$8,535

3: $9,250                                            3: $8,250

Ethereum

Ethereum’s price took a dive, just like Bitcoin’s price did. Its price broke many support levels along the way, but the $217.7 one held up quite strong and managed to bounce ETH’s price back up. Ethereum looks like it’s gaining some value now, as it managed to even pass the next resistance level, which is standing at $225.5.


Ethereum’s volume is elevated, while its RSI level has just recently left the oversold territory.

Key levels to the upside                    Key levels to the downside

1: $240                                                1: $225.5

2: $251.3                                            2: $217.7  

3: $259.5                                             3: $198

Ripple

When Bitcoin drops in price, it is common that Ethereum falls a bit more in price, while XRP does either better than Bitcoin or worse than almost every other coin in the industry. This time, XRP did better than both Bitcoin and Ethereum price-wise as it did not drop as much over the past 24 hours. The downwards moving trend seems to have stopped at the $0.227 and XRP turned slightly bullish from there as its price started to increase. The move was strong enough to even break the $0.235 resistance, which is where XRP is currently at.


XRP’s volume is elevated, while its RSI level is just above the oversold territory.

Key levels to the upside                    Key levels to the downside

1: $0.2454                                          1: $0.235

2: $0.266                                            2: $0.227

3: $0.285                                             3: $0.221

Categories
Forex Market Analysis

Daily F.X. Analysis, February 27 – Top Trade Setups In Forex – Brace for U.S. Economic Events!

On the forex front, the U.S. dollar stabilized on Wednesday, with the ICE U.S. Dollar Index gaining 0.2% on the day to 99.14. The European Central Bank will report the Eurozone’s M3 money supply in January (+5.3% on-year expected), February Economic Confidence Index (102.8 expected), and final readings of Consumer Confidence Index (-6.6 previously). Let’s take a look at trade ideas…

On the forex front, the U.S. dollar stabilized on Wednesday, with the ICE U.S. Dollar Index gaining 0.2% on the day to 99.14. The European Central Bank will report the Eurozone’s M3 money supply in January (+5.3% on-year expected), February Economic Confidence Index (102.8 expected), and final readings of Consumer Confidence Index (-6.6 previously). Let’s take a look at trade ideas…

On the forex front, the U.S. dollar stabilized on Wednesday, with the ICE U.S. Dollar Index gaining 0.2% on the day to 99.14. The European Central Bank will report the Eurozone’s M3 money supply in January (+5.3% on-year expected), February Economic Confidence Index (102.8 expected), and final readings of Consumer Confidence Index (-6.6 previously). Let’s take a look at trade ideas…

Economic Events to Watch Today 

  

EUR/USD – Daily Analysis

The EUR/USD pair managed to cross the high level of 1.0890 as the U.S. yields continue to flash red in the wake of coronavirus fears. Whereas, the 10-year Treasury note is currently trading at 1.37%, representing a five basis point profit on the record low of 1.32%. 

Overall, the Greenback has traded near a three-month high against the Euro as worries over the outbreak of Coronavirus has driven sharp volatility in the market, mostly driving dollar prices higher. 

The Euro has tried to rally higher during the Asian trading session on Thursday but continues to encounter resistance above. We are in a strong downtrend, and the EUR/USD is exhibiting correction of that downtrend as it could lead the EUR/USD prices towards the next target level of 10925. 

On Thursday, there won’t be any meaningful macroeconomic data releases from the Eurozone. Still, the markets will remain focused on coronavirus headlines and the U.S. economic figures, especially the Prelim GDP q/q and Durable Goods Orders m/m.

Daily Support and Resistance

  • S1 1.0747
  • S2 1.0807
  • S3 1.0844

Pivot Point 1.0867

  • R1 1.0905
  • R2 1.0928
  • R3 1.0988

EUR/USD– Trading Tips

The EUR/USD is consolidating near 1.0916, as the pair seems to go for completing 50% Fibonacci retracement at 1.0930. The pair appears to have initiate correction as it has previously achieved 38.2% Fibonacci retracement at 1.08930. The MACD is crossing above 0 level, which suggests.

Chances of further buying in the EUR/USD. The pair may find immediate support around 1.08540, which is mostly extended by the 50 EMA and a bullish trendline. On the higher side, the EUR/USD may find resistance around 1.0930 and 1.0980. Consider taking bullish trades above 1.0900 today. 

GBP/USD– Daily Analysis

On Thursday, the GBP/USD is trading at 1.2935, falling below the 1.2965 resistance to become a support level. The GBP dropped a day before as forecasts of the Bank of England (BOE) rate cut fueled over-optimism that expansionary fiscal policy would support the U.K. economy.

The outbreak of the Coronavirus has directed some traders to think central banks will be required to go after dovish monetary policy to support the economy against the potential threat of a coronavirus. The Sterling is still trading with a bearish bias as the interest rate cut sentiment from 0.75% to 0.50% remains pretty solid. 

The council approved a decision to allow the opening of the Brexit talks for a new partnership with the U.K. The Commission has also formally nominated the Commission as an E.U. negotiator. Besides, the council has also selected negotiating directives, which constitute a mandate to the Commission for the negotiations.

By comparison, when Prime Minister Boris Johnson’s Tories succeeded December’s election, extending his hold on parliament and pushing some Brexit risk, the Sterling was trading near 83 pence per Euro, and it also gained some support against the U.S. dollar.

Daily Support and Resistance

  • S1 1.2802
  • S2 1.2893
  • S3 1.2949

Pivot Point 1.2937

  • R1 1.304
  • R2 1.3074
  • R3 1.3165

GBP/USD– Trading Tip

On Thursday, the GBP/USD continues trading with a mixed bias, following a narrow trading range of 1.2980 – 1.2880. As we can see on the 4-hour chart above, the Cable has formed a descending triangle pattern which is supporting the Sterling around 1.2880. It’s one of the most crucial trading levels as a violation of this can open further room for selling until 1.2795 area. 

On the other hand, the GBP/USD has the potential to go after 1.3070 if it manages to trade above 1.2960 support. The MACD and RSI are holding in the selling zone, supporting bearish bias for the GBP/USD pair. Let’s look for selling trades below 1.2966 and bullish above the same level today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair is flashing red, falling below the 110.350 resistance. The USD/JPY is holding at 110.14 and consolidates in the range between the 110 – 110.58. However, a stable market tends to weaken the Japanese yen’s safe-haven demand.

The Coronavirus is growing in the Middle East, Europe, and another area of the world, as Brazil verified its initial case in Latin America, while other regions of China found to lower their emergency response level as the number of fresh cases recorded there proceeds to reduce.

The Greenback is now trading with a slightly bearish bias amid forecasts that the U.S. Federal Reserve may lower the interest rates this year to control downside influence on the economy produced by China’s coronavirus outbreak.

The dollar initially traded bullish as the virus outbreak further around the globe, with traders eyeing all U.S. assets as safe-haven investments. Nevertheless, money managers now assume the Fed would be more prone to dovish monetary policy and cut rates, considering the ongoing uncertainties of Coronavirus. 

Daily Support and Resistance

  • R3: 113.5
  • R2: 112.2
  • R1: 111.46

Pivot Point 110.9

  • S1: 110.16
  • S2: 109.6
  • S3: 108.29

USD/JPY – Trading Tips

The USD/JPY has traded mostly in line with the previous forecast and stayed below the horizontal resistance level of 110.350. On the 4 hour timeframe, an upward trendline is extending resistance at 110.350, as the USD/JPY pair failed to break above this mark yesterday. 

For now, the USD/JPY has formed a bearish engulfing pattern below 110.350, which may trigger further selling until 109.50. We need to keep an eye in the USD/JPY as the closing of candles below 110.350 level can help us secure a selling trade with a take profit of around 109.650.  

All the best for today! 

Categories
Forex Basic Strategies

Trading The Bullish & Bearish Bat Pattern Like A Pro

Introduction

Introduction

Introduction

We have learned the importance of Harmonic patterns in our previous articles. We also understood a couple of interesting harmonic patterns – The Butterfly & AB=CD. In this article, let’s understand what a ‘Bat’ pattern is, and how to make money trading this pattern. The Bat pattern is a part of the Harmonic group, and ‘Scott Carney’ discovered this pattern in the year 2001. Out of all the patterns present in the harmonic group, Bat pattern has the highest accuracy. This pattern can be extremely profitable when traded correctly.

It works very well on all the timeframes but try not to trade it in smaller timeframes because the price in these timeframes tends to reverse quickly. The Bat pattern comes in both bullish and bearish variations and is made up of five swing points X, A, B, C, and D. In a downtrend, the appearance of a bullish Bat pattern indicates a bullish reversal. In an uptrend, the appearance of a bearish Bat pattern indicates a bearish reversal.

One of the critical characteristics of the Bat pattern is the power, speed, and strength of the reversal that occurs after the appearance of this pattern on the price chart. Fibonacci ratios are the core strength of any harmonic pattern, and thanks to the advanced technology for providing the Fibs ratios to the Bat pattern to increase its accuracy.

Bat Pattern Rules

Just like most of the harmonic patterns, the Bat pattern is a four-leg reversal pattern that follows specific Fib ratios. A proper Bat pattern needs to fulfill the below criteria.

‘X-A’ – In its bullish form, the first XA move of the Bat pattern could be any random upward move on the price chart.

‘A-B’ – For a Bat pattern to get validated, the AB leg’s minimum retracement should be 38.2% of XA leg or maximum of 50% Fib levels. Scott Carney suggests that the retracement at 50% Fibs levels increase the accuracy of the signal generated.

‘B-C’ – The BC move can retrace up to a minimum of 38.2% Fib level of AB and a maximum of 88.6%.

‘C-D’ – CD is the last move that confirms the Bat pattern. This move should be at 88.6% Fibs retracement of XA leg, or it should be between 161.8% or 261.8% Fibs extension of the AB leg.

For a bearish Bat pattern, point X should be at a significant high. Conversely, for a bullish Bat pattern, point X should be at a significant low.

Below is the pictographic representation of the Bat Harmonic Chart Pattern.

Bat Pattern Trading Strategy

Trading The Bullish Bat Pattern

In the below USD/CHF four hours chart, we can see the formation of a bullish Bat pattern. These days, on most of the trading platforms, we can find all the harmonic tools which are combined with Fib levels. These tools get extremely handy when we need to quickly confirm the pattern. We use TradingView charts, and the harmonic pattern tool can be found in the left-side toolbar.

Coming to the strategy, our starting point X was at 0.9840 from where the move has started. The price action started to counter the trend from 0.9984. Let’s consider this as our point A, and the XA is nothing but a random bullish move in the market. Now we located our first swing high, so the next step is to count the market wave movement. The AB move retraces at 38.2% of the XA move, and the BC move goes up again and retraces at 88.6% of AB. Furthermore, the market prints the last move of the pattern, which is at 88.6% level of the XA move. So now we have got all the four touch patterns for a bullish Bat pattern on the price chart.

While back-testing, we found the market blasting to the north whenever the CD move finishes at 88.6% level. This is the reason why we took the buy entry as soon as the price-action completes the CD move. Overall it was an excellent risk-reward ratio trade. Also, when the CD move touches the 88.6% Fib level, it always provides a decent risk-reward ratio. The stop-loss is placed below the ‘X,’ and take-profit can either be placed at A or C points.

Trading The Bearish Bat Pattern

Both the bearish and bullish Bat patterns have the same rules. The only difference is that it appears inversely. So in this strategy, let’s trade the bearish Bat pattern with at most accuracy.

In the below NZD/USD daily chart, we have identified a bearish Bat pattern. The very first move has started from point X and ends at point A. This can be considered as a random bearish move. The price action has then reversed back and retraced at 38.2% level of the XA move forming the AB move. The market then goes into the counter direction and forms a BC leg, which is also retraced at 38.2% Fib level of the AB leg. The last leg was the CD move, and it finished close to the 88.6% Fibs level.

These swing highs and lows confirm the formation of a bearish Bat pattern on the price chart. So when the price action prints a bearish confirmation candle, we went short in this pair. Scott Carney described the points B, C and A as the first, second, and third target respectively. We can book profit at any of these points, or we can hold for deeper targets depending on the market situation.

In this particular trade, we didn’t book profits at B or C after seeing the momentum of the price. We were sure that the price could easily reach the last target. The price action did hold at point C for a longer time, which indicates that this trade might not work. Any armature trader would have panicked and closed their trades at breakeven.

But, as mentioned, whenever an ‘almost perfect’ Bat pattern is formed, the trade will definitely work. We must be patient and confident enough to stick to the strategy. Stop-loss placement is crucial, and one thumb rule while trading harmonic patterns is to place the stop-loss just below point X.

Conclusion

In short, harmonic patterns imply that the trends can be subdivided into smaller or larger waves using which the future price direction can be predicted. These harmonic patterns only work if the fibs ratios are aligned with the pattern. Some traders do not believe the authenticity of harmonic patterns, but we assure you that you can trade these patterns confidently. This ends the discussion on the Bat pattern. Remember that this pattern provides accurate entries as well as good RRR trades compared to other harmonic patterns. In the upcoming articles, let’s discuss Gartley and Crab patterns, which are equally important to learn.

We hope you find this article informative. In case of any questions, please let us know in the comments below. Cheers!

Categories
Forex Market Analysis

Safe Haven Gold Completes 38.2% Retracement – Coronavirus Risk In Play! 

On Wednesday, the precious metal gold prices rose slightly following a sharp decline in the prior session, as a U.S. indication of an imminent pandemic urged traders to seek shelter in safe-haven assets.

On Wednesday, the precious metal gold prices rose slightly following a sharp decline in the prior session, as a U.S. indication of an imminent pandemic urged traders to seek shelter in safe-haven assets.

On Wednesday, the precious metal gold prices rose slightly following a sharp decline in the prior session, as a U.S. indication of an imminent pandemic urged traders to seek shelter in safe-haven assets.

Gold prices climbed 0.7% to $1,646.19, having decayed as much as 1.9% in the prior session. On Monday, prices reached their highest level in more than seven years at $1,688.66. Today, the yellow metal gold prices eased 0.1% to $1,648.30.

The United States announced it’s citizens to start planning for the virus to expand inside the country as outbreaks in Iran, South Korea, and Italy intensified. The consequences of the epidemic are expected to reflect beyond China as the most significant markets in the region are anticipated to either slow down significantly, stop or recoil entirely in the current quarter.

The speedy spread of the disease and its influence on global economic movements boosted chances for monetary policy easing by global central banks, with U.S. money market futures now entirely pricing in a 0.25% point cut by the end of June. Nevertheless, U.S. consumer confidence soared in February, implying a constant pace of consumer spending that could boost the economy despite rising fears over the fast-spreading disease.

XAU/USD – Daily Technical Levels

Support     Resistance 

1,643.69     1,682.16

1,628.07     1,705.01

1,589.6       1,743.48

Pivot Point 1666.54

Gold has already completed the 38.2 %Fibonacci retracement at 1,636 level. The MACD and RSI are holding in the selling zone, supporting bearish bias for the gold. Gold has an immediate resistance around 1,660, which may keep gold prices in a bearish mode until this level gets violated. A bearish breakout of 1,636 level can lead to gold prices towards the next support level of 1,619 and 1,609. Both of these levels mark the 50% and 61.8% Fibonacci retracement levels. Let’s consider selling below 1,630 to target 1,626 today. Good luck

 

Categories
Forex Daily Topic Forex Videos

Forex Black Swan Event Update! What Should You Be Trading & Avoiding

https://youtu.be/eIbzumSjVcc

https://youtu.be/eIbzumSjVcc

Black Swan event update!

If you missed our earlier article, a financial black swan event is usually a catastrophic event such as the Japanese earthquake and tsunami of March 2011, or virus breakout events such as the Sars epidemic in 2002/2003, Avian flu, or the Ebola breakout in West Africa in February 2014.
These events cannot be predicted and have the risk of severe consequences for the global economy. Black swan events are thankfully rare and have a severe market impact. They are also almost impossible to predict.


The latest COVID-19 breakout in China could turn out to be a major black swan event, with severe implications for the global economy.
While previous black swan events such as the 2003-2004 Sars epidemic wiped 14% off of the S&P 500 in as little as two months, it subsequently went on to recover its losses and gained from there. The avian flu crisis in 2006, the Ebola crisis in March 2014, both had similar effects, where the S&P slumped at the time only to recover and thrive after the events. It would, therefore, seem that stock indices, especially in the USA, such as the S&P 500 and DOW 30, have taken that onboard and, as yet, have suffered no real sustained selling pressure. And although both have recently hit record-breaking all-time highs, we might expect normal ebbing and flowing based on US fundamentals until the real global impact of the COVID- 19 can be seen in terms of hard data. And that won’t be available for several weeks. History tells us that the markets are prone to short jolts during such events, but they go on to recover, and in many cases, make further gains than were lost.
Another fairly typical scenario would be for investors and traders to bail out of riskier assets, such as equities, but that isn’t happening in the USA at the moment. And where safe-haven assets such as the Yen or Swiss Franc currencies get bought.


However, when the Japanese health expert who visited the Diamond Princess at the port in Yokohama said the situation on board was “completely chaotic” it left the market wondering if there could be an outbreak of the disease in mainland Japan, who earlier in the week said the virus could impact their GDP by 0.2%. This, coupled with weak data and the possibility of a spread of the infection in Japan, saw the USDJPY pair punch through the psychological 110.00 barrier this week. Should there be a breakout, it will prove catastrophic for the Japanese economy and where we might see the pair accelerate to 115.00 and beyond.


With the Yen failing to act as a safe haven we might see a continuation higher in USDCHF, where the Swiss National Bank has made it clear they are not happy with a strong Franc, and they will defend this stance by intervention, in which case we might see a return to the 0.1000.00 level.

The pound and Euro have their own problems with uncertainty regarding if the UK can reach a trade deal by the deadline of December 2020 and where the economic data coming from the Euro area looks bleak and where Germany is struggling to achieve growth. The COVID-19 virus will not help.


The Australian dollar is also on the back foot due to its dependence on trade with China as with New Zealand, and we might see AUDUSD hit 0.63 and NZDUSD test 0.60 in the short term if there is no immediate resolution in China, which looks highly unlikely.

Oil prices are at risk, and we would expect gold and precious metals to remain bid.
The Chinese government has committed to honoring the trade pact with the rest of their partners across the globe, but the longer this goes on, the more likely the markets will doubt if this is possible.

And so while the US economy remains strong and while economically and geographically it remains on peripheries of the virus event, and with its higher interest rates than the other safe-haven currencies, we should now see a further surge in the USD DXY which is approaching the psychological 100.00 level and which is now being seen by the markets as a safe haven currency and preferred investment choice.
Therefore, all scenarios are strictly data dependant and likely to be fluid and volatile as things unfold.

Categories
Forex Elliott Wave

Introduction to Intermediate Wave Analysis

The wave analysis consists of the market study following the principles described by R.N. Elliott in its Treatise “The Wave Principle.” In this educational article, we’ll introduce the concept of wave patterns.

The wave analysis consists of the market study following the principles described by R.N. Elliott in its Treatise “The Wave Principle.” In this educational article, we’ll introduce the concept of wave patterns.

The wave analysis consists of the market study following the principles described by R.N. Elliott in its Treatise “The Wave Principle.” In this educational article, we’ll introduce the concept of wave patterns.

Introduction

In the preliminary section, we presented the fundamentals of the wave analysis. We learned the wave concept, which will allow us to identify the segments that build a sequence of waves. Additionally, we unveiled the way to recognize the start and the end of each formation. Finally, we presented different rules to describe each kind of sequence according to which the wave analyst will get a panoramic overview of the market.

In the current section, we will present the concepts of wave analysis defined by Glenn Neely, expanding R.N. Elliott’s work.

Grouping Waves

In the preliminary wave analysis section, we presented the concept of “monowave,” or segment, that corresponds to the basic unit of a movement developed by a wave sequence. R.N. Elliott, in his work “The Wave Principle,” defined a set of patterns that follows a specific order according to its internal subdivision.

Elliott grouped these patterns into two main groups, defined as impulses and corrections. In simple words, impulses are directional movements, having five internal segments that create trends. On the other hand, corrections are non-directional movements and, also, moves against the trend; these formations present three sub-divisions.

According to the process of wave grouping, we have five basic kinds of patterns, these are:

  1. 5-5-5-5-5: Impulse.
  2. 5-3-5: Zigzag.
  3. 3-3-5: Flat.
  4. 3-3-3-3-3: Triangle.
  5. 3-3-3-3-3: Terminal.

There are, also, other complex combinations called double and triple three, that will be studied in depth in the advanced analysis wave section.

Analyzing Waves Formations

The process for an Elliott wave pattern analysis begins with the separation of formations that have 3 or 5 internal segments. The knowledge of the basic structures will allow the wave analyst to simplify the study of complex corrective patterns.

As the formations under study are recognized, the analyst should consider that the waves must have a certain level of similarity to each other, in terms of price and time. Two consecutive waves will be similar in both price and time if the smaller of the two is not less than one third (1/3) of the largest. In case the next wave is shorter, then the next wave is said to belong to a sequence of lesser degree. In other words, if W2 does not meet the price and time rule with respect to W1, then W2 must be associated with W3. After this association is made, the new segment should be called W2.

Example

The following chart illustrates Johnson & Johnson (NYSE: JNJ) in its log-scale 2-week timeframe. On the figure, when we compare wave 2 with wave 1 we observe that both comply with the similarity rule in price and time. However, wave 4 does not reach the 1/3 of time rule when compared with wave 3.

Fig 1 – Johnson & Johnson (NYSE: JNJ) 2W Log-scale. (click on it to enlarge)

Conclusions

In this article, we introduced the five basic Elliott wave patterns, which will use in the wave analysis process. Also, we presented the rule of similarity in terms of price and time between waves.

The application of these criteria and integrating the concepts of Directional and Non-Directional moves drove us to conclude that Johnson & Johnson moves in its fourth wave due that does not accomplish the 1/3 rule of minimum time compared with wave 3.

Suggested Readings

  • Neely, G.; Mastering Elliott Wave: Presenting the Neely Method; Windsor Books; 2nd Edition (1990).
Categories
Forex Market Analysis

Daily F.X. Analysis, February 26 – Top Trade Setups In Forex – Mixed Sentiment Dominates! 

On the forex front, the U.S. dollar fell against its major peers, with the ICE Dollar Index declining 0.4% on the day to 99.00. France’s INSEE will release the February Consumer Confidence Index (103 expected).

On the forex front, the U.S. dollar fell against its major peers, with the ICE Dollar Index declining 0.4% on the day to 99.00. France’s INSEE will release the February Consumer Confidence Index (103 expected).

On the forex front, the U.S. dollar fell against its major peers, with the ICE Dollar Index declining 0.4% on the day to 99.00. France’s INSEE will release the February Consumer Confidence Index (103 expected).

The U.S. Commerce Department will report January’s new home sales (717,000 units expected). That’s all we have on the economic docket, so let’s take a look at the technical setups for today.

Economic Events to Watch Today 

  

 

EUR/USD – Daily Analysis

The EUR/USD fell back towards $1.08, and the Australian dollar dropped to an 11-year low amid the extension of the coronavirus outside China prompted concerns of a pandemic and led traders to take safe-haven shelter in the Greenback.

What’s more surprising is that the safe-haven Japanese yen and the Swiss franc has also gained bullish momentum, but not by much as the U.S. dollar. It seems like the investors are giving more weightage to Greenback, which is keeping the EUR/USD bearish. 

The EUR/USD pair seems to cross the high level of 1.0890 if the U.S. yields continue to flash red in the wake of coronavirus fears. Whereas, the 10-year Treasury note is currently trading at 1.37%, representing a five basis point gain on the record low of 1.32%. 

Looking forward, there won’t be any meaningful macroeconomic data releases on Wednesday, and markets will remain focused on coronavirus headlines.


Daily Support and Resistance

  • S1 1.0747
  • S2 1.0807
  • S3 1.0844
  • Pivot Point 1.0867
  • R1 1.0905
  • R2 1.0928
  • R3 1.0988

EUR/USD– Trading Tips

The EUR/USD pair is trading sideways due to the lack of major economic events. The EUR/USD is consolidating near 1.0850, as investors seem to do profit taking due to lack of volatility. The pair appears to have initiate correction as it has previously achieved 23.6% Fibonacci retracement at 1.08530. 

On the 4 hour timeframe, the EUR/USD pair seems to form a bearish flag that has the potential to drive further selling in the EUR/USD pair. The pair may find immediate support around 1.08540, which is mostly extended by the 50 EMA and a bullish trendline. Above this, the direct currency pair can bounce off until 1.0890, while bearish breakout can lead the pair towards the next support area of 1.0820.

GBP/USD– Daily Analysis

The GBP/USD is trading at 1.2975, above the 1.2965 resistance become a support level. Closings of candles above this level may help secure a buy trade around 1.2975 with a target of 1.3070. Whereas, a bearish breakout of 1.2965 can lead the Cable towards 1.2930

The stronger dollar has capped the gains for the GBP/USD pair. On Wednesday, the dollar has expanded by 0.2% versus a basket of currencies to 99.62. Even though the U.S. economic figures during the previous week came in under economists’ expectations. Money markets are presently pricing in a Federal Reserve interest rate reduction sentiment as Fed is expected to cut rate by 25 basis points in June. A stronger dollar in the wake of coronavirus can hurt the exports from the United States, and Trump may put more pressure on the Fed Chair Powell to introduce the dovish policy in the future. 

On the Brexit front, the council approved a decision to allow the opening of the Brexit talks for a fresh partnership with the U.K. The Commission has also formally nominated the Commission as an E.U. negotiator. Apart from this, the council selected negotiating directives, which constitute a mandate to the Commission for the negotiations.

On the fundamental side, the Sajid Javid’s abrupt departure as Chancellor of the Exchequer recently helped the GBP currency because markets started to price in the possibilities of a significant fiscal expansion in the U.K., repealing the Bank of England rate cut trade. 

Daily Support and Resistance

  • S1 1.2802
  • S2 1.2893
  • S3 1.2949
  • Pivot Point 1.2984
  • R1 1.304
  • R2 1.3074
  • R3 1.3165

GBP/USD– Trading Tip

Technically, the GBP/USD is trading with a mixed bias, following a narrow trading range of 1.2960 – 1.3010. At the moment, the Cable seems to head south to retest the resistance become support level of 1.2965, and closing of doji or reversal candles above this level may help support the GBP/USD pair. 

The GBP/USD has the potential to go after 1.3070 level only if it manages to trade above 1.2960 support. Bearish violation of this level can extend selling until 1.2900 level. The MACD and RSI are holding in the buying zone, supporting bullish bias for the GBP/USD pair. Let’s look for selling trades below 1.2984 and bullish above the same level today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair flashing green rose above the 110.00 handles, the pair continued its recent recovery rally and reached above the 110.00 level mainly due to market stability. The USD/JPY is holding 110.36 and consolidates in the range between the 110.14 – 110.58. However, a stable market tends to weaken the Japanese yen’s safe-haven demand.

The modest recovery in the global risk sentiment allowed the U.S. Treasury bond yields to stage a goodish bounce from all-time lows. This ultimately continued some support to the U.S. dollar and remained supportive of the early uptick.

The renewed strength could be the cause of the uptick in the S&P 500 futures, which are now reporting a 0.70% gain on the day. The state of confusion between the traders is mainly due to the global outbreak of the deadly coronavirus, which is driving traders towards placing bullish bets on gold and the U.S. dollar instead of Japanese yen. Therefore, it will be a good idea to wait for putting some secure follow-through buying after confirming that the recent sharp corrective slide from multi-month tops has already ended.

Looking forward, there isn’t any major market-moving economic data scheduled to release on Wednesday. So, any fresh developments about the coronavirus will play a key role in producing some meaningful trading opportunities.

Daily Support and Resistance

  • R3: 113.5
  • R2: 112.2
  • R1: 111.46

Pivot Point 110.9

  • S1: 110.16
  • S2: 109.6
  • S3: 108.29

USD/JPY – Trading Tips

The USD/JPY has dropped from 112.160 level to 110.135 level just in two trading days. Earlier, we expected it to reverse after completing the 61.8% Fibonacci support level of 110.350, but this level has now been violated. 

On the 4 hour timeframe, an upward trendline was also extending support at 110.350, but the pair failed to hold above this mark, perhaps due to profit-taking in the Greenback. For now, the safe-haven pair is showing a slight bullish correction to retest the support become a resistance area of 110.350. Closing of candles below this level can help us secure a selling trade with a take profit of around 109.650.  

All the best for today! 

Categories
Crypto Market Analysis

Daily Crypto Review, Feb 26 – Crypto market continuing the downtrend; BTC to retest $9,000?

The crypto market continued its path down and lost some value as a whole. Bitcoin is currently trading for $9,170, which represents a 3.78% decrease on the day. Meanwhile, Ethereum lost 6.59% on the day, while XRP lost 7.89%.

The crypto market continued its path down and lost some value as a whole. Bitcoin is currently trading for $9,170, which represents a 3.78% decrease on the day. Meanwhile, Ethereum lost 6.59% on the day, while XRP lost 7.89%.

The crypto market continued its path down and lost some value as a whole. Bitcoin is currently trading for $9,170, which represents a 3.78% decrease on the day. Meanwhile, Ethereum lost 6.59% on the day, while XRP lost 7.89%.

Dragon Coins took the position of today’s most prominent daily gainer, with gains of 22.16%. On the other side, Decentraland lost 16.54% on the day, making it the most prominent daily loser.

Bitcoin’s gained some dominance in the past 24 hours. Its value is now 64.11%, which represents a 0.73 difference to the upside when compared to the value from when we last reported.

The cryptocurrency market capitalization a lot of its value over the past 24 hours. It is currently valued at $261.62 billion, which represents a decrease of $13.63 billion when its value is compared to the value it had yesterday.

What happened in the past 24 hours

Coinbase announced that the company became a principal member of Visa on Feb 19. Coinbase, which is one of the biggest crypto exchanges in the world, is now able to issue their own debit cards without involving any third parties.

While Coinbase didn’t share what it would do in the future, its new status grants it the possibility to issue debit cards to other cryptocurrency firms. This development certainly marks an important milestone for the cryptocurrency payments sector.

Honorable mention

Chainlink 

Polkadot is preparing for its upcoming network launch after the reveal that they will be integrating with Chainlink. The integration of Chainlink oracles could be crucial for the development of DeFi (Polkadot decentralized finance) as well as other advanced smart contracts.

Chainlink has completed its initial integration on Kusama, which is a canary network for Polkadot (similar to a testnet).

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin continued to move downwards as a prolonged Feb 24 bearish move. The largest cryptocurrency fell under the $9,255 support, which could not hold the bear pressure for long. The RSI finally entered the oversold area where the bear move stopped (for now) and BTC started consolidating.


Bitcoin’s volume is average for this week. It’s RSI level is currently in the oversold territory.

Key levels to the upside                    Key levels to the downside

1: $9,255                                           1: $9,120

2: $9,580                                           2: $9,070

3: $9,735                                            3: $8,915

Ethereum

Ethereum’s price took an even bigger hit than Bitcoin’s. The second-largest cryptocurrency continued its move down and dropped under the $251.3 support as well as under the $240 one. However, bulls came to the market and pushed the price slightly above the $240 support, which is where ETH’s price is at right now.


Ethereum’s volume average when compared to volumes from this week, while its RSI level is currently just above the oversold territory on the 4-hour chart.

Key levels to the upside                    Key levels to the downside

1: $251.3                                             1: $240

2: $259.5                                            2: $225.5  

3: $279                                                3: $217.7

Ripple

XRP performed the worst out of the top3 cryptos in the past 24 hours. After its price fell below the $0.266 major support (now resistance), the outlook quickly became bearish. However, the drop did not end there, as XRP managed to break $0.2454 to the downside as well. Its price is now right under this level.


XRP’s volume quite low, with the exception of one candlestick, which brought its price below $0.2454. Its RSI level is currently sitting in oversold territory.

Key levels to the upside                    Key levels to the downside

1: $0.2454                                          1: $0.235

2: $0.266                                            2: $0.227

3: $0.285                                             3: $0.221

Categories
Forex Course

66. Pairing The Fibonacci Levels With Trendlines

Introduction In the previous articles, we learned how Fibonacci retracements give extra confirmations while trading the support & resistance levels. We also know that Fibonacci levels can be used as a confirmation tool to trade many candlestick patterns as well. Now we shall extend this discussion and understand how Fibonacci retracements can be traded using […]

Introduction In the previous articles, we learned how Fibonacci retracements give extra confirmations while trading the support & resistance levels. We also know that Fibonacci levels can be used as a confirmation tool to trade many candlestick patterns as well. Now we shall extend this discussion and understand how Fibonacci retracements can be traded using […]

Introduction

In the previous articles, we learned how Fibonacci retracements give extra confirmations while trading the support & resistance levels. We also know that Fibonacci levels can be used as a confirmation tool to trade many candlestick patterns as well. Now we shall extend this discussion and understand how Fibonacci retracements can be traded using the trendlines.

Trendlines are a crucial part of technical analysis. They are primarily used to identify trends, be it up or down. Trendlines being such an important part of trading, when combined with the Fibonacci indicator, can produce trades that have the highest probability of winning. So let us see how this can be done.

Combining Fibonacci Levels & Trendlines

In the below chart, we have, firstly, identified an uptrend and drew a supporting trendline to it. The next step is to plot Fibonacci on the chart by identifying a swing low and a swing high. The marked area shows where all our trading is going to take place and the region in which we will find our swing low and swing high.

The traditional way of selecting a swing low is when the point intersects with the trendline, just as we have done in this case (below image). The swing high will be the point where the market halts and reverses for a while.

In the below chart, we have used the chosen a swing low and swing high to plot our Fibonacci indicator. In order to combine the Fibonacci with trendline, we must wait to see if the retracement from the swing high touches the 50% or 61.8% Fib level. After touching any of these levels, if the market gives a confirmation candle, it could be a perfect setup to go long. The retracement, in this case, touches the 50% level, which coincides exactly with the upward trendline. The next and final step is to look for a confirmation candle, if any.

We have gotten a confirmation sign from the market after the second green candle closes above the 23.6% Fib level (below image). Hence traders can now take risk-free positions on the ‘long’ side of the market with a stop-loss below the 61.8% Fib level and with an aggressive target above the recent high. This trade results in a risk to reward ratio of 1.5.

We should not forget that if the retracement does not take support at the 50% or 61.8% Fib level and goes further down, breaking all the levels, it could be a potential reversal sign. Thus the retracement that is coinciding with the trendline and reacting from 50% or 61.8% Fib level is the thumb of the rule of this strategy.

The above is a more widened image of the chart shows that the market continues to trend upwards, crossing our ‘take-profit‘ area. To take advantage of the market’s trending nature, we can place a trailing stop-loss order to maximize our profits.

Conclusion

When trends start to develop in the market, one should start looking for ways to go ‘long’ or ‘short’ by using necessary technical indicators that give a better chance of a profitable trade. The Fibonacci indicator is one such powerful tool to help traders find potential entry points. We hope you understood this concept clearly. Let us know if you have any questions in the comments below. Do not forget to take the quiz before you go. Cheers!

[wp_quiz id=”64779″]
Categories
Forex Market Analysis

Daily F.X. Analysis, February 25 – Top Trade Setups In Forex – Coronovirus Dominates Market Sentiment! 

Later today, the Conference Board’s Consumer Confidence Index for February is expected to increase to 132.1. The number of confirmed coronavirus cases in South Korea has jumped to 833 with eight fatalities. Japan has recorded 850 cases (4 deaths), Italy announced there were 229 incidents (7 deaths). Singapore has also addressed 90 instances.

Later today, the Conference Board’s Consumer Confidence Index for February is expected to increase to 132.1. The number of confirmed coronavirus cases in South Korea has jumped to 833 with eight fatalities. Japan has recorded 850 cases (4 deaths), Italy announced there were 229 incidents (7 deaths). Singapore has also addressed 90 instances.

Later today, the Conference Board’s Consumer Confidence Index for February is expected to increase to 132.1. The number of confirmed coronavirus cases in South Korea has jumped to 833 with eight fatalities. Japan has recorded 850 cases (4 deaths), Italy announced there were 229 incidents (7 deaths). Singapore has also addressed 90 instances.

Save-haven assets, like U.S. government bonds and gold, kept receiving bids. The benchmark 10-year Treasury yield slid from 1.470% Friday to 1.377%, the lowest level since July 2016. And the 30-year yield shed 6.8 basis points to 1.849%.

Economic Events to Watch Today 

  

EUR/USD – Daily Analysis

On Tuesday, the EUR/USD remains lightly positive, +0.08%, while taking steps to 1.0860. The dollar slid on Tuesday following a recent bullish momentum amid heightened expectations that the expected hit to economic extension from the spread of the coronavirus will urge the U.S. Federal Reserve to decrease interest rates.

Expectations for the Federal Reserve interest rate cut have grown in the last few days to price in a 50-50 probability. Today is likely to be a quiet day ahead on the economic docket. Key economic figures will include Germany’s 2nd estimate GDP figures for the 4th quarter.

Lack of major deviation from 1st forecast is not likely to have too much of an influence on the EUR. Any drop in the U.S consumer confidence figure and risk sentiment could help capture a movement in the EUR/USD currency pair later during the U.S.s session today. 

Daily Support and Resistance

  • R3: 1.0977
  • R2: 1.091
  • R1: 1.0882

Pivot Point 1.0844

  • S1: 1.0815
  • S2: 1.0777
  • S3: 1.071

EUR/USD– Trading Tips

On Tuesday, the EUR/USD pair soars higher to trade around 1.0865, making a bullish engulfing pattern on the daily chart. This pattern suggests the odds of bullish trend continuation. The 50 periods EMA is also likely to extend support at 1.0815, and we may see a bounce off above this level. The same level also marks the 50% Fibonacci retracement, while 61.8% Fibo support prevails at 1.0815. On the higher side, resistance can be seen around 1.0845.

GBP/USD– Daily Analysis

The GBP/SD currency pair failed to continue its recent gains and dropped to 1.2940, representing 0.20% declines on the day mainly due to uncertainty and worries regarding the Brexit deal. The broad-based greenback strength also keeps the pair under pressure. At this moment, the GBP/USD currency pair is trading at 1.2978 and consolidates in the range between the 1.2934 – 1.3000.

The United Kingdom Prime Minister Boris Johnson will likely push for the U.S. trade deal by March 02, according to the Telegraph. The U.S. gave warning to the Tory government to avoid the greed checks on the good in the Irish Sea to secure the US-UK trade deal.

Besides, the on-going bearish pressure on the Cable is a reason for Greenback’s broad-based strength. The USD is getting gains due to the broad risk-off market sentiment in the wake of deadly coronavirus intensifying fears. As in result, the traders prefer the safe-haven assets like gold and dollar.

Yesterday, the British pound sank along with most currencies as traders blended out of assets considered riskier for the Greenback. Most of the economic analysts see the U.S. economy as nearly well-shielded should the coronavirus damage global economic growth heavily. Eyes will remain on the UK CBI Realized Sales for more trends in the GBP/USD pair.

Daily Support and Resistance

  • S1 1.2749
  • S2 1.2845
  • S3 1.2902

Pivot Point 1.2942

  • R1 1.2998
  • R2 1.3038
  • R3 1.3134

GBP/USD– Trading Tip

The GBP/USD is trading at 1.2975, above the 1.2965 resistance become a support level. Closings of candles above this level may help secure a buy trade around 1.2975 with a target of 1.3070. Whereas, a bearish breakout of 1.2965 can lead the Cable towards 1.2930

. 

On the technical side, a daily closing beyond 100-day SMA level of 1.2955 can recall 1.3000 marks to the charts whereas February 13 top surrounding 1.3070 and 23.6% Fibonacci retracement at 1.3206 can entertain the buyers during further upside. The MACD and RSI are holding in the buying zone, supporting bullish bias for the GBP/USD pair. Let’s look for selling trades below 1.2965 and bullish above the same level today. 

USD/JPY – Daily Analysis

The USD/JPY sank 0.7% to 110.81 on increasing safe-haven demand. The USD/JPY pair failed to maintain its bullish momentum as investors started taking profit in the U.S. dollar, which leads the USD/JPY prices lower. The Japanese yen has now dropped back to the lower end against Greenback, and the pair now continues to trade around the 110.65-60 region.

Investors prefer safe-haven assets, mainly due to a rise in the number of coronavirus cases outside China, especially in South Korea and Italy. As per the latest report, the number of coronavirus cases in Italy’s Lombardy region rose from 54 on Sunday to 89, leaving the country with 150 confirmed infection, the highest in Europe, and around 5-times that of Germany whereas the news came as the total number of virus cases rose past 77,000 in China.

The USD/JPY currency pair may drop to levels below 111.30 if the German IFO data, which is scheduled to release at 09:00 GMT, prints below estimates, increasing recession fears and growing demand for the anti-risk Japanese yen.

Daily Support and Resistance

  • R3: 113.5
  • R2: 112.2
  • R1: 111.46

Pivot Point 110.9

  • S1: 110.16
  • S2: 109.6
  • S3: 108.29

USD/JPY – Trading Tips

The USD/JPY prices are trading with a bearish bias above 61.8% Fibonacci retracement level of 110.450. Closing of the candle above this level can extend buying until 110.850. Earlier, most of the bearish trend came after the USD/JPY violated the 38.2% Fibonacci retracement level on the 4-hour chart. On the lower side, the pair has the potential to go after the next support level of 109.650 in case of a bearish breakout of 110.250 support. Let’s consider staying bullish above 110.2 today to target 110.860. 

All the best for today! 

Categories
Forex Videos

Master Forex By Trading Double Tops and Double Bottoms

https://youtu.be/SqvFh4NttKw

https://youtu.be/SqvFh4NttKw

Double Tops and Double Bottoms

In mastering technical analysis, one of the key pattern formations is the double top and double bottom, and it is essential that you understand what this is, and that you develop your skills for identifying it, and implementing it in your trading because these patterns will recur time after time. It will provide you with invaluable information when it comes to trading around it.
Double tops and double bottoms will enhance your trading by showing you where potential reversals in price action may occur, whether or not they form the basis of technical support and resistance levels.

 

Example A


So what exactly is a double top? Let’s take a look at example A, which is a 5-minute chart of the GBPUSD and where only price action is shown on the chart.

 

Example B


Now, let’s drill down a little further on this chart as per example B, pair and where we have a high at position A and where we have had a pullback, followed by another push higher at position B, and where the price action stopped at the same level as position A, before selling off again.
So what is the rationale behind this double top? Traders read their charts from left to right, because they tell a story of how price action is unfolding as time goes on. Firstly we have the area of support which has seen price action fails to go lower on at least two occasions, which will have been observed by traders, and where price action moved higher from this line, and then ran out of steam at position A, before retreating, and whereby traders would again keenly observes the area of support and therefore started to close out their short positions when price failed to breach the support line while expecting a reversal. This does indeed happen and where we see price action move up to position B, and where traders would have noted the reversal at position A, and used that as a possible area of resistance, and therefore exited their long trades when price failed to move higher than position A, and thus leaving a double top formation.

 

Example C


In example C, we have the reverse, which is a double bottom formation, where we can see that price has failed to breach the resistance line at positions 1 2 and 3, before moving lower to position A, and where price action failed to move any lower and where it reversed before failing to reach the resistance line, and then has a second attempt to move lower to the support line at position B. Thus forming a double bottom formation.

Incidentally, we can see that eventually, price action does move higher and breaches the line of resistance at position 4, which then becomes a line of support for future price action.

Categories
Forex Daily Topic Forex Price Action

Riding on a Trend is rewarding

The trend is the trader’s friend. To be able to spot the trend and reversal point are the two most important factors of price action trading. In the Forex market on the minor charts, trend changes in a second. However, the trend usually continues on major charts such as the H4, the daily as well as weekly. In today’s lesson, we are going to demonstrate an example of how we can ride on a trend and make most of it.

The trend is the trader’s friend. To be able to spot the trend and reversal point are the two most important factors of price action trading. In the Forex market on the minor charts, trend changes in a second. However, the trend usually continues on major charts such as the H4, the daily as well as weekly. In today’s lesson, we are going to demonstrate an example of how we can ride on a trend and make most of it.

The trend is the trader’s friend. To be able to spot the trend and reversal point are the two most important factors of price action trading. In the Forex market on the minor charts, trend changes in a second. However, the trend usually continues on major charts such as the H4, the daily as well as weekly. In today’s lesson, we are going to demonstrate an example of how we can ride on a trend and make most of it.

The chart shows that after making a strong bearish move, the price produces three consecutive bullish corrective candles. It finds its support and creates a bearish engulfing candle closing below consolidation support. The sellers may trigger a short entry right after the last candle closes. Let us proceed to the next chart.

The price heads towards the South and hits 1R. Look at the last candle. The candle comes out as a bearish engulfing candle as well after a long consolidation. However, the sellers on this chart shall skip taking this entry for its shallow consolidation. Let us find out what happens next.

The price again consolidates and produces another bearish engulfing candle. The sellers may trigger another short entry right after the last candle closes. This is the second entry of the trend.

As expected, the price again heads towards the South. This time the price moves with strong bearish momentum. The sellers again make some profit here. Let us proceed to the next chart.

The chart after producing one stronger bearish candle consolidates. This time the chart presents an A+ trade setup with deep consolidation and a strong bearish engulfing candle. The sellers may trigger another short entry here with 1R.

This is what tells the story of the Forex market. This one has been the best entry so far on this chart. However, the price does not head towards the trend’s direction as expected. Nevertheless, it hits the target again (1R). The sellers again make some pips. Altogether, it offers three entries and this is called riding on a trend. By looking at the chart, it seems it may provide more. The buyers must stay out of this chart until it produces a strong bullish reversal.

Meanwhile, the sellers shall keep eying on the chart to go short with the same process. It does not happen so often but when it does, traders shall make most of it. As they say, “Trend is your Friend,” and we have just demonstrated that riding on a trend is very rewarding.

Categories
Forex Videos

Master Forex By Trading Pin Bar Candlestick Formations

https://youtu.be/lKfR1-uAd44

https://youtu.be/lKfR1-uAd44

Pin Bar Candlestick Formations

Traders can potentially use price action alone to trade without the need to rely on other indicators. When doing this, they rely on Japanese candlestick patterns and formations, and one such pattern is the pin bar formation, which we will look at in great detail in this presentation. Traders try to identify reversal patterns, and pin bars are high on their list because they offer a high probability of success, and especially in volatile market conditions.

Example A


Example A is what you would expect to see when looking for bullish or bearish pin bar formations. The formation is dependent on one single candlestick, and will typically be larger than its immediate preceding candlesticks and represents a rejection of a move, followed by a sharp reversal. The pin bar reversal, as it is sometimes referred to, consists of a short body and a wick, or tail, which is at least three times the length of the body, thus making them easy to identify. The area of the pin bar’s wick defines the area of price action that was rejected. Traders would read the formation as identifying a reversal in price action and a continuation in the direction of the wick.

 

Example B


Example B looks at these shapes more closely and identifies the expected move of any subsequent price action.

 

Example C


Example C shows a bullish pin bar trading strategy in action on a real chart of the USDCAD pair on a 4-hour chart. Here we can see a bullish reversal pin bar at position A. The reason that we can be fairly confident that this is a potential set up to move higher is because we can see that the previous candlesticks have found a support area as defined by our line and where candlestick A has gone down and touched that support area, only for the majority of the price action to be reversed. Had we decided to take this trade on, we would have placed a stop loss just below the support line, and we can see that on this occasion, we would have been nicely rewarded with a push higher in price action.

 

Example D


In example D, we can see a bearish pin bar set up on the same pair at a later date. The pair has witnessed a move higher and where at candlestick A we can easily identify a bearish pin bar setup. The subsequent candlestick moves lower, and this enforces our belief that we are going to get a reversal in price action and that indeed happens. Had we taken on this trade and placed a fairly tight stop loss, we would have been nicely rewarded again.

A word of caution, trading pin bars is essentially gambling that price action will reverse in the opposite direction of which might have been a trend, and which is therefore almost counterintuitive. Trading pin bars might be a result of many factors including economic data releases, price action hitting key levels of support and resistance, or simply running out of steam, newsflow, policymaker speeches, or other unexpected events, and therefore we do not recommend that new traders use these setups to trade unless they are experienced.
However, pin bars can also offer a warning of when to exit a trade, rather than necessarily looking at it as an opportunity to trade in the opposite direction.

Categories
Crypto Market Analysis

Daily Crypto Review, Feb 25 – Crypto market continuing its move down; First crypto bank in the US?

The crypto market dropped some value as Bitcoin, and the other cryptos failed to reach new highs. This move is a continuation of the small downtrend that started on Feb 24. Bitcoin is currently trading for $9,527, which represents a 2.29% decrease on the day. Meanwhile, Ethereum lost 4.03% on the day, while XRP lost 3.96%.

The crypto market dropped some value as Bitcoin, and the other cryptos failed to reach new highs. This move is a continuation of the small downtrend that started on Feb 24. Bitcoin is currently trading for $9,527, which represents a 2.29% decrease on the day. Meanwhile, Ethereum lost 4.03% on the day, while XRP lost 3.96%.

The crypto market dropped some value as Bitcoin, and the other cryptos failed to reach new highs. This move is a continuation of the small downtrend that started on Feb 24. Bitcoin is currently trading for $9,527, which represents a 2.29% decrease on the day. Meanwhile, Ethereum lost 4.03% on the day, while XRP lost 3.96%.

DxChain Token took the position of today’s most prominent daily gainer, with gains of 5.46%. On the other side, Wayki Chain lost 22.69% on the day, which made it the most prominent daily loser.

Bitcoin’s dominance increased slightly in the past 24 hours. Its value is now 63.38%, which represents a 0.53 difference to the upside when compared to the value from when we last reported.

The cryptocurrency market capitalization increased slightly over the past 24 hours. It is currently valued at $275.25 billion, which represents a decrease of $7.28 billion when its value is compared to the value it had yesterday.

What happened in the past 24 hours

Former Wall Street executive Caitlin Long is taking advantage of Wyoming legislature to establish the first crypto-native bank in the United States. The bank’s name will be Avanti, meaning “forward” in Italian.

Long announced the news in a series of 29 tweets. She believes that a critical piece of US market infrastructure is missing, with her bank being the solution.

Honorable mention

EOS troubles? 

One of the largest cryptocurrency exchanges, Coinbase, said that the EOS has degraded its performance, with sends and receives possibly suffering from delays.

The exchange later stated that the EOS network is still suffering from degraded performance. However, EOS Nation responded that the EOS main net is “currently extremely reliable.”

The tweet that EOS Nation posted included a chart that was showing a slight blip on Feb 20, with 192 blocks missing due to the micro-forking issue. However, the chart also indicated a stable mainnet performance for the past two weeks.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin continued to move down as a prolonged Feb 24 move to the downside. The largest cryptocurrency is now under the $9,580 support, and it looks like it will drop some more. With RSI still not reaching oversold and plenty of leeway to the next support, Bitcoin certainly has a big chance of pulling back even further.


Bitcoin’s volume is lower when compared to the past week. It’s RSI level is approaching lower values of the value range.

Key levels to the upside                    Key levels to the downside

1: $9,580                                           1: $9,255

2: $9,735                                           2: $9,120

3: $9,870                                            3: $9,070

Ethereum

Ethereum followed in Bitcoin’s footsteps and lost some value as well. In fact, Ethereum managed to drop more in price than Bitcoin over the past 24 hours. While going down in price, Ethereum broke its $259.5 support.


Ethereum’s volume is on the lower side of the spectrum, while its RSI level is slightly below the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $259.5                                             1: $251.3

2: $279                                               2: $240  

3: $289                                                3: $225.5

Ripple

XRP made pretty much the same move as Ethereum. Its price continued to move down, breaking one of the biggest support levels to the downside. XRP broke $0.266 and is slowly moving below it. However, the 4-hour candle did not close below the support (now resistance) yet.


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

Key levels to the upside                    Key levels to the downside

1: $0.266                                            1: $0.2454

2: $0.285                                            2: $0.235

3: $0.31                                               3: $0.227

Categories
Forex Videos

Convid 19 – USDJPY Acting As A Barometer To Sentiment – What Happens Next In Forex!

https://youtu.be/RCHnrV6jToc

https://youtu.be/RCHnrV6jToc

 

Convid-19 USDJPY acting as a barometer to sentiment

The coronavirus, or to give it its technical name, Convid-19, is dominating the financial markets, which are broadly holding their nerves and apart from a few jitters, overall remaining steady at the moment. And this is because of a lack of information regarding the true economic impact of this breakout. This can only be analysed with data, and because we are in the early stages, there is no clearly defined economic basis to say how this has or will affect the global economy. In the past, events such as the Avian flu, Ebola, and Sars have all caused losses on global equities and where safe-haven currencies such as the Yen, and Swiss franc have been bought along with gold and precious metals and where oil has been sold off due to perceived risk to a global economic slowdown and flight to invest in less riskier assets.


But the markets have learned that on each of these occasions, the markets have subsequently turned around and rallied at some point close to, or after the event has passed. Although China now is a much greater power than at any time of these previous events and has a significantly higher percentage in terms of global gross domestic product which is estimated at nearly 20%, the Chinese government has said that it believes that the economic impact of the virus will be short-lived and that it will meet its trading obligations with its global partners.
While this has pacified the markets to a certain extent, one wonders about the reality of this virus which seems not to be coming under control as quickly as the Chinese government led us to believe, and where some analysts wonder if indeed the West has been given a true picture of what is going on in mainland China regarding the outbreak and the true extent of those infected and dying. And of course, if it does turn into a pandemic, the above sentiments will change in a heartbeat.

Until such time as the true economic statistics have been released by the Chinese government, the markets will be driven by snippets of information being released on daily statistics from China of those infected and dying and the number of incidences outside of China, and more importantly should any such incidents begin to spread in other countries will be of the utmost interest.
In order to trade cautiously at these times, and especially for those traders who may not have access to real-time news release information from entities such as Reuters or Bloomberg, One way to try and gauge their sentiments of the markets is to to keep a close watch on USDJPY pair, which has been acting a somewhat of a perimeter two news releases surrounding this event. Any sell-off in the spare air or short spikes either indirection will most likely be on the basis of a news of events regarding the virus and where traders and then go fishing to find out what that information is.

Example A


Let’s take a look at a couple of examples. First of all example A, is a 1-hour chart of the pair.

 

Example B


If we drill down in more detail at this chart as in example B, we can see that the Yen was losing ground against the dollar on the 4th of February at position 1 our charts, and this was because the Chinese government said it had the virus under control and that it would meet its trade obligations and that the impact to its growth would be minimal and short-lived, and market sentiment became more positive and drove price action up to a key area of 110.00.
However, jitters ensued as the virus continued to give bad news with cases breaking out in other countries, and the Yen became a safe haven currency again as the market moved from position A to position B, as the sentiment is again reversed. And by the 10th of February price action moves up again to test the 110.00 key area before spiking above it at position C,

However, the sentiment which drove the pair up initially during our uptrend at position 1 is reversed buy a hammer blow at position 2, when the market learnt of a massive increase in the number of deaths overnight on the 12th February, which amounted to 250 people, and which sent the pair back to position D. This A B C D formation confirms consolidation and with A and C acting as an area of resistance at the key 110.00 level, and where the B and D confirms a support line.

The move to position one coincides with improved sentiment around the crisis, whereas the move lower, from position 2, coincides with negative sentiment, and where at position 3, the price action has become muted and has not returned to the top line of resistance, which would strongly indicate the high probability of negative sentiment and the likelihood of a move lower to retest the support line and beyond as mood sentiment becomes soured.

Categories
Forex Market Analysis

Daily F.X. Analysis, February 24 – Top Trade Setups In Forex – Risk-off Sentiment In Play! 

On the forex front, the U.S. dollar retreated from the strongest level in nearly three years, as the ICE Dollar Index lost 0.6% on the day to 99.26. Germany’s IFO Institute reported its indexes for February (business climate at 95.0, current assessment at 98.4 and expectations at 91.6 expected). However, the actual figure surprised the market with a 96.1 gain.

On the forex front, the U.S. dollar retreated from the strongest level in nearly three years, as the ICE Dollar Index lost 0.6% on the day to 99.26. Germany’s IFO Institute reported its indexes for February (business climate at 95.0, current assessment at 98.4 and expectations at 91.6 expected). However, the actual figure surprised the market with a 96.1 gain.

On the forex front, the U.S. dollar retreated from the strongest level in nearly three years, as the ICE Dollar Index lost 0.6% on the day to 99.26. Germany’s IFO Institute reported its indexes for February (business climate at 95.0, current assessment at 98.4 and expectations at 91.6 expected). However, the actual figure surprised the market with a 96.1 gain.

In the U.S., the Federal Reserve Bank of Chicago will post January National Activity Index (-0.16 expected). The Federal Reserve Bank of Dallas will release its Manufacturing Activity Index for February (0 expected).

Economic Events to Watch Today 

  

 

EUR/USD – Daily Analysis

The EUR/USD rose 0.6% to 1.0845. Research firm Markit reported that the eurozone’s manufacturing PMI bounced to 49.1 in February (47.4 estimated) from 47.9 in January and Services PMI climbed to 52.8 (52.3 expected) from 52.5. Later today, the German IFO Business Climate Index will be released (95.0 expected).

The Euro is getting badly hit in the wake of coronavirus. At the virus front, the number of coronavirus cases in Italy’s Lombardy region rose from 54 on Sunday to 89, leaving the country with 150 confirmed infection, the highest in Europe and around 5-times that of Germany whereas the news came as the total number of virus cases rose past 77,000 in China.


Daily Support and Resistance

  • S1 1.0686
  • S2 1.076
  • S3 1.0804

Pivot Point 1.0834

  • R1 1.0878
  • R2 1.0908
  • R3 1.0982

EUR/USD– Trading Tips

The EUR/USD pair soars higher to trade around 1.0865, making a bullish engulfing pattern on the daily chart. This pattern suggests the odds of bullish trend continuation. 

The 50 periods EMA is also likely to extend support at 1.0815, and we may see a bounce off above this level. The same level also marks the 50% Fibonacci retracement, while 61.8% Fibo support prevails at 1.0815. On the higher side, resistance can be seen around 1.0845.

GBP/USD– Daily Analysis

The GBP/SD currency pair failed to continue its recent gains and dropped to 1.2940, representing 0.20% declines on the day mainly due to uncertainty and worries regarding the Brexit deal. The broad-based greenback strength also keeps the pair under pressure. At this moment, the GBP/USD currency pair is trading at 1.2938 and consolidates in the range between the 1.2934 – 1.2955.

The United Kingdom Prime Minister Boris Johnson will likely push for the U.S. trade deal by March 02, according to the Telegraph. The U.S. gave warning to the Tory government to avoid the greed checks on the good in the Irish Sea to secure the US-UK trade deal.

Besides, the on-going bearish pressure on the Cable is a reason for Greenback’s broad-based strength. The USD is getting gains due to the broad risk-off market sentiment in the wake of deadly coronavirus intensifying fears. As in result, the traders prefer the safe-haven assets like gold and dollar.

Looking forward, the traders will keep their eyes on the Brexit headlines because the British ministers are to approve the initial offer by Tuesday. On the other hand, the 2nd-tier project numbers from the US Dallas Fed and the US Chicago Fed will be the keys to watch.



Daily Support and Resistance

  • S1 1.2749
  • S2 1.2845
  • S3 1.2902

Pivot Point 1.2942

  • R1 1.2998
  • R2 1.3038
  • R3 1.3134

GBP/USD– Trading Tip

The GBP/USD is trading at 1.2898, below the 1.2965 resistance level. Closings of candles below this level may help secure a sell trade around 1.2875, whereas, a bullish breakout of 1.2975 can lead the Cable towards 1.3070. 

On the technical side, a daily closing beyond 100-day SMA level of 1.2955 can recall 1.3000 marks to the charts whereas February 13 top surrounding 1.3070 and 23.6% Fibonacci retracement at 1.3206 can entertain the buyers during further upside. The MACD and RSI are holding in the buying zone, supporting bullish bias for the GBP/USD pair. Let’s look for selling trades below 1.2951 today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair flashing red and dropped from the session high mainly due to the risk-off market in the wake of escalating coronavirus fears. At press time, the USD/JPY pair is trading right now at 111.52 and consolidates in the range between the 111.34 – 111.69. However, the USD/JPY is struggling to keep the recent gans above the 111.50.

Investors prefer safe-haven assets, mainly due to a rise in the number of coronavirus cases outside China, especially in South Korea and Italy. As per the latest report, the number of coronavirus cases in Italy’s Lombardy region rose from 54 on Sunday to 89, leaving the country with 150 confirmed infection, the highest in Europe, and around 5-times that of Germany whereas the news came as the total number of virus cases rose past 77,000 in China.

The USD/JPY currency pair may drop to levels below 111.30 if the German IFO data, which is scheduled to release at 09:00 GMT, prints below estimates, increasing recession fears and growing demand for the anti-risk Japanese yen.

It should be noted that China is declining some limitations in the Wuhan province and may allow non-local citizens to leave the city at the center of the outbreak. Whereas Guangdong province in China, which has the most infected sectors by virus after the Hubei region, decreased its coronavirus emergency response level from its highest this morning.



Daily Support and Resistance

  • S1 110.57
  • S2 111.13
  • S3 111.35

Pivot Point 111.69

  • R1 111.91
  • R2 112.25
  • R3 112.81

USD/JPY – Trading Tips

On Monday, the USD/JPY prices are trading with a bearish bias above 38.2% Fibonacci retracement level of 111.280. Closing of candle below this level can extend selling until 110.850. Earlier, most of the bullish trend came after the USD/JPY violated the upward channel on the daily chart. 

This channel extended resistance around 111.01 level, and now this is going to extend support to the USD/JPY currency pair. On the upper side, the pair has the potential to go after the next resistance level of 112. Let’s consider staying bearish below 111.69 today to target 110.860. 

All the best for today! 

Categories
Forex Assets

Assessing The USD/UAH Exotic Forex Currency Pair

Introduction

Introduction

USD/UAH is the abbreviation for the currency pair US dollar against the Ukrainian Hryvnia. It is classified as an emerging currency pair. The volatility, liquidity, and volume in this pair, is significantly low. In this pair, the US dollar is the base currency, and UAH is the quote currency.

Understanding USD/UAH

The value of the pair as a whole represents the value of UAH that is equivalent to one US dollar. It is quoted as 1 USD per X UAH. For instance, if the value of USDUAH is 24.19, then about 24 Hryvnias are required to purchase one US dollar.

Spread

The difference between the bid price and the ask price is referred to as the spread. Spread usually varies from broker to broker, and also on the execution model used by the brokers.

ECN: 20 pips | STP: 23 pips

Fees

As the name pretty much suggests, the fee is the charge paid to the broker on each trade. Below is the fee on ECN and STP accounts.

ECN – 5-10 pips | STP – 0 pips

Slippage

Due to the changes in the volatility and the broker’s execution speed on the trade, a trader does not get the exact price he needed. And the difference between the two prices is called slippage.

Trading Range in USD/UAH

Risk management is a vital factor in trading. The trading range is a tabular representation of the pip movement in a currency pair in different timeframes. And these values help in determining the gain or loss on a trade.

Note: The product of the pip movement value and the pip value (per standard lot) yields the profit/loss in a trade for a particular timeframe.

Procedure to assess Pip Ranges

  1. Add the ATR indicator to your chart
  2. Set the period to 1
  3. Add a 200-period SMA to this indicator
  4. Shrink the chart so you can determine a large time period
  5. Select your desired timeframe
  6. Measure the floor level and set this value as the min
  7. Measure the level of the 200-period SMA and set this as the average
  8. Measure the peak levels and set this as Max.

USD/UAH Cost as a Percent of the Trading Range

The total cost of a trade is determined by the sum of the spread, slippage, and the trading fee. And this varies from time to time, based on the volatility of the market. Below are the tables that represent the costs for different volatilities and timeframes.

ECN Model Account

Spread = 20 | Slippage = 3 |Trading fee = 5

Total cost = Spread + Slippage + Trading Fee = 20 + 3 + 5 = 28

STP Model Account

Spread = 23 | Slippage = 3 |Trading fee = 5

Total cost = Spread + Slippage + Trading Fee = 23 + 3 + 5 = 31

The Ideal way to trade the USD/UAH

Firstly, the percentage values depict the cost variation on the trade. The magnitude of the percentage is directly proportional to the cost of the trade.

We can see that the minimum pip movement in 1H, 2H, and 4H timeframe is 0 pips. So, it is pointless to trade in the lower timeframes. However, one may trade this pair on the higher timeframes, like the 1D, 1W, and 1M. To reduce costs even further and to have decent volatility, one may preferably trade when the volatility of the market is above the average values.

Furthermore, limit orders is another way through which a trader can bring down their costs considerably. This is because limit orders, unlike the market orders, do not have any slippage on it. For instance, the total cost on an ECN account for limit orders would be,

Total cost = Spread + Slippage + Trading Fee = 20 + 0 + 5 = 25

Corollary

We can see that on average volatilities, it almost takes a week range to cover the costs if the trade goes in the direction of the trade.  That means this pair is unsuitable to trade short-term. The use of limit orders to catch the price entry at the absolute minimum of the week, combined with ultra-reliable timing, is the only way to succeed. There are lots of better pairs to choose from.

Categories
Crypto Market Analysis

Daily Crypto Review, Feb 24 – New Jersey regulating crypto?

The crypto market is currently at the same price level as when we last reported. However, that does not mean that the markets were stagnant over the weekend. Many cryptos attempted to reclaim previous highs but failed and started consolidating or losing a bit of value. Bitcoin is currently trading for $9,736, which represents a 1.41% decrease on the day. Meanwhile, Ethereum lost 1.39% on the day, while XRP lost 3.29%.

The crypto market is currently at the same price level as when we last reported. However, that does not mean that the markets were stagnant over the weekend. Many cryptos attempted to reclaim previous highs but failed and started consolidating or losing a bit of value. Bitcoin is currently trading for $9,736, which represents a 1.41% decrease on the day. Meanwhile, Ethereum lost 1.39% on the day, while XRP lost 3.29%.

The crypto market is currently at the same price level as when we last reported. However, that does not mean that the markets were stagnant over the weekend. Many cryptos attempted to reclaim previous highs but failed and started consolidating or losing a bit of value. Bitcoin is currently trading for $9,736, which represents a 1.41% decrease on the day. Meanwhile, Ethereum lost 1.39% on the day, while XRP lost 3.29%.

WaykiChain took the position of today’s most prominent daily gainer, with gains of 62.30%. On the other side, Swipe lost 9.58% on the day, which made it the most prominent daily loser.

Bitcoin’s dominance remained at exactly the same place as before the weekend. It is now at 62.85%, which represents a decrease of 0.03% when compared to the value it had on Friday.

The cryptocurrency market capitalization increased slightly over the weekend. It is currently valued at $282.53 billion, which represents an increase of $1.78 billion when its value is compared to the value it had on Friday.

What happened in the past 24 hours

The New Jersey state legislature is considering a new bill to regulate cryptocurrency. If passed, every cryptocurrency businesses would have to obtain a proper license in order to operate in their state.

This bill is called the Digital Asset and Blockchain Technology Act, which was proposed by assemblywoman Yvonne Lopez on Feb 20.

Honorable mention

Monero 

Italy’s crypto-powered debit card supplier Bitsa is continuing with its expansion. Its prepaid card expanded by adding support to the privacy-focused altcoin Monero (XMR).

By enabling support for Monero on its Bitsa Card, this company unclocks the ability to use all Monero-based card transactions in both physical stores and online.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin had a turbulent weekend, though its current price doesn’t show it (if compared to our last report on Friday). The largers cryptocurrency by market cap attempted to break $10,000 over the weekend on two ocasions. however, the $10,015 resistance held up nicely and the bulls could not reach above. The price fell sharply after the second failed attempt, which brought BTC to the support of $9,580. However, the bulls did not allow it to drop further and BTC is now consolidating just above the $9,735 support level.


Bitcoin’s volume is slightly lower when compared to the past week. It’s RSI level is in the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $9,870                                           1: $9,735

2: $10,015                                         2: $9,580

3: $10,360                                          3: $9,255

Ethereum

Ethereum had a nice upwards-moving trend that started on Feb 20. However, the most recent failed attempt to break $279 made bears take over and bring the price down to lower levels. Ethereum is now consolidating at $268, which is in the middle of the range between $279 to the upside and $259.5 to the downside.


Ethereum’s is slightly lower when compared to the past week, while its RSI level is slightly above the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $279                                                1: $259.5

2: $289                                               2: $251.3  

3: $302                                                3: $240

Ripple

XRP was, unlike ETH and BTC, extremely stagnant over the weekend. In fact, its price has been moving within the range bound by $0.285 to the upside and $0.266 to the downside since Feb 19. XRP made one attempt to break this range to the upside over the weekend but failed. Its price is now consolidating in the middle of the range.


XRP’s volume is quite low at the moment, while its RSI level is in the lower part of the value range.

Key levels to the upside                    Key levels to the downside

1: $0.285                                            1: $0.266

2: $0.31                                              2: $0.2454

3: $0.324                                             3: $0.235

Categories
Forex Basic Strategies

Identifying & Trading The Bull Trap Pattern In The Forex Market

Introduction

Introduction

Introduction

A Bull Trap is one of the unique patterns that can be found in the Forex market. This pattern is comprised of two highs were the second high is failing to hold higher, and as a result, prices push to the new low. Unlike most of the patterns, a Bull Trap pattern generates false buying signals and indicate us to be cautious when we identify this pattern on the price charts. Hence it is also known as a whipsaw pattern.

The up-move that happens trick the buyers & investors into making bullish trades as they look identical to a buy signal. But the signal is not real, and they end up generating losses on long positions. Traders must seek confirmation after the breakout so that they can filter out these false buying signals and escape the Bull Trap. Bear Trap is the opposite of the Bull Trap pattern, which occurs when sellers fail to hold the prices below the break down level.

Psychology Behind The Bull Trap Pattern

The markets will be in a downtrend printing brand new lower lows & lower highs continuously. The price action then hits the major resistance level and starts pulling back. When the pullback begins to struggle, some of the aggressive traders and investors tend to take their long positions. Then, suddenly, one strong candle breaks the resistance line with power.

At that stage of the market, emotions are on a peak point, so as a result, most of the traders take buy entries believing the breakout. The market then prints one red candle, and the price action respects the resistance level and starts to hold below the resistance level. At this point, most of the trader will be hoping for the market to go up, but the prices roll into the sell-side.

How Does The Bull Trap Occur?

Example 1

As we can see in the below 15-minute EUR/JPY Forex chart, price action hits the resistance line twice, but both the times it failed to break the line. However, the third-time, price action broke the major resistance line with power. This would have resulted in most of the traders taking their long positions. When the four small candles held above the resistance line, it gives extra confirmation to the traders to buy this currency pair, but that was just a trap by the sellers. After some time, the price action dropped back, and that would affect most of the traders’ emotions negatively.

This kind of situation is common, and sometimes novice traders tend to immediately jump to the opposite side. But for professional traders, their emotions never play a role in decision making. So never take the opposite trade if that is not a part of your plan. In the above chart, we shouldn’t be going short unless the second or third bearish candle is formed after the beginning of a downtrend.

Example 2

In the below EUR/GBP chart, the pair was in an overall downtrend. During the pullback phase, when price action reached the major resistance area, most of the amateur traders visually see that as a bullish market. Price action respects the resistance line twice, but on the 25th of Nov, when strong buyers broke the resistance line, it creates the illusion of a buy signal in this pair.

But the buyers failed to hold the price higher, and the very next candle pushed the price below the resistance line. When the price broke the resistance line, amateur traders activate their buy trades. Still, technical traders will always wait for the prices to hold above the resistance line and take the buy entry only after the confirmation. In this example, prices never held above the resistance line, so there was no trade buy trade for professional traders. On the other hand, inexperienced traders end up booking losses.

Trading The Bull Trap Pattern

In the above examples, we discussed how to identify the Bull Trap pattern. Now, let’s understand how to trade this pattern. In the below EUR/AUD Forex chart, the price action tried to break the resistance line twice, but both of the time buyers failed to perform. On the 3rd of Jan, buyers broke the resistance line with some strong power. After the break, inexperienced traders would have activated their buy positions. But always keep in mind that the breakout never confirms the buy entry. We should be keeping a close look at the price after the breakout and only trade once we get the confirmation.

As you can see in the above chart, after the breakout, many candles held above the resistance line. After watching close to fifteen candles, we can confirm that the resistance has turned to support. The hold after the breakout confirms that the sellers failed to take prices lower.

Entry, Stop-Loss & Take-Profit

When buyers held the prices above the resistance line for a while, it is a clear indication of a buy signal. So now we enter the market as soon as the confirmation is done. We have decided to go for a smaller stop-loss because the hold confirms that the sellers left the ground.

Our take-profit is at the higher timeframe resistance area. We can see the price dropping back right after our take-profit level as the price tested the resistance line. Interestingly, a bull trap pattern is formed again above our take-profit order. This is the ideal way to trade this pattern, and most of the professional traders follow the same. Patience is the key to trade the Forex market. If you are patient enough to follow all the rules of the game, you will win for sure.

Conclusion

Bull Trap occurs when the prices fail to hold above the breakout. It could happen for various reasons. Some of them are buyers not being interested in pushing the prices higher, or they might have been booking the profits. On the other hand, professional sellers might have jumped into the market to take sell trades. As a result, they end up dropping the prices below the resistance levels, which will eventually result in triggering the stop-loss orders of the trapped buyers.

The best way to identify the Bull Trap pattern is to analyze the momentum of the buyers in the Forex market. If the buyers fail to hold the prices above the breakout, do not take long positions and never let the emotions drive your decision making.

Categories
Forex Course

64. Trading Support & Resistance Levels Using Fibonacci Levels

Introduction

Introduction

Introduction

In the previous lessons, we understood how to use the Fibonacci tool to trade the pullback of a trend. We have also learnt how these Fib levels are not foolproof. Now, in this lesson, let’s extend this discussion to see how the Fibonacci tool can be used in conjunction with Support and Resistance – arguably the most critical levels on a price chart.

Support is the area where the price rejects to go down and bounce back further. This area acts as a floor where the price gets stopped. Resistance is the opposite of Support. At this level, the price finds it very hard to go up as it acts as a ceiling. The general idea is to buy at the Support and sell at Resistance. But blindly buying and selling at these levels carry huge risk as there is no guarantee that these levels will work each time.

So let’s use Fibonacci levels to determine the working of these S&R levels. Basically, we are combining both Support Resistance and Fib levels to increase the accuracy of trading signals generated. Let’s get started.

In the below chart, we have identified a strong resistance area, and now we must wait to see if it creates an area of Support after breaching the Resistance. It is always advisable to buy at ‘resistance turned support.’ Also, if the price has broken a strong resistance with multiple touches, there is a higher chance of it turning into Support. At the marked region below, we can see the price breaking the strong resistance area.

In the marked regions below, we can see the price retracing after breaking the Resistance. So in order to combine this support resistance level with Fib levels, we must identify the swing low and a swing high. As we can see below, we have also plotted the Fibonacci levels on the chart using a Fib indicator.

Ideally, if we get a retracement at the 61.8% Fib level and a confirmation candle, we can confidently enter for a buy. If the market does not react at any of the Fib levels, this could be a sign that the Support is no longer strong, and it can be broken.

As per the theory of Support and Resistance, the market must react at the previous Resistance and bounce off. From the below chart, it is clear that the retracement has reached our S/R line, which is exactly coinciding with the 61.8 Fib level. Now it is a clear indication for us to go long once we see a confirmation candle.

In the below chart, we can see that the price has exactly bounced off from the 61.8% Fib level and printed a bullish candle giving us a confirmation sign. Right after the confirmation candle, we can place our buy trade with a stop-loss at 78.6% Fib level and take-profit anywhere near the high.

Further, in the below chart, we can see the market making higher highs breaking the previous resistance levels. From this trade, we learn that, when Fibonacci is used near S/R as a confirmation tool, it increases the odds of that level performing. The price will surely take Support at the Fib levels and continue its trend.

One can notice that the ‘buy’ happens precisely at the 61.8% Fib level near Resistance turned support line. The market continues to take Support at this level until, eventually, it breakouts on the upside. This shows the power of the Fibonacci indicator when combined with S&R levels.

There are many other credible indicators that are reliable and can be combined with S&R levels. But Fibonacci is one of the most used ones by the traders across the world.

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Categories
Forex Market Analysis

WTI Crude Oil Drops Amid Coronavirus Fears – 61.8% Fibonacci Level In Focus! 

The WTI crude oil prices flashing red and dropped to $53.42 because the fears of coronavirus burdened on the crude inventories. The U.S. Crude Oil WTI Futures dropped 0.9% to $53.42.

The WTI crude oil prices flashing red and dropped to $53.42 because the fears of coronavirus burdened on the crude inventories. The U.S. Crude Oil WTI Futures dropped 0.9% to $53.42.

The WTI crude oil prices flashing red and dropped to $53.42 because the fears of coronavirus burdened on the crude inventories. The U.S. Crude Oil WTI Futures dropped 0.9% to $53.42.

The WTI oil inventories increased by 414,000 barrels for the week ended Feb. 14, the EIA said. That compared with expectations for a build of 2.5 million barrels, according to forecasts. The data supported crude oil prices yesterday, which raised more than 1% before decreasing today due to intensifying fears of the new coronavirus.

The global risk-off sentiment increased further on Friday after the World Health Organization (WHO) officials gave warning that the new coronavirus may break out globally at any time. 

According to the latest report, there are now 74,675 cases of the coronavirus in China, including 2,121 deaths in the country. Outside of China, there are 1,076 confirmed cases in 26 countries. The Chinese Commerce Ministry stays ready to take further steps to control the economic impact of coronavirus.

On the other hand, the U.S. State Department recently reiterated its travel warnings while Japanese officials and German Finance Ministry reports also showed attention about the coronavirus negative impact. Looking forward, coronavirus headlines will be the key to watch for fresh direction.

Daily Support and Resistance

  • S1 51.55
  • S2 52.75
  • S3 53.24

Pivot Point 53.95

  • R1 54.44
  • R2 55.15
  • R3 56.35

On the technical front, the WTI crude oil is trading at 52.94, heading towards 61.8% Fibonacci retracement at 52.25. On the 4 hour timeframe, the WTI prices are also expected to gain support around 52.25, which is the most extended by bullish trendline. Above this level, we may see bullish recovery in the WTI crude oil prices until 53.50 and 54. Good luck! 

Categories
Forex Videos

Make Money In Forex Using The Ichimoku Cloud indicator!

https://youtu.be/EiKJfcVBU7w

https://youtu.be/EiKJfcVBU7w

Simplifying the Ichimoku Cloud indicator for trading the Japanese Yen

The Ichimoku Cloud technical indicator was developed by Goichi Hosoda, a Japanese journalist, in the late 1960s. It is favoured by Japanese traders who use it to predict areas of support and resistance and it also shows momentum. It produces its data on historical price action and is therefore considered to be a lagging indicator.

All types of traders use the indicator for various currency pairs, however it is predominantly used for trading the yen. The Ichimoku Cloud is composed of 5 lines of calculations and where clouds form on charts along with moving averages and lines showing momentum.
The basic principle is that if price action is going on underneath the bottom section of the cloud, it is confirming an area of resistance is above and that a downtrend is likely or happening and if price action is going on above the top section of the cloud it is confirming that the cloud is supporting price action, or that an uptrend is in progress. Another key feature of the cloud is that it should ideal be moving in the direction of the trade that you wish to take.

Example A


Example A, is the cloud component only on a 1-hour chart of the USDJPY pair. We can see various clouds forming on the chart in areas 1, 2, 3 and 4.

Example B


Example B shows us that if we were trading this chart and waited patiently for the above methodology to kick in we have a downwards move on the cloud at position ‘A’ which is followed by subsequent price action to the downside producing 65 pips.
While later on, at position B we have an upward moving cloud and where price action is supported by this set up producing 62 pips. This is simply using the cloud only component of the indicator.

Example C


In example C we have added the moving average components and we are looking for the price action to be above the black MA, and where the black MA is above the green MA, and where our cloud must be ascending to support our buy side trade. Or we need price action to be underneath the the green moving average and where the green MA is below the black MA, and supported by a descending cloud to support our sell-side trade. It is important to note that the calculations for the MA’s in this chart are calculated differently than the usual simple moving averages. The cloud MA’s are based on highs and lows over a period, and then divided by two.

In order to keep things as simple as possible, we have elected not to use the final momentum part of the indicator, because it throws up an awful lot of noise on the chart. One of the biggest criticisms of this indicator is that there are too many components on the chart, thus making it difficult to read. The best way to identify trend is by analysing the shape and size of each candlestick. The larger the candlestick, the greater the momentum.
It is also important to point out that if the indicator is predominantly use for trading the yen currency and we would suggest that you stick to this if you decide to use the indicator because at the very least it shows you you what other yen traders are looking at on their charts. And the bottom line is we want to be trading the same way as the big guns in order to be successful.

Categories
Forex Market Analysis

Daily F.X. Analysis, February 21 – Top Trade Setups In Forex – U.K. Retail Sales In Highlights! 

On the forex front, the ICE U.S. Dollar Index advanced 0.2% on the day to 99.88, the strongest level in nearly three years, supported by broadly positive U.S. economic data. Official data revealed that the eurozone’s Consumer Confidence Index rose to -6.6 in February (-8.2 expected) from -8.1 in January, while the German GfK Consumer Confidence Index for March slipped to 9.8 (as expected) from 9.9 in February. Later today, research firm Markit will release eurozone’s February Manufacturing PMI (47.4 estimated) and Services PMI (52.3 expected).

On the forex front, the ICE U.S. Dollar Index advanced 0.2% on the day to 99.88, the strongest level in nearly three years, supported by broadly positive U.S. economic data. Official data revealed that the eurozone’s Consumer Confidence Index rose to -6.6 in February (-8.2 expected) from -8.1 in January, while the German GfK Consumer Confidence Index for March slipped to 9.8 (as expected) from 9.9 in February. Later today, research firm Markit will release eurozone’s February Manufacturing PMI (47.4 estimated) and Services PMI (52.3 expected).

On the forex front, the ICE U.S. Dollar Index advanced 0.2% on the day to 99.88, the strongest level in nearly three years, supported by broadly positive U.S. economic data. Official data revealed that the eurozone’s Consumer Confidence Index rose to -6.6 in February (-8.2 expected) from -8.1 in January, while the German GfK Consumer Confidence Index for March slipped to 9.8 (as expected) from 9.9 in February. Later today, research firm Markit will release eurozone’s February Manufacturing PMI (47.4 estimated) and Services PMI (52.3 expected).

Economic Events to Watch Today 

 

 

EUR/USD – Daily Analysis

The EUR/USD currency pair continues to bearish and found near the 1.0783 ahead of the German flash service PMIs. The EUR/USD currency pair is currently trading at 1.0791 and consolidates in the range between the 1.0783 – 1.0795. Traders are cautious about placing any position ahead of the German PMIs data.

At the data front, Germany’s flash manufacturing PMI for February, scheduled to release at 0830 GMT, is seen arriving at 44.8, down from January’s final print of 45.3, whereas the index for the services sector is seen declining to 53.8 this month against 54.2 last.

The forecast for the Eurozone flash manufacturing PMI (due at 0900 GMT) shows 47.5 for February against 47.9 seen in the previous month. The Eurozone services sector PMI is seen printing a tad weaker at 52.2 in February compared to January’s 52.5 reading. Whereas, the actual figure has been mixed as, but the Flash Services PMI soared to 52.8 while economists expected a figure of 47.4.

Germany’s export-oriented sector growth has decreased sharply, mainly due to the coronavirus outbreak, a recently published Zew survey of the financial market specialists showed.

However, the slowdown fears will grow if the German data prints below expectations. As in result, the shared currency could drop further and send the EUR/USD currency pair down to 1.0750.

On the flip side, the EUR currency may get support if the German PMI betters estimates by a significant margin, while the immediate technical bias of the pair will continue to bearish as far as the pair is holding at the declining 10-day average.

Daily Support and Resistance

  • S1 1.0708
  • S2 1.0751
  • S3 1.0768

Pivot Point 1.0795

  • R1 1.0811
  • R2 1.0838
  • R3 1.0881

EUR/USD– Trading Tips

The EUR/USD pair is mostly trading the same technical levels, as mentioned in the previous report. The EUR/USD pair appears to have formed neutral candles as the investors still didn’t find any solid reason to trigger bearish breakout at 1.0825 level. Today’s candle is slightly bearish, but it’s still no violating the previously placed low of 1.0775. It is pretty much likely to drive upward correction. Today, if the EUR/USD pair manages to drop below 1.0840, we may see EUR/USD prices going towards 1.0760. Let’s look for buying trade today above 1.0806. 

GBP/USD– Daily Analysis

The GBP/USD currency pair flashing green and registered 1st daily close under the 100-day moving average since October. The GBP/USD currently trading at 1.2896 and consolidates in the range between the 1.2878 – 1.2899. The currency pair representing modest gains on the day, having hit the 3-month low of 1.849 on Thursday.

The preliminary Markit Manufacturing PMI (Feb) is expected to print at 49.7, indicating a contraction in the activity after January’s neutral reading of 50.00. The selling interest around the GBP currency may increase if the PMI number prints below estimates. The actual results have come out and are supporting the GBP/USD pair. The U.K. manufacturing and services PMI performed slightly better than before. The Manufacturing PMI surged surprisingly to 51.3, crossing the 49.7 forecasts.

The GBP/USD pair slipped lower to test the next support level of 1.2880 and has formed bearish engulfing candle around, which is confirming the bearish breakout of 1.2974 support. Now his level is working as resistance, and it may keep the GBP/USD pair bearish. 

The GBP/USD has formed a descending triangle pattern that typically breaks on the lower side. Currently, this pattern is extending support at 1.2885, but the breakout of this level can extend selling until 1.2785 and even below this level. Therefore, 1.2885 is going to be one of the crucial trading levels. 

Daily Support and Resistance

  • S1 1.2719
  • S2 1.2835
  • S3 1.2879

Pivot Point 1.2951

  • R1 1.2995
  • R2 1.3067
  • R3 1.3183

GBP/USD– Trading Tip

On the technical side, a daily closing beyond 100-day SMA level of 1.2955 can recall 1.3000 marks to the charts whereas February 13 top surrounding 1.3070 and 23.6% Fibonacci retracement at 1.3206 can entertain the buyers during further upside. 

The GBP/USD is trading at 1.2906, below the 1.2975 resistance level. Closings of candles below this level may help secure a sell trade around 1.2875, whereas, a bullish breakout of 1.2975 can lead the Cable towards 1.3070. The MACD and RSI are holding in the buying zone, supporting bullish bias for the GBP/USD pair. Let’s look for selling trades below 1.2951 today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair flashing red and dropped to 111.69 after the 2-days of bullish trend mainly due to the renewed risk-off market sentiment supporting the Japanese yen. The USD/JPY currency pair is currently trading at 111.75 and consolidates in the range between the 111.69 – 112.19. However, the Japanese Yen recently boosted to the highest since April 2019 after the broad-based U.S. Dollar rally and weak Japanese data.

The global risk sentiment increased further on Friday after the World Health Organization (WHO) officials gave warning that the new coronavirus may break out globally at any time. After 2-days of heavy selling, the Japanese yen found some support from the renewed risk-off tone.

As the latest data front, Japan’s National Consumer Price Index (CPI) (YoY) for January matched 0.7% forecast, whereas National CPI ex-Food, Energy (YoY) dropped below 0.9% forecast and before 0.8%. Further, the preliminary reading of Japan’s February month Jibun Bank Manufacturing PMI dropped below 49.00 estimates and 48.8 before 47.6.

The USD/JPY currency pair has now dropped below the 112.00 round-figure marks. However, the bearish trend is likely to remain warm, due to the backdrop of the recent weakness in the Japanese macro data and increasing concerns of deepening economic fallout from the coronavirus outbreak. Traders will now await All Industry Activity Index (MoM) data for December, prior 0.9%, for further direction.

Daily Support and Resistance

  • S1 110.12
  • S2 111
  • S3 111.55

Pivot Point 111.89

  • R1 112.44
  • R2 112.77
  • R3 113.66

USD/JPY – Trading Tips

On Friday, the bullish trend of the USD/JPY continues to hit the market as the pair has surged dramatically to trade at 111.800 level. Most of the bullish trend came after the USD/JPY violated the upward channel on the daily chart. This channel was extending resistance around 111 level, and now this is going to extend support to the USD/JPY currency pair. On the upper side, the pair has the potential to go after the next resistance level of 112.300. The MACD has also started forming histogram lines above 0, signaling bullish bias for the USD/JPY pair. Let’s consider staying bearish below 112.150 today to target 111.500. 

All the best for today! 

Categories
Forex Basic Strategies Forex Daily Topic

Partial Profit-taking and Decision-making

Traders on major charts such as the daily and the H4 often take partial profits and let the rest of the trade run to earn more profit. This is an effective way to earn more pips without any doubt. Yes, to do that, traders need to have good ideas about price action and enough experience to interpret the market’s language. In today’s lesson, we are going to demonstrate an example of partial profit-taking and a situation where traders to make a decision. Let us get started.

Traders on major charts such as the daily and the H4 often take partial profits and let the rest of the trade run to earn more profit. This is an effective way to earn more pips without any doubt. Yes, to do that, traders need to have good ideas about price action and enough experience to interpret the market’s language. In today’s lesson, we are going to demonstrate an example of partial profit-taking and a situation where traders to make a decision. Let us get started.

Traders on major charts such as the daily and the H4 often take partial profits and let the rest of the trade run to earn more profit. This is an effective way to earn more pips without any doubt. Yes, to do that, traders need to have good ideas about price action and enough experience to interpret the market’s language. In today’s lesson, we are going to demonstrate an example of partial profit-taking and a situation where traders to make a decision. Let us get started.

This is an H4 chart. The price heads towards the North with good bullish momentum. It then consolidates and produces a bullish engulfing candle. The buyers may trigger a long entry right after the last candle closes. Typically, the buyers shall aim to earn 1R.

The next candle comes out as a bullish candle as well. Things look suitable for buyers. It seems they do not have to wait too long to achieve 1R. Let us proceed to the next chart.

Things do not go according to the buyers’ expectations. However, the price hits their 1R target. Look at the last candle. It comes out as a bullish engulfing candle. Thus, the buyers may consider taking partial profit and let the rest of the trade run. Let us assume that the buyers take out their 50% trade. With 1R, they have free trade running.

After two more candles, things look a bit different. Anyway, the buyers must be patient and hold their positions. Overall, price action has been very bullish biased.

After a long while, the price does not know where to go. It gets trapped within two horizontal levels. Have a guess. What should you do here? It is an H4 chart, and the price action has been very choppy recently.

Yes, traders may close the rest of the entry as well. The price is at the breakeven (a bit above). Traders get ½ R here. In most cases, partial profit-taking rewards more. However, in some cases, it may not give us the maximum reward. Another important thing with partial profit-taking is it is to be applied when we trade only on the major charts. We may not consider taking partial profit if we trade on the 5M, the 15M, or the H1 chart. With partial profit-taking, we need to be well acquainted with using trailing stops as well. Only that is when we will be able to make the most out of it.

Categories
Crypto Market Analysis

Daily Crypto Review, Feb 21 – Morgan Stanley dipping its toes into crypto? Analysts still confused by the price drop

The crypto market seems to have taken the day off, as there were no significant price movements. Meanwhile, analysts are still trying to pinpoint the cause of the fifth-largest single-hour drop since 2017. Bitcoin is currently trading for $9,677, which represents a 0.77% increase on the day. Meanwhile, Ethereum lost 0.01% on the day, while XRP lost 0.38%.

The crypto market seems to have taken the day off, as there were no significant price movements. Meanwhile, analysts are still trying to pinpoint the cause of the fifth-largest single-hour drop since 2017. Bitcoin is currently trading for $9,677, which represents a 0.77% increase on the day. Meanwhile, Ethereum lost 0.01% on the day, while XRP lost 0.38%.

The crypto market seems to have taken the day off, as there were no significant price movements. Meanwhile, analysts are still trying to pinpoint the cause of the fifth-largest single-hour drop since 2017. Bitcoin is currently trading for $9,677, which represents a 0.77% increase on the day. Meanwhile, Ethereum lost 0.01% on the day, while XRP lost 0.38%.

Algorand took the position of today’s most prominent daily gainer, with gains of 15.96%. On the other side, ABBC Coin lost 11.94% on the day, which made it the most prominent daily loser.

Bitcoin’s dominance increased slightly as altcoins fell just a bit more than BTC did in the past 24 hours. It is now at 62.85%, which represents an increase of 0.11% when compared to the value it had yesterday.

The cryptocurrency market capitalization increased slightly in the past 24 hours. It is currently valued at $280.75 billion, which represents an increase of $1.85 billion when compared to yesterday’s value.

What happened in the past 24 hours

Morgan Stanley, one of the biggest investment banks, is buying an online trading firm called E*Trade Financial Group. This $13 billion deal will be Morgan Stanley’s largest takeover since the economic breakdown of 2008. Morgan Stanley will bring E*Trade’s five million clients as well as $360 billion in assets.

E*Trade is planning to offer digital currency trading on its platform. The company is preparing to offer BTC and ETH trading.

Honorable mention

Cardano 

The Cardano network is scheduled to perform a network upgrade on Feb 20. This upgrade will introduce Ouroboros BFT to its users. Ouroboros BFT is an improved consensus mechanism, which will allow for staking.

The upgrade will be executed on Thursday at exactly 9:44 PM UTC, or 4:44 PM EST. The network will undergo a hard fork.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin didn’t move much price-wise in the past 24 hours. Bulls attempted to make a run and take over the $9,735 resistance level, but failed to do so. This put Bitcoin in the same spot as yesterday, bound between the $9,735 resistance and $9,580 support levels.


Bitcoin’s volume fell in the past 24 hours, while its RSI level is just below the middle of the value range. All key levels stayed the same as the largest cryptocurrency did not break any supports or resistances.

Key levels to the upside                    Key levels to the downside

1: $9,735                                           1: $9,580

2: $9,870                                           2: $9,255

3: $10,015                                          3: $9,120

Ethereum

Ethereum didn’t move much either. In fact, most of the market had quite a low volume, so the volatility was low as well. The second-largest cryptocurrency fell below the $259.5 support level at one point but managed to reach back above it. It is currently hovering at around $260.


Ethereum’s volume dropped slightly, just like Bitcoin’s. It’s RSI level is also at nearly the same level, which is just under the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $279                                                1: $259.5

2: $289                                               2: $251.3  

3: $302                                                3: $240

Ripple

XRP suffered from the same fate as the top3 cryptocurrencies in the past 24 hours. However, its price movement was more alike to Ethereum’s than to Bitcoin’s. The third-largest cryptocurrency attempted to break the $0.266 support line but failed to do so. The price has increased since and XRP is now trading at $0.275, which is almost exactly where it was during our last report.


XRP’s volume is quite low at the moment, while its RSI level is in the lower parts of the value range. No key levels have been broken in the past 24 hours.

Key levels to the upside                    Key levels to the downside

1: $0.285                                            1: $0.266

2: $0.31                                              2: $0.2454

3: $0.324                                             3: $0.235

Categories
Forex Market Analysis

Gold’s Symmetric Triangle Breakout – Is It Going After 1,637? 

The precious metal gold is trading dramatically bullish at 1,622 in the wake of boosted safe-haven appeal. The U.S. stocks advanced, buoyed by China’s stance in supporting local businesses amid the impact of the coronavirus outbreak. At the same time, minutes of the Federal Reserve’s last monetary policy meeting showed that officials were optimistic about the U.S. economy.

The precious metal gold is trading dramatically bullish at 1,622 in the wake of boosted safe-haven appeal. The U.S. stocks advanced, buoyed by China’s stance in supporting local businesses amid the impact of the coronavirus outbreak. At the same time, minutes of the Federal Reserve’s last monetary policy meeting showed that officials were optimistic about the U.S. economy.

The precious metal gold is trading dramatically bullish at 1,622 in the wake of boosted safe-haven appeal. The U.S. stocks advanced, buoyed by China’s stance in supporting local businesses amid the impact of the coronavirus outbreak. At the same time, minutes of the Federal Reserve’s last monetary policy meeting showed that officials were optimistic about the U.S. economy.

The U.S. official data showed that the number of housing starts increased to an annualized rate of 1.567 million units in January (1.428 million units expected), and the producer price index (PPI) rose 0.5% on month in January (+0.1% expected). Later today, initial jobless claims for the week ended Feb. 15 (210,000 expected), and the Conference Board Leading Index for January (+0.4% on month expected) will be reported.

European stocks rebounded, as the Stoxx Europe 600 Index rose 0.8%. Germany’s DAX increased by 0.8%, France’s CAC added 0.9%, and the U.K.’s FTSE 100 was up 1.0%. Despite that, the gold’s demand is still at the peak, which is driving its prices higher. Let’s take a look at the technical side of the market. 


Support Resistance 

1,604.59     1,615.98

1,597.42     1,620.2

1,586.03     1,631.59

Pivot Point 1,608.81

Technically, the precious metal gold has violated the symmetric triangle pattern, which was keeping it under pressure at 1,591. A bullish breakout of this level has opened further room for buying until 1,627 and 1,637. While the support can be found around 1,612 now, let’s take with a bullish bias above 1,612 level for the targets mentioned. Good luck! 

Categories
Forex Elliott Wave Forex Fibonacci

How to Use Retracements to Analyze Waves – Part 5

Until now, we studied different scenarios for the retracement of W2 when it is lower than 100% of W1. In this educational article, we’ll review what to expect when the retrace experienced by W2 is higher than 100% of W1.

Until now, we studied different scenarios for the retracement of W2 when it is lower than 100% of W1. In this educational article, we’ll review what to expect when the retrace experienced by W2 is higher than 100% of W1.

Until now, we studied different scenarios for the retracement of W2 when it is lower than 100% of W1. In this educational article, we’ll review what to expect when the retrace experienced by W2 is higher than 100% of W1.

The Fifth Rule

The fifth rule surges when the price runs in wave two (W2) and its progress extends between 100% and 161.8% of the first wave (W1).

In this case, could exist four possible conditions as follows.

Condition a: this condition occurs if W0 is lower than 100% of W1. As a first scenario, W1 could be part of a corrective sequence, and in consequence, W1 should identify as “:3”. In terms of the Elliott wave formations, W1 could be the first or the second segment of a corrective pattern, like a Flat pattern, a triangle formation, or the center of a Complex Correction.

A second option considers the possibility of a five-wave structure. If it occurs, W1 should label as “:5”, and the structure could correspond to the end of a zigzag pattern.

Condition b: occurs when W0 moves between 100% and 161.8% of W1. In this scenario, W1 should be part of a three-wave structure. It means that we should identify it as “:3”. In consequence, W1 could belong to the first segment of a Flat pattern, a section of a Triangle structure, or the center of a Complex correction.

Condition c: this condition occurs if W0 is between 161.8% and 261.8% of W1. In the same way that condition b, in this scenario, W1 should be part of a corrective formation as a flat (which should be an irregular flat), triangle, or complex correction.

Condition d: occurs when W0 is higher than 261.8% of W1. In this case, W1 likely will be the first part of a corrective structure; then, W1 should identify as “:3”. In terms of the Elliott wave formations, the structure in progress could correspond to a Flat pattern, a triangle, or the center of a complex correction.

The Sixth Rule

This rule will activate if wave 2 retraces between 161.8% and 261.8% of W1. The possible conditions are similar as in the fifth rule and are detailed as follows.

Condition “a”: this condition occurs if W0 is lower than 100% of W1. In this scenario, W1 could be a three-wave structure (labeled as “:3”), and W1 could correspond to a flat, triangle, or the connector of a complex correction. A second scenario considers that W1 could be a five-wave formation (identified as “:5”), then, W1 could be the end of an impulsive movement.

Condition “b”: occurs when W0 moves between 100% and 161.8% of W1. In the same way that Rule 5, condition b, the most probable formation for W1 is a three-wave structure and should identify as “:3”. W1 could be the first segment of a flat, an internal section of a triangle, or the center of a complex correction.

Condition “c”: this condition occurs if W0 is between 161.8% and 261.8% of W1. The structure that W1 develops could correspond to a corrective pattern, which should identify as “:3”, and the formation developed could be a flat pattern with failure in C or an expansive triangle.

Condition “d”: occurs when W0 is higher than 261.8% of W1. In this case, W1 could be part of a zigzag, a segment of a contractive triangle, a flat pattern with a failure in C, or the correction of an impulsive move. In any case, W1 should identify as “:3”.

The Seventh Rule

The wave analyst must use this rule when the retrace experienced by wave 2 is higher than 261.8% of wave 1. In this case, the possible conditions of W0 are similar to rules fifth and sixth, which are as follows.

Condition “a”: this condition occurs if W0 is lower than 100% of W1. In this case, W1 could be part of a three-wave structure (identified as “:3″) developing a complex correction, or a flat with a complex wave B. Another option for W1 could be a five-wave structure (labeled as”:5″) running in the failure of the fifth wave.

Condition “b”: occurs when W0 moves between 100% and 161.8% of W1. In this condition, W1 could be a three-wave structure (identified as “:3”) performing the center of a complex correction, a flat pattern, or a contractive triangle.

Condition “c”: this condition occurs if W0 is between 161.8% and 261.8% of W1. In this case, W1 could be part of a corrective formation as a continuous correction, a flat pattern, or a contractive triangle, and W1 should identify as “:3”.

Condition “d”: occurs when W0 is higher than 261.8% of W1. In this scenario, the structure suggests that W1 could be part of a corrective formation (tagged as “:3”) as a zigzag pattern, the connector of a double zigzag, the center of a complex correction (or wave-x), or a contractive triangle.

 

Conclusions

In this educational article, we reviewed what should be the Elliott wave structure that W1 build when W2 exceeds 100% of W1. As can be observed, in most cases, the formation developed by W1 corresponds to a corrective sequence.

According to R.N. Elliott’s words, the knowledge of the corrective formations could provide to wave analyst an edge over what should be the next move. In this context, the comprehension of different rules and conditions presented could ease and offer a relevant clue in the wave analysis to the Elliott wave trader.

Suggested Readings

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

Consolidation Length: An Important Aspect of Price Action Trading

In price action trading, new traders at their beginning often ignore an important factor. This leads them towards taking losing entries. In today’s lesson, we are going to demonstrate an example of a winning trade and a losing trade on the same pair. Later, we try to find out what that important factor is.

In price action trading, new traders at their beginning often ignore an important factor. This leads them towards taking losing entries. In today’s lesson, we are going to demonstrate an example of a winning trade and a losing trade on the same pair. Later, we try to find out what that important factor is.

In price action trading, new traders at their beginning often ignore an important factor. This leads them towards taking losing entries. In today’s lesson, we are going to demonstrate an example of a winning trade and a losing trade on the same pair. Later, we try to find out what that important factor is.

This is an H4 chart. On the chart, the price heads towards the South with good bearish momentum. Upon finding support, the chart produces three consecutive corrective candles. The sellers must keep their eyes on the chart. A bearish reversal candle, along with a breakout at consolidation support, would be the signal to go short on the pair.

The price action produces a bearish engulfing candle, which closes below the level of consolidation support. The sellers may trigger a short entry right after the candle closes with 1:1 risk-reward. Another point I may add here is the daily level of support is far enough, which allows the H4 chart to travel towards the South a lot further down.

The next candle comes out as an inside bar bullish candle followed by another bearish candle. The sellers are to wait a bit more to hit their take profit level. As things stand, it may not take long. Do you notice something here? Let us have a look at the same chart with more drawings on it.

Does it not offer another short entry? It does, since the daily support level is far enough, as mentioned earlier. Typically, the sellers shall go with 1:1 risk-reward. Let us proceed to the next chart. Do not forget that we have two entries here.

The next candle comes out as a bearish candle as well as closing within the previous candle, though. The first entry does not hit the target yet. It has a few more pips to reach. Things look good for those two entries.

The next candle hits Take Profit level for the first entry. Let us wait and find out what happens with the second one.

 

The price gets choppy and hits the stop loss of the second entry. Can you find the difference between the two entries? Do not worry about the next level of support. Both entries meet all the requirements for the sellers. However, there is one difference, which is consolidation length. On the first occasion, the price makes a deeper correction/consolidation. On the second occasion, the price makes a shallow correction. Usually, the price travel four times of consolidation length. It means if the consolidation length is 10 pips, the price travel 40 pips in total (from where the trend starts). Thus, the deeper the consolidation length, the stronger the trend gets. In our future articles, we will learn more about consolidation length, breakout, and target. Stay tuned.

Categories
Forex Market Analysis

Daily F.X. Analysis, February 20 – Top Trade Setups In Forex – U.K. Retail Sales In Highlights! 

On the forex front, U.S. Dollar Index gained 0.2% on the day to 99.59, as the Fed’s FOMC minutes confirmed that officials “viewed the current stance of policy as likely to remain appropriate for a time.”

On the forex front, U.S. Dollar Index gained 0.2% on the day to 99.59, as the Fed’s FOMC minutes confirmed that officials “viewed the current stance of policy as likely to remain appropriate for a time.”

On the forex front, U.S. Dollar Index gained 0.2% on the day to 99.59, as the Fed’s FOMC minutes confirmed that officials “viewed the current stance of policy as likely to remain appropriate for a time.”

The European Commission will release the eurozone’s January Consumer Confidence Index (-8.2 expected). The German Federal Statistical Office will report January PPI (-0.4% on year expected). The GfK Consumer Confidence Index for March will be released (9.8 expected). 

France’s INSEE will post final readings of January CPI (+1.5% on-year expected). The U.K. Office for National Statistics will report January retail sales (+0.7% on month expected).

Economic Events to Watch Today 

 

 

EUR/USD – Daily Analysis

The EUR/USD currency pair still found on the bearish track below the 1.08 handles ahead of the German data, having hit the high of 1.0815 in Asian trading hours. The EUR/USD currency pair is currently trading at 1.0798 and consolidates in the range between the 1.0792 – 1.0816. However, the traders are still struggling to keep the gains above the key hurdle ahead of the forward-looking German data. 

The currency pair got another failure to keep the pair above the 50-hour moving average located near 1.0810 during the Asian session. 

On the fundamental side, the German Gfk Consumer Confidence Survey, which is scheduled to release at 07:00 GMT, is expected to show a slight decline in the consumer sentiment in March. The index is anticipated to edge lower to 9.8 from February’s 9.9 figures. 

It should be noted that the euro may take further losses and drop towards the psychological support at 1.0750 if the German GFK Consumer Confidence Survey data disappoint expectations. 

On the other hand, the currency pair may hit the corrective bounce above the 50-hour M.A., currently placed at 1.0805 if the German data cheer expectations. Moreover, Germany will also report the Producer Price Index for January at 07:00 GMT. However, that data isn’t a big market mover. 

Daily Support and Resistance

  • S1 1.074
  • S2 1.077
  • S3 1.0788

Pivot Point 1.08

  • R1 1.0818
  • R2 1.083
  • R3 1.0859

EUR/USD– Trading Tips

The EUR/USD pair is mostly trading the same technical levels, as mentioned in the previous report. The EUR/USD pair appears to have formed neutral candles as the investors still didn’t find any solid reason to trigger bearish breakout at 1.0825 level. 

Today’s candle is slightly bearish, but it’s still no violating the previously placed low of 1.0775. It is pretty much likely to drive upward correction. Today, if the EUR/USD pair manages to drop below 1.0840, we may see EUR/USD prices going towards 1.0760. Let’s look for buying trade today above 1.0806. 

GBP/USD– Daily Analysis

The GBP/USD currency pair hit the 7-days low and dropped to 1.2910 ahead of the Retail Sales data. The GBP/USD is trading at 1.2912 and consolidates in the range between the 1.2901 – 1.2929. However, the European Union and the United Kingdom trade war, as well as the broad-based greenback strength, is keeping the pair under pressure and sent below the 7-day low.

Whereas the European Union’s chief Brexit negotiator Michel Barnier refused the U.K.’s signal for the Canada-style trade deal with the region. He is already aware that the Toris will stand ready to criticize this move. Moreover, the U.K.’s diplomats challenged the E.U. diplomat’s demand to return the Elgin Marbles under the post-Brexit trade deal. 

On the other hand, the opposition is using all the way to reject Home Secretary Priti Patel’s latest immigration plan, whereas the European Union stuck in the budget’s tension before the 1st E.U. summit post-Brexit.

Apart from U.K. politics, the greenbacks still flashing green and keep its gains higher because not only the risk-sentiment but the upbeat data is also sending the greenback higher. According to the latest update, the coronavirus numbers again shocked markets by using the re-revised methodology. Although, this doesn’t stop negative comments from the International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva and rating giant S&P. Eventually, these are keeping the risk sentiment off. 

It is worth to mention that the fresh easing from the Peoples Bank of China (PBOC) and Australian employment data also gave support to the greenback, Moreover, the U.S. ten-year treasury yields, and Asian stocks again flashing red after rising the previous day.


Daily Support and Resistance

  • S1 1.2719
  • S2 1.2835
  • S3 1.2879

Pivot Point 1.2951

  • R1 1.2995
  • R2 1.3067
  • R3 1.3183

GBP/USD– Trading Tip

The GBP/USD pair slipped lower to test the next support level of 1.2880 and has formed bearish engulfing candle around, which is confirming the bearish breakout of 1.2974 support. Now his level is working as resistance, and it may keep the GBP/USD pair bearish. 

Zooming out on the 4-hour chart, the GBP/USD has formed a descending triangle pattern that typically breaks on the lower side. Currently, this pattern is extending support at 1.2885, but the breakout of this level can extend selling until 1.2785 and even below this level. Therefore, 1.2885 is going to be one of the crucial trading levels. 

The GBP/USD is trading at 1.3036, below the 1.3065 resistance level. Closings of candles below this level may help secure a sell trade around 1.3065, whereas, a bullish breakout of 1.3065 can lead the Cable towards 1.3200. The MACD and RSI are holding in the buying zone, supporting bullish bias for the GBP/USD pair. Let’s look for bullish trades above 1.3018 today. 

USD/JPY – Daily Analysis

The USD/JPY is flashing green, but the recovery from the session lows might be temporary because the U.S. equity index futures are now flashing red. The USD/JPY is trading at 111.70 and consolidates in the range between the 111.11 – 111.72. However, the currency pair hit the 9-months high of 111.59 during the previous sessions.

The pair’s buyers are struggling to lift the pair back to 111.80, possibly due to the uptick in the U.S. equity index futures. The S&P 500 traded bullish by around 0.25% in early Asia. 

The bid tone around the currency pair was declined in the past few minutes despite China passing an interest rate cut as anticipated. During press conference time, the futures are shedding 0.25%. Moreover, the U.S. 10-year yield is also reporting a two basis point drop at 1.55%. 

It’s worth mention that the Shanghai Composite index is soaring by 0.4%. Thus, the positive action in the Chinese stocks can also help support the U.S. index futures, and therefore the USD/JPY pair may hit fresh multi-month highs even above 112. 

Daily Support and Resistance

  • S1 107.85
  • S2 109.42
  • S3 110.4

Pivot Point 111

  • R1 111.97
  • R2 112.57
  • R3 114.14

USD/JPY – Trading Tips

The bullish trend of the USD/JPY continues to hit the market as the pair has surged dramatically to trade at 111.800 level. Most of the bullish trend came after the USD/JPY violated the upward channel on the daily chart. This channel was extending resistance around 111 level, and now this is going to extend support to the USD/JPY currency pair. 

On the higher side, the pair has the potential to go after the next resistance level of 112.300. The MACD has also started forming histograms above 0, signaling bullish bias for the USD/JPY pair. Let’s consider staying bullish above 111.450 today to target 112.200. 

All the best for today! 

Categories
Crypto Market Analysis

Daily Crypto Review, Feb 20 – Sudden selloff puts crypto market in the red; Bitcoin under $10,000 yet again

The crypto market fell significantly in the past 24 hours as Bitcoin dropped below $10,000 yet again. Bitcoin is currently trading for $0,590, which represents a 4.63% decrease on the day. Meanwhile, Ethereum lost 5.84% on the day, while XRP lost 6.09%.

The crypto market fell significantly in the past 24 hours as Bitcoin dropped below $10,000 yet again. Bitcoin is currently trading for $0,590, which represents a 4.63% decrease on the day. Meanwhile, Ethereum lost 5.84% on the day, while XRP lost 6.09%.

The crypto market fell significantly in the past 24 hours as Bitcoin dropped below $10,000 yet again. Bitcoin is currently trading for $0,590, which represents a 4.63% decrease on the day. Meanwhile, Ethereum lost 5.84% on the day, while XRP lost 6.09%.

Kyber Network took the position of today’s most prominent daily gainer, with gains of 22.18%. On the other side, WAX lost 21.81% on the day, which made it the most prominent daily loser.

Bitcoin’s dominance increased slightly as altcoins fell just a bit more than BTC did in the past 24 hours. It is now at 62.74%, which represents an increase of 0.19% when compared to the value it had yesterday.

The cryptocurrency market capitalization decreased significantly in the past 24 hours. It is currently valued at $278.90 billion, which represents a decrease of $14.94 billion when compared to the value it had yesterday.

What happened in the past 24 hours

South Korean technology giant Samsung unveiled its latest smartphone series recently. The Galaxy S20 was revealed at the Unpacked 2020 event that took place in San Francisco.

While most people looked at the new camera, the official marketing material assured the market that the phone would also improve the integrated blockchain security features that they introduced a year ago with the Galaxy S10.

Honorable mention

Bitcoin Gold 

Bitcoin Gold’s price is being heavily manipulated by a whale controlling almost half of the circulating supply. Independent trader and analyst, who wants to remain anonymous, conducted this research, and came to the conclusion that one whale holds this much BTG.

He published the findings in a blog post, explaining why he believes that an individual or a single group of people accumulated a huge Bitcoin Gold position.

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Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin was moving slightly up or sideways until one big red candle, which brought its price to the $9,300 levels. The largest cryptocurrency experienced a massive sell-off (possibly from a single source) as the price fell from $10,150 to $9,300 during only one 5-minute candle. Bitcoin is now stable and trading above the $9,580 support level.


Bitcoin’s volume in the past 24 hours was average, with the exception of one big candle which occurred during the sudden price drop.

Key levels to the upside                    Key levels to the downside

1: $9,735                                           1: $9,580

2: $9,870                                           2: $9,255

3: $10,015                                          3: $9,120

Ethereum

Ethereum experienced the same fate as Bitcoin. Its price was solid and stable while moving to the upside or sideways until one big red candle brought ETH’s price to $250. Ethereum recovered and managed to stay above the $259.5 support line.


Ethereum’s volume was average, with the exception of the big red candle. Its RSI level is hovering around the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $279                                                1: $259.5

2: $289                                               2: $251.3  

3: $302                                                3: $240

Ripple

XRP was no different from the other two of the top3 cryptocurrencies in the past 24 hours. The third-largest cryptocurrency experienced a quick and sudden selloff, which brought its price from $0.31 all the way down to $0.27. The price has not moved much from the bottom, so it is currently hovering just around $0.275.


XRP’s volume declined slightly, while the red candle during the selloff was above the daily average candle, but below average big “spike” candle XRP had recently. It’s RSI level is approaching oversold territory.

Key levels to the upside                    Key levels to the downside

1: $0.285                                            1: $0.266

2: $0.31                                              2: $0.2454

3: $0.324                                             3: $0.235

Categories
Forex Market Analysis

Gold Prices Inched Up – Eyes On Fed’s Minutes! 

The safe-have-metal prices rose as traders await the U.S. Federal Reserve minutes of its latest meeting, which is scheduled to release later in the day. The gold gained 0.2% to $1,607.25 by the time of writing this update. 

The safe-have-metal prices rose as traders await the U.S. Federal Reserve minutes of its latest meeting, which is scheduled to release later in the day. The gold gained 0.2% to $1,607.25 by the time of writing this update. 

The safe-have-metal prices rose as traders await the U.S. Federal Reserve minutes of its latest meeting, which is scheduled to release later in the day. The gold gained 0.2% to $1,607.25 by the time of writing this update. 

Gold is higher 5.7% during this year because investors evaluate the impact of the disease on economic growth amid thinking that the Federal Reserve will feel increased pressure to deliver the rate cut. Moreover, fears of the new coronavirus and its impact on global growth pushed the safe-haven metal higher.

Official data showed that new cases in China declined for a second straight day. However, the World Health Organization has cautioned there is not enough data to know if the epidemic was being controlled.

China continues to struggle to achieve the identity of manufacturing in the world’s 2nd-largest economy again after imposing substantial travel restriction and city lockdown to control the virus that has killed more than 2000 peoples so far. However, investors still seem confident that the economic impact may be temporary.

The epidemic is expected to impact business in China and drag down its economic growth. Earlier this month, Moody’s Investors Service has lowered the growth forecast for China from 5.8% to 5.2% for 2020.



Daily Support and Resistance

  • S1 1556.92
  • S2 1577.08
  • S3 1589.29

Pivot Point 1597.25

  • R1 1609.46
  • R2 1617.41
  • R3 1637.58

Technically, the gold prices are likely to face resistance around 1,612. Below this, gold prices are expected to gain support around 1,594 area. A bullish breakout of 1,612 can lead to gold prices towards the next resistance area of 1,622. At the moment, we can either wait for bearish retracement until 1,602 to take a buying trade or enter a buy trade above 1,612 level to target 1,620. Good luck! 

Categories
Forex Videos

How To Make Profit Using The Box Trading Strategy – 144 Pips Made!

https://youtu.be/bFx6Mz7OcC4

https://youtu.be/bFx6Mz7OcC4

Simplified trading using boxes produces 144 pips

One of the biggest areas where new traders fall down is because they overload their screen charts with too many indicators. Many professional and institutional size traders will often use price action only to trade. Or may supplement their charts with a minimal amount of indicators, while many prefer draw lines in order to calculate areas where price action has consolidated into a sideways movement. They can then trade where the breakout will occur.

Example A


Example A is a one hour chart of the USDJPY pair, with only price action in the form of Japanese candlesticks. Blue for bullish, or up, and red for bearish, or down. On the face of it, although there seems to be a general bias to the downside, it would be fairly difficult to pinpoint where to enter as the hours roll by.
In order to confirm consolidation or sideways trading, a simple rule applies: price action must have touched at least two areas of resistance and at least two areas of support.
Traders will confirm this on the charts by simply adding a couple of horizontal lines, once they have identified this consolidation, as per the price action. They will then make the necessary trading decision based on the information they see.

 

Example B


Now let’s look at example B, we always read our charts from left to right, because they tell us a story, and at the beginning of the session in question we can see that at position A, we have a confined area of resistance and support, where we can see that both lines have been touched by price action on at least two occasions. In the example, we have closed off the end of the parallel lines, and thus, we can now identify this area as a box, And where we can see that at position price action punches through the support area, and traders will have gone short at this position.

Example C


If we move on during the course of the training session, we can identify another two boxes, in example C, firstly at position B, and then position C, we’re both have the minimum requirements of 2 touches of the support and resistance lines.

Example D


In example D, we can drill down a little bit more and identify that this pair is consolidating at position A, and then taking a move lower, then consolidating again at position B, before taking another step lower and then consolidating again at position C, and where traders will have picked up on the bias to the downside, and traded accordingly at breaks in the support lines.

 

Example E


Finally, in example E, let’s take a closer look at the false breakout to the downside at position X. There will always be times when traders are wondering if the market has topped or bottoms out, and this will cause breakouts from our boxes to be quickly reversed, and this happens at position X where we see a break of the support line and where the selling action has run out of steam, and the buyers have come in and reversed price action back into box C. However the move lover still produced 18 pips to the downside on this occasion, which is not an unreasonable amount.

But importantly, price action does not continue up to the area of resistance and begins stalls at position Y, before fading back to the support line and where the second breach at position Z is much more enhanced and producers 45 pips to the downside before price action looks to form the basis of another consolidation period.
The total move lower, just by using this simplified box trading, produced a total of 144 pips.

Categories
Forex Videos

Forex – How To Trade The USDJPY Right Now

https://youtu.be/GXWe3aBr1OU

https://youtu.be/GXWe3aBr1OU

What on earth is going on with the USDJPY pair and how to trade it?

The USDJPY pair is one of the most volatile major currency pairs. In the last 12-months, we have seen highs of 112.40 to lows of 105.00 and where current price action has become volatile, difficult to predict and therefore difficult to trade. Or has it?


Let’s look at a naked 15-minute chart of this pair, with only price action on our chart, as in example A. On the face of this, it seems exceptionally volatile, unpredictable, with wild swings and where no particular directional bias is evident. This is a typical time frame for an institutional trader to use when trading this pair..


Let’s drill down a little further and try and analyze what is really going on with this pair. In example B, we have broken down the trading exchange rate from the 5th to the 7th of February 2020, which includes two days of trading in the European and American sessions, which is where you would expect to see the most volume going through.

In section A, we can see the overall price action has been using the 1.10 as an area of resistance, while price action it was confined in a 23 pip sidewards moving consolidation period.
We can then see a drop in the form of a spike lower, in area B, which has a range of 20 pips, before price action is again pushed up into area C, and trades into a narrow range of only 14 pips.

Area B’s spike is attributed to the release of the US non-farm payrolls, which had an upbeat 225,000 jobs added to the US labor force, which caused some initial strength in the US dollar before price action consolidates in area C.
But the real elephant in the room with regard to this pair, and the reason for the spikes higher and lower, can be attributed to news flow, including rumors and speculation around the Coronavirus epidemic. The Japanese Yen is favored as a currency that gets bought in uncertain times due to its safe-haven reputation, and it is therefore very sensitive to any information, real or rumors, which are prevalent in the market at this time. The pair also runs in correlation with us stock indices, and as long as the virus situation continues, we can expect spikes in both directions during news alerts, and potential yen strength should be situation worsen.

Therefore trading this pair should take into account the sentiment around the virus crisis, and bias could form for further downside. And due to the extreme volatility and huge swings in the pair over the last 12- months, it should be treated with the utmost care while using tight stop losses.

Categories
Forex Market Analysis

Daily F.X. Analysis, February 19 – Top Trade Setups In Forex – UK CPI Surprises! 

The U.S. Empire Manufacturing Index rose to 12.9 in February (5.0 expected). Later today, January reports on housing starts (an annualized rate of 1,425,000 units expected), and producer price index (+0.1% on month expected) will be released.

The U.S. Empire Manufacturing Index rose to 12.9 in February (5.0 expected). Later today, January reports on housing starts (an annualized rate of 1,425,000 units expected), and producer price index (+0.1% on month expected) will be released.

The U.S. Empire Manufacturing Index rose to 12.9 in February (5.0 expected). Later today, January reports on housing starts (an annualized rate of 1,425,000 units expected), and producer price index (+0.1% on month expected) will be released.

European stocks were broadly lower, as the Stoxx Europe 600 Index declined 0.4%. Germany’s DAX fell 0.8%, France’s CAC lost 0.5%, and the U.K.’s FTSE 100 was down 0.7%.

Economic Events to Watch Today 

 

 

EUR/USD – Daily Analysis

The EUR/USD dropped 0.4% to 1.0796, the lowest level since April 2017. The German ZEW Current Situation Index declined to -15.7 in February (-10.0 expected) from -9.5 in January. The research institute said economic development is rather fragile at the moment, and the outlook for export-intensive sectors has deteriorated particularly sharply, citing impacts of the coronavirus outbreak.

The single currency’s vulnerability has prompted by moderate or negative growth in Germany during the last year. Moreover, data from this Monday imply that the market has not yet attained its bottom, as the Bundesbank stated in its monthly statement that there are no indications the currency position is set to improve in the opening quarter of the year, while coronavirus’ risk scores a new course of risk.

The traders eagerly anticipated the German ZEW economic sentiment, which was expected to worsen to 21.5 in February against. 26.7 reported in January. As per the recent release, the ZEW Indicator of Economic Sentiment for Germany decreased sharply in February, dropping 18.0 points to a distinct reading of 8.7 points. 

The fundamental event is thus lightly beneath its December 2019 mark. The evaluation of the economic situation in Germany has also worsened when we compare it with the previous month.

Moreover, EUR/USD currency pair near-term technical outlook also shows a bearish picture, with a test of the psychological support at 1.0800 on the cards. The traders will have their sights on the coronavirus headlines for taking fresh clues.

Daily Support and Resistance

  • S1 1.0702
  • S2 1.0754
  • S3 1.0774

Pivot Point 1.0806

  • R1 1.0826
  • R2 1.0858
  • R3 1.091

EUR/USD– Trading Tips

The pair appears to have formed neutral candles as the investors still didn’t find any solid reason to trigger bearish breakout at 1.0825 level. Today’s candle is also neutral, and it is pretty much likely to drive upward correction. Today, if the EUR/USD pair manages to drop below 1.0840, we may see EUR/USD prices going towards 1.0760. Let’s look for buying trade today above 1.0806. 

GBP/USD– Daily Analysis

The GBP/USD slipped 0.1% to 1.3002. Official data showed that the U.K. jobless rate was steady at 3.8% in the three months to December as expected. Earlier today, the Sterling declined during but concerns about whether the current Chancellor of Exchequer will be ready to pass the budget on time. 

A report from U.K. Prime Minister Johnson’s spokesman confirmed that the U.K. is not asking anything distinct from the E.U. in trade discussions and that they are available to negotiate. 

Besides, the market risk-tone getting worse day-by-day mainly due to the coronavirus fears, which provides support to the greenback as a safe-haven currency. Despite lowering the pace of the death toll and infected peoples in China, the uncertainty and fears still surrounding the market.

On the forecasted views, the Bank of England’s last MPR looks for the unemployment rate to stay unchanged at 3.8% for the next 3-4 months, we look for an increase to 3.9% in December (mkt 3.8%), with the potential for another pop higher in January. 

As we already mentioned that many countries had banned travelers from China, and major airlines have delayed flights, something that China’s representative to the E.U. warned was fuelling panic and threatening attempts to resume business.


Daily Support and Resistance

  • S1 1.285
  • S2 1.2928
  • S3 1.2964

Pivot Point 1.3007

  • R1 1.3043
  • R2 1.3085
  • R3 1.3164

GBP/USD– Trading Tip

The GBP/USD pair slipped lower to test the next support level of 1.2960 and has formed a Doji candle around this corner before taking a sharp bullish reversal. 

The GBP/USD is trading at 1.3036, below the 1.3065 resistance level. Closings of candles below this level may help secure a sell trade around 1.3065, whereas, a bullish breakout of 1.3065 can lead the Cable towards 1.3200. The MACD and RSI are holding in the buying zone, supporting bullish bias for the GBP/USD pair. Let’s look for bullish trades above 1.3018 today. 

USD/JPY – Daily Analysis

The USD/JPY currency pair flashing green and rose to 110.08, mainly due to the uptick in the Asian stocks. As well as the sluggish data from Japan sent the pairs higher. As of writing, the USD/JPY currency pair is currently trading at 110.06 and consolidates in the range between the 109.86 – 110.09. However, the risk-reset based on catalysts from China.

Stocks in China, Hong Kong, Indonesia, and Japan are printing moderate gains ranging between 0.20% and 0.60% after the latest improvement in risk-tone. Also representing the risk reset is the U.S. 10-year treasury yields that rise one basis point to 1.563% by the press time.

The fundamental reason behind the pair’s bullish moves is the release of Japan’s Machinery Order and Merchandise Trade Balance Reports. As well as the positive comments from China’s President Xi Jinping and the World Health Organization (WHO) that we have to stay relaxed. Whereas, the opposing statement from Moody’s Investors Service has been ignored.

Whereas Caixin Media Company Ltd. increased uncertainties regarding the reducing coronavirus infected people on Tuesday, the latest figures from Hubei showed a confused picture. According to the report, there are 1,693 new cases on February 18 against 1,807 of February 17. This report also suggests 132 new deaths compared to 93 recorded the previous day.

Moving ahead, China-related headlines will be the key to watch, the U.S. housing market numbers and the Producer Price Index data will also be essential to watch.

Daily Support and Resistance

  • S1 109.26
  • S2 109.54
  • S3 109.7

Pivot Point 109.83

  • R1 109.99
  • R2 110.11
  • R3 110.4

USD/JPY – Trading Tips

The USD/JPY pair has violated the sideways trading range of 110.025 – 109.500 in the wake of a stronger dollar. The couple is heading north towards the next resistance level of 110.800. On the way, the pair may find 161.8% Fibo extension resistance at 110.450. 

The RSI and MACD are crossing on the higher side, suggesting chances of further bullish bias in the USD/JPY currency pair. Alternatively, the USD/JPY can drop after testing 110.850 resistance. 

All the best for today! 

Categories
Forex Basic Strategies

Understanding Welles Wilder PSAR Indicator

Introduction
The Parabolic Stop and Reverse system was presented by Welles Wilder in his classic book New Concepts in Technical Trading in 1978, and he originally calls it The Parabolic

Introduction
The Parabolic Stop and Reverse system was presented by Welles Wilder in his classic book New Concepts in Technical Trading in 1978, and he originally calls it The Parabolic

Introduction

The Parabolic Stop and Reverse system was presented by Welles Wilder in his classic book New Concepts in Technical Trading in 1978, and he originally calls it The Parabolic Time/Price System.

This system sets stops at points that are closer and closer to the price action as time goes on. Mr. Wilder calls it “parabolic” by the fact that the pattern forms a kind of parabola when charted. The main idea is to give the market room at the beginning of the trade and, as price moves in our favor, gradually tighten the stops as a function of time and price.

The PSAR stop always moves in the direction of the trade, as a trailing stop should do, but the amount it moves is a function of price because the distance the stop level is computed relative to the range the price has moved. It also gets closer to the price action regardless of the direction of the price movement.

PSAR equation

If the stop is hit, the system reverses; therefore, Wilder named each point SAR: Stop and Reverse point.

The formula to compute it is:

 SARTomorrow = SARToday + AF x (EPTrade – SARToday)

The AF parameter starts at 0.02 and is increased by 0.02 each bar with a new high until a value of 0.2 is reached.

The EP  parameter is the Extreme Price point for the trade made. If long, EP is the highest value reached. If short, EP is the lowest value for the trade.

Fig 1: The magenta areas are winners, the yellow are break-even trades, and the pink regions are losers. As we might expect, in congestion areas, the SAR system is a loser.

The PSAR Trading System

PSAR as a naked system isn’t too good, since trades that go against the primary trend tends to fail, and almost all trades fail when the price is not trending. Sudden volatility peaks also fool the PSAR system. See Fig 1, point 18, where an unexpected downward peak reversed the trade in the wrong direction, cutting short a nice trade and transforming it into a big loser.

Fig 2a and 2b show the profit curve for longs and shorts in the EUR/USD 1H EURUSD 2017 chart. As expected, the long-trade graph presents more robustness than the short-trade curve, since the EURUSD had a clear upward trend back in 2017, whereas the short trades lost money. That is an example of how following the underlying trend grant traders an edge.

Fig 2a equity curve for long trades

Fig. 2b – Equity curve for short trades

Anyway, it’s fantastic that using an entry system with absolutely no optimization could deliver such good results as the  PSAR system when taking only the trades that go with the primary trend. That shows, also, the power of a good trailing stop.

The naked system isn’t too good at optimizing profits, as well. A profit target makes it a lot better. Fig 3.a and Fig. 3.b shows the improvement after setting an optimal target for longs and shorts, especially relevant on shorts.

A small change in the AF parameter, lowering down to 0.18, to give profits more room run, and the use of profit targets, raised the percent profitable from 41.4% to 48.1. Max drawdown improved from -4.77% to -3.37%, as well, and the avg_win/avg_loss ratio went from 1.69 to 1.78. It seems not too much, but in combination with the increment in percent winners to 48.1% makes it an effective and robust system.

PSAR as a trailing stop

In this section, we’ll study the Parabolic Stop and (not) Reverse system, as it might be called, as the exit part of a trading system.

As an exercise, let’s consider a simple moving average crossover. We’ll use the same market segment that we used in the naked PSAR case. For longs, we’ll use an 8-15 SMA crossover, while, for shorts, a 7-23 SMA will be taken, as this arrangement creates optimal crossovers for the current market.

Figs. 4a and 4.b show the equity curve for longs and shorts, respectively, with a Simple Moving Average Crossover system, acting on its own. No PSAR stops added.

As we see in fig 4a, the long equity curve behaved much better than the short one, although that is due to the EUR/USD trending up. On the short side, even after optimizing its parameters, the crossover relationship is lousy.

Fig 5.a and 5.b show the effect of a PSAR trail stop. There’s almost no noticeable positive effect. The oddity that PSAR, as a system, is more profitable than when it acts as a trailing stop in another system is related to the entry signal. It’s evident that the SAR signal takes place earlier than the SMA crossover, so the PSAR stop isn’t able to extract profits when the entry signal lags its own signal. On the short side, if we take a closer look, we can see that it improves a bit the drawdown.

It may seem that the smart thing to do in a trending market such as the EUR/USD back in 2017 is NOT to trade the short side, at least not mechanically.

Take-Profit Targets

But, it’s impressive how take-profit targets help us extract profits and reduce risk when trading against the trend. Let’s see the equity curves using long and short targets:

We observe that the long equity curve has a bit less drawdown, but, overall, it doesn’t change much. That was expected because the naked crossovers are very good at following a trend, so not very much can be gained using targets.

The use of profit targets is much more noticeable on the short side. It not only presents a higher final profit, but it’s drawdown practically disappeared, allowing us to better extract profits against the prevailing trend. We have to be cautious, though, if we detect a major trend change and adapt the targets accordingly.

Conclusions

Throughout this article, we tried to understand and analyze the PSAR as, both, an entry-exit system and its behavior as trailing stop to be used with other entry systems. We spotted its strengths and its weaknesses.

Given the results of our present study, we can conclude that:

  • The PSAR is a decent system if we combine it with a market filter and profit targets.
  • Trailing stops, even sophisticated ones, such as PSAR, doesn’t solve our problem of whipsaws when we trade against the trend.
  • By tweaking a bit the AF parameter down to .18, we were able to improve the trend following the nature of PSAR. Consequently, it is advisable to adapt PSAR to the current market volatility.
  • The best tool we own to profit using counter-trend strategies is profit targets, optimized to the current swing levels of the market.

 

References:

The definition of the PSAR is taken from New Concepts in technical trading, Welles Wilder.

The studies presented were made using Multicharts 11 trading platform programming capabilities, and its results and graphs were taken from its System Performance Report.

Categories
Crypto Market Analysis

Daily Crypto Review, Feb 19 – IRS aiming at Crypto regulation; BTC over $10,000 once again

The crypto market rallied as Bitcoin moved above the $10,000 mark yet again. Bitcoin is currently trading for $10,058, which represents a 2.54% increase on the day. Meanwhile, Ethereum gained 2.97% on the day, while XRP gained 0.04%.

The crypto market rallied as Bitcoin moved above the $10,000 mark yet again. Bitcoin is currently trading for $10,058, which represents a 2.54% increase on the day. Meanwhile, Ethereum gained 2.97% on the day, while XRP gained 0.04%.

The crypto market rallied as Bitcoin moved above the $10,000 mark yet again. Bitcoin is currently trading for $10,058, which represents a 2.54% increase on the day. Meanwhile, Ethereum gained 2.97% on the day, while XRP gained 0.04%.

ABBC Coin took the position of today’s most prominent daily gainer, with gains of 29.24%. On the other side, MonaCoin lost 7.83% on the day, which made it the most prominent daily loser.

Bitcoin’s dominance increased slightly as altcoins rose while BTC stood still in the past 24 hours. It is now at 62.55%, which represents an increase of 0.44% when compared to the value it had yesterday.

The cryptocurrency market capitalization increased slightly in the past 24 hours. It is currently valued at $293.84 billion, which represents an increase of $6.87 billion when compared to the value it had yesterday.

What happened in the past 24 hours

With the 2019 US tax season just around the block, the IRS wants to leave nothing off the table. The IRS has invited crypto companies and advocates to show up for a March 3 summit in Washington DC. One of the aims of the summit is to determine how to “balance taxpayer service with regulatory enforcement.”

Topics that will be discussed at the summit include regulatory guidance as well as compliance, preparing tax returns, crypto exchange issues, and technology updates.

Honorable mention

Ripple (XRP) 

A recent Medium post from Whale Alert (blockchain monitor) showed Jed McCaleb, CTO of Stellar, sold more than 1 billion XRP between 2014 and 2019. Whale Alert, however, noted that compared with the trade volume XRP has on a daily basis, the amount McCaleb sold seems insignificant.

_______________________________________________________________________

Technical analysis

_______________________________________________________________________

Bitcoin

Bitcoin’s went above $10,000 yet again. The bull presence increased and the price spiked from the $9,580 support level all the way to $10,290, breezing through the $9,735, $9,870 and $10,015 resistance levels. As the bulls got tired and overextended, bears took over and the price fell a bit. Bitcoin is now consolidating at the $10,100 level.


Bitcoin’s volume quite average when compared to the past week, while its RSI is now near the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $10,360                                         1: $10,015

2: $10,505                                         2: $9,870

3: $10,855                                          3: $9,735

Ethereum

Ethereum also had a green day, with gains similar to Bitcoin’s. The second-largest cryptocurrency increased in price from $244 all the way up to $286. The move broke the $251.3, $259.5, and $279 resistances with ease. The move, however, ended, and Ethereum’s price fell slightly, dropping under the $279 support (now resistance) level.


Ethereum’s volume is quite average, while its RSI level is just above the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $279                                                1: $259.5

2: $302                                              2: $251.3  

                                                           3: $240

Ripple

XRP performed worse than Bitcoin and Ethereum on the day. The third-largest cryptocurrency gained a bit of value, but actually stayed at the same level it was at 24 hours ago. It is currently consolidating and preparing for the next move, bound by the $0.31 resistance as well as $0.285 support level.


XRP’s volume is on the same levels it was at during the past week (if we disregard the few large candlesticks during the breakouts), while its RSI just under the middle of the value range.

Key levels to the upside                    Key levels to the downside

1: $0.31                                              1: $0.285

2: $0.324                                            2: $0.266

3: $0.332                                             3: $0.2454

 

Categories
Forex Market Analysis

Crude Oil’s Ascending Triangle Pattern Breakout – What’s Next?

The WTI crude oil prices dropped mainly due to falling demand in the wake of intensifying coronavirus fears. The U.S. Crude Oil fell 0.6% to trade at $51.99during the European session.

The WTI crude oil prices dropped mainly due to falling demand in the wake of intensifying coronavirus fears. The U.S. Crude Oil fell 0.6% to trade at $51.99during the European session.

The WTI crude oil prices dropped mainly due to falling demand in the wake of intensifying coronavirus fears. The U.S. Crude Oil fell 0.6% to trade at $51.99during the European session.

The crude oil prices recently dropped despite China’s report that the pace of virus infection in the region continued to decrease. It is worth to mention that the Chinese health authorities confirmed 1,886 new cases of coronavirus and 98 further deaths as per yesterday’s report.

China recently imposed tighter restrictions on travel and movement within the country to control the spread of the virus. The International Energy Agency announced this month that the virus could reduce oil demand by 435,000 barrels per day in the first 3-months of the year. In contrast, global experts stated it is yet too immature to announce the outbreak is being controlled.

The equity market risk-tone is getting worse, and U.S. stock futures slipped from record levels after tech giant Apple said on Monday that it would not reach its revenue target of the March quarter, due mainly to slower iPhone production and weaker demand in China, as a side effect of the coronavirus outbreak. 

Looking forward, the traders are also awaiting news from the Organization of the Petroleum Exporting Countries and its allies about deepening production cuts to support oil prices.

    

Daily Support and Resistance

  • S1 51.57
  • S2 52
  • S3 52.28

Pivot Point 52.44

  • R1 52.72
  • R2 52.88
  • R3 53.31

On the technical front, the WTI crude oil prices have violated the ascending triangle pattern on the lower side to trade at 51.45 level. The breakout patterns open further room for selling until 50.50 and 49.45. While the MACD has recently started forming histograms below zero level, which are suggesting odds of more selling in the WTI crude oil prices. In case the WTI crude oil violates 52.30 resistance mark, we may see crude oil prices heading towards 53.50. Good luck!