Market trend analysis for 30th of July 2011

Coming back to Friday trend analysis

 

Hi, everyone. Today I want to come back to yesterday market trend analysis and look a little at one more pair which reacted in a very volatile manner to news from Canada. I just want to remind you that there was Gross Domestic Product data from Canada, which caused Canadian dollar to collapse across the board. When I analyze potential pairs that are the best to trade news in Canadian dollar my favorite pairs are eur/cad and gbp/cad. Why? These are the most volatile loonie pairs. So let me look how one could have traded gbp/cad pair during and after Canadian news data release. 

Preparation for news trading

 

Before trading any news event you need to identify breakout levels. I mean support resistance levels and when news pushes the price of a security beyond those levels your orders or one order should be opened and you would be moving with the market. Since gbp/cad is probably the most volatile loonie pair, one should have placed long and short orders further from the price than one would do for example with eur/chf or eur/gbp pair. 

How one could trade gbp/cad pair on Friday

 

The most logical places (in my opinion) for placing long order(s) would have been at 1.5560 level and 1.5450 for placing short orders. Since market went upwards your long order would have been opened. This also means that you had to cancel your short order and then move your long order stop in the direction of the market. Since the move was very strong you could have used peaks and valleys principle by placing stop below valleys on 5 or 15 minute charts. This would have gotten you out at around 1.5660 level. 

See also:

Resistance

Support

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

Market trend analysis for 29th of July 2011

News from Canada moves the markets

Hi, everyone. I hope you saw what happened today when news from Canada was released. There was a lot of action in various currency pairs as well as oil, but Canadian dollar pairs were affected most. EUR/CAD rose 200 pips. Wow! That’s what we have in mind when we talk about news trading. Data from Canada was pretty negative and there is no surprise that loonie collapsed. 

How you could have traded eur/cad pair

Since eur/cad pair is very volatile you had to trade it very carefully. Fortunately the pair was not moving before news and you could comfortably place your long and short stop orders above resistance and below support. 1.3590 would have been a good place for long order and 1.3520 would have been perfect for a short one. As the market decided to go up, your long order would have been opened. You would have probably gotten out of the market around 1.3730 level, following 5 minute chart. Nice catch!

I will comment a little more on today’s price action tomorrow. 

See also:

Follow the leader

123

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

Market trend analysis for 28th of July 2011

Unstable situation in US

 

Hi, everyone. Let us do market trend analysis for today. Although everyone is looking at a possible debt default in US, dollar managed to strengthen yesterday and today. It broke support in eur/usd and ran around 60 pips downwards before retracing. I guess this is due to the fact that investors expect that US congress will finally agree on debt ceiling and America will be able to live as it used to before. The former statement will probably come true, the latter will definitely not. I do not think Europe is in a better position than US. So, buying Euro against dollar is not a very smart idea in the long run.

How you could have traded eur/usd breakout today

 

However, there was an opportunity today to sell a technical breakout downwards when support failed and Euro went down. You would not have got 60 pips, but cashing in around 30 pips was definitely possible. You had to place a sell stop order below 1.4320 level (below the support line that you can see on a chart) and move your stop loss following peaks and valleys principle (on 15 minute chart). This would have got you out around 1.4290 level. 

Data from Canada will probably create a lot of volatility tomorrow

 

Tomorrow might be quite interesting. We have the same piece of data coming from US and Canada (Gross Domestic Product). I think eur/cad and gbp/cad could be very good for trading data from Canada. I noticed that news from Canada creates a lot of volatility in currency markets. So, if you want to trade tomorrow, have it in mind. Markets could become crazy, especially having in mind this US debt thing, you should not be reckless. Be sure to use tight stops and trade what you see, not what you assume. 

See also:

RSI

MACD

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

Market trend analysis for 27th of July 2011

US in serious trouble

 

Hi, everyone. Let us do market trend analysis for today. Nobody believed that the second wave of crisis was possible one year ago. Like always, there were some people that were shouting about it, but their voices were never listened to and the vast majority of people never really heard the message that those voices were delivering. Now, every day is uncertain for a bankruptcy of United States is more than a possibility. It is just a matter of time.

Wait for opportunities to sell the greenback

 

Although most currencies fell against US dollar today, I do not think this is a long term phenomena. In my opinion dollar will collapse soon. EUR/USD is at support now and will probably continue its’ ascend sooner rather than later. Much depends on the decision that the US government will make regarding debt ceiling. However, a ‘bomb of debt’ has been ticking for too long. Something had to be done long time ago. Now it is too late. I think the best candidate for shorting is the greenback. Therefore, if you are interested I would recommend watching eur/usd, gbp/usd, aud/usd price action around European sessions and try to see whether there are any reversal around support area. If there are you would have an opportunity to short the greenback and have a day trade.

See you tomorrow. 

Moving average

MACD

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

Market trend analysis for 25th of July 2011

Possible default in US

 

Hi, everyone. Let us look at some market trends that we have seen recently and try to speculate a little on what we might expect in the nearest future. You may have heard about a possible default in US. I do think it is unavoidable and is due very soon, despite the fact that US has one of the best credit ratings in the world. It simply says that the agencies that give ratings for countries are looking to the moon and the stars by trying to decide which rating this or that country should be given. These kind of institutions are worthless and their advice and analysis should be the subject of humor rather than object of serious considerations. 

Commodity currencies and Swiss Frank could be best to trade long term

 

Events in US as well as Europe (serious troubles in Greece, Italy, Spain, Ireland, Portugal and other European countries) simply show that a collapse is coming. You see that dollar has been falling when the news about possible default in US came. I am convinced that is a matter of when, not a matter of if, for both US and Europe.  I do not know which currency will be the biggest loser, but I believe if you want to trade in currencies you will probably be willing to long Swiss Franc and commodity currencies (Australian dollar, Canadian dollar and New Zealand dollar). I would concentrate on those and be careful about US dollar, Euro and British pound as well as Japanese Yen. Japanese are also in debt up to their ears and the problems that were caused by the nuclear crisis after the recent disaster in Japan will continue having bad impact for Japanese Yen. 

Day traders could be watching market reaction to news from Great Britain tomorrow

 

In the meantime, we can wait for tomorrow and see what reaction will be to news from Britain (Gross Domestic Product) at 8:30 GMT. So, if you are still day trading, this could be a possibility to use. But try to concentrate on long terms more now. 

See also:

Forex news trading

RSI

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.