Trend

Swing trading

Disclaimer

A reversal of trend in eur/aud and gbp/aud looks probable

2012-01-24T13:31:00.000-08:00

You see how gbp/usd and gbp/jpy were going up recently as I had predicted. The same is happening to aud/jpy pair (look my previous post). The breakout in the pair was real and we will probably see even higher prices very soon.

Today I looked at eur/aud and gbp/aud pairs and I saw a reversal of a downward trend coming. If you analyze gbp/aud more carefully you will see that it is at a very important resistance on daily chart. It has also formed a reversal pattern (123 structure) on 4 hour chart. The same picture can be seen on eur/aud. The pair has already made a higher high and higher low, which is a clear technical indication of upcoming higher prices. It has to take the barrier of 1.2460 lying ahead though.

gbp/aud looks even stronger. It seems to have broken the breakout point of 1.4915. The price has retraced a little, but my sixth sense tells me that we will probably see a move up. As always, try to apply your own sound judgment to make your own decisions and do not trust everything I say.

Hope this short trend analysis was useful.

See also:

Triangle pattern

Swing trading strategies

Forex news

Disclaimer

Possible breakout in aud/jpy may cause it to continue upward trend

2012-01-19T10:16:00.000-08:00

If you followed my recent posts you remember that I talked about possibility of gbp/usd and gbp/jpy pairs reversal near their important support levels. That is exactly what has been happening these couple of days. Support held and the pairs are going up. I am not sure whether it will continue for a long time, but I expect a pretty strong resistance at 123.00 level for gbp/jpy and 1.5700 level for gbp/usd.

On the other hand I look at aud/jpy daily chart and see that the security has been ranging between 80.50 and 77.00 levels for some time and forming upward pressure makes me think that there will be a breakout upwards and the pair will resume its’ upward trend. It is at resistance now and in case of breakout the next resistance level would be 82.00-83.00 area.

Since all important data from Australia came yesterday I do not see anything from fundamental point to stop the rise of the pair. So, buying point of the pair can be anything above its’ present level. Of course, one has to remember that the pair has already travelled a nice distance from its’ bottom of 72.04 made on the 4^th of October 2011. Do not make your positions big and when (and if) the pair breaks up move your stops upwards when the security goes up.

Hope the trend analysis was useful.

See also:

Day trading

Disclaimer

A reversal in gbp/jpy trend is in the cards

2012-01-16T12:45:00.000-08:00

Today I wanted to talk a little about my expectations for an upcoming change in gbp/jpy pair trend. I do believe that pound will continue falling against major currencies, especially commodities this year, but looking at pound/yen pair I see that the way down for the security maybe over in the short term. Why do I think so?

I cannot say that I have many reasons to justify my opinion, but I have one, which might be very important. I am looking at daily chart of the pair and I see that it is approaching a very important support, which was hit on the twenty second of September, 2011 and revisited after a week on the sixth of October. Then the pair was moving upwards till the end of October and then started collapsing. It is quite close to the support now.

Why would support hold? It might because this was the lowest point of 2011 and 2010. When a security comes to such an important level we would more naturally expect it to reverse rather than to breakout. So, I expect a reversal. RSI indicator is also close to oversold level on daily charts now.

Hope my trend analysis was useful. See you soon.

See also:

Swing trading

Bollinger bands

Divergence

Disclaimer

Trend for 12th of January 2012

2012-01-12T12:12:00.000-08:00

I haven’t written a post on the blog “Trend” for over a month. I want to renew writing my posts. I won’t do it every day, but hope to renew the blog a few times each week.

Today I will write a short post on my expectations about gbp/usd pair. If you look at daily chart, you will see that the security is at a very important support level of 1.5270-1.5300. The last time the pair visited the level was on the 6^th of October 2011. It isn’t a very long period of time, but I still expect the area to hold and pound to strengthen against the greenback. This prediction of mine is based on general technical market tendencies. We more often see a reversal at important support and resistance levels rather than breakouts.

Although RSI indicator is not too much oversold yet, it does not mean the 30 level on indicator has to be reached by all means. No, my intuition says we have to follow price action in this situation on not start selling a breakout. Let the pair play a little in a range and when the breakout time comes we will have sat in a tight range for quite a long period of time. At least I hope so. And then, down we will go.

Hope this short market trend analysis was useful.

See also:

Support

Day trading

Disclaimer

Day trading strategies and rules for dummies

2011-12-06T01:44:00.000-08:00

I decided to call the post ‘day trading strategies and rules for dummies’. I thought to give you a few basic trading strategies that some of day traders use and rules how to implement those in your daily trades. I am more a swing and trend trader myself, but I occasionally enjoy placing a few short term trades that I usually close the same day. In my opinion these could be a supplement to your main strategies, but should not replace them. Some of the things that you are going to read have already been covered in my previous posts so I will slightly repeat myself. I hope you will benefit from the post.

Day trading strategy for dummies 1: Asian range breakout

This strategy is quite good for “dummy traders” and can be easily implemented. The rule for day trading it is to define the high and low of a given range during Asian session and place buy stop above the highest point above the range and a sell stop below the lowest point of the range. During European session volatility starts increasing and the market usually pushes the price of a given security beyond the limits of Asian session. So, one can take advantage by placing the above mentioned orders.

In the example below you can see how gbp/jpy pair collapsed downwards during European session and had you placed a sell stop order below the lowest level of the Asian session you would have made nice profits.

Day trading strategy for dummies 2: trading overbought and oversold levels

This strategy works quite well in range bound markets when there is absence of a clearly defined trend and a trader can expect a reversal around important support and resistance levels when he sees technical indicators oversold or overbought on 15 minute, 30 minute or 1 hour charts. One can use RSI or any other technical indicator that is meant for checking those levels and try to combine this trading strategy with some other facts.

One can draw a trendline on the indicator and wait for a break of a trendline and combine it with a break of price and sell or buy depending whether prices are overbought or oversold. You can see it with gbp/usd 15 minute chart example how an upward trendline on RSI indicator breaks and this coincides with a break in price of the pair. You can also spot minor 123 pattern in the price of a security, which means you can place a sell order below point number 2. Stop has to be a little above point number 3.

Day trading strategy number 3: trading fundamental news

This trading strategy was fully described in my post on Forex news trading and I do not want to expand here again on the same subject. Let me just give you a few facts. Most traders know how volatile markets become when economic news is released. This presents us both opportunities and risks. Risk is always involved since the prices fly so fast and so far that in case you have an order open and the market goes in the opposite direction your stop loss order might not be closed due to price gaps. However, if you are on the right side you can make tremendous profits trading this strategy.

You do it by simply placing a buy stop above the most recent high (let’s say 4 hour high) and a sell stop order below the most recent low (let’s say 4 hour low). You then wait for the news to be released and when one of your orders is opened you go together with the market till it exhausts itself.

So much regarding day trading strategies and rules for dummies. I promise to expand the post as the time goes by adding more day trading strategies.

See also:

Disclaimer

Technical analysis

2011-11-24T05:29:00.000-08:00

Today I want to talk about importance of technical analysis and various aspects of it that should help you in making profitable trading decisions. I know that most people want to know the fundamentals of economics, finance and see the big picture of how global economy works. However, we should understand that our perception and understanding of what we see in the world may be very subjective and if we make decisions (in trading) based on those subjective assumptions we might end up losing all of our capital. Therefore, I am more for doing technical analysis than I am for doing fundamental analysis. This does not mean you should not study fundamentals. It means you have to compare what you know with price action and follow the market, not your opinion.

Even if your opinion is right about economy you should never forget that there are a lot of powers working in the market and they have enough capital to push the price where they want, no matter what state this or that economy is in at a given moment. This can have a very negative impact on your trades, especially if you are a short term trader. I saw a lot of times how good economic news is accepted very negatively by participants, or market makers I’d better say and prices start falling. So, if you follow your opinion you may be right and lose money, if you follow the market your fundamental opinion might be wrong, but you make money. So, that is a big plus for studying technical analysis.

Resistance and support levels

I personally believe that resistance and support levels are the greatest tools of TA. These are levels where price comes and usually reverses. These levels are extremely important in range trading for when prices are stuck in ranges support and resistance levels are visited a lot of times and they do hold till finally a breakout occurs. One would wait for reversals around these levels and often be able to catch a new swing and go to the other end of the range making nice money. Patience and risk management is the key element here.

Technical indicators in technical analysis

Technical indicators have been developed by a variety of trading specialists to help one in making trading decisions with the help of those indicators most of which are based on moving averages. The most popular indicators are: MACD, RSI, various moving averages, Stochastics, Bollinger Bands, Pivot points, Price channels and many more. I do not want to mention all of them, nor discuss them in detail as I do not believe you should base your trading decisions on those alone. Try to use them with other technical or fundamental analysis tools. My favorite indicators are MACD and RSI. I wrote posts on the usage of both of them as well as moving average indicator.

Price action

It is a movement of a security in some direction and by using tools of technical analysis a trader is often able to guess the direction of price in advance. The application of those tools might be subjective as looking one and the same pattern two traders will probably form a different opinion. If one includes things such as fundamental news releases into one’s analysis his accuracy in predicting price action will grow. Most traders like looking at candlestick patterns, support and resistance levels and other methods to predict direction of price in the nearest future. No one will do it one hundred percent correctly all the time. Learning from mistakes and perfecting one’s methods of analysis should make one’s speculation better.

Trading strategies

There are plenty of trading strategies that purely rely on application of technical analysis. If you visit sites like Forex factory, Babypips, dailyfx and many more you will find a lot of free trading strategies that are based on TA. Most are based on the application of technical indicators, some on breakout of support and resistance levels, others on news trading and many more. If you are a newbie you can visit one of the above mentioned sites and back test some of the strategies, which you will like most.

Chart patterns in technical analysis

Those that like trading swings or trends that last longer than a week will often wait for developing chart patterns that would indicate a continuation of an existing trend, show a possibility of a break out of a current chart pattern, show places of a possible reversal and many more. The most famous chart patterns are: triangles, head and shoulders, inverted head and shoulders, wedges and rectangles. Some traders rely purely on those patterns while making their trading decisions and make big money in financial markets. One of them is Dan Zanger who made millions in stock market when it experienced dot.com bubble. He also pays much attention to volume, which is not very important if you are a Forex trader for you cannot know exact volumes if you are trading currencies. It is important if you are trading stocks though.

Trends and swings

Predicting long term trends and swings is probably one of the best things that technical analysis can help you to do in trading securities. We know that securities tend to stay in ranges for a long time. Some say that the ratio is ten to one. It means that securities could be in ranges for about ten months in ranges a year and only two months trend. But if one wants to make consistent profits, one should also learn how to identify an emerging trend and trade in the direction of it. One of the best ways to do it is to identify the limits of a range (support and resistance levels) that a security is in at a given period of time and wait for those limits to be broken. That’s how a lot of traders of the past and present made millions of dollars. They also kept building a line of positions after the breakout and would exit all of them when they saw the slightest sign of reversal.

That much information about technical analysis. I hope to expand the post and add more information on the topic in the nearest future.

See also:

Disclaimer

Trend for 24th of September 2011

2011-09-24T12:52:00.000-07:00

Hi trend traders and independent market analysts. Today I wanted to remind you about importance of 123 pattern in your trading. I hope you noticed that very often at the end of the move (in a range or a trend) we have some reversal patterns. In most cases they would be: head and shoulders or 123 structure. I wait for those patterns near important support and resistance levels or at the end of a swing. If the move is strong and continues for a long time you will want to search for a reversal on daily or even weekly charts. If it is a short term (one week or a few day move) you would be willing to see the pattern on 4 or 1 hour charts.

I want you to look at eur/aud daily chart and see two 123 patterns there. Both of them formed at the end of strong moves and presented unique opportunities for those who like trading reversals to enter reversal trades and jump on to a new developing move. As eur/aud tends to develop big moves you would definitely have to watch the pair for possible reversal patterns at important support and resistance levels.

See also:

123 pattern

Divergence

Disclaimer

Trend for 23rd of September 2011

2011-09-23T15:16:00.000-07:00

Hi fans of market trend analysis. Today I just wanted to talk a little about selling breakouts of support levels. I will take gbp/usd as an example. You can see that the pair has been falling for almost a month and is close to very important support now. You can also see that the pair reversed today and this may signal the bottom in the pair. But the pair has been falling and you can see in the chart how you could have successfully sold support breakouts on a number of occasions.

You could have taken the first short position at 1.6355 level, right after the pair formed a peak at resistance of around 1.6600 level. As the down trend progressed one could have gone short at 1.6211 (not a perfect short example), then at 1.5900 level and finally at 1.5700 level. As always, it is best to wait when the pair starts ranging after a move and forms some kind of a bottom. Then one could wait for the bottom to be broken and sell a breakout when it occurs. I usually say that Asian sessions are for ranging and European and American ones for breakouts and trending.

Do your own analysis about it and you will see. Hope you enjoyed this short post.

See also:

Forex factory

Disclaimer

Forex factory

2011-09-21T00:07:00.000-07:00

I decided to call this post Forex factory. I got the idea from the famous Forex forum under the same name. It sounds cool and shows exactly what it takes to become a successful Forex trader. You have to undergo a series of processes in the same manner as some product undergoes various stages in a factory until it goes for sale. Those who have attempted to trade stocks, commodities or Forex know that it is not easy to be a profitable trader. Most traders get burnt within two months of their trading. Most of them decide to leave trading and make money or realize themselves in some other way. I remember myself and my first steps in Foreign Exchange market. I repeated the statistics and lost my initial deposit it 2 months. I almost left the thing, but after a few months having seen some repetitive technical structures in the market I decided to study the thing more carefully. After some time I was able to come back to the market by trading trends and swings with a friend of mine and this time we managed to make money, not to lose it. In the post I want to share some of the things that I believe are necessary to become a successful forex trader. I guess that for those who are not new these processes in ‘Forex factory’ will not be new, but for some it will be, so let me start.

Forex factory rule number 1 – understand the basics of the market

Anybody who wants to be a successful Forex trader should understand the fundamental part of Forex. One should know how this market operates, what causes prices to change, have understanding on what kind of orders exist and which type of orders are best at various conditions market can be in, the biggest size of position that one can take without risking to lose too much, best times for trading, closing and leaving open positions and a few more things. I remember my friend opening a real Forex account with one of European Forex brokers. At one time he had usd/jpy pair open and wanted to close it. However, the platform he was using was rather complicated. So, instead of closing the order, he opened another one. My friend did not know how to close his position. Finally he had to phone company’s help desk and after some twenty minutes of talk his order was finally closed. I believe he was lucky that the thing did not happen during some news release. Having one standard lot open with 2 thousand bucks in the deposit and not knowing how to close it could be a fatal mistake at the time when news comes out. So, you can blow off your account just because you do not understand a few basic things about Forex trading.

Forex factory rule number 2 – have a thoroughly tested and profitable trading system

If you want to be a successful Forex trader you must develop or simply get a tested and reliable trading system that could be used long term. I am sure that with time you will be able to develop and use as many trading strategies as you want, but when you start you should master one. I would really advise you to try the system for at least two months and if that is possible try to backtest its’ performance for twelve or twenty four months. If the system is not profitable within that period of time, do not deceive yourself that it will be successful. Just drop it and search for another one. If it is profitable just go ahead and use it trading in small lots until you feel comfortable.

Forex fatory rule number 3 – develop a trading plan

Ask any trader who has been in the market for five or more years and is able to trade profitably and he/she will tell you a well developed trading plan is a must. A plan can remind you about the direction that you take, goals you want to achieve and the way you are going to trade. It must include: frequency of your trades, rules about entering and exiting the market, what market conditions should be present in order for you to execute a trade. It should also remind you how you are going to solve complicated situations in trading; let’s say when the market starts going against you. It must also remind you how you should behave when you have a few bad trades one after another and maybe even a few good trades one after another.

Forex factory rule number 4 – stick to your plan

After developing your plan you should stick to it and follow it with strict discipline. Other things will not work long term if you do not follow the plan that you have made or you make too many exceptions to it. Your trading strategy could be the best in the world, you can have a terrific plan and excellent understanding of fundamentals, but if you do not follow those and start making spontaneous trading decisions you will surely burn your account. Succesful trading does not start with improvisation. It might come later, but if you improvise all the time you will probably become a gambler, not a trader (and a bad one too!). Simply follow your plan blindly and only when you see that something repetitively does not work, then you make adjustments to your plan. Just do not make those adjustments every day for your trading plan will have too many points, which will become too difficult to follow. So, have a plan and keep to it.

Forex factory rule number 5 – learn to control your risk

If you want to stay long in Forex market and finally become a profitable trader, you should also have a risk management system. You should have it outlined in your trading plan, but as it is very important I decided to mention it as a separate point. Your deposit is the tool you work with to make more money. You cannot trade without money. Before you can make money, you should learn how to protect the amount that you have. Read any article on risk management (in trading) and you will always find that the rule of not risking more than two percent of your capital on any given trade. I would say that you should not risk more than one percent when you are starting. As the time goes one you will be able to increase the percentage. In the meantime, learn to manage your risk.

I hope the article was useful. It cannot reflect all the necessary things that one should know as a Forex trader, but I believe it conveys the most important things. You should stick to the points till they become your second nature and the process of trading becomes automated. With time you will develop your own trading style and strategies, but before profits come you will have to undergo a painful learning process. Good luck in staying in Forex factory and becoming a profitable Forex trader.

See also:

Original Forex factory forum
RSI
MACD

Disclaimer

Trend for 20th of September 2011

2011-09-20T11:32:00.000-07:00

Hi, trend and day traders. I have been looking at aud/jpy pair today. As you may see from the charts it (as well as other Yen pairs) has been falling lately. Yen has been growing strong due to weakening oil prices, which may fall once again this week. This maybe good news for Yen and US dollar and bad news for commodities and commodity currencies such as Australian dollar, Canadian dollar and New Zealand dollar. It should be good for an average consumer like you and me who are influenced by inflation that has been rising due to printing of money and high prices in commodities.

As you may see oil is at some short term resistance now and will probably continue falling. This could influence aud/jpy and it will fall with the commodity too. However, I see some support coming at around 77.00 level (in aud/jpy) and 75 (in oil). I would wait for a reversal pattern at around 77.00 level (head and shoulders or 123 structure) on 5 or 15 minute chart around the area. If you study eur/jpy or gbp/jpy or other Yen pairs you will see that most currencies are at multi year lows against Japanese Yen. This tells me that the trend may change soon and Yen will collapse.

See also:

123

MACD

RSI

Disclaimer

Trend for 20th of September 2011

2011-09-19T15:17:00.000-07:00

Hi, trend trading lovers. My computer has been repaired today, so I will continue my posting as usual. I did not have much time to look through the charts, so I won’t write a long post today too. I have just looked at commodity pairs. I know that you can remind me my positive position towards those and say:”Look, do you see where they are going?” Yes, I see. But this is short term. Those who want to make serious money in the market have to concentrate on long term picture and do not overtrade using short term moves. Hope you see what I mean.

So, I looked at my charts and I see that eur/cad is at support now. I am short term bullish for the pair. Long term, I am bearish. Euro will collapse, because they have too many problems and too few ideas how to solve those. I believe it will be number 1 loser in currency market in the days to come.

Australian dollar has been falling. However, if you remember my post where I talked on eur/aud, that it can be a leader in a bullish move of Australian dollar, I hope you see that I was right. I has reversed recently, but I am sure that it won’t continue for a long time. Just remember, that currencies that have been weak for a long time will rally at some point and become biggest winners from biggest losers. I do not believe it be for a long time though. So, I am looking forward to more weakness in eur/aud.

Good luck.

See also:

RSI

MACD

Moving average

Disclaimer

Trend for 18th of September 2011

2011-09-18T12:23:00.000-07:00

Hi, market trend analysis fans. My pc is still not repaired, so my post will again be short today, with no charts attached. I hope that I will come back to normal posting in the middle of this week.

Today I wanted to pay your attention to eur/usd pair. You saw that it stopped falling last week and was mildly rising throughout all of the week. However, if you carefully look at the pattern in which it was rising you see that it might reverse and start falling again this week. 1.3750 level is support now, but when broken we will definitely see the most recent bottom of 1.3500 and nobody knows whether the pair will stop there.

It seems to me that the security will visit 1.3000 level somewhere this year. In my opinion eur/usd will continue going down in a downward channel creating shorting opportunities in counter trend moves (rallies). Wait for reversal patterns there.

It is important what happens during European session on Monday. If support breaks, I believe we are going to see much lower prices in eur/usd sooner rather than later. Let us wait for the morning. Do careful analysis, before you make any serious trading decisions.

See you tomorrow.

Disclaimer

Trend for 16th of September 2011

2011-09-16T14:41:00.000-07:00

Hi guys. It is the third day I am sitting with an old pc of mine, which does not work very properly, therefore I can simply remind you a few things till my computer will be fixed. Today I wanted to stress the importance of looking at the big picture. How can we do it? By looking at long term charts. That’s how you should start your market trend analysis.

You should always remind yourself whether the market you are studying is in a big move, range or is going sideways. Daily charts, with the help of 4 hour charts can help you to do it. When you see that you are in a move, wait for counter trend moves and when they are over jump back to continue going in the direction of a trend.

If the market is ranging, wait for it to reach important resistance or support levels and reverse there (after forming a reversal pattern). And if the market is going sideways, I would simply stay out of it and wait for better opportunities.

Hope that helped. See you tomorrow.

Disclaimer

Trend for 15th of September 2011

2011-09-15T15:14:00.000-07:00

Hi everyone who enjoys my market trend analysis. I am not sure if you can enjoy it much these few days, because my computer is being repaired now and I have to work with the old horse I am working with now. So, my posts will be extremely short for about five or six days. At least I hope so!

Today I just wanted to remind you about the fact that in trading a range you have to look at support and resistance levels. Markets are now in awful ranges and the best way to trade them is to simply wait for a security to go to a resistance (or support) level form some reversal pattern (123 or head and shoulders) and reverse. If you learn to do that you will become a professional range trader.

See you tomorrow!

Disclaimer

Trend for 14th of September 2011

2011-09-14T15:26:00.000-07:00

Hi, market trend followers. Unfortunately, my computer crashed and it will be problematic for me to do serious analysis for about a week. I guess the problem will be solved sooner and I will continue with my market updates regularly. Computer that I am using at the moment is good for almost nothing. An old horse and that’s it.

Anyway, in the meantime, don’t forget to always trade in the direction of the move and never in the opposite direction. Do not be attracted by those who enjoy trading counter trend moves for it is a much more difficult strategy that simply trading a direction.

And also, do not forget that when securities start moving, they usually do it all at once. Your task is to select the leader and put your biggest positions on that one. That’s how most money is made in financial markets.

So much for today. Hope to write more informative posts soon.

Disclaimer

Trend for 12th of September 2011

2011-09-12T14:26:00.000-07:00

Hello those who enjoy reading my daily trend analysis. Let me today come back to my prediction regarding aud/jpy pair. If you remember I said that I expected it to rise as it had reached some support level and bounced of it. Unfortunately it did not happen. Now, what do you do if the move does not continue and you are not able to follow the price in the direction you expected it to go? Well, you just go the other direction. How? By trading a reversal and a breakout of support or resistance (in this case support).

So, if you look at the chart I gave yesterday and compare it with today’s you see what I mean. Our prediction can never be one hundred percent right. We should always have plan B, C and maybe even D and E. If you see a pair bouncing from support it does not mean that it can do it for a long time. A breakout downwards can be very soon. That’s what happened today. The pair just plunged through support and that’s it.

So, one could simply place a short order below the support level that is indicated in the chart and go together with the market if the breakout is not false (and it was not). The pair is at intermediary support now, but will probably go lower to another support level, which is at 77.00. I really expect the security to find its’ bottom there, reverse and go up again. Why? Because I expect commodities to go up and this means that Australian, Canadian and maybe New Zealand dollar pairs will continue going up against other currencies. Hope I am right.

See you tomorrow.

See also:

Breakout

Divergence

Disclaimer

Trend for 11th of September 2011

2011-09-11T12:32:00.000-07:00

Hi, lovers of trend trading. Since nothing was happening during weekend (markets are closed) I do not want to go into long talks today. I just looked at aud/jpy pair and decided to say a few words on the security. As you may see it fell sharply on Friday. However, if you looked at 4 hour chart you can clearly see that it hit previous support and jumped off it. What does that say to us?

I do not know about you, but I see that a reversal is coming and the pair might continue its’ upward trend. From my perspective I see that the best way to trade the pair is to wait till it consolidates (probably during Asian session) and then buy it near most recent support (that is to be established yet). Then, if my prediction is ok, market will continue upwards and those that have open long positions will go with the flow.

I would not trade Asian sessions though. They are mostly consolidation times with low range and one cannot get much out of such small ranges. Well, if you are a scalper of a faithful day trader with a good trading system, then I do not have any objections. Just do not overtrade!

See you tomorrow.

See also:

Disclaimer

Trend for 10th of September 2011

2011-09-10T13:52:00.000-07:00

Hi, fellow market trend analysts and independent traders. Yesterday I talked a lot about eur/gbp pair. Today the post will be very short. I just wanted to say a few ideas of mine how to prepare for Monday in terms of the security I have just mentioned. I wrote yesterday, that we can have both continuation of the move downwards for the critical support was mildly broken, or we could have a reversal and the pair will come back to its’ former range. So, what do we do having this information.

I would personally see where the market goes during Asian session. If it retraces upwards to some most immediate resistance and forms a reversal pattern (such as 123 or head and shoulders) on smaller time frames (5-15 minute charts), it would be a good possibility to sell the pair and go lower with the market (if it does go there). If the pair continues falling during Asian session and then forms a reversal pattern at other level of support it might be a sign to go up. Wait for reversals on the bottom too. And of course, the pair can simply turn upwards during Asian session and the entire move from Friday will be forgotten.

Use your sound mind and do not overtrade. Learn to analyze before you jump on any trade. It might be a good idea not to trade at all and spend the day for monitoring price action in this and other securities. Good luck in whatever you do. See you tomorrow.

See also: