Big Money is in Big Moves

That was the idea that famous speculator Jesse Livermore realized and the idea helped him to make millions in stocks and commodities trading both on the long and short (buying and selling) side. According to his own words when he day traded he failed to see the big picture and the prevailing trends in the market. When he realized that he should follow trend, he stopped losing money and started making it regularly.

The good news is that big moves happen almost every week. We call those swings. Trends are longer term moves that happen one or two times per year, while swings do happen every week, both as directional and correctional moves. If you look at the chart of gbp/usd below you can see that the pair has been in a range for some time, but within the range there were plenty of swings every week that you could play on the long and sort side. On the 25^th of January the pair was mostly in downward swings with some correctional swings. You would have made more money selling correctional rallies than buying dips in a downtrend. However as moves lasted from 5 to 10 business days with the help of trendlines, key price points, resistance points, key reversal days (Fridays and Mondays) you would have made money trading either direction.

My point is that you need to see bigger picture: from one to three months. Then you will be able to see those key resistance and support points where reversals typically take place and place buy or sell orders respectively. You may measure number of pips from one peak to another to calculate possible reversal point in a downtrend in order to take a position and number of pips from one bottom to another in order to guess a reversal point and initiate a buy order in an uptrend.

These weekly swings help you not to get lost in daily fluctuations and to see bigger picture more clearly. Seeing it you would probably trade less, but more profitably and on each trade make more money. Good luck.

Disclaimer: Your capital is at risk.

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Bitcoin in a downtrend, but the trend might change soon

Disclaimer: Cryptocurrencies can fluctuate widely in prices and are therefore not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.  

I know there are a lot of cryptocurrency lovers out there and I don’t mind analyzing and even trading it myself. It is obvious that Bitcoin and most other cryptos were in a downtrend mode since the middle of December. The move down was very dramatic erasing a lot of profits by correcting about 67 percent. It is quite a magic number as the move down represents the third level of Fibonacci retracement. In most cases securities resume their trends when the number is hit.

Looking at current price action you might see that after the crypto hit 5860 level it bounced really hard indicating there is some strong buying in the area and possibly indicating that the downtrend can be over. Therefore, I assume a move up may resume any time soon and Bitcoin will revisit 20 000 level sooner rather than later, possibly by the end of this year.

Disclaimer: Cryptocurrencies can fluctuate widely in prices and are therefore not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework. 

Technically speaking I expect a move up in a zig zag way (wave up, wave down with higher highs and lower lows). There will probably be a bottoming process now till the crypto stand firmly on both feet, so to speak and we may see it revisiting 5900 level again, before making another rally. Any move down is probably a good opportunity to buy and buying on dips will be a good strategy.

So, to sum up, I expect Bitcoin to resume its trend and excellent opportunities might be ahead of us soon.

Gold and oil analysis

Gold and oil have been trending lower for quite a while. From fundamental point of view I see a lot of politics going on with both commodities. Due to annexation of Crimean and turmoil in Ukraine Russia faced a lot of pressure from the West and one of the reasons for fall in oil prices could be just this. I can never be sure about it, but big boys definitely have means to push the price of oil or any other security. Of course, there are other reasons too. However, no trend continues forever. On the one hand we could see oil going to 60 bucks per barrel and stay at that level for quite a while. On the other hand, we could see gold bottoming in the area of 1000-900 per ounce. You should remember that gold is a currency as well as cash and in such troublesome times as these you should invest in gold. I mean you should possess it in physical forms. Silver is an alternative, of course, if you cannot afford buying gold. At some point, we might see nations collapsing economically due to debts in government sector.
TRADE GOLD, OIL AND CURRENCIES ON eToro

Disclaimer: All trading involves risk. Only risk capital you’re prepared to lose. Past performance is not an indication of future results. This content is for educational purposes only and is not investment advice.

For the time being, more pressure will be coming to both commodities. If you are a swing trader you should consider selling gold at resistance of 1220-1180 (previous support, now resistance) level down to 1000 level. Selling pressure may come as early as the beginning of next week.

Now, oil is currently at resistance. The commodity ended the week at resistance and you might expect oil to start falling to new lows from these levels. We are in a downtrend and you should only sell rallies when downtrend is in progress. Price may do some topping process at these levels, but I am pretty sure that it will go through the floor sooner rather than later.
For those who need basic Forex education I recommend visiting website http://www.theforexspeculator.com/ where I regularly write educational articles.

Trend for 31st of March 2011

If you remember I wrote about an uptrend that I expected to develop in gbp/usd. It did happen today and you could have made some nice profit on the move up in the pair. It has already made some pretty fast reversal and I am out of my trade that I entered yesterday when the pair broke out. Today I am more looking at gbp/jpy pair and I see some possible down trend in the process of developing.

I see two points of support at 132.90 level and the pair failing to continue its’ ascend. So, 132.90 level can be broken pretty soon. At the time of writing it is under assault. I am not entering yet, but waiting for some retracement from the level. If the pair fails to go beyond resistance again, then I will short the pair when it passes below the support. So much for today. Look at the chart to better understand what I mean. See you tomorrow. 

Read my previous posts:

Gbp/usd breakout and uptrend

Gbp/jpy news trade

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.