Thursday, July 28, 2011

#USDx Outlook

Contrary to the widespread pessimistic views surrounding the buck, I still believe we will see the Dollar much higher in the upcoming years.

The daily chart demonstrates price action inside a broadening triangle formation. If one were not to follow the right sequence of moves, but only consider higher highs and higher lows, than one can assume that price is also inside a rising channel.

It's interesting to see price inside a sideways channel on RSI containing the broadening formation as well. A break on any of these two red lines will turn into the driving force. Whichever way it choses to break. There is also a flat line that extends from last October that contrasts with the lower highs and lower lows made until may of the current year.

Needless to say that a MACD bull divergence points to a must reach target of 75.85.

Once again, time will tell.


#EURUSD Trade Options

A good opportunity of taking a LONG in the direction of the monthly/weekly main move just presented itself during the ASIA session. A position could/should be established in the direction of the main move of the week/month (uptrend) in an attempt to take out the weekly average range.However, I truly believe this low of the week won't hold because the average monthly range was taken out this week. Therefore, we should see monthly range trading until Friday (last trading day of month) thus having higher probabilities of expanding the weekly range (currently around 62%) south of the weekly low.


In case those stops are triggered, a second option would be to take a position on the break (SHORT) of the low of the week. In this case, a the position will be backed up by the main move of the day and the NEW main move of the week. However, in this case, the position will require a bigger SL (above the days high).


A third option would be to skip the break of the weekly low and wait for a pullback towards the daily high where a more acceptable number of pips @ risk will provide a better R:R trade.


Fiber has just encountered a supportive trend line clearly seen on 4h or 5h time frames. On these time frames, a potential H&S formation could be in the makings. In this case, it could be worth trying to catch the top of the projected right shoulder with a very tight stop loss.


Let see what happens.


Cheers.





The 300 min. chart: a possible H&S formation could be in the makings.





A chance to go LONG presented it self as price closed in towards the low of the week when the monthly trend is up and the weekly trend is also up. However, a SHORT position can be established at the break of the low of the week.

Wednesday, July 27, 2011

#GBPUSD Long Term Technical Picture

The pound has a very interesting technical picture. The weekly chart shows that price reached a resistance trend line that extends from 2008 yesterday.

A short position could be established with a very tight stop loss. This would be a very discretionary trade as the monthly trend is up as well as the weekly trend. It would be based on R:R. By looking at price action added to the closer proximity to the low of the year, it was a clear opportunity to get a possible extension of the yearly range south if it actually happens.

Interestingly enough, both RSI and MACD demonstrate a very discrete but confirmed divergences.

While actual price action shows price making higher highs and higher lows, RSI shows action inside a sideways parallel channel. A break of  of the lower line is expected thus drawing down force pressure.



While chart price actio is inside a rising channel, RSi is clearly showing a sideways channel: divergence. Price reached a key trdline earlier this week.

Tuesday, July 26, 2011

#USDCAD

Loonie had/has two interesting positions as of now. Earlier during Asia, I took a short position in the direction of the main move on the brak of he lowwhen price was drifting upwards.

Another opportunity was just provided as price pulled back closer to the high of the day.

#EURUSD Range Breakout

The Euro was ranging between a roughly 120 pip parallel channel since thursday of last week. It broke this pattern north during Asia session. Considering the size of this consolidation, it has some more room to go up to around the 1.4550 level.


It was a considerable brekout because it took out the daily high/weekly high as well as last weeks high. A full trend following position.

However, the high of the month remains intact as it is still down.




Asia session took out the high of the day/week/last week. A

Sunday, July 24, 2011

USDCHF

It looks as if the swissey has chosen its path for some short time. Most likely, it will head north for some time now.

I usually don't take the first break of a triangle formation as usually the first break means a fake break and therefore, the real market intentions is usually the opposite direction.

Taking the first break on such a formation is too obvious. Therefore, a great opportunity for stop hunting.

Lets see if this formation confirm my thoughts.

Best.



The first break of such a formation confirms the real market intentions.

Tuesday, July 19, 2011

#Dow Jones Diamond Formations

The Dow is inside a diamond formation on the daily chart. It seems to me that it will be a reversal pattern. Depending where the pattern breaks, the minimum objective target should be around 10.500 - 10.600 points. There is also a confirmed MACD bear divergence that will send price initially to the 10.900 points level. This is a must reach level. Timing, however is unknown.

I also have indications that price will head even lower. The monthly chart demonstrates a huge broadening triangle formation that could become a diamond formation. This one, however, would be a continuation pattern. If and when price reaches around the 8.000 level and bounces, we should have a complete formation. Therefore I expect a bearish Dow for the next years before it turns back into a bullish trend.

Only history will tell how all of these will unfold. However, when I put together all the analysis regarding the USD, the EURO,commodities as  well as other currencies, it makes all the sense in the world.

Lets see how all this unfolds.

Best to all.




Monday, July 18, 2011

Percent of Average Daily Range Fulfillment for 10 pairs (last 60 days)

As my trading method involve statistics and probabilities, I present this first hand information to you.

I have backtested 10 pairs using MSN historical data and found the valuable information for those of you who trade targeting % of average daily range completion.

It seems that at current market cycle, JPY pairs have a more limited potential to achieve above average ADR percentage. USDJPY and AUDJPY, for example,  had above average (above 50%) performance at no more than 78-82% of ADR completion.

In other pairs, the % of ADR coverage seem to perform better than the JPY crosses.

EURCHF seem to be the overall champ. This pair has above average potential to achieve above 100% ADR completion. With an aprox. 136 pip average daily range, this pair seems to be a good choice for trading at a first glance. Of course, one has other things to consider (trend, SL placement and R:R) just to name a few.

Therefore, there is no point trying to set unachievable goals for a intra-day trade. The distance between your entry and your TP level has to be a very important component of trading tactics. Boarding a fast car (trend), going for an achievable distance (ADR % completion) will give a trader statistic advantage of price reaching the Take Profit level before it reaches the proposed Stop Loss level.

Here is the graph.

Cheers.

PS: Special Thanks for Sorin (AKA SOSO) for helping me compile this valuable data. You can find Sorin Chiorean at his website: www.codeworks.ro


Setting a reasonable TP level has to be a very important part of one traders tactics. 

Thursday, July 14, 2011

#USDX and Fibonacci Precision

One of the theories that I believe regarding trading is the retracement (discount) theory. The Fibonacci retracement tool aims to take those discounts and put them into measured levels.

Although I see significance in retracement, it's not every instrument that follows the fib levels accordingly. I would say that most of them don't exactly follow the fib level accordingly. There is always an exception for the rule.

USDx ans USDJPY are exceptions and interestingly enough EURUSD in some ways follow the fib levels as well.

So far, the bullish correction that we observe on the USDx, has followed the fib level in pretty accurate fashion. 61.80%, 50.0% and 38.2% (latest level for buy orders) have been very accurate.

Not only that, but the 61.8 level for the original downtrend channel, seems to be the first MACD bull divergence target @ the 78.90 level.

Although I don't use fib levels on my trading, it seems to me that there is enough amount of money parked on these levels as to make them have significance at least in a few instruments.

Cheers to all.

Wednesday, July 13, 2011

#EURAUD Diamond and Intraday Trade

A Fellow trader called me to the attention to this consolidation formation that happened towards the end of June on EURAUD.

This is a clear example of how a Geometrical formation, after its break (in this case clearly reversal) sets the pace of the trend. We needed a measured objective target for this and any short entries should be favored during the ride down.

Today was a clear example of this when price made a pullback towards the high of the day and a SHORT entry could/should be established in the direction of the main move. All trends were aligned (monthly/weekly/daily), therefore there were higher probabilities that this pair would try to fill its ADR south of the border. It did.

Both (break of diamond) and pullback were EXCELLENT trading ideas.


A textbook example of a diamond formation on the 60 min.  chart at the top of the range. Its main diagonal pointing up suggested a reversal as it clearly happened.

Tuesday, July 12, 2011

#USDCHF Diamond Reversal Picture

The daily chart shows see that we need a lower right border that perhaps will be formed in a few days to finish a very symmetrical diamond consolidation form.

Lets see what the low of the week will be. Probably that will determine the lower border.
The green line touch (as a swing low) would determine a good symmetry for this one. Since the main diagonal is pointing DOWN, the odds are that an upward break is most likely to occur.

Looking good so far.




We have other clues that show that a reversal (correction) is imminent. Those being price action being inside a bullish wedge formation and some confirmed MACD/RSI bull divergences already published here.









A projected diamond consolidation formation: although we still need a lower right border, mos-likely will be completed by the end of this week. A correction is very likely.

Monday, July 11, 2011

#EURUSD Breakout

The Euro broke an important trend line and now is heading towards the lower boarder of the channel path it is currently inside.

1.3968 seems to be the nearest support. We are also reaching the lower boarder of a triangle.

I still maintain my post from June 16, 2011 (http://mcapitalmarkets.blogspot.com/2011/06/is-us-dollar-really-doomed.html) where I believe EURUSD is headed towards parity and even below and that the USD will be bullish for quite some time.

Here is the daily chart for EURUSD.




The Euro broke an important trend line on its path down south. I still maintain the prognosis of parity or below parity in the following years.

Thursday, July 7, 2011

#GBPUSD Outlook 08/07/2011

The Pound still holds some good opportunities for trading this Friday. Current prices show that we have close to an 80% chance of further expansion south towards the completion of the average weekly range.

If we get an aligned downtrend (month/week/day) tomorrow, than 2 trades could be possible:

1. If we have a downtrend day, than trade the pullback towards the high of the day targeting the average daily range and/or the weekly range.
2. Take the entry on the break of the weekly/monthly low following the direction of the main move. I will take this one only if the price action   permits placing a SL at a reasonable distance if compared to the potential profit.

Lets see what is reserved for us tomorrow.





In the case of a downtrending day tomorrow, the entry should be guided by tomorrow's high of the day towards the main move.





Price is much closer to an expansion south. Therefore, If tomorrow's price action allows, a position on the months/weeks break could be taken. 

#EURUSD Outlook 08/07/2011

The EURO doesn't seem to be a very interesting pair to trade tomorrow as it has completed its average weekly range already. A very limited option would be to take an intraday short on the pullback if price action permits (downtrend tomorrow as well). However, it wouldn't be too attractive, at least to me.

Better odds is that we should see some 'range' trading tomorrow.

A break below this months low (week as well) seem too distant as to enable us to place reasonable intraday stops. Therefore, I'll check back on this pair next week.

Here is the hourly chart for it.


A break above the turquoise line would mean a counter trend trade. Not suitable for this particular strong downtrend. The option could be to enter on a pullback towards tomorrows high, if we indeed have a downtrending day. I will seat out on this one tomorrow.

#USDCHF Hourly Triangle

The Franc has formed a tringle observed on the hourly chart.

Current price levels suggest that the swissey has roughly a 38.2% chance of completing it's average weekly range to the downside, thus taking out the low of the week and the month. This leaves us with around 61.8% chances of observing an expansion north.

So the break towards the top of the triangle seems the better choice as long as we have some inspiring price action tomorrow (daily trend should be up). If indeed price action permits a a SL to be placed below tomorrows low at a reasonable R:R, than a good trade could be setting up. Will see when time comes.

0.84342 level on the chart represents 50% of this weeks price action. The blue line level, above @ 0.85056 represents the high of the week. The higher peak to the left is the high of the month.



Price inside a triangle formation. We could see a break of the formation as well as a break of the weekly high as well as the monthly high thus far.

Wednesday, July 6, 2011

#USDCHF Holding On As A Safe Haven

Contrary to the other majors and many of their connected crosses, the swissey has been holding on as the safe haven for investors during turbulent days. However many indications says that a strong correction upwards is imminent (wedge + divergences), it seems that this particular pair is draining milk from rock.

 Literally.

As though the US Dollar Index is regaining ground (after a bounce from a triangle's lower trend line), the Franc is into a short-term downtrend. After having completed about 62% of its weekly average range, having the weeks and the months trend both aligned SOUTH, we should see a completion of this weeks range to the downside. However, as an outlook, not for trading sakes, I wouldn't be surprised if this months high is taken sooner than later.

For trading sakes, shorts are WAY more promising as of now.

On lower time frames, we can see a pretty flat, sideways channel which the top break, will represent the break of the monthly high so far.

Here is the daily chart for the Franc.



The Franc have all indications of a move upwards. However, we are still in downtrend mode. 

#GBPUSD Breakout

Cable has finally made the break of the monthly low and made a run towards its average daily range.

Other GBP crosses have followed.

Therefore, MANY pairs have a strong short/mid-term outlook.

Look for SHORTS.

Regards.

Tuesday, July 5, 2011

#EURUSD & #NZDUSD

Euro and kiwi have just changed the main move of the week/day/month to down. Therefore, these 2 pairs have a 'strong' downtrend probably for the remainder of the week. Look for shorts. Breakouts towards the end of NY session were good trade ideas.

#EURO Crosses Breakouts

Some Euro Crosses had very nice breakouts as announced earlier.

EURCHF broke it's days low during the Asia session and it took out the weekly low in the direction of the weekly trend. It has reached 100% of its average daily trading range. The low of the month still remains to be taken out thus putting it in FULL downtrend mode for the remainder of this week.

EURGBP had a similar situation to EURCHF and took the whole range as well. However, EURGBP also changed the main move of the month making it a strong downtrending pair. Look for SHORT entries on this pair.

EURNZD took almost the whole range as well on the break of the week low in the direction of the main move. The low of the month sent this pair on a full downtrend mode for this week/month so far. Look for short entries here.

On other European currencies crosses:

CHFJPY: A great breakout of the high of the week in the same direction of the month, makes this pair very interesting to trade on the next few days. Not only it completed its average trading daily range as it took out the high of the month thus changing the month move to UP. If we have a close near todays high, expect some upwards expansion tomorrow as well. Look for longs on this pair.

GBPCAD: This pair took out the high of the week as well as the high of the month thus aligning all three trends (daily, weekly, monthly) to an upwards condition. Look for longs on pullbacks or high (daily, weekly, monthly) breakouts.

GBPAUD: Also had a nice breakout on the daily/weekly highs in the direction of the move. All 3 moves (UP) are aligned. Also a great pair to trade in the next few days.

#EURCHF Follow Through

#EURCHF also had a nice weekly breakout with a very consistent follow through. Some 30, fast pips, could have been made.

Monday, July 4, 2011

#USDJPY, #GBPUSD, #EURUSD Range Breakouts



The Yen just had a nice breakout in the direction of the main move. A quick gain could be made. Also, TP @ ADR could be a second option. This was a special breakout with the month main move up as well as the change in the weeks move to UP and the days move as well.


Cable has an opportunity too. However, against the temporary main move of the month which still is UP. So, the probabilities of such a trade are smaller.
The same is being observed in other pairs. EURUSD including.

Sunday, July 3, 2011

#USDx

The buck has reached a lower trend line of a triangle formation. Lets see what happens from there on.

#GBPUSD Outlook

GBPUSD is currently inside a channel as observed on the 60 min. and on the 30 min charts.  If and when price takes out the low of this month, so far, than the Pound will change the monthly main move to down. Therefore, if the daily range permits when and if that break occurs, a SHORT position should be established and the SL shall be placed above the intraday high.

Therefore, a very nice setup is in the horizon.


The 30 min. chart showing price action inside a rising channel. A break of this pattern should propose a change in short term trens direction. That wil only occur if and when price breaks below 1.587. A short position could be established in the direction of the main move.


Friday, July 1, 2011

#USDCHF Outlook Next Week and Further

In the short time-frames, we should see the beginning of the week with a bearish start. A bearish wedge formation can be seen on the 30 min and the 60 min. charts. One could take this 'risky' trade counter to the main move of the month (UP). However, I would recommend taking profits as soon as possible once and if the trend line break occurs. A bear MACD target is pointing towards 0.8393. We had incredible ranges for the last two days and closing prices close to the top. Therefore, momentum/acceleration is CLEARLY to the upside. However, we have a holiday in the US on monday. So activity will be lowered and therefore, this 'fall' in price is likely to occur.

On the 240 min chart, price is still inside a descending wedge formation. However June's whole price action is inside a broadening triangle formation (violet lines). It's early to say, however, this could later on turn into a diamond. Still early to say.


The daily chart still points to a correction pattern with price inside two bullish wedges (green and blue lines). A clear MACD bull divergence points to the must reach target of 0.8946.

So I expect this next week to begin bearish, however, price will pick up to the upside most-likely. Needless to mention that the USDx is reaching a critical trend line. A bounce from this trend line will inspire the USD bulls back.

Here are the charts.



The 30 min. chart showing the bearish wedge formation. Holiday in US could trigger this bear action.





The 240 min. chart.: The whole month of June inside a broadening triangle.




The daily chart showing signs of a reversal. Must reached target @ dotted line.

#EURUSD Outlook Next Week

The Euro is currently drifting inside a broadening formation since yesterday (thursday). The whole price-action of Thursday and Friday, in which mos people call it ranging, can give out an oppostunity to take positions. One option would be to take a short position from the upper trend line. However I dislike this a lot because one has no plac to "hide" the SL on such situation. It would also mean that one would be taking a position against the current main move, which is up.

However, taking a short on the break of the months low (today's low) is a good opportunity to take a position on the direction of the new main move.

Therefore, the plan is to take a short position on the break of todays low in the direction of the main move with a targets being the average ranges as well as that MACD bearish divergence target.

A great weekend to all.


The 30 min. chart demonstrating price action inside a broadening triangle formation.



The Macd divergence with the target on the 60 min chart. A position on the break of todays low will be established.
 

#EURUSD Main Move

EURUSD has just changes its main move to down. Most likely will complete rest of the day to downside