Archive For "October, 2008"

10-31-08

3:34a GMT – In the short-term for the EUR/USD I am favoring shorts down to support at 1.2600. The pair has recently seen a pullback from daily lows at 1.2740 and I see above 1.2800 as a good selling point for the retreat.

Trading Idea: Look for bearish reversal signals around 1.2850 with shorts favored down to support at 1.2600.

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10-29-08

3:15a GMT – After correctly predicting yesterday’s rise in the EUR/USD pair I am still bullish on the pair for today’s trading and I’m looking to buy dips. The pair rose yesterday as US traders took money out of the dollar safety and into the stock market in hopes of a rate cut by the Fed. A rate cut would put more money into stocks and take carry trades out of the dollar, leading to a rise in the pair.

Trading Idea: Closest support is 1.2600 and I’m looking for bullish signals at that area with longs favored to targets at 1.2680, 1.2750 and 1.2900.

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10-28-08

2:58a GMT – Is it time to start buying the EUR/USD pair? It may be as the pair has just bounced off support around 1.2300, the weekly RSI is well below 30 and the Slow Stochastics on the weekly chart are trying to cross. The US stock market dips Monday and last week have pushed the USD higher, and good news yesterday about new home sales may push some of that money back into the stock market and provide the bounce we are looking for in the EUR/USD.

Trading Idea: Look for bearish reversal signals around 1.2300, with long targets favored to 1.2395, 1.2455 and 1.2695.

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10-24-08

2:40a GMT – EUR/USD continues to plummet, and as smart traders we will continue to trade with the trend, right? Right! Nearest resistance zones are at 1.3075 and 1.3250. We should be looking to sell rallies on bullish reversal signals at one of these levels.

Trading Idea: Sell at 1.3075 with short targets favored down to 1.2730. If 1.3085 is broken look for a return to 1.3250 and look for a selling opportunity there.

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10-21-08

1:26a GMT – As traders we tend to focus in on our time frame of comfort. If you are a day trader that could be anywhere from 5 minute to 30 min charts. If you are more of a mid-term trader you might focus on the 60 minute, 4-hour or daily charts. Most independent traders don’t have the luxury of really examining the longer-term monthly or weekly charts because, well, you need to make money today – not four months from now!

But that is not to say that we should never look at those longer term charts. Longer term charts can provide us invaluable information as to the trend of the pair, and give us a great view of which direction we should be looking to trade on the shorter-term charts.

Today I want to do exactly that. As an exercise that should benefit us all I am taking a look at the monthly chart of the EUR/USD, to give us better perspective on our shorter-term trades. The first thing you notice looking at the chart below is that the EUR/USD is more or less at the 1994 level of 1.3000. In 1995 there was a brief spike up to 1.4500 before plummeting to an all-time low of 0.8250 in March of 2000, when the Fed interest rates were high and Europe was struggling to unite.

In late 2001, after the US stock market issues, the wars in Afghanistan and Iraq were launched we see a slow and steady decline in the dollar’s value which leads to an inevitable climb to an all-time high of 1.6000 this year.

What has happened since then though? The chart speaks for itself. The pair has dropped 3000 pips in only 3 months! Anyone holding long on this drop has lost their shirt and is no longer trading!

Currently the pair is hovering right on support at 1.3000.

So you are probably asking: Mark, what does this mean to me? I’m an independent trader. I can’t make trades based off the monthly chart! The answer is one of the most tried and true trading strategies around: look for areas of confluence.

Areas of confluence are when you find that multiple chart time frames all signal the pair is going in the same direction. For example in the month chart we can see that the pair is obviously headed downward. We then take that information and look at the 4-hour or even the Daily chart for selling opportunities, most likely at resistance levels.

If you can learn to trade at areas of time-frame confluence, practice good money management and look for candlestick confirmations you will be part of 5% of traders who succeed in this market.

Trading Idea:

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10-21-08

3:26a GMT – Pair is at dangerous point right now, though technically I am looking to sell into rallies. Pair has broken through my last buy point without producing a bullish reversal signal so no long trade was entered. Have broken support I am now looking to sell as the downtrend appears to be intact. Closest resistance level is at 1.3415.

Trading Idea: Looking for bearish candlestick or indicator signals to confirm the short trade around 1.3415, with short targets favored down to 1.3205.

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10-20-08

3:22a GMT – EUR/USD is consolidating above support (which is a 61.2% Fibonacci level froma long-term rise over the past year) at 1.3350. As long as the pair stays above that number I am looking for buying opportunities with the pair. We have seen a bullish divergence in the RSI over October, further indicating that pair is headed for a rise. Look for traders to take money out of the dollar and put it back into the stock market this week, causing the EUR/USD to rise.

Trading Idea: Looking to buy on bullish signals near 1.3350. Long targets favored back up to 1.3360.

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10-17-08

3:00a GMT – I thought I would change it up today and do an analysis of USD/JPY since I haven’t posted on this pair for awhile. The pair has seen some dramatic volatility in the past months, going from a 10-year low 8 months ago, steadily rised 1000 pips for 6 months, and has seen a 1000 pip drop in the past 2 months. In the long term I see this pair bouncing around in the sub-100 area to low-100 area, possibly in a range trade situation. As such, I am looking for bullish reversal signals between the 99.00-99.25 support area.

Trading Idea: Look for bullish reversal signals between the 99.00-99.25 support area, with long targets favored back up to  101.85, 102.85 and 105.00.

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10-15-08

2:15a GMT – GBP/USD is approaching support around 1.7370 and I’m looking for bullish candlestick confirmations in that area. GBP/USD has been in a pretty steady downtrend since late september to early October, and given the uncertainity in the markets right now surrounding the global financial bailouts, I expect the pair to range between 1.7370-1.7565 for the the week. Make sure to get confirmation on the trade to help put the odds in your favor (e.g. I like bullish candlestick confirmations on the 4H or 60M charts).

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10-13-08

2:26a GMT – The first thing I saw when I looked at my charts tonight was a huge almost 200-pip gap, indicating the bulls are going to have their way this week. Of course in today’s market anything can happen, but with Europe getting closer to unifying on a response to the global credit crisis, I think the bullish gap is a valid technical indicator. I will look to buy on dips between 1.3260 and 1.3345.

Trading Idea: look for bullish reversal signals on dips around support at 1.3345 and 1.3260 with longs favored to targets back up to 1.3795.

(click to enlarge)

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