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Slow day yesterday – in the markets and in the forums. The pair only moved 15 pips from open to close, and it was one of the least volatile days in recent history moving less than 100 pips from high to low. Traders didn’t have much to talk about either with not trades being entered!

Daily Outlook: The pair continues to consolidate in the1.3750-1.3450 range, coming closer and closer to our key falling trend resistance dating back to early December 2009. The last time this resistance was tested (January 13th) the pair flirted with the resistance a few times before ultimately plummeting over 900 pips. Also reinforcing the bearish picture is that bulls were unable to sustain their new rally, failing to make a new high on the day or even sustain their gains (in fact the day ended as a bearish candle with a long bearish wick).

Trading Idea: I will look to sell a challenge of this trend resistance line, currently between 1.3700-1.3730. From 1.3730 the short targets are 1.3700, 1.3665, 1.3625 and 1.3595.

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3-4-10

4:17a GMT – Euro bulls were able to extend the rally past 1.3700 resistance yesterday. I had a small position much lower down on a bearish doji that was stopped on a very tight stop and did not enter at 1.3700 as their was no candlestick signal to confirm the trade. The Greek worries were set aside for a bit yesterday as risk sentiment improved and the US dollar sank accordingly. Greece is just the tip of the iceberg however, with problems in Portugal, Italy and Spain (PIGS for short) on the horizon. EU is in a bind because aiding Greece is in their best interests in the short-term but long-term how will they respond if one of the other PIGS countries needs help?

Daily Outlook: I’ve posted a possible weekly scenario below for everyone to look at, and circled the double dojis that give me pause and make me concerned this bullish sentiment could continue for a few more days. The pair is still capped by a falling trend resistance on the daily chart however.

Trading Idea: I will play it cautious today as the short-term trend exposes itself. No need to risk my capital on a 50/50 toss. The primary trade I will look for is a short near falling trend resistance (falling blue line below on 1h chart) which is around 1.3800. 1.3800 is also resistance from mid-February. From 1.3800 at 1.3765, 1.3730 and 1.3700. If you are feeling aggressive a long in the 1.3600 area offers a good shot at jumping back up, but I will not be taking that trade.

(click to enlarge)

Weekly Chart with Bullish Dojis:

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12-29-09

5:29a GMT – The markets struggled to move at all yesterday, with virtually nothing happening throughout the entire trading day! I could sum up the entire day with: “the markets rose a little bit, then fell a little”. No new highs, no new lows. The only technical detail worth mentioning was that on the daily chart yesterday formed a (very small) bearish doji. Because it is so small however, on thin markets and not a new high it is a very unreliable bearish signal at best.

Daily Outlook: After failing to make a new high by breaking 1.4420 and the somewhat bearish daily doji discussed above I am back to leaning bearish, however the technical signals are weak at best and the market is without a clear direction at the moment. It would seem bulls and bears are content with the price at the moment as we go into 2010.

Trading Idea: Look for the pair to continue to consolidate in the 1.4420-1.4350 range, with a break of 1.4420 opening the way to 1.4500 and a break of 1.4350 opening up 1.4320 and 1.4275. Remember, markets are razor thin this time of year and tend to either do nothing or make big jumps, so trade carefully, always use stops and good money management!

(click to enlarge)

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12-28-09

6:14a GMT – I hope everyone had a relaxing few days off last week! This is generally the slowest week of the year before the New Year, and I know many of you are still out for the week on vacation, but the markets are open so the signals will continue! We finally saw a breath of life out of the bulls last week as the EURUSD managed to close on a high note, climbing above 1.4400 and almost piercing the 23.6% fibonacci retracement resistance from 12/3-12/22 at 1.4330. Price also managed to break the downtrend resistance we’ve had since December 3rd.

Daily Outlook: So what does this all mean? Well, if we were in a long-term downtrend for all of 2009 I would let this go and continue selling, but given the thin markets and the fact that we have actually been in a strong uptrend all of 2009 these are enough bullish signals to make me a believer – I looking to buy on dips today.

Trading Idea: I’m looking first for bullish signals near support at 1.4320 and, if that gets broken, I’ll look above 1.4275. From 1.4275 targets are 1.4315, 1.4345, 1.4390 and 1.4420. Make sure to keep an eye out for candlestick signals here to confirm the trade.

(click to enlarge)

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12-18-09

5:14a GMT – Before today’s signal I want to say something quick about patience. As you all probably know I talk about NOT trading about as much as I talk about trading. About waiting for a good pullback to buy/sell on, about waiting for confirmation, and about not minding if I miss a trade because there will always be another one. It’s one of the hardest things to learn in becoming a trader but I think the most important. I’m going to write a full article on it this weekend but until then please 30 seconds and read this post by James in the forum on Patience and Trading here. Feel free to share your own thoughts and stories (reply to the forum please) so we can all grow as a community.

On to the signal! Markets will probably be thin today due to it being Friday and so close to the holidays. We’ve definitely seen the end-of-year increase in volatility that many of us were expecting, and Friday’s can make it even worse. As always use stops and good money management. No entry on yesterday’s sell signal as the price dropped like a rock and never looked back. Mind the news event at 9a GMT – details on the forex calendar.

Daily Outlook: Short-term trend is obviously still bearish, and we have a short-term resistance in place at 1.4420 that should provide a good guide as to the direction of the pair on the day. 1.4420 is the 38.2% retracement of Wednesday’s high and Thursday’s low and has been twice tested (7:00 and 14:00 yesterday).

Trading Idea: Below 1.4425 I am bearish. For the day I will look for a bearish confirmation signal (candlestick, failure, etc.) to enter on with short targets at 1.4390, 1.4355 1.4320 and 1.4290. If 1.4425 is broken to the upside look for a re-challenge of 1.4500.

(click to enlarge)

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12-9-09

6:42a GMT – When I wrote in yesterday’s signal that the bears had circled wagons and looked to be in firm control I still thought the bulls would be able to muster a little bit of a fight. Turns out the bulls played the role of punching bag yesterday as bears continued the downward pressure, smashing through 1.4775 support. Price action never got to yesterday’s signal entry, but there were candlesticks worth entering on all major timeframe charts that captured some nice pips. On a side note – this is why I only trade with me trend direction on the day. Anyone jumping at bullish signals more than likely got punished for doing so. If you go with the trend you can get punished, but usually the punishments are not as harsh.

Daily Outlook: With bulls showing little strength and strong daily support broken signals point toward more EURUSD losses and I will look for shorting opportunities. My preferred shorting zone would be 1.4775 (resistance and a 23.6% fibonacci retracement) as that would offer the best reward/risk ratio, but I will also look for shorter-frame shorts on candlestick signals with very tight stops as bears appear to have a firm grip on the markets at the moment.

Trading Idea: Under 1.4775 shorts are preferred with targets 1.4745, 1.4710 and 1.4670. On a clean break of 1.4775 look for a possible re-challenge of 1.4900.

(click to enlarge)

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12-4-09

5:41a GMT – Yesterday’s signals produced a trade (which is still open) at 1.5050 (currently a little bit in the profit) though I have tightened the stop as 4h charts are leaning toward a bearish consolidation pattern. Another reason I have tightened the stop considerably is because on the daily chart a bearish shooting star was produced so today could be a bearish profit-taking day for the markets. The AUD/USD trade I mentioned in the comments produced good pips as well :).

As far as yesterday’s news went Bernanke again talked about protecting the dollar – but the markets have heard this many times from Bernanke and never have his actions matched his words. In fact his actions (historically low interest rates) have said the exact opposite: that he at the moment cares very little about the value of the USD. One interesting thing he did say at his Senate meetings was that he would consider using interest rates to “burst” asset bubbles before they got too big.

Daily Outlook: Even as I write this we are seeing a bit of a bounce in the EUR/USD, which is good for our trade, but the signals for today are a bit mixed. The bearish shooting star on the daily chart yesterday and the potential double-top at 1.5140 are signals for a potential return to channel bottom around 1.4880. I will keep my long open from yesterday with a tight stop, though a break of support at 1.5025 will open the short-term bearish challenge of 1.4970. If it reaches this level I will look for bullish candlesticks to buy on.

News Events: Be weary of the Non-Farm Payroll (NFP) data and the US unemployment data due to come out around 13:30 GMT. Markets are usually choppy around news events.

Trading Idea: On a break of 1.5025 look for a challenge of 1.4970 support, around which I will look for buying opportunities with targets at 1.5000, 1.5030 and 1.5065.

(click to enlarge)

Update Graph: Big drop today. Wanted to post this longer term chart to give you some perspective on the drop. Looks like a better buying opp as it approaches that lower trend support doesn’t it?

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12-03-09

6:14a GMT – EUR/USD did indeed bounce off of yesterdays signal’s 1.5050 support and would have provided a quick 50 pips (possibly more, it’s at 1.5107 right now). Unfortunately I didn’t enter a long as I was waiting for a bullish confirmation candlestick to confirm the long signal. I know some of you did take that long and are now in the profit.

Daily Outlook: For the rest of us, I will look to reset longs with a similar trading strategy around 1.5050-1.5030 support zone. Pair remains within the the bullish channel I showed you yesterday after recently making a new 2009 high – so there is little reason to look for shorts at the moment.

Trading Idea: Looking for entry signal between 1.5050-1.5030 support zone. Targets from 1.5030 at 1.5060, 1.5095 and 1.5130.

Event Risk: Lots of news today (thanks for the reminder Nnagozie)! Be cautious around these times as markets could be thin and volatile. Starting at 12:45 GMT we have the EUR interest rate decision, initial jobless claims, nonfarm productivity, and Trichet and Bernanke speaking. No major changes predicted but the dovish/hawkish comments always can move the markets on thin volume. To read more about these events check out the Forex Calendar here.

(click to enlarge)

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12-2-09

5:45a GMT – No trade was entered from yesterday as I held off for the news (which had very little immediate impact). Which is fine with me – as many of you know I prefer less trades with a higher win percentage rather than trying to make lots of trades. Many of you yesterday did ignore the news however and entered long at the 05:00a bullish hammer which pierced our support at 1.4980 – a move which would have yielded 100+ pips within just a few hours.

Daily Outlook: 4-hour chart below, zoomed out so we can see the bullish uptrend of the last few months that we find ourselves in. With many speculative traders attempting to short the pair as it approaches its 2009 high I will continue my strategy of looking to buy on dips. I’d prefer the  1.5015 or 1.4980 supports to buy on but the uptrend is strong right now so I will also keep my eyes open for bullish candles around 1.5050 support. There is USD news event (non-farm payroll) at 13:15 GMT so I will stay out of markets around these times. For more details on it visit the forex calendar here.

Trading Idea: From 1.5015 support targets are 1.5045, 1.5080, 1.5110 and 1.5140. Will also look for a solid entry reason around 1.5050 (such as a reversal candlestick from the candlestick alert service here) as well as uptrend is fairly strong right now, but would still prefer a solid dip to buy into.

(click to enlarge)

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