Saturday, April 30, 2011

The Gartley Pattern Illustrated:

The Gartley Pattern: GBPUSD Monthly Chart













The Gartley Pattern Vs. Perception

Saturday, April 23, 2011

Strategic Forex Trading - SRO

Just for the record! A summary, Review & Outlook Ahead

The amazing truth of the matter, is that when the Forex market made that slight recovery on the USDX at 75.50bp; the EURUSD headed lower with prices coming back to its original trend higher was the real limelight. The corrective movement, as we mentioned on our April 16 video ' 8 Forex Technical Trading Tools & Analysis thru 4-22' on Youtube and a follow-up market view analysis dated the 18th of April ' Major Correction within a Major Trend' mentioned that it was just a short-lived correction that we expected and could more likely be a buyers trap. Well, it did turn out to be one.

Although, that corrective move was considered to be a major correction coming from a 1.4520 high and down to a low of 1.4155 for the EURUSD from 04-14 to 04-18 respectively for three consecutive days. Thereafter, the registered high was at 1.4647 on the 21th of April. Which is a three day up move from a three day down corrective move. A retreat from the highs made some significant statements that that a selling divergence between the Relative strength and momentum indicators on those high prices met some forced liquidation from earlier bear positions holding on until they threw in the towel. In other words some market capitulations from sellers in the market. However, these would not be entirely be seen in the market except knowing how the market prices have behaved by following the price page indicator. On a technical perspective by comparing the divergences between the higher prices with the relative strength and momentum indicators should provide you with the signal. Although, by having a keen analytical eye and training can this be achieved. Which apparently, other traders and analysts were calling it a possible reversal. Of course its always after the fact. . . easier said than done! right?

Meanwhile the GBPUSD did the same exact scenario that dropped to 1.6165 from a high of 1.6250 which is a slight correction. However, that particular higher curve we mentioned from our video plus the idiosyncrasy of the Sterling Pound of making a double top candlestick formation was a false indication that would only move upwards. And registered a high just about 1.6600 vs. the USD. The lower closing at 1.6510-15 levels was merely because of the shortened and thin closing trading sessions for Good Friday.

For a complete market view report of this article and the continuing market outlook; pls. visit http://www.megatrade101.com/





Monday, April 18, 2011

Major Correction within a Major Trend

Corrective movements are prevailing the forex market amongst the major currency pairs including the cross rates. As this is part of the statement from our previous analysis, that a major corrective movement should not be discounted within a major trend. A price reversal as we call it but definitely not a trend reversal.

The EURUSD corrective moves lower is influenced more on the fundamentals related to the Irish downgrade and on a technical note is now out of its overbought areas along with the rest of the currencies across the board. Interest rates hike is still looming in the air for the ECB to continue it intentions raising rates sooner than later. However, the contrary analysis for the daily prices to move lower for the European currencies are now in effect. Although, we do anticipate it to be short-lived. The 1.4520 levels is just the initial resistance ideal for the correction, alongside with the EURGBP's 0.8770 low to be stable and a good support price for the cross rate. Risk factor is minimal with a -100 pips tolerance level but rather substantial for short term main street investor to trade long for a position. While the GBPUSD tries to recover from its corrective moves sooner than we expected.

Meanwhile, the influence of the EURJPY is weighing in more on the continuation of the upward trend for the EURUSD as it pulls-back in line with the USDJPY currently working at the 82.55 levels alongside with the USDCHF at the 0.8929 levels. The EURJPY looking at its 1st attempt back to the 116.00-50 area levels, as the technical spike candlestick formation weighed heavier. As of the moment this a a technically motivated market. The same goes with the GBPJPY.

The corrections on the USD led to this movements as some good reports came out fromt he US slight recovery in spite of the surrounding conditions. As the trading week is gaining closer to the month closing expect some wild fluctuations on both directions but we do remain firm on our analysis until the 22nd and a spill-over effects towards the 27th of April, 2011

Friday, April 15, 2011

Observation: Getting a kick on Speculation!

During our period of reading through most of the forex articles by broker dealers and other trader's analysis; we have observed lately that most write-ups, forex article related to market behavior tend to speculate on reversal patterns in the making. Anticipating a reversal in any currency pair may or may not be more than calling and claiming that they have called a market forecast accurately. At times, its not about calling a price correctly based on forecast, but simply taking market behavior on step at a time. As a market trend reversal can only be called if and whenever a new price is established on the higher or lower side of the market.

As we gather market sentiments and studying current market conditions; as perplexing as it may seem, most of these analysts have been calling a near term probable market reversals for the Euro and other currency pairs. With all due respect; whenever such calls does not appear to accommodate their analysis, tendencies are they do change and never go back to their written articles.

As a matter of caution, most market analysis provided by some are merely short term. For those who provides both sides of the market are in a better position in providing the pros and cons of the market. However, the psychology behind most analysis is to provide a short term outlook leaving enough room for traders to trade. Be extra keen on the time table of charts being shown as the time frame needs to be identified and would have to coincide with the analysis. An example would be a 15 minute chart, including some technical tools and a 200 day moving average. Of course, some analyst would simply show the relationship with it, but does not necessarily relate to a short term trading analysis. Thus providing a not so clear picture of what is being presented. However, with all due respect, everyone is entitled to their own opinions and analysis. So it all depends if you would buy or sell your trade at the end of the day's trading.

In essence, knowing a trader or investors perception is equally important to be entirely independent of what one reads and see in the market place, including this writing. A certain level of comfort & ability in trading decisions can only be attained from due diligence and careful studies before trading. A short video which we have presented before; the 8 forex trading analysis describes at least 8 to 9 trading tools that is needed to come up with at least an informed decision and a clear observation of the related currency pairs that does influence the market conditions. Link to video: http://www.youtube.com/watch?v=n9gE1iN-wUU

As we come back to reality, the Consumer Price Index and the University of Michigan reports would be more influential as to the direction of the USD. As it has lost its luster from market investors as they are try to maintain their oil and precious metals positions in the futures market. No sign of market sentiments shifting otherwise in spite of some corrective moves on the Gold and the oil prices. The closing market prices across the board on the currency pairs are vital to provide some much needed direction and an overview of the next probable currency pair to move by next week.

Monday, April 11, 2011

Technical Vs. Fundamental Analysis 04.12

Interestingly enough, the prices on the currency majors and cross rates have outperformed our expectations especially for the EURJPY and the GBPJPY registering record levels; respectively at 123.31 for the EURJPY & 140.05 for the GBPJPY. The trading signal and price indicator has been provided since early January and the only confirmation of the trend reversal was after the market was influenced by the Yen accelerating to it strongest levels 76.73 equivalent to the 106.50 & 122.60 for both cross rates. This has made it possible for the more influential institutions to clean the slates with minor speculative traders out of the market. As some may disagree, but the relative price behavior and indicator has proven that from the market forces after the incident of the international currency intervention led by the Bank of Japan.

On the Technical perspective, the market charts for these two pairs have shown its vulnerability in making a corrective move lower; within a major upward trend. This would be found on its daily movements like this week, where we can find technical price adjustments to support a technically over-bought price levels. The euphoria sentiments on a major upward trend has not been swamped with settlement positions as the market would now have indicated. Although, the first signal that it would is daily closing of these prices across the board, but more importantly the closing for this week's market prices.

What this all means, is that a minor correction of the EURGBP would be an influential factor for the time being before it would break away from its previous trading range values of 0.8550 -0.8770. As the 0.8790 was the week's low is just above an important support. As we do speculate that these corrective moves are merely a preparation for the next leg upwards unless a stronger tone and incentive would be made and led by this week's fundamental reports. Nevertheless, the market itself would dictate the pace coming from investors sentiments. Please pay more attention to the relative correlation between the financial futures market's volume and open interest; as it would provide a trading signal of any market shift of price reversals. Note: that a price reversal does not constitute a market trend reversal. As new highs and lows needs to be established after the fact.

A ripple effect would be expected as the market shifts when the prices on the precious metals would also close lower than the opening prices for the week. That would confirm a negative selling-divergence bias to a downward momentum by the earlier part of next week's trading. The up and coming reports on Friday's consumer price index may still favor the USD on a friendlier tone. But this would be overshadowed by the performance of volumes from investors shifting cash flow towards a settlement.

Indeed, easier said than done, after the fact. However, as we recall, the previous market view analysis have stated this scenario. Which has led us to speculate that the continuing trend lower for the USD has not been discounted. The relative stronger market sentiments for the USD bears have been more influential with investors funds still in the oil and commodities market. Which one outweighs the other, is a question as to where a turn around would be expected. Not until fresh incentives would provide, the Forex market would still be dominated by major market participants who happens to have deeper pockets than most retail speculative investor. Choosing which side of the trade you're on would be the defining position.

For a complete report and anlysis on this article; please visit our website: http://www.megatrade101.com/

Monday, April 4, 2011

Degree of Trading Difficulty

In the recent months, the level and degree of trading difficulty had increased right after the acceleration of the Yen's value to its strongest level and not to mention the increase in investors interest in the precious metals and obviously the oil prices reaching its historical highs.

The price levels achieved within the 1st quarter of the year across the board have been a historical trading event. With the continuing US dollar on the defensive low in spite of the remarkable recovery from the economy including the unemployment figures has not helped these continuing efforts led by the quantitative easing from the Federal Reserve.

We do believe that with all these economic surroundings, a more political atmosphere has dampened the financial markets especially the foreign Exchange where the market price behavior has been more influenced by institutional players and not much of the real main street investors. Having said that, what is left of the retail investors are just being caught-up in between market movements. Although, the main street retail trading the FX market is plain and simple. Short-speculative trades in between profitable pips, get out and re-enter. And the cycle does not stop from there.

And the more favorable pairs that offers such scalping opportunities can only identified with a couple of major pairs such as the EURUSD and the USDJPY. Amongst the cross rates would undoubtedly be the EURJPY and the GBPJPY. And these pairs were indeed favored from our previous market view analysis for the week of March 29, 2011. The continuing rally of these pairs have far exceeded our expectations. With the EURJPY trading at its current levels of 119.78 and the GBPJPY at 135.97 respectively. This just goes to show how strong market sentiments are and no amount of fundamentals would alter the current trend. Of course, with some corrective daily movements would be made as it rallies from the previous low levels that they came from.
The EURGBP chart formation has been more defined ever since its major support price has been established at the 0.8330 levels and never looked back thereafter. Although, there were several attempts made to break lower from the 1st two weeks of February 2011, it failed thereafter and headed higher slowly. Reaching a high of 0.8852 extension and currently at the 0.8809 as of this writing.