CCy Insight: GBP JPY & Cross Rate

The market's ability to change directions can only be dictated by market participnts themselves. And this ie equally true with the Euro's backing the fundamental comments made by ECB Mario Draghi and currently has gained back its lost ground half-way through its previous decline.

While coming from its HI/LO range between @1.3800 / @1.3300; the current price level @1.3488 to this writing is seeking fresh incentives from market data particluarly on both sides of the continent, while waiting for the unemployment data to push market volatitlity. Meanwhile, the EURUSD gradual climb is indeed a welcome relief. Although, it is still pacing price action compared with the rally on Cable. GBPUSD is @1.6125 after coming from an anticipated correction and again is back on track even above the 1.6080 interim resistance of last week's trading.

Market conditions between these two major pairs have slowed with daily price consolidation is seen over the market place.

CCy Insight: GBP JPY / Cross Rate

Identify Price Discrepancy & Candlestick Bar Formation: EURGBP CROSS RATE

CONSTRUCTING A TRADE ON THE EURGBP CROSS:

In the absence of news before a major risk event takes place, traders & strategist in the forex market tend to look for identifiable candlestick bar & price discrepancy that occurs in charting system providers.

Not to discredit them but simply to turn such discrepancies into a trading edge and an added support for technical analysis. Developing a keen eye to pinpoint such formations takes time and experience. This process helps to determine a more detailed approach in establishing an entry and exit strategy. And this is just one of the methods we apply in our trades. Click here to continue

Trading Consistency:

USD Overlay USDCHF:
The chart below represents the Dow Jones - FXCM USDollar (Japanese Candlestick) and an overlay line chart (Black) of the USDCHF-currency pair that has the closest correlation with the USDx.

At first glance, the upward trend has been defined after breaking away from the consolidation and thereafter rallied to its high. However, the volatility of price action hear the highs have reflected a "Tug of War" between bull & bear players as prices went in both directions several times. And currently the Dow Jones-FXCM USDOLLAR reflected two(2) DARK CLOUD clusters indicating a negative (bear) signal.
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Technical & Behavioral Perspective: EURJPY

EURJPY CROSS DAILY CHART

UPDATE : As of Feb 09- Expect increase volatility, follow-through price action and pullbacks in the next 2 trading days especially the trading sessions in European market towards the US American trading sessions on Friday for both majors & cross rates respectively!
The EURJPY candle configuration is quite interesting then prior to today's upward direction as fueled by the surge on the EURUSD, due to reports that there may already be a more likely deal addressing the Greek debt crisis. The technical perspective signaling a positive tone was the recovery on the EURUSD and simultaneously a move higher with the USDJPY.

A move for the USDJPY higher is a lost in Yen value. The break from a triangle formation came at 100.60/85 that followed through at current price of 101.99 from a rising equidistant channel application. Closing prices above these levels would still provide a positive tone thereafter with a further corrective daily moves on both directions giving a false reversal scenario.

A pause and consolidation after a dramatic move is likewise considered which would cause some traders to reluctantly create trade positions. A word of caution, never try to catch a rapid market movement as pullbacks would cause to trigger stop loss due to wide price fluctuation.

Technical Perspective: GBPJPY

GBPJPY Cross as of Feb. 06, 2012

On the Technical perspective; the GBPJPY started of with the GBPUSD initial price reversal at 117.53 low; with a higher bottom at 119.55 serving as a good support, likewise a double bottom price level within a rising channel. The GBPJPY is a 2nd cross rate currency pair that has very market potential which has been shadowing the GBPUSD on its 1st leg of a price reversal. While breaking its trendline resistance and its current working price of 121.15 is above the 21WK-MA of 120.85 as shown of this candle chart of the GBPJPY on a Daily formation. The MACD is now on a positive tone after the movement while the cross awaits some follow through from the GBPUSD. Its initial attempt to its previous high of 121.85 may find some temporary resistance unless a USDJPY recovery would out pace the GBPUSD on the way up. A market behavior of the GBPUSD correlation with the Japanese Yen vs. the USDX would be the primary focus for the coming weeks ahead.

USD back lower from correction.

Technical perspective: Fig.1

As of January 31

The USDX have indicated a slight recovery from its recent low at 78.74 well within our support trading range of 78.05-78.85 initial objective from the high of 81.78 basis point. The daily price movement would be in both directions as position adjustments takes place towards the opening of the new month of February and the closing trading days of the week. The USDX current outlook for the weekly intra-candle bar is within the range of the previous bar signaling a slight retracement from the downward movement resting on the support. However, the overall technical outlook is a near term bearish formation would continue until it finds a relative higher bottom for the index to continue its upward trend direction as shown on fig.1 chart.
The catalyst to trigger some momentum lower would eventually come from one of the fundamental reports expected this week especially for Thursday and Friday data. The significance of a slight correction higher as it opened for the new month of February at the 79.36 and currently working back down to the 78.85 mid-week support on a trading session to session basis and engulfing the corrective gain yesterday as of this writing.

Market Timing in Forex Trading - MegaTrade101

This has always been the case for most traders and strategist whenever trading the Foreign Exchange Market. It would be nice to share some of the successful trades made specially these current market conditions. As they would be very useful for some who may be starting to feel how the FX market really moves when major economic numbers are released. However, there are a lot of worldwide reports to consider within a given period of time and to be able to cover all of them would be quite demanding for a trader.

As correlation in the currency market in particular are as important to every trade position marked in the market. The degree of trading difficulty is ever increasing by the day as uncertainty and unpredictability of wider price fluctuation will always be present. But in recent market conditions, the most impressive price reaction is a currency who has made a dramatic price movement either way and stalls.

This is when traders are contradicting either a follow through or a pullback would be made causing the trader's reluctance and patience to be tested. This also applies to those who are too eager or for those who happens to wait for a confirmation of a price break/confirmation signal. If this were true to the fact, then everyone would be considered a winner.

But the total opposite does happen and the next question would be ...where did I go wrong?

In the Foreign Exchange market, to improve market timing would really depend in developing a keen eye in spotting trade set-ups combined with identifying market behavioral patterns for each currency related trade, focused only on entry & exit price range. Naturally, this would only follow once a strategic trade plan has been established. A certain degree of elimination and process of deduction would always be in place before any trade execution is made. And that is being able to draw an informed and reasonable decision from the due diligence whether such trade plan is worth the risk/reward ratio given a specific period of time exposure in the market.

It is quite easy to enter into a trade at any given time especially if and when the market has enticed the trader to get into a trade by impulse. What is equally important is getting out of the trade alive with at least a fairly good gain. But there are some traders, even seasoned ones who tries to catch the market action in either direction and subsequently would place an order to trade feeling not to be left out for a chance and an opportunity of riding with the market sentiments.
For the complete article including the process of developing 'MARKET TIMING in FOREX TRADING' visit our website: http://megatrade101.com/megatrade101/fxminar 

• In addition, please refer to MEGATRADE101 - STRATEGIC FX TRADING TECHNIQUES

Forex Trading: Spot FX Vs. Futures SRO

EURO & USDX - 8+ Strategic Trading Techniques Applied

Most major currency pairs have reached their respective oversold and overbought areas as indicated by both the W% Range and the Relative Strength Index; where it measures the weakness and strength of its prices in a given period of time frame. Video Support: http://youtu.be/2yLP4XE_B3s

This has been the norm of the market prices, thereafter an expected correction to the opposite direction shall be made. The RSI commonly known for its relative strength index as a technical tool, is quite effective, especially where a combination of divergences and convergences are created by the prices from time to time. This is where we could identify two opposing directional lines between the RSI and the prices on the chart either using any of the chart types.

FIG. 1 DAILY EURUSD CHART

In keeping our reports and Market view as simple as possible; the Daily EURUSD shown above is within a Downward Channel since May of 2011 with a few major corrections in October. The point of Price Reversal from both May and October would have the supporting analysis based from the Financial Futures which would not have been reflected above as the equivalent Volumes and Open Interest data are not included unlike the chart of the EURO Futures and USDX in Figures 2 & 3 below. See the comparison and pls. pay close attention to the distinctions also mentioned in our Trading video.

The Japanese candlestick bar is the most reliable tool amongst the other charting systems applied today. Due to its uniqueness in Japanese bar analysis and interpretation as compared with the Western Bar system below in Fig. 2. With these alone, you are actually applying at least a minimum of three to eight (3-8) technical methods of trading analysis. As we do have applied a few tech tools such as the MACD, RSI, VOI, and the 3-line MA Cross over indicators on the chart. A clearer explanation is also mentioned in our video report and analysis. For a complete report pls. visit http://www.megatrade101.com/ and watch our supporting video below.

PIVOT Price Levels for EURGBP Cross

EURGBP DAILY as of 11.22.11

Identifying the Pivotal point for the EURGBP Cross rate after its continued downward trend momentum from the registered highs of 0.8820 down to the 0.8484 is very difficult. Although, based from our previous market view report dated the 1st of November where we called a probable low between 0.8420-0.8460. (Pls. refer to EURO, EURGBP & GBPJPY price reversal on our website)

The registered low then was at the 0.8484; not too far from our calculations and it was at the 23.6 Fibonacci support retracement levels providing a similar support. And thereafter, the 2nd re-test of that price extension dated the 10th of November and closed above the 0.8550 spinning top candlestick bar for the weekly have indicated a halt on the extension. The succeeding bar was not as signficant as the correlation with the negative news reports in the Euro Zone prevailed and still is up to this writing. As the obvious reports coming from both sides tries to outweigh trade investors to play the markets in a defensive mode. For a detailed technical outlook and analysis please visit: http://www.megatrade101.com/

Do expect some pullbacks in between trading session in Europe, Asia and the US as the coming Turkey holiday is just around the corner.

Only the best for your trades!

US Dollar Index Market Analysis

For the past decade, with more e-trading developments and accessibility to the markets have made it easier to monitor market behavior during market holidays. The up-coming trading period before the Thanksgiving holiday would prove to be one of those times where a handful of institutional and majors players would again be in place. Although with an expected mix bag of market directional movements and the general trend developments into a bullish advance through the year end from thereon as a comparison as far back in 2008 that should not be discounted unless otherwise proven not to follow the cyclical pattern hereunto.



US Dollar Index Weekly Candlestick Chart



However,as for the US Dollar unexpected downward distortion after touching the 79.83 by dropping back down in October for a re-test of the 74.72 low was the appropriate corrective move in preparing for the 2nd leg higher where the market conditions are presently at. The backlash of news reports from both continents have been dragging this lagging recovery which should be respected from the market behavior. As price movements by market numbers doesn't lie. And the only way that we can stay unbias of any market analysis is to always trade with a level playing field in any given position(s) while in the market. For the Technical description & Analysis, please refer to our website at http://www.megatrade101.com/

The coming holiday trading conditions will certainly be a complicating factor for trading the US dollar. For the time-being, focusing our attention on the backdrop for financial strains; with the European market’s are particularly stressed; with both the EU and other major US Financial bank's exposure to the EU debt crisis have been a huge part of this global recovery. Money market funds have significantly reduced exposure to EU banks, though the ill-effects have nevertheless found their way into funding costs in the US system.

These are the underlying issues that we should consider to be critical rather than the ineffective event of risk aversion and appetite in the market place. The coming crucial reports this week; including the 2nd reading of the third (3Q) quarter GDP on TUES NOV. 22, the Fed minutes, the UK BOE MINUTES on WED. NOV. 23; US durable goods,the University of Michigan Consumer Confidence Nov.numbers and personal spending and on the EURO ZONE side would be Germany and the UK's Nov. 24 GDP figures.

All this reports would occur towards before and after the end of the trading week of the Thanksgiving holiday which would provide the market with an ever increasing volatility from lack of liquidity in a thinly traded market to position adjustments and liquidation for the rest of the month of November towards the end of the trading year. However, pay close attention to market behavior as these are the ripe times to consider.

Just a side precautionary note where we would like to quote the words of Gordon Gekko from the movie Wall Street - Money never sleeps..."bulls make money, bears make money...but pigs get slaughtered".

Only the best for your trades!

Developing a Sense of Market Timing I

With the recent US jobs data, most of the traders in Wall Street would normally take a pause before any major reports are released. And as some have made it a point to trade from a confirmation with a volatile market and have generated a certain degree of success. For others the percentage of loss is greater as they try to simulate the same scenario with the Foreign Exchange market. But what is the ratio and probability of success versus a loss for the regular / retail investors turned traders for that matter. Quite an expensive price to pay!

In the exchange, we do have a mix of traders, market makers, institutional managers trading for client's accounts as well as their own. The viability of having access to certain information sometimes called in the stock market as the whisper numbers that circulates around purely on speculative basis.

Developing a sense of timing could either be both on a fundamental or technical stand point. More often than not is a technically motivated trader where numbers are plug-in on a trading system that would simply try to trade for itself. but the numbers and position is till derived from the trader / investor who wants either to buy or sell at a certain price. Most trades made are on short term basis that goes for 10-50 pips in between trades.

An application to maximize potential profits could be taken from a well developed trade plan that uses the basis of 4 sequential charts from an hourly, daily, weekly and monthly charting analysis. When all three out of four are in line then the probability of a profitable trade is more likely to happen. Using the hourly charts as entry and exit strategy application is more advisable rather than using them for positioning. The various time frames are geared to provide different signals that may be detrimental to the final trade, so it is equally advisable to implement at all time a time separator line that distinctively identify the time element involve in any such trades. Time management in proper positioning is vital too.

Monitoring prices for longer periods may also be contributing to misconceptions and misunderstanding of the market prices and its behavior. A certain correlation ship amongst the currency majors may also be best used in developing your sense of market timing as the ripple effects on the pairs are quite common. so the Technical tools accessible are only has good as the person's application in the trading process. If others are successful by using a combination of technicals, there is still no guarantee that the same will happen.

There is no " one size fits all " scenario. By having mentors and advisers along the way without having to worry about commission rebates or cash backs then one may be in better hands.

Good Luck and Best of trading for the week ahead!

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