A Structured Trading Strategy: Classic Set-ups

 Where Price Action, Trend & Proper Market Timing delivers an effective trade

The continuing market set-up that built a structured trading strategy for the EURGBP have started from the consolidation period since April 2013, towards the first week of May to the current corrective movement of the USD today the 24th of May, that provided the additional lift that can best be described as a follow-through registering a 0.8595 High.

As the USDx declined before the North American trading session to as low as 83.50 where its support level would stall its decline since its resting just above its rising secondary channel. Pullbacks such as this is very typical and healthy during the end of a Friday trading activity; but not necessarily a trend reversal that can only best described as a temporary price reversal which would very well finish at the support levels. The weekly closing and candlestick bar configuration is always critical as it would dictate the outlook for the trading week ahead. For now, the weekly bar is within the previous week's higher band signifying an intra-week bar suggesting a pause for some fresh incentives.

Watch for the opening price in the Asian trading session for a glimpse of the first 3 days of trading activity. So far the chosen currency pair for the EURGBP cross rate has delivered the necessary gains to stay within a structured trading strategy.Click to continue

Technical Perspective: CABLE VS. USD

The weakness of the GBPUSD came with an abrupt decline last week after touching the 1.5990 major resistance trend line. This is considered to be a major correction on the daily as renewed selling pressure came from the USD rally beyond the 79.50 basis level and sustained it higher at the current price of 79.80. Again, the key prices to watch would be first the USDx market movements, the next level of support for the GBPUSD is at the 1.5640/50 range with an expected daily and session to session correction no higher than the 1.5820/80 levels. And probable extensions at the 1.5520/40 levels that may likewise serve as a trend line support for the weekly chart formation. Some consolidation would be found at these levels as the Euro & the USDx may find some levels of support and resistances between net ling and short traders readjusting positions at the continuation of the second week of trading activities. A weekly chart formation of these prices is still higher from its previous low at the 1.5230 last 01.13.12. Thus making these prices within the interim rising channel; well within a major trend lower.

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

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!

EU Majors Confirms 11.01 Analysis

USD influenced by EU-Italy Crisis

The price direction for the Euro today, half-way through the week re-confirms the Price reversal called last Nov 01. Its really not a matter of price but rather the re-affirmation of the overall market sentiment that has gauge investors shifting funds out of the Euro-zone. This has provided a price stability for the time being with the tight consolidation levels of the US dollar, as measured by the USDX Hi/Lo band where the current 77.42 basis point is nearing the high resistance band. The technical breakout may only occur with a strong momentum towards the end of the week's trading which would culminate with the release of the University of Michigan's confidence report on Friday.

When this happens a re-test of the 78.85 would likely be seen with extensions at the higher band and within breaking an inverted H/S formation that is reflected as a mirror imaged from the previous H/S daily chart formation. The high probability that the same would occur on the way higher when it happens. This has been a repeat only that the opposite circumstances would be inversely related to the down swing of the recent movement of the US dollar index when it touched a 74.72 low Oct. 27, 2011.

The location of the projected price direction when such a break higher would be beyond the Ichimoku Senkao Span A(green) breaking a neckline towards the next FIB retracement along the 78.85 basis point. Extensions higher would occur upon a completion of several daily pull backs until fresh volumes and price settlements would be made towards the week ahead. While the overlay STOCH/RSI still breaths positive with a 21/9 measure as compared to the T4-FIB 61.8% extension which would establish an overbought area if it attempts it in one spike upwards. This can only happen if and when a sudden unexpected event happens in both continents. But weigh in from the other is equally important. This can justify the technical outlook thus far. 

Meanwhile, the current market situation with the EURUSD at 1.3603 low and 1.5932 low for the GBPUSD respectively has proven the investors prevailing market sentiments for the continuation of the US Dollar to move higher--another flight to quality safer bet versus the crisis in the Euro zone.

The defining analysis is based on the market's price behavior with a true reflection of the Price Page indicator which is indicative of the historical prices and price directional price extensions. As price extensions are derived from the average day & weekly trading range plus /minus the difference of the extended price higher/lower from the previous day/week's prices. And the number of days/weeks where such consolidation has occurred would be the measure of the directional trend higher/ lower.

Technical Outlook 6-21

The sustainability of the forex majors such as the EURUSD and the GBPUSD to move forward higher has been at a slower pace since the volumes and volatility index have been diminishing to its low levels. The FOMC meeting may be the only meaningful indicator for volumes to increase and while most investors/ traders wait; the vulnerability of the market place is simply to move on a technically motivated market.

This has been true to the fact that the USDX has so far followed to the letter our market out specially after the index touched its initial objective on the 88.78 / 80 basis points which we have been constantly writing about. Now that the corrective mode for the USDX still continues to sustain since Gold has indicated its reinforced trend making new highs from last weeks movements has made money flow shift to the precious metals again. This has set the pace for the USDX to move lower in line with the corrective and pivotal price reversal for the majors like the Pound and the Euro.

Meanwhile, the USDJPY has shown its sensitivity of moving higher and currently working at the 91.25 from a technical double bottom price alignment at the 90.30 which happens to be a higher bottom price and making the symmetrical triangle of the weekly USDJPY chart more visible. This formation has been in the making since the candlestick configuration was setting in place. Contrary to the weekly chart formation of the USDCHF which has already reaffirmed its downward direction. Where currently working at the 1.1075-80 levels, there would only be a temporary correction on the prices but the continuation to move lower would continue after such correction is done.

Favorably, both the AUDUSD and the NZDUSD has been the ideal pairs as the established lows as held relatively at the 0.8150 levels and has now been at the 0.8815-20 maintaining its strength and the Kiwi at the 0.7125 from the 0.6677 key support prices. The psychological key prices on the low moving average of 0.8100 and 0.6600 respectively is now considered to be the base reference to consider for quite sometime.

Best to your Trades and Good Luck!

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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