EUR/USD has been hovering near a critical support level in the 1.3300 region after having continued its drop on Monday morning. For more details on the technicals for this key pair, please click here for Monday’s Chart of the Day.
USD/JPY - Bearishness Down to a Key Trendline
Posted on January 12, 2009 at 14:36 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2009/01/2009-01-12-usdjpy-300x185.jpgStrong bearish price action on the USD/JPY (a daily chart is shown) in the last several days, which has resulted from increasing risk aversion in the market, has descended all the way down to a key downtrend line above which the pair broke in the very beginning of the year. This is as of early Monday morning in New York. In the event of further bearishness that breaks cleanly back below this line, as might be expected, we could soon be seeing price test the long-term support lows that were last hit in mid-December (around the 87.00 region).
Forex Levels to Watch (Week of Jan 12-16, 2009)
Posted on January 12, 2009 at 0:33 in Analysis, Announcements by James ChenNo Comments »
I am trying out a new feature on this blog. This feature will be posted on Sunday evenings and will highlight critical price levels/zones for the upcoming week on the major currency pairs. The levels will be based primarily upon key prior support and resistance (where price turned significantly in the recent past), but may also include other technical bases. This should be useful and informative for all forex traders that would like some confirmation on the potentially important price zones to watch for in their trading. These price levels will be quoted with the key support figure first, followed by the key resistance figure. Traders may use these as guidelines to evaluate potential breakout and/or bounce opportunities.
Below are the forex levels for the upcoming week of Jan 12-16, 2009 (all prices are bid prices):
EUR/USD - 1.3312 / 1.3798
USD/JPY - 87.12 / 94.62
GBP/USD - 1.4348 / 1.5372
USD/CHF - 1.0863 / 1.1277
- James Chen
After the NFP Dust Has Settled - Levels to Watch
Posted on January 9, 2009 at 18:29 in Analysis by James ChenNo Comments »
As of early Friday afternoon in New York, the dust has settled from the Non-Farm Payrolls data report. For the majors, the dollar strengthened considerably against the euro and swiss franc, and, to a lesser extent, sterling. At the same time, the dollar weakened significantly against the yen. Still, however, the majors are in clear sideways consolidation mode, for the most part. Some potential breakout levels to watch on these majors for next week include: 1.3300 on EUR/USD, 1.5000 on GBP/USD, 90.00 on USD/JPY, and 1.1275 on USD/CHF.
AUD/USD - Traversing a Breakable Channel
Posted on January 9, 2009 at 14:43 in Analysis by James Chen1 Comment »
http://blogs.fxstreet.com/fxpath/files/2009/01/2009-01-09-audusd-300x185.jpgThe displayed AUD/USD daily chart after the non-farm payrolls report is showing price still traversing up a skinny uptrend channel. As of Friday morning in New York, price is hugging the bottom of this channel after having bounced down off a significant resistance level in the 0.7250 region. Technical momentum at this time appears to be biased towards the downside. Any strong breakdown of this channel could provide a breakout trading opportunity, which could potentially target the 0.6750 support region. To the upside, the mentioned 0.7250 level should remain as strong resistance, at least for the short-term.
UPDATE: As of Monday morning in New York, price has made a clean break below the channel. As mentioned above, the 0.6750 region should serve as strong support to the downside.
EUR/USD - High Volatility in Consolidation
Posted on January 8, 2009 at 13:44 in Analysis by James Chen4 Comments »
http://blogs.fxstreet.com/fxpath/files/2009/01/2009-01-08-eurusd-300x208.jpgAfter having declined substantially from its recent high around 1.4700 during the 2008 holiday season (which was partly caused by low seasonal liquidity and a resulting high volatility), price on the EUR/USD (a daily chart of which is shown) has consolidated above the lows hit earlier this week. Price action during the past couple of days has been characterized by relatively indecisive high volatility. In the event of further bullishness (dollar weakening) that began late Tuesday, the 1.3850 region to the upside should serve as strong resistance. A subsequent move back down should meet substantial support in the 1.3300 region, which represents the approximate level of the last swing low in the pair.
USD/CAD - Broken Trendline Support
Posted on January 7, 2009 at 17:53 in Analysis by James ChenNo Comments »
USD/CAD has broken down below a key uptrend support line. For more details on the technicals for this pair, please click here for Wednesday’s Chart of the Day.
UPDATE: As of Wednesday late afternoon in New York, price action on the USD/CAD has risen to break tentatively back above the uptrend support line that it just broke down below yesterday. In the event of a strong close above this line, the original breakdown could potentially be considered a false or premature one. Further price action on Thursday should lend further indications as to the near-term directional bias.
GBP/USD - Broadening Formation at the Lows
Posted on January 7, 2009 at 14:49 in Analysis, Education by James Chen2 Comments »
http://blogs.fxstreet.com/fxpath/files/2009/01/2009-01-07-gbpusd-300x185.jpg
Consolidation near the long-term lows on the GBP/USD daily chart, as shown, has formed a rather distinctive broadening formation. These patterns, which are shaped much like megaphones facing towards the right, are not very common and can be difficult to trade. Some traders view a broadening formation as an opportunity to range trade the consolidation between the diverging lines. Other traders view these formations as possible reversal patterns at extreme price levels, preferring to trade the pattern breakout. In either case, there is very little in the way of obvious trading opportunities on this pair at the current, immediate juncture. More updates on this pair to come once clearer direction and technical levels are further clarified.
USD/JPY - New Year Bulls
Posted on January 6, 2009 at 17:09 in Analysis by James Chen2 Comments »
From the very beginning of the New Year, the USD/JPY has displayed robust bullishness, and the bulls do not appear to be relenting in any major way as of yet. For details on the technicals for this pair, please click here for Tuesday’s Chart of the Day.
UPDATE: As of Tuesday late afternoon in New York, price on USD/JPY has stalled well below the stated resistance breakout point of 94.50. Going forward, if there is a substantial breakout above this level, we should be seeing additional bullish price action, possibly targeting the 97.50 resistance region.
UPDATE 2: As of early Wednesday morning in New York, price has thus far failed to breakout significantly above the noted 94.50 level. Instead, it has made a bearish retracement within the context of the bullish correction. More updates to come as price action on this pair develops …
EUR/USD - Stalled Above Strong Support
Posted on January 6, 2009 at 14:23 in Analysis by James Chen2 Comments »
http://blogs.fxstreet.com/fxpath/files/2009/01/2009-01-06-eurusd-300x185.jpgAs noted on Monday’s blog post, bearish price action on the EUR/USD (a daily chart of which is shown) was targeting strong support in the 1.3250-1.3300 region. As it turned out, price on Tuesday morning dropped to just above the 1.3300 level before retreating back up a bit and stalling. The bearishness, however, does not appear to be over just yet. Any strong subsequent break below this 1.3300 level could potentially target further support in the 1.3050 region.
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James ChenEUR/USD - Beginnings of a Dollar Recovery?
Posted on January 5, 2009 at 14:13 in Analysis by James Chen1 Comment »
http://blogs.fxstreet.com/fxpath/files/2009/01/2009-01-05-eurusd-300x185.jpgThe very beginning of the first full week of 2009 has made a grand statement in the currency markets. The EUR/USD (a daily chart of which is shown) has made a precipitous decline as of the early hours of Monday. This could indicate that the remarkable rise in the pair seen during the last month of 2008 possibly represented just an exaggerated retracement in the overall downtrend, helped along by low seasonal liquidity and high volatility. In the process, price reached and retreated from a key 61.8% retracement level (as shown on the chart) and then subsequently dropped well below the previously noted 1.3800 support region. Currently, price appears to be targeting further support around the significant 1.3250-1.3300 region. If this is the case, the EUR/USD could well be on its way to a continuation of its downtrend, and the dollar could well be on its way to a potential recovery after drastic weakening in December. Friday’s Non-Farm Payrolls should provide some further indication as to potential subsequent direction.
Happy New Year!
Posted on December 31, 2008 at 16:28 in Announcements by James ChenNo Comments »
Hello Everyone, and Happy New Year! I will be back to updating this blog in full force next week (Monday, January 5th, 2009). Until then, I would like to wish everyone a safe New Year’s and a happy, healthy, and successful 2009!
- James Chen
EUR/USD - New Year’s Consolidation on Pullback
Posted on December 30, 2008 at 15:47 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-30-eurusd-300x208.jpgApproaching the New Year, a trading range consolidation has settled in for most of the majors. This includes the EUR/USD (a daily chart of which is shown), which, after pulling back to and bouncing up off a key 38.2% retracement level within the overall uptrend, has wavered in a rough sideways trading range for the past week. For the beginning of 2009, a strong break above the 1.4700 level should presage a potential uptrend continuation off the pullback. A substantial drop below the 1.3800 region, on the other hand, would invalidate the pullback and could be a sign of a long-awaited dollar recovery.
Webinar: The World of Forex Breakout Trading
Posted on December 30, 2008 at 3:28 in Announcements, Education by James ChenNo Comments »
To start off the New Year right, I will be giving an open FX Street webinar entitled “The World of Forex Breakout Trading” on Thursday, January 8, 2009 at 14:00 GMT (9:00 AM U.S. Eastern Time).
This free webinar will demonstrate the intricacies of high-probability breakout trading (and fading) in the forex market. Breakouts can be remarkably effective opportunities to take advantage of potentially profitable currency price action. But in order to maximize these opportunities while minimizing potential losses, the right tools, criteria, and mindset must be utilized. This webinar will cover the best methods for approaching forex breakouts.
It will be a very useful and informative session for traders of all levels. For more details and to pre-register, please click on the following link: http://www.fxstreet.com/live/sessions/session.aspx?id=e5d635cb-3910-4625-900d-57157cd72013 . Thanks!
- James Chen
USD/JPY - Pullback within Downtrend
Posted on December 29, 2008 at 16:38 in Analysis by James ChenNo Comments »
USD/JPY has just pulled back up to a well-established downtrend resistance line. This move could represent just a retracement within a continuing downtrend. For more details on this pair, please click here for Monday’s (12/29/2008) Chart of the Day.
USD/CHF - On the Verge of a Downtrend Continuation
Posted on December 29, 2008 at 14:21 in Analysis by James Chen1 Comment »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-29-usdchf-300x185.jpg
Approaching the New Year, substantial dollar-weakening price action on the USD/CHF pair (a daily chart of which is shown) has reached support around the 1.0400 region, as of early Monday morning in New York. This level was mentioned as significant support on last Tuesday’s Chart of the Day (12/23/2008). This support represents the last major swing low in the current downtrend. A strong breakdown of this level should confirm a downtrend continuation in the pair after a 38.2% pullback retracement. In the event of this breakdown, price could target further key support in the 1.0000 region, with intermediate support in the 1.0300 region.
Happy Holidays!
Posted on December 23, 2008 at 17:54 in Announcements by James Chen2 Comments »
Hello everyone, and Happy Holidays! I will be taking a short break for Christmas, but will be back on Monday with blog updates right before the New Year. Hope everyone has a great holiday season!
- James Chen
USD/CHF - Pullback within Downtrend?
Posted on December 23, 2008 at 17:02 in Analysis by James ChenNo Comments »
From a technical perspective, the USD/CHF chart appears to have tentatively formed what looks like a classic 38.2% pullback within the context of the current downtrend. For a look at the chart and more details on this formation, please click here for Tuesday’s (12/23/2008) Chart of the Day.
EUR/USD - Potential Uptrend Pullback
Posted on December 23, 2008 at 14:05 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-23-eurusd1-300x185.jpgPrice action on the EUR/USD (a daily chart of which is shown) has indeed stalled near a key 38.2% retracement level as of early Tuesday morning in New York. This level could possibly be the launching pad for a move back up in a continuing uptrend. If this is indeed the case, the 1.4300 level is a major resistance level to the upside. A fall back down in a larger downside correction, on the other hand, would be confirmed with a drop below the 1.3825 region, in which case price could target further support in the 1.3650 region.
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more details and to view the chart, please click here for Monday’s Chart of the Day.GBP/USD - H&S Base or Downtrend Continuation?
Posted on December 22, 2008 at 13:32 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-22-gbpusd-300x208.jpgPrice action on the GBP/USD daily chart, as shown, appears to be in the midst of forming a tentative inverted head-and-shoulders/triple bottom base formation, as of early Monday morning in New York. If this is indeed the case, we are currently on the rightmost shoulder. An H&S reversal formation would only be valid if price rose up to break the neckline, as shown on the accompanying chart. Therefore, the neckline should serve as a strong resistance target going forward. Of course, any significant break below the 1.4470-1.4500 support zone will invalidate this pattern and should subsequently confirm a continuation of the general downtrend.
Webinar Reminder - The Power of Oscillators in Forex Trading
Posted on December 21, 2008 at 17:29 in Announcements, Education by James ChenNo Comments »
Just a quick reminder - I will be holding an FX Street premium webinar on Monday, December 22, 2008 at 14:00 GMT (9:00 AM, U.S. Eastern Time). The title is “The Power of Oscillators in Forex Trading”. If you are an FX Street Premium Subscriber, check out this webinar, as it will be a very useful and informative session. For more details and to pre-register, please click on the following link: http://www.fxstreet.com/live/sessions/session.aspx?id=ee4e320f-a5bb-462e-9359-68bbb6923ca8 . Thank you!
- James Chen
EUR/USD - Deep Retracement
Posted on December 19, 2008 at 13:33 in Analysis by James Chen4 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-19-eurusd-300x208.jpg
As of early Friday morning in New York, price has retraced dramatically, all the way back down to the 1.3900 region, purportedly on low liquidity. After the one-directional bullishness of the last week or so, this retracement, or at least a consolidation, was to be expected (as noted here on Wednesday’s blog post). Further bearishness on this retracement below the 1.3880 level could target support around the long downtrend line as shown on the chart.
USD/JPY - A Possible Halt to the Freefall?
Posted on December 18, 2008 at 15:11 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-18-usdjpy-300x185.jpg
As shown on the accompanying USD/JPY daily chart, as of Thursday morning in New York, price has retraced significantly after falling to new 13-year lows. This upside move is purportedly due to speculation that the Bank of Japan may cut interest rates. If this indeed occurs, could we finally see a halt to the prolonged freefall in the USD/JPY pair? If the rate cut does take effect, we should at least be seeing a substantial upside retracement. Major resistance to the upside resides around the 91.00 region. In the event of a break above this level, further resistance resides around the key downtrend resistance line, as shown on the chart.
AUD/USD - Exploiting the Interest Differential
Posted on December 18, 2008 at 14:43 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-18-gbpusd-300x185.jpgWith the current interest rate differential between the Aussie and USD now at a sizeable 4.00%, the AUD/USD pair (a daily chart of which is shown) appears to be jumping on the dollar-weakening bandwagon. After having just broken out of a triangle consolidation support base, price has now gone on to break a key downtrend resistance line, as of Thursday morning in New York. If this break indeed turns out to be true, it hints at a potential trend reversal. The next major resistance to the upside resides around the 0.7250 region. A breakout above this level could eventually target strong further resistance in the 0.7700 region.
UPDATE: Thursday and Friday morning’s price action proved that the dollar-bearishness of the last couple of weeks was not to continue just yet. Like the EUR/USD, AUD/USD retraced rather dramatically, erasing some of the dramatic gains made in the last several days. There is still a good chance for the pair to rise again, but in the current thin liquidity, inexplicable volatility may dominate price action at least for the holiday season.
EUR/USD - Unrelenting Bullishness - 50% Retracement
Posted on December 17, 2008 at 13:34 in Analysis by James Chen5 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-17-eurusd-300x208.jpgPhenomenal bullishness on the EUR/USD ( a daily chart of which is shown) that was further fueled by the Fed rate cut to a record low level, has quieted the dollar bulls at least for the time being. To put the recent bullish run in perspective, when measuring the plummet that occurred from the all-time high just above 1.6000 in July to the recent 2-1/2 year low around 1.2330 in late October, bullish price action from the last few weeks has retraced approximately 50% of the plummet (as of early Wednesday morning in New York). Any continued bullishness could target the 1.4300 region to the upside, a significant prior support/resistance level. Likely, however, we should soon be seeing a consolidation or retracement within the current bullish run.
UPDATE: Needless to say, the EUR/USD continued its bullish march, hitting a high of 1.4435 before retracing back down just above the 1.4300 region as of Wednesday mid-afternoon in New York. To the upside, we have the 1.4550 resistance target. On the downside, there is support around the 1.4200 zone. In all likelihood, this bullish run is not over, but consolidation and retracement should now be in order.
USD/CAD - Bearish Bias
Posted on December 16, 2008 at 18:00 in Analysis by James ChenNo Comments »
USD/CAD is continuing its bearish correction off the 4-year highs. For details on the current technicals for this pair, please click on the following link: http://www.fxstreet.com/technical/analysis-reports/chart-of-the-day/2008-12-16.html
Webinar - The Power of Oscillators in Forex Trading
Posted on December 16, 2008 at 15:22 in Announcements, Education by James ChenNo Comments »
I will be holding an FX Street premium webinar on Monday, December 22, 2008 at 14:00 GMT (9:00 U.S. Eastern Time). The title is “The Power of Oscillators in Forex Trading”. I will be covering some high-probability techniques for using oscillators (RSI, CCI, Stochastics, etc.) in forex trading, including some strategies that focus almost exclusively on oscillator analysis. If you are an FX Street Premium Subscriber, check out this webinar, as it will be a very useful and informative session. For more details and to pre-register, please click on the following link: http://www.fxstreet.com/live/sessions/session.aspx?id=ee4e320f-a5bb-462e-9359-68bbb6923ca8 . Thank you!
James Chen
GBP/USD - Approaching Resistance
Posted on December 16, 2008 at 14:17 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-16-gbpusd-300x185.jpg
On the GBP/USD daily chart (as shown), a key downtrend resistance line has been broken and an approximate double bottom at the six-year lows has tentatively formed. The 1.5530 region now represents strong resistance that also acts as the double bottom’s confirmation level. Therefore, any strong move above this level could be a potential reversal indication. But does this pair have enough bullishness left in it to reach and then surpass that level? Or is it finally ready to continue its entrenched downtrend? Price action around 1.5530, if it is able to reach that level, should shed further light on the subsequent directional bias.
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Posted on December 15, 2008 at 14:04 in Analysis by James Chen4 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-15-eurusd-300x185.jpgAs noted on this blog last Thursday (”Beginnings of a Bullish Reversal?“), the EUR/USD bulls were targeting the 1.3550 region, a significant support/resistance level. As of early Monday morning in New York, that level has indeed been reached. And as noted in last Thursday’s Chart of the Day (click here to view), in the event of strong momentum above the 1.3550 level, price could eventually target further major resistance in the 1.3880 region.
GBP/JPY - Hitting Record Lows
Posted on December 12, 2008 at 17:45 in Analysis by James ChenNo Comments »
The GBP/JPY cross has established a new 13-year low on Friday. Click here for today’s Chart of the Day to read the technicals on this volatile pair.
USD/CHF - Approaching Uptrend Support
Posted on December 12, 2008 at 14:24 in Analysis by James Chen2 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-12-usdchf-300x185.jpgAs shown on the accompanying USD/CHF daily chart (click on the image to enlarge), the pair has dropped significantly within the last few days and has now approached an uptrend support line within the context of a parallel uptrend channel. The support offered by this dynamic uptrend line is currently in the 1.1700 region. At this time, price is technically near oversold, so there could soon be a retracement, or at least a rest, in the bearishness that has been occurring. A bounce back up or consolidation at or near the uptrend support line would be a technically expected move at this juncture.
EUR/USD - Beginnings of a Bullish Reversal?
Posted on December 11, 2008 at 13:10 in Analysis by James Chen6 Comments »
As of early Thursday morning in New York, EUR/USD has made a substantial bullish stride to launch off the support base that has been developing for quite some time now. Could this be the beginning of a turn in the pair? Possibly. But from a technical perspective, price would need to blow substantially past the 1.3300 level in order to state more definitively that the consolidation has been broken and a reversal, or at least a major correction, has indeed begun. If this happens, relevant resistance targets to the upside will be posted here.
UPDATE: As of early Thursday afternoon in New York, price has made remarkable gains, moving well past the above-mentioned 1.3300 mark. Further bullish momentum could target the 1.3550 region, a significant support/resistance level.
UPDATE 2: As of Thursday mid-afternoon in New York, price has stalled just above the 1.3300 level, as the drastic bullish run has likely exhausted itself for the day. If the next daily candle (Friday) surpasses today’s high, this pair could potentially be looking at a continuation of the upside correction, in which case the resistance mentioned above should continue to be valid. Before that happens, though, we should be seeing some sort of retracement of the substantial gains that were made throughout the day on Thursday.
UPDATE 3: As of early Friday morning in New York, price continues to have somewhat of a bullish bias, though a retracement in this bullish correction should be due at some point soon.
EUR/CHF - Near Critical Resistance
Posted on December 10, 2008 at 18:07 in Analysis by James ChenNo Comments »
The EUR/CHF cross has just reached and tentatively retreated from a critical resistance level. Find out how this may translate into possible trading opportunities. Click here for Wednesday’s Chart of the Day.
UPDATE: As of early Thursday morning in New York, EUR/CHF has made a drastic break of resistance, and appears to be heading towards the 1.5800 resistance as noted.
UPDATE 2: As of Thursday noon in New York, price has reached and stalled almost precisely at the 1.5800 resistance target.
EUR/USD - Tentative Breakout Move
Posted on December 10, 2008 at 15:24 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-10-eurusd-300x185.jpg
As of the first half of the morning in New York, EUR/USD appears to be making a tentative breakout move above the top border of the triangle, as shown on the accompanying daily chart. This could be a sign of further bullishness going forward, possibly targeting the next resistance around the 1.3250 region. At this point, though, it is a bit too early to make a definitive assessment. Further updates to come as price action develops.
UPDATE: As of late afternoon in New York, price has been wavering up and down around the top of the triangle. What initially appeared to be a substantial breakout attempt on Wednesday morning has lost much of its steam by the afternoon. Thursday morning price action should dictate whether today’s move will indeed become a bonafide triangle break or if it was just a head fake within a continuing consolidation.
UPDATE 2: As of early Thursday morning in New York, a true triangle break has indeed occurred and has nearly reached the above-mentioned 1.3250 resistance target
GBP/USD - On the Brink
Posted on December 10, 2008 at 14:28 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-10-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of early Wednesday morning in New York, low-volatility price action on the GBP/USD daily chart, as shown, still remains on the brink between two major support/resistance levels. One is the key downtrend resistance line - a breakout above this dynamic line with strong momentum could eventually target major resistance around the 1.5500 region. To the downside, the 1.4460-1.4500 zone represents extremely significant support around the recent 6-year lows. Breaks of either of these levels (to the upside or downside) could provide some substantial trading opportunities, as traders are watching these levels very closely.
EUR/USD - Coiling Up for an Aggressive Move
Posted on December 9, 2008 at 15:09 in Analysis by James Chen4 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-09-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
Price action on the EUR/USD daily chart, as shown, has been coiling up within a triangle consolidation, likely in preparation for a major impending directional move. Like other pairs that are currently entrenched within triangles, EUR/USD has been respecting the borders of its triangle, unwilling to commit to a decisive direction as of yet. A triangle break to the upside could signal a possible reversal of the prevailing downtrend, with major resistance around the 1.3250-1.3300 zone. An eventual break to the downside of the triangle could signal a continuation of the prevailing downtrend, and should meet key support around the 1.2330 region.
USD/JPY - Slow but Steady Slide
Posted on December 9, 2008 at 14:19 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-09-usdjpy-300x185.jpg
(Please click on the accompanying chart to enlarge.)
As shown on the accompanying USD/JPY 4-Hour chart, this key pair has been falling steadily since August. From a technical perspective, the well-respected downtrend resistance line looks poised to continue, as there is still some significant room for movement to the downside. With prudent risk management, any pullbacks to the trendline that do not violate the line substantially may be treated as potential high-probability entry points for short positions. The 91.00 region should act as the next major support to the downside.
Webinar Reminder: Candlesticks and Western Technical Analysis - The Forex SuperCombo
Posted on December 8, 2008 at 15:08 in Announcements, Education by James Chen2 Comments »
Just a quick reminder. I will be holding an FX Street open webinar on Thursday entitled “Candlesticks and Western Technical Analysis - The Forex SuperCombo.” The title is pretty self-explanatory. I will cover the combination of Eastern and Western technical analysis in the forex market, with current chart examples.
Just as a side note, we can see a very good example in the current USD/CAD daily chart, which I just wrote about on this blog. The shooting star candle triple-testing 1.3000 resistance is an excellent example of the Candle/Western combination.
The webinar will be held on Thursday, December 11, 2008 at 14:00 GMT (9:00 AM U.S. Eastern Time). Please click on the following link to pre-register for this free webinar: http://www.fxstreet.com/live/sessions/session.aspx?id=af1b7dba-7a7a-43b7-b7f0-e9cf5f49bf62 . Thank you.
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Posted on December 8, 2008 at 14:30 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-08-audusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
Price action on the AUD/USD daily chart, as shown, has reached and stalled around the top of a large, well-formed triangle as of Monday morning in New York. If price remains confined in this triangle, a logical support target to the downside would reside around the bottom border of the triangle, currently around the 0.6150 region. A strong breakout above the triangle, on the other hand, could eventually target the 0.7000 zone, both a prior support/resistance level and a key psychological level.
UPDATE: As of early Tuesday morning in New York, price has indeed respected the top border of the triangle and is currently moving back into the center of the pattern consolidation.
USD/CAD - Massive Retreat from Triple-Tested 1.3000
Posted on December 8, 2008 at 13:54 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-08-usdcad-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of early Monday morning in New York, price action on the USD/CAD daily chart has continued a substantial retreat from a precise triple-test of the 1.3000 resistance level. In the process, price has formed a textbook shooting star candle pattern right at resistance. There has also been a tentative break of the steep uptrend support line that we have been watching for quite a few days now. In the event of continued strong downward momentum, the 1.2100 region, a significant prior support/resistance level that has been noted previously on this blog, serves as a key support target to the downside.
USD/CAD - Four-Year High Triple-Tested
Posted on December 5, 2008 at 14:42 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-05-usdcad-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of Friday morning in New York, price action on the USD/CAD daily chart (as shown) has shot up to re-test the 4-year high in the pair (1.2980-1.3000) once again. This now constitutes a triple-tested high. Subsequent direction should be dictated by how the day and week closes. If this major resistance is respected, price could revert back, targeting the steep uptrend support line as shown on the chart. A significant break and close above the 1.2980-1.3000 zone, on the other hand, could carry strong enough momentum to target the 1.3250 resistance region.
AUD/USD - Wavering in Consolidation
Posted on December 4, 2008 at 19:16 in Analysis by James ChenNo Comments »
Smack in the middle of a converging consolidation, AUD/USD is currently seeking direction. Check out Thursday’s Chart of the Day (click here) for details on the current technicals for this pair.
EUR/JPY - Bearish Potential Triangle Break
Posted on December 4, 2008 at 15:25 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-04-eurjpy-300x185.jpg(Please click on the accompanying chart to enlarge.)
A relatively well-formed triangle consolidation pattern on the EUR/JPY daily chart, as shown, appears on the verge of being broken to the downside as of Thursday morning in New York. A true breakdown and close below the bottom border of this triangle should help identify this formation as a potential downtrend continuation pattern. This potential downtrend continuation, however, would not truly be confirmed unless price broke down below the 113.60 region, which is the bottommost point of the triangle and a multi-year low in the pair.
UPDATE: As of Thursday afternoon in New York, price on this pair has retreated back up, failing to make a bonafide break below the bottom border of the triangle. This setup will continue to be monitored for any subsequent pattern breaks.
USD/CAD - Riding the Uptrend Line
Posted on December 4, 2008 at 14:33 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-04-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of Thursday morning in New York, price on the USD/CAD daily chart, as shown, continues to strengthen significantly and adhere to the steep uptrend support line that has been in place since late September. The continued strength of this pair hints at a possible targeting of the double-tested 1.3000 level, the recent 4-year high in the pair. Before that level is potentially reached again, however, a significant correction should occur. If this correction happens to break the aforementioned uptrend support line, price could subsequently target the 1.2100 region to the downside, a significant prior support/resistance level.
UPDATE: Apparently, there was to be no major correction. As of early Friday morning in New York, price has come within only a few pips of reaching the prior double-tested high around the 1.2980-1.3000 region. Traders are currently watching this level for any significant price action, whether breakout or bounce.
GBP/USD - Tentative Wedge Breakdown
Posted on December 3, 2008 at 16:48 in Analysis by James ChenNo Comments »
Price on the GBP/USD chart has just tentatively broken down below a rising wedge formation. In the past few months, this pair has been characterized by chart pattern breakdowns. For more details on the current technical perspective on Cable, please click here to view Wednesday’s Chart of the Day.
USD/JPY - Continued Bearishness Despite Dollar Strength
Posted on December 3, 2008 at 13:59 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-03-usdjpy-300x208.jpg(Please click on the accompanying chart to enlarge.)
As of early Wednesday morning in New York, despite a somewhat strengthening dollar in other major currency pairs, the USD/JPY (a daily chart of which is shown) has exhibited continued bearishness in line with its steep general downtrend. Technical signs are pointing to further bearishness in this pair, potentially targeting the 91.00 support region to the downside.
USD/CAD - Watching for Signs of a Potential Breakdown
Posted on December 2, 2008 at 18:31 in Analysis by James ChenNo Comments »
On the USD/CAD daily chart as of early Tuesday afternoon in New York, in the event of any breakdown below the current uptrend support line, it could presage some substantial bearishness in the pair going forward. If a breakdown below this uptrend line indeed occurs, major support to the downside resides around the 1.2100 region. For more details on this potential setup, please click here for Tuesday’s Chart of the Day.
UPDATE: Bullishness off the uptrend support line has continued as of Tuesday afternoon. Still, however, we are watching for any possible subsequent breakdown of dynamic uptrend support.
UPDATE 2: As of Wednesday morning in New York, the bullish bounce off the abovementioned uptrend line has accelerated. No breakdown has occurred as of yet, obviously, but any subsequent breakdown could still be a key trigger for impending bearishness in this pair.
Webinar: Candlesticks and Western Technical Analysis - The Forex SuperCombo
Posted on December 2, 2008 at 14:59 in Announcements, Education by James ChenNo Comments »
Just a quick announcement - I will be conducting another open webinar here on FX Street. This time, the subject will be “Candlesticks and Western Technical Analysis - The Forex SuperCombo”.
As you may know, I have been working closely with Steve Nison, the trader who originally introduced candlestick analysis to the West from its origins in Japan many years ago. There are numerous subtle nuances within candle charts, and when combined with Western technical analysis (i.e., support/resistance, trends, patterns, indicators, etc.), the combination can potentially be extremely powerful. Learn in this free webinar how to identify these combinations to find high-probability forex trading opportunities.
The webinar will be held on Thu, Dec 11 2008, 14:00 GMT (9:00 AM U.S. Eastern Time). For more details and to pre-register, please click on the following link: http://www.fxstreet.com/live/sessions/session.aspx?id=af1b7dba-7a7a-43b7-b7f0-e9cf5f49bf62 . Thank you, and I hope to see everyone there!
James Chen
« Newer posts – Older posts »
Posted on December 2, 2008 at 14:35 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-02-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of early Tuesday morning in New York, the bulls on the EUR/USD daily chart, as shown, have been resisting the bears, as might be expected from a support/resistance perspective. Noted on Monday’s Chart of the Day (please click here to view), price has been approaching a confluence of support. These support factors are notated by the three converging lines on the accompanying chart. Barring a fundamentally-driven breakdown below this strong support, there is a technical bias towards an eventual move back up to target the 1.3050-1.3100 region once again, which represents the approximate top of the current consolidation.
USD/JPY - Expected Downtrend Continuation
Posted on December 1, 2008 at 13:20 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/12/2008-12-01-usdjpy-300x208.jpg(Please click on the accompanying chart to enlarge.)
As noted on last Wednesday’s Chart of the Day (click here to view), the USD/JPY was technically bearish, and was poised to continue its entrenched downtrend after just a minor upside retracement. As of early Monday morning in New York, this outlook appears to be coming to fruition as price has clearly respected the downtrend resistance line, plummeting two big figures all the way down to strong support in the process. Monday’s price action thus far has hit but not yet broken this support at 93.50. As noted on Wednesday’s Chart of the Day, if this support is broken convincingly, the next major target to the downside could potentially be in the 91.00 region.
UPDATE: As of early afternoon in New York, price has broken tentatively below the key 93.50 support region.
Recorded Webinar Posted - High Probability Forex Pattern Trading
Posted on December 1, 2008 at 12:43 in Announcements, Education by James ChenNo Comments »
In response to many inquiries regarding this, I wanted to provide the link for my recorded webinar on High Probability Forex Pattern Trading, which I conducted live on Tuesday, November 25th. So if you missed it, or attended and would like to review it again, here is the link to the video: http://transcripts.fxstreet.com/2008/11/high-probabilit.html . Thank you!
- James Chen
Happy Thanksgiving!
Posted on November 27, 2008 at 16:05 in Announcements by James ChenNo Comments »
To all forex traders in the U.S., Happy Thanksgiving! And to forex traders around the globe, Happy Trading!
James
GBP/USD - Finally Forming a Base?
Posted on November 26, 2008 at 14:46 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/11/2008-11-26-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying GBP/USD daily chart, price has confirmed an approximate double bottom bullish reversal after having broken out above the double bottom’s intervening peak on Tuesday.But in the early morning hours on Wednesday, price has retraced back down significantly. Still, the current consolidation is showing technical signs that the pair may finally be forming the beginnings of a base after a prolonged downtrend over the past several months. A strong re-break above the 1.5500 region would lend considerable strength to the view that a base has indeed formed. If this occurs, further levels to the upside will be noted here.
EUR/USD - Follow-Up
Posted on November 25, 2008 at 19:14 in Analysis by James Chen2 Comments »
As of Tuesday afternoon in New York, EUR/USD has cautiously continued its bullish run after breaking decisively out above the large triangle formation that was described on Monday’s blog post. Currently, price appears poised eventually to shoot for key resistance in the 1.3250 region, which is a significant prior support and resistance level, and also coincides with a 38.2% Fibonacci retracement level.
USD/CAD - Follow-Up
Posted on November 25, 2008 at 15:42 in Analysis by James Chen2 Comments »
As of Tuesday morning in New York, as expected, price on the USD/CAD has tentatively continued its bearish run off the double top and appears poised eventually to reach its target in the 1.2000 region as mentioned yesterday on this blog. If that level is breached, the next support target to the downside should be the level of the trough between the two peaks in the double top formation. In the event that this potential bearish run comes to its full fruition, it should be peppered periodically with minor retracements and consolidations.
Reminder - Open Webinar on High-Probability Forex Pattern Trading
Posted on November 24, 2008 at 19:13 in Announcements, Education by James ChenNo Comments »
Just a quick reminder - I will be conducting an open webinar here on FXstreet.com entitled High-Probability Forex Pattern Trading. It will be held tomorrow, on Tuesday, November 25, 2008 at 14:00 GMT (9:00 AM U.S. Eastern Time). This free webinar should be a very helpful and informative session for beginners and experienced traders alike. Please click on the following link for more details and to pre-register: http://www.fxstreet.com/live/sessions/session.aspx?id=5fd1a1bd-46f0-4ac0-a163-72c20a3aac3f . Thank you, and I hope to see everyone there!
James Chen
USD/CAD - Bearishness after Double Top
Posted on November 24, 2008 at 18:55 in Analysis by James Chen2 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/11/2008-11-24-usdcad-300x185.jpg(Please click on the accompanying chart to enlarge.)
Price action on the USD/CAD daily chart, as shown, has made a large bearish move on Monday, breaking down below a steep uptrend support line. This comes on the heels of hitting the second peak in a potential double top (around the 1.3000 region). Any further bearish action on the current trendline break could first target the 1.2000 support/resistance area before potentially shooting for the bottom of the trough in the current double top formation.
EUR/USD - Tentative Bullish Consolidation Breakout
Posted on November 24, 2008 at 14:07 in Analysis by James Chen2 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/11/2008-11-24-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying EUR/USD daily chart, price action early Monday morning has broken out above the descending resistance line imposed by a large descending triangle consolidation that has been in place for the last month or so. Though strongly bullish as of Monday morning, this is just a tentative break thus far. In the event of a continuation of bullish daily bars, price could eventually target major resistance in the 1.3250 region. Updates with additional levels/targets to follow as price action develops.
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Posted on November 24, 2008 at 3:23 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/11/2008-11-23-gbpusd-300x208.jpg
(Please click on the accompanying chart to enlarge.)
As shown on the GBP/USD daily chart, the last three months of price action have been marked by a progressive pattern of multiple pattern breaks. On the displayed chart, at least four patterns are clear and highlighted - one rising parallel channel and three triangles. The first three patterns were all broken decisively to the downside. As of Sunday night in New York, price is still within the boundaries of the most recent pattern, a relatively smallish triangle. In the event that this pattern is also subsequently broken to the downside, as might be expected, continuing the strong downtrend that has been in place for quite some time now, the first major support target resides around the 1.4550 region.
UPDATE: As of early Monday morning in New York, price has risen to the top of the above-mentioned triangle. A strong break with close on either side has not yet occurred. More updates to come as price action on this pair develops.
Webinar - High-Probability Forex Pattern Trading
Posted on November 23, 2008 at 16:41 in Announcements, Education by James Chen2 Comments »
Hello, Everyone! I’m finally back from the Traders Expo, and I wanted to let everyone know that I will be presenting an open educational webinar here on FXstreet.com on Tue, Nov 25th. The subject will be one of my favorites (and among the most potentially lucrative) - High-Probability Forex Pattern Trading. This free webinar should have something for everyone, whether you are a forex beginner or have been trading patterns in forex for many years. For more details and to pre-register for this webinar, please click on the following link: http://www.fxstreet.com/live/sessions/session.aspx?id=5fd1a1bd-46f0-4ac0-a163-72c20a3aac3f . Thank you!
James Chen
EUR/USD - Prolonged Triangle with Bearish Bias
Posted on November 21, 2008 at 3:44 in Analysis by James Chen2 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/11/2008-11-20-eurusd1-300x185.jpg
(Please click on the accompanying chart to enlarge.)
This is an evening blog post after the second busy day of events at the International Traders Expo. I have been watching the rough triangle consolidation form within the past couple of weeks and days, and the borders of this triangle have been holding true thus far. It is roughly a descending triangle, although the bottom border is not perfectly horizontal. Traders looking at this triangle to be a continuation pattern are watching very closely now for a strong breakdown and close below the bottom border.Currently, as of Thursday evening in Las Vegas, price is hugging the bottom border. Friday morning will dictate whether this support holds or is broken down for a potential bearish run. In the event of a move below strong support around 1.2330, price could target further support in the 1.2200 region.
First Day at International Trading Expo in Las Vegas
Posted on November 20, 2008 at 4:10 in Announcements by James ChenNo Comments »
We just had our first day here at the International Trading Expo in sunny Las Vegas. It was a very large turnout, and I met several readers of FX Street and this blog at the show. It was a great pleasure meeting all who showed up on this first day. The forex community came on strong for this event, as there were many exhibitors, speakers, and forex traders everywhere the eye could see.Thursday will be filled with seminars and speakers. I will be speaking with Steve Nison on Thursday morning and afternoon, as well as on Friday morning.I hope to meet any of you that might be here in Las Vegas within the next few days. More analytical updates to come!
James Chen
USD/JPY - Continued Triangle Consolidation
Posted on November 19, 2008 at 15:54 in Analysis by James Chen6 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/11/2008-11-19-usdjpy-300x185.jpg
(Please click on the accompanying chart to enlarge.)
As shown on the accompanying USD/JPY daily chart, price action on this key pair has formed a large triangle-type consolidation, much like the EUR/USD has been in recent days and weeks. There is a slight technical bias for an eventual downside break on the USD/JPY triangle. If this occurs with sufficient momentum to breakdown below the 95.80 level, price could further descend to the 94.50 region. A break to the upside, on the other hand, should meet initial resistance in the 98.50 region.
Updates from Las Vegas Traders Expo
Posted on November 17, 2008 at 17:42 in Announcements by James ChenNo Comments »
Just a quick heads up. I will be writing updates on this blog from the Las Vegas Traders Expo. This will include technical analysis updates on different currency pairs, when time permits, as well as updates on anything special that might be happening at the show itself. Please stay tuned!
- James Chen
Back from Vacation - Heading to Vegas
Posted on November 16, 2008 at 15:59 in Announcements by James ChenNo Comments »
Hello all! It’s great to be back from a long vacation. But I’ll be heading back out again in a couple days, this time to Las Vegas for the International Traders Expo at the Mandalay Bay Resort & Casino. There, I’ll be giving a couple of presentations on forex trading with Steve Nison, the man who introduced Japanese candlesticks to the West. If any of you find yourselves in Las Vegas from November 19-22, please feel free to stop by the FX Solutions booth, where I’ll be hanging out when I’m not speaking. Hope to see everyone there!
- James Chen
On Vacation
Posted on October 31, 2008 at 17:03 in Announcements by James Chen1 Comment »
Just a quick note - I will be on vacation for the next two weeks. During this time, I will be updating this blog periodically, but will not be able to do my usual daily and intraday updates. Please stay tuned, and I will be back in two weeks with a lot of great new ideas and updates for this blog. Thanks!
James Chen
EUR/USD - Rejected by Resistance
Posted on October 31, 2008 at 12:56 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-31-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
As of early Friday morning (10/31/2008) in New York, as shown on the accompanying EUR/USD daily chart, the upside correction on this key pair has been rejected at the key resistance imposed by a major 38.2% Fibonacci retracement level that coincides with strong prior support/resistance around the 1.3250-1.3300 region. After having been rejected at this level, price has fallen back severely once again to target strong support around the two-and-a-half year lows in the pair (1.2330 region), which were just hit earlier in the week. At this juncture, we should potentially be seeing a consolidation between the long-term lows and the aforementioned 38.2% Fibonacci level, possibly with some further near-term downside action within this consolidation.
AUD/JPY - Comeback of the Carry Trade?
Posted on October 30, 2008 at 13:24 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-30-audjpy-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
As shown on the accompanying AUD/JPY daily chart, price has been making a major rebound from the extreme depths of just a few days ago. Right after price reached an historical low of around 55.00, the pair turned on a dime to rise around 1300 pips as of early Thursday morning (10/30/2008) in New York. Could the carry trade finally be on stable ground again? Or will we be seeing even lower lows within the foreseeable future? On any continued upward momentum, price could eventually be targeting the key 72.00 resistance region.
« Newer posts – Older posts »
Posted on October 28, 2008 at 13:21 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-28-usdjpy-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
As of early Tuesday morning (10/28/2008) in New York, USD/JPY (a daily chart of which is shown) rebounded in a major way during Asian trading, purportedly due to reports of potential yen intervention and a rebound in the Nikkei Index. From a technical perspective, price has just turned up from oversold, hinting at a possible change in directional momentum. This week should tell if this turn becomes a true bottom reversal or is just another correction in the overall downtrend. Major support to the downside remains in the key 90.90 region, which is the recent historical low. Any continued upward momentum on this correction should target initial resistance around the 98.50 region, a previous support level.
UPDATE: As of Tuesday afternoon in New York, bullish rebound action on this pair has not abated. Price has blown well past the 95.75 barrier, potentially on its way up to the 98.50 support/resistance level as mentioned above.
UPDATE 2: As of late Tuesday afternoon in New York, price has indeed come only 10 pips shy of reaching the resistance target of 98.50, as noted above, before retreating.
Update 3: As of early Wednesday morning in New York, price has surpassed and then retreated substantially from the 98.50 resistance in late trading on Tuesday.
EUR/USD - Continued Bearish Bias
Posted on October 27, 2008 at 13:08 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-27-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
EUR/USD has continued to drop as of early Monday morning, New York session. As shown on the accompanying daily chart, price is currently stalled around the key 1.2450 support/resistance region that was noted on this blog last week. And the low that was reached this morning was another key support/resistance area around 1.2330. If there is a strong subsequent break below this level, price could ultimately target 1.1800, yet another key level. However, before that level could potentially be reached, minor correction(s) and/or consolidation(s) should be in order. Further updates to come as price action develops.
UPDATE: As of Monday afternoon in New York, price has rebounded significantly to the upside. Support to the downside remains at 1.2330, while any continuation of an upside correction should target strong resistance to the upside around the 1.2860 region.
UPDATE 2: As of Monday evening in New York, price has finally reached the 1.2330 level once again, as noted in the original blog post above. Watch for any strong potential breaks below this key support/resistance level.
UPDATE 3: As of early Tuesday (10/28/2008) morning in New York, price has respected the 1.2330 level and bounced up off of it in overnight trading. This support level will continue to be watched for any possible breakdowns, and resistance as noted above remains in the 1.2860 region.
Massive Drops - Extreme Yen and Dollar Moves
Posted on October 24, 2008 at 13:50 in Analysis by James Chen3 Comments »
Across the board as of Friday morning, key currency pairs have dropped massively and mercilessly. This includes EUR/USD, GBP/USD, AUD/USD, USD/JPY, GBP/JPY, and EUR/JPY, among others. Huge movements occurred in the direction of JPY and USD strengthening before prices finally exhausted themselves for the time being and retreated from their extremes. In the process, numerous support levels were summarily tossed aside. While the extreme bearish price action that has occurred in these pairs is most likely done for the week, the big question is whether downward momentum will continue next week or if the bears have finally exhausted themselves. More price action updates to come as the markets digest the carnage that has occurred.
GBP/USD - Drastic Drops to Multi-Year Lows
Posted on October 23, 2008 at 16:11 in Analysis by James ChenNo Comments »
Bearish price action this week on GBP/USD has been nothing short of remarkable. And this key pair continues to plummet as of Thursday noon in New York. Get the details by clicking here for today’s Chart of the Day.
UPDATE: With the incredibly bearish price action on this and other pairs as of early Friday morning in New York, Cable has made a record-breaking plunge to hit new and extreme lows. At this point, the downtrend momentum may have exhausted itself for the week, but any strong further bearish action going forward could potentially reach the 1.5100 region in the foreseeable future.
AUD/USD - Emerging from Consolidation
Posted on October 23, 2008 at 13:16 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-23-audusd-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
As of early Thursday morning in New York, price action on the AUD/USD daily chart, as shown, has just tentatively poked its head below the bottom border of a key inverted pennant/triangle pattern. This pair has been slower to break its consolidation than other pairs, most notably USD/JPY and GBP/USD, but it appears now to be attempting a significant bearish move. Any continued downward momentum on this break should meet initial support in the 0.6330 region, a strong breakdown of which would confirm a downtrend continuation in the pair.
UPDATE: Like other pairs as of early Friday morning in New York, AUD/USD has taken a massive dive, dropping well below the noted 0.6330 support level to confirm an almost unmistakable downtrend continuation. Further support resides in the 0.5870 region.
USD/JPY - Downtrend Continuation
Posted on October 22, 2008 at 20:21 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-22-usdjpy-300x185.jpg
(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
As of late Wednesday afternoon in New York, price on the USD/JPY (a daily chart of which is shown) has broken down well below the previous triangle formation, confirming what currently appears to be a bonafide downtrend continuation. Any further bearish price action off this break should target the 13-year low around 95.75 that was just hit in March.
UPDATE: As of early Thursday morning in New York, price on this pair currently appears to be continuing its major downmove from Wednesday. The next major support around 95.75, as noted above, continues to apply.
UPDATE 2: As of early Friday morning in New York, USD/JPY has taken a phenomenal dive to drop well below the above-mentioned support level. Dollar-Yen is in a whole new playing field now, and the bears are continuing to win in a major way. More technical updates to come …
« Newer posts – Older posts »
Posted on October 22, 2008 at 12:25 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-22-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
Bearish price action on the EUR/USD pair (a daily chart of which is shown) was absolutely unrelenting on all of Tuesday and as of early Wednesday morning. In the process, a two-year low for the pair was reached. The bears seem to be in full force, and even if there is an impending consolidation or minor correction, which should soon be due, the overall market sentiment on this pair at this time appears strongly biased to the downside. In the event of this continued downward momentum, key support below resides around 1.2450, a major prior support/resistance region.
(Note: Please check back to this blog often, as I frequently add price action updates to the bottom of these posts on an ongoing basis. Thank you.)
UPDATE: Extremely bearish price action as of early Friday morning in New York has pushed the pair down to just around 45 pips shy of the major support target around 1.2450 as mentioned above. Price then retreated from this region. Going forward, key support should remain at that level.
USD/JPY - Yet Another Triangle
Posted on October 21, 2008 at 13:41 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-21-usdjpy-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
As of Tuesday morning in New York, price on the USD/JPY daily chart, as shown, has moved towards the bottom border of the current triangle, as might have been expected. This triangle was highlighted on Monday’s Chart of the Day. In the event of a break to the downside, the next major support under the breakpoint should be the 98.50 region, a significant prior support/resistance level.
UPDATE: As of Tuesday noon in New York, fast-moving bearish price action has just poked its head below the bottom border of the triangle. Support to the downside is as mentioned above.
UPDATE 2: As of early Wednesday morning in New York, price broke down well below the above-mentioned triangle consolidation and slightly surpassed the 98.50 support target that was noted above. A further strong breakdown and close below this level should confirm a downtrend continuation off the triangle.
GBP/JPY - Hard Triangle Breakdown
Posted on October 21, 2008 at 13:20 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-21-gbpjpy-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
As of early Tuesday morning in New York, price on this volatile pair, the GBP/JPY (a daily chart of which is shown), has broken down well below the lower triangle border as mentioned on Monday’s post. This break appears significant, and with any further downward momentum, price could subsequently target the key 166.00 support level to the downside, which is the level of the last major swing low (an historical low in the pair).
UPDATE: As of early Wednesday morning in New York, price action has made a huge decline since Tuesday. The pair has not only broken the above-mentioned triangle in a major way, but has also broken down well below the prior 166.00 support level that was noted in the post above. In the process, price has confirmed a continuation of the steep downtrend that was in place prior to the triangle consolidation.
USD/CAD - Bullishness Unrestrained
Posted on October 21, 2008 at 13:09 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-21-usdcad-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
Following up from Monday’s post regarding the USD/CAD pair (a 4-hour chart of which is shown), price has indeed bounced up cleanly off the uptrend support line and has surpassed the mentioned 1.2000 key resistance level, as of early Tuesday morning in New York. After having broken above this level, price could now potentially be shooting for the long-term high around the 1.2120 region.
UPDATE: As of Tuesday noon in New York, price has far-surpassed the 1.2120 region, shooting for the next immediate resistance around the 1.2250 level.
UPDATE 2: As of early Wednesday morning in New York, price action on the USD/CAD has broken out well above the noted 1.2250 support/resistance level onto new and dizzying highs. In the event of continued upward momentum, key resistance to the upside resides around the 1.2700 region.
GBP/USD - Broken Triangle
Posted on October 20, 2008 at 18:32 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-20-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
Monday’s fast-moving bearish price action on the GBP/USD daily chart, as shown, has broken down below a well-formed triangle formation. Any continued downward momentum on this break should target initial key support around the 1.6800 region, which is the level of the last major swing low (and the five-year low in the pair).
UPDATE: As of early Wednesday morning in New York, strong bearish price action in the last couple of days has brought price down well below the bottom point of the triangle (around 1.6800), thereby confirming a steep downtrend continuation.
GBP/JPY - Traversing a Triangle
Posted on October 20, 2008 at 13:20 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-20-gbpjpy1-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
Much like other currently consolidating pairs, the GBP/JPY daily chart, as shown, has recently been forming a significant triangle pattern. Since the overall trend is decidedly down, traders are watching this pair for a decisive breakdown below the triangle for a potential continuation move. In this event, relevant support levels to the downside will be posted here.
USD/CAD - Uptrend Support Line Bounce
Posted on October 20, 2008 at 13:08 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-20-usdcad-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
As shown on the accompanying USD/CAD 4-hour chart, price action as of early Monday morning in New York has retraced all the way down to the steep uptrend support line and bounced up off of it. Any continued upward momentum off this bounce should target the very important 1.2000 level once again. A subsequent breakdown below this uptrend line, on the other hand, should target key support around the 1.1530 prior support/resistance level.
AUD/USD - Triangle/Pennant Alert
Posted on October 17, 2008 at 16:16 in Analysis by James Chen2 Comments »
Like other dollar-based pairs, AUD/USD has been forming a large pennant/triangle pattern. Please click here for more details from the Chart of the Day.
USD/CAD - On a Steep Uptrend
Posted on October 17, 2008 at 14:09 in Analysis by James Chen4 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-17-usdcad-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
Price on the accompanying USD/CAD 4-Hour chart, as shown, has lately been traveling up a very steep uptrend support line, and has additionally established several horizontal support/resistance lines in the process. As of Friday morning, price has tentatively rebounded up off yet another pullback. Any continued upward momentum off this pullback could target the key 1.2000 level once again. A clean break above that key psychological level could target the multi-year high around 1.2120. A breakdown below the 1.1750 level, on the other hand, should meet immediate further support down at the uptrend support line (currently around the 1.1650 region).
EUR/JPY - Bearish Continuation Level to Watch
Posted on October 16, 2008 at 15:46 in Analysis by James ChenNo Comments »
Just a quick note on the EUR/JPY technicals. An upward pullback has occurred in the past couple of days on the daily chart. If there is to be a bearish trend continuation off this pullback, 133.00 is the level to watch for any potential breakdown. For more details, please click here for the Chart of the Day.
UPDATE: As of early Friday in New York, price on this pair has consolidated. Support to the downside (133.00) remains as mentioned above.
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UPDATE: As of early Friday in New York, the abovementioned consolidations appear to be continuing, some pairs having formed triangles. More support/resistance levels to watch are forthcoming.
USD/CHF - Momentum Wane Near Resistance
Posted on October 15, 2008 at 13:54 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-15-usdchf1-300x185.jpg(Please click on the accompanying chart to enlarge. Chart is courtesy of FX Solutions.)
Price on the USD/CHF daily chart, as shown, has recently hit and retreated from an uptrend resistance line within a rough parallel uptrend channel. This retreat retraced to around the 50% Fibonacci level within the context of the most recent up-run. This 50% level is also a strong historical support/resistance level that resides around the 1.1125 region. Oscillators, like the displayed Stochastics, are overbought and pointing down. Any impending bearish move should target support once again at the aforementioned 1.1125 region. In the event of yet another upside test, on the other hand, uptrend channel resistance currently resides around the 1.1520 region.
UPDATE: As of early Thursday morning in New York, price has reached all the way back up to approach the above-mentioned resistance once again, before subsequently retreating in a significant manner. Key support and resistance levels remain as described above.
EUR/USD - Correction in the Making
Posted on October 14, 2008 at 13:23 in Analysis by James Chen5 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-14-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying EUR/USD daily chart, price has made a true rebound off its one-year low reached late last week. This constitutes an expected correction after the steep downtrend of the last three weeks. The next logical target for this correction/retracement from a technical perspective would be the 1.3880 region, which represents not only the last major swing low pivot, but also a key 38.2% Fibonacci retracement level. To the downside, the 1.3260 region, which represents the aforementioned one-year low for the pair, should continue to act as support going forward.
UPDATE: As of early Wednesday morning in New York, price action on this pair has consolidated in a horizontal trading range, and the correction has stalled. Relevant support and resistance levels as noted above still apply.
GBP/USD - Trendline Breakout / Bullish Rebound
Posted on October 13, 2008 at 13:15 in Analysis by James Chen2 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-13-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of early Monday morning in New York, price action on the GBP/USD daily chart, as shown, has broken out above the steep downtrend resistance line that has been in place for the last couple of weeks. Currently, price is approaching a key support/resistance level around the 1.7450-1.7500 zone. A clean break above this zone should confirm that price has indeed begun a bonafide correction of recent bearish activity. In this event, further upside momentum could eventually target key resistance up in the 1.7750 region. Oscillators like the displayed Stochastics are pointing up from prolonged oversold conditions.
UPDATE: As of Monday afternoon in New York, price has retreated somewhat after its strong bull run of this morning. Price closely approached the resistance mentioned above, but respected it without a break. More updates on this pair to come as price action unfolds …
UPDATE 2: As of early Tuesday morning (New York session), price on the GBP/USD has indeed made a bonafide upside correction, as expected, easily breaking the 1.7450-1.7500 zone and following-through. As noted above, a major resistance target to the upside remains around the 1.7750 region.
UPDATE 3: As of Tuesday afternoon in New York, price has slowly retreated down below the 1.7500 level. A technical bias to the upside within the context of the current correction, however, still exists.
GBP/USD - Further Bearish Bias
Posted on October 10, 2008 at 14:18 in Analysis by James Chen6 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-10-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of Friday morning in New York, price action on the GBP/USD daily chart, as shown, continues to be entrenched in a steep downtrend. And the overall technical bias is still somewhat bearish. A potential retracement all the way back up to the current downtrend resistance line could well occur, but barring a breakout above that line (which would put the current steep downtrend in serious jeopardy), price appears generally to be leaning in a southerly direction, which could eventually target a key historical support/resistance level around the 1.6550 region.
UPDATE: As of early Monday morning in New York, price has broken out above the aforementioned downtrend line in an apparent rebound. With further upside follow-through, this could be a sign of a turn or retracement in the recent steep downtrend. Immediately to the upside is significant resistance around the 1.7450 level, which originally served as support before it was broken down last week.
EUR/USD - Inverted Flag Alert
Posted on October 9, 2008 at 15:31 in Analysis by James Chen2 Comments »
Price action on the EUR/USD daily chart has formed a rough inverted flag pattern. Watch for any strong, sustained break of this flag. Click here for more details from the Chart of the Day.
UPDATE: As of early Friday morning in New York, price action on the EUR/USD has broken down well below the lower border of the abovementioned bearish flag. In the event of further bearish action below the bottom point of the flag (around 1.3440), a key support target to the downside (as mentioned in the Chart of the Day yesterday) resides around 1.3350 region.
USD/CAD - Bumping Up Against Resistance
Posted on October 9, 2008 at 13:12 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-09-usdcad1-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of early Thursday morning in New York, price on the key USD/CAD daily chart, as shown, has just bumped up against the substantial resistance offered by the top of a key uptrend channel. The top of this channel currently resides around the significant 1.1300 support/resistance region. Well-overbought Stochastics are indicating a potential waning of upward momentum. Price has tentatively retreated from resistance as of early Thursday morning. Any further downward correction after the impressive one-directional rally of the last several days could initially target the key 38.2% retracement level (around the 1.0950 region), as shown on the chart. In the event of any strong, sustained breakout above the aforementioned 1.1300 level, the next resistance target to the upside resides around the important 1.1450 region.
UPDATE: As of Thursday mid-morning in New York, price has tentatively broken above the key 1.1300 level, but the top of the abovementioned channel has not yet been substantially breached.
UPDATE 2: As of around noon on Thursday in New York, after breaking out above the 1.1300 level, fast-moving price action on this pair has broken well above the top of the channel, continuing further on to breakout tentatively above the mentioned 1.1450 resistance level. The next major resistance to the upside in the event of continued upward momentum resides around the 1.1650 level.
UPDATE 3: As of early Friday morning in New York, the above-mentioned 1.1650 resistance target has been reached and exceeded.
Unprecedented Times
Posted on October 8, 2008 at 13:36 in Analysis, Announcements by James ChenNo Comments »
The current circumstances in the global financial markets can be considered essentially unprecedented. With the coordinated rate cut and massive volatility in worldwide markets, the technicals have been somewhat overshadowed at this time. Relevant support and resistance levels that normally would have been respected, have summarily been decimated by price action without pause in the last few days. As the markets are expected to settle down gradually after the coordinated global measures were taken, the technicals will quickly come back into the picture. More forex chart analyses to come shortly …
USD/JPY - Yen Strength
Posted on October 8, 2008 at 2:38 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-07-usdjpy1-300x208.jpg
(Please click on the accompanying chart to enlarge.)
As of Tuesday evening in New York, price on the USD/JPY daily chart, as shown, has been characterized by substantial yen strength. Price has recently bounced up off of the significant 100.00 region (marked “A”) after having retreated from a significant downtrend resistance line (marked “B”). Support to the downside not only includes the above-mentioned psychologically-important 100.00 region, but also the long downtrend line (marked “C”) that originally acted as downtrend resistance before transforming into support after breakout in June. Any clean and fast breakdown below these two support factors, which would signify burgeoning yen strength, could eventually target major long-term historical support around the 95.75 region (marked “D”). Any yen correction for Wednesday and/or the rest of the week, on the other hand, should continue to treat the downtrend line at “B” as strong resistance to the upside.
UPDATE: A tentative breakdown of the key 100.00 level has indeed occurred as of Wednesday morning. As mentioned above, if downward momentum continues on this break, price could eventually target the 95.75 region.
Carry Trade Shakeout - Opportunity?
Posted on October 7, 2008 at 14:11 in Analysis by James Chen2 Comments »
Virtually across the board, currency carry trades have unwound drastically, shaking out even the most determined yield-seekers at an almost unprecedented pace. The big question now is how much longer the freefall will last. If a bottom or near-bottom has been reached in the yen crosses, forex carry traders could soon potentially be looking at an opportunity to begin testing the waters (with low commitment) for a possible longer-term interest play. This could be the case even as central banks start easing interest rates. Now is almost definitely not the time to commit fully to establishing a new carry trade portfolio. But the fact that carry traded pairs are at or near historical lows lends to the outlook that there may be significant potential room for upside in the foreseeable future. At the same time, great caution should be exercised now, especially with the recent massive volatility in the markets. So any potential signal to enter into a carry trade at the present time should be considered extremely carefully.
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book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.EUR/USD - Prolonged Bearish Run 2
Posted on October 6, 2008 at 13:07 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-06-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As noted last Thursday on this blog, EUR/USD (a daily chart of which is shown) was on a prolonged bearish run that continued to look bearish going into the weekend (click here for that blog post). The targeted support at that time was the 1.3550 region. As it turns out (as of early Monday morning), price plunged sharply, reaching and slightly overshooting that support level by around 8 pips before retreating back up again. A subsequent strong breakdown of this key support could eventually target further strong support around the 1.3350 region.
UPDATE: As of Monday mid-morning (New York session), price has broken down decisively below the 1.3550 support region. The next support target to the downside, as mentioned above, resides around the 1.3350 region.
GBP/USD - After the Dust Settles
Posted on October 3, 2008 at 14:01 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-03-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As seen on the accompanying GBP/USD daily chart, the dust is settling after the Non-Farm Payrolls report on Friday morning, and this pair seems to be reaching somewhat of a plateau right above strong support (in the 1.7450-1.7500 region). The trend is still down, but the downward momentum has waned a bit, as we can see from the progressively diminishing height of the candles along with the relatively indecisive current candle. Oscillator momentum on the daily chart is indicating well oversold with a possible turn occurring at the bottom. If a bonafide correction back up occurs, price could eventually target the 1.7950 resistance region to the upside. On the other hand, if a decisive break below strong support in the aforementioned 1.7450-1.7500 zone occurs, a continuation of the current overall downtrend will have been confirmed on this pair.
UPDATE: As of early Monday morning in New York, the GBP/USD is still languishing right above the aforementioned 1.7450-1.7500 support region.
UPDATE 2: As of Monday mid-morning in New York, price has broken down decisively below the abovementioned support. A strong bearish bias continues to be in play.
EUR/USD Update - Prolonged Bearish Run
Posted on October 2, 2008 at 14:27 in Analysis by James Chen6 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-02-eurusd-300x185.jpg
(Please click on the accompanying chart to enlarge.)
The EUR/USD daily chart, as shown, is displaying a prolonged, one-way bearish move reminiscent of the similar drastic plummets that began in late July and late August. At this point, the pair has dropped below the last major support around 1.3880, and the bias is still bearish. The fact that this last support was broken hints at a potential continuation of the general downtrend. Further bearish action, even if interrupted by minor retracements or consolidation, could target further major support around the key 1.3550 region.
USD Update - Dramatic Gains Against European Currencies
Posted on October 2, 2008 at 13:44 in Analysis by James ChenNo Comments »
As of Thursday morning, the dollar has made dramatic gains against the European currencies (euro, sterling, franc). As of early New York session, prices have begun to retrace that move somewhat. More updates on specific currencies to come.
USD/JPY Update - Near Brink of Resistance
Posted on October 1, 2008 at 14:07 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/10/2008-10-01-usdjpy-300x185.jpg(Please click on the accompanying chart to enlarge.)
After the substantial bullish dollar move on Tuesday, price on the USD/JPY daily chart, as shown, has risen as of Wednesday morning (New York session) to the brink of a key downtrend resistance line within a triangle-style consolidation. Price has then retreated from this resistance line. The line has been touched at least 4 times since late August. If it is respected today, support to the downside resides around the bottom of the consolidation, in the 103.50-103.80 region. A breakout above downtrend resistance on strong dollar-bullish momentum, on the other hand, should target the key 108.00 level.
GBP/USD Update - Bear Run Continuation
Posted on September 30, 2008 at 13:31 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-30-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of early Tuesday morning (New York session), price on the GBP/USD daily chart, as shown, has just made some forceful strides in continuing the bear run that has been in place since late July (and that was interrupted by an upside correction during the latter part of September). Within the current downside continuation, if the pair breaks down below the significant 1.7900 support/resistance region (which coincides approximately with a key 61.8% Fib retracement level), price could ultimately target major support down in the 1.7450-1.7500 zone.
UPDATE: As of noon on Tuesday (New York session), price has indeed broken down swiftly and strongly below the 1.7900 mark, and has reached an intermediate support level around the 1.7750 region. Further bearish momentum could eventually target the abovementioned 1.7450-1.7500 support zone.
Dollar Strengthening Across the Board
Posted on September 30, 2008 at 13:03 in Analysis by James ChenNo Comments »
It turns out that the dollar weakening that occurred late Monday (New York session) was just a temporary respite before the dollar bulls came out in force once again early Tuesday morning. The momentum from this bullish sentiment continues to be strong. Analyses on specific dollar-based pair(s) are forthcoming.
- James
Dollar Erases Gains on Monday Late NY Session
Posted on September 29, 2008 at 18:14 in Analysis by James Chen3 Comments »
During the afternoon (New York session) on Monday, the dollar erased much of the gains made earlier in the day. This occurred via sharp, erratic dollar-weakening moves. Further details to come as the primary directional bias settles in.
- James
USD/JPY Update - Rise and Fall Respecting Resistance
Posted on September 29, 2008 at 13:11 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-29-usdjpy-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of early Monday morning in New York, price action on the USD/JPY daily chart, as shown, has reached up to an established downtrend resistance line once again, and then respected it by bouncing sharply back down. This downtrend resistance line should continue to serve as resistance going forward, while the strong horizontal level around the 103.75-104.00 region should act as a significant support level to the downside.
- James
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Posted on September 26, 2008 at 13:25 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-26-usdcad-300x185.jpg(Please click on the accompanying chart to enlarge.)
As of early Friday morning (New York session), price on the USD/CAD daily chart, as shown, is still stuck in a tight consolidation zone after a deep drop stalled several days ago. Price is now ripe for a directional move. A continuation break of the consolidation to the downside should meet immediate support at or near the uptrend support line (currently around 1.0250), a strong breakdown of which could ultimately target the key psychological 1.0000 region. Any significant break above the current consolidation, on the other hand, should eventually target key resistance around 1.0550.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
Consolidation in the Majors
Posted on September 25, 2008 at 13:22 in Analysis by James ChenNo Comments »
As of Thursday morning (New York session), after a prolonged period of major directional volatility, the majors currently appear to be in a general state of consolidation. Distinct continuation patterns of consolidation like flags and pennants are appearing on many of these charts, suggesting that the next major breakout moves could potentially be a continuation in the direction of dollar-weakening. Watch for any strong potential breaks out of these consolidation areas, which could presage major directional moves.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
The Self-Fulfilling Prophecy
Posted on September 24, 2008 at 19:14 in Education by James ChenNo Comments »
A quick note about the important role of the “self-fulfilling prophecy” in forex trading and technical analysis. One of the key reasons that many aspects of technical analysis, especially such important concepts as support and resistance, often seem to work remarkably well has to do with this phenomenon. A self-fulfilling prophecy is a forecast that causes itself to become true. In the case of forex trading and technical analysis, a certain support/resistance level may be valid and respected to a significant extent simply because that level is well-known, and is therefore watched and acted upon by a critical mass of traders. So, for example, a 38.2% Fibonacci level, an R1 pivot point, and a key uptrend support line do not in themselves really have magical predictive properties. It is more the fact these these levels are so universally accepted and therefore so closely watched and traded by so many traders, that they often take on considerable price action significance. The role of the self-fulfilling prophecy is one of the keys to effective technical analysis in the forex market as well as all other financial trading markets.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/USD Update - Pullback Before Possible Upside Break?
Posted on September 24, 2008 at 12:16 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-24-eurusd-300x185.jpg
(Please click on the accompanying chart to enlarge.)
As seen on this EUR/USD 4-Hour chart (early Wednesday morning, New York session), price has formed a rough flag formation, which hints that price has pulled back in preparation for a possible upside continuation run. Watch for any strong break of this flag. In this event, significant resistance to the upside resides around the top of the flag, around the 1.4865 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
GBP/USD Update - Continued Climb
Posted on September 23, 2008 at 19:45 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-23-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
Recent price action on GBP/USD (a daily chart of which is shown) has been continuing its climb to progressively higher levels. Having broken out solidly above the key 1.8500 support/resistance level, the big question is whether or not price currently carries enough bullish strength to reach another key resistance level around the 1.8800 region. Not only does 1.8800 represent a recently double-tested resistance level, but it also represents a major 50% Fibonacci retracement level (the high-to-low retracement span being measured from the high reached on 7/15/2008 to the low hit on 9/11/2008). A forceful fall back down below 1.8500, on the other hand, should meet initial support around the 1.8400 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/JPY Update - March of the Bears
Posted on September 22, 2008 at 19:58 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-22-usdjpy-300x185.jpg
(Please click on the accompanying chart to enlarge.)
As of around the New York session close on Monday, price action on USD/JPY (a 4-hour chart of which is shown) has dropped dramatically since the beginning of the day. This drop comes shortly after bouncing down off of a significant downtrend resistance line (represented by the long black line). Further bearish action should target intermediate support around the 104.00 region, which is the level of the last significant swing low.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
GBP/USD Update - Near Major Resistance
Posted on September 22, 2008 at 13:34 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-22-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying GBP/USD daily chart, recent price action within the last few days has brought price all the way up to approach a very significant support/resistance level in the 1.8500 region. This level was described in Friday’s Chart of the Day (click here to view). On a long-term basis, we can see that price has visited and turned at this level many times in the past. As of early Monday morning (New York session), price has come within pips of reaching this level before retreating. If 1.8500 is respected, a turn back down at or near this level should target support around the 1.8150 region. A strong break above 1.8500, on the other hand, should target further long-term resistance around the 1.8800 region.
UPDATE: As of early Monday afternoon in New York, price has broken out swiftly above the noted 1.8500 resistance level. Further upside should target the 1.8800 resistance, as noted above.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
The Power of Forex Point and Figure Charting
Posted on September 19, 2008 at 13:25 in Announcements, Education by James Chen4 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-19-pointfigure1-300x185.jpg(Please click on the accompanying chart to enlarge.)
Here’s some information on Point & Figure charts in preparation for the FX Street Premium webinar I will be conducting next Tuesday (September 23, 2008 at 13:00 GMT). If you are a Premium FXstreet member, please click on the following link for more information and to pre-register: CLICK HERE. Additionally, I wrote an article for Technical Analysis of Stocks & Commodities Magazine on Forex Point & Figure charting that you can access here: http://www.traders.com/Reprints/PDF_Reprints.html$FS_POINT .
In short, some may characterize point & figure charting as trading based upon pure price action. This is because only price, which is undeniably the most important aspect of technical analysis, is customarily included on this type of chart (in the form of X’s and O’s). Other data that can readily be found on bar and candlestick charts, like time and period opens/closes, are generally excluded on point & figure charts. This leaves only the uncluttered purity of price action.
Trading from a point & figure chart, like the EUR/USD chart shown here, generally involves a good amount of looking for breakouts. For example, whereas double and triple tops on bar charts are usually thought of as reversal patterns, they are considered breakout patterns on p&f charts. There are some intricacies to learning how to use point & figure, but they offer a whole new technical viewpoint to the typical foreign exchange trader.
Hope to see everyone at the webinar next week!
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
Recorded Webinar Posted - Forex Multiple Timeframe Trading
Posted on September 18, 2008 at 14:00 in Announcements, Education by James ChenNo Comments »
I just wanted to provide the link for my recorded webinar on Forex Multiple Timeframe Trading, which I conducted live on Wednesday, September 17. So if you missed it, or attended and would like to review it again, here is the link to the video: http://transcripts.fxstreet.com/2008/09/multiple-timefr.html . Thank you!
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/CHF Update - Sharp Decline Off Breakdown
Posted on September 18, 2008 at 13:40 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-18-usdchf-300x185.jpg(Please click on the accompanying chart to enlarge.)
After breaking down below the steep uptrend support line earlier in the week, price on the USD/CHF daily chart (as shown) broke another support level on Wednesday (click here for details). As of Wednesday morning (New York session), price has further declined to approach and bounce off of a key psychological level around 1.0900. A continued upward move off this bounce should meet resistance around the 1.1050 support/resistance level that price broke down on Wednesday. If there is a subsequent break below the 1.0900 psychological level, on the other hand, the next immediate support to the downside resides around the strong 1.0850 horizontal price level, followed by the equally strong 1.0730 level.
UPDATE: As of Thursday late afternoon (New York session) price has tentatively broken back up above the 1.1050 support/resistance level. The technical bias, however, is still generally bearish as of this writing.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
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Posted on September 17, 2008 at 20:21 in Analysis by James Chen2 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-17-gbpusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As seen on the accompanying GBP/USD 4-Hour chart, the pair has made very substantial gains on Wednesday (as of Wednesday’s New York session close). In the event of a subsequent strong breakout above Wednesday’s resistance high (around 1.8240), price should target further major resistance to the upside around the 1.8400 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
Today’s Forex Multiple Timeframe Trading Webinar
Posted on September 17, 2008 at 15:47 in Announcements by James Chen4 Comments »
I would like to thank the many traders that attended my webinar today on Forex Multiple Timeframe Trading. I think it was a great interactive session for everyone involved. At the same time, I would like to apologize for any technical problems in terms of viewing my charts that were experienced towards the end of the presentation. As requested by some attendees, I tried to upload my slides from the webinar onto this blog, but was not allowed to do so by the system. So if you would like a copy of those slides, please drop me a note by email. As I mentioned in today’s webinar, I may conduct another webinar on this topic in the near future, as it is a very useful and logical trading methodology that has always attracted a lot of interest from Forex traders.
Next week, I will be conducting another webinar here on FX Street. This one will be on trading Forex using Point & Figure charts, and will be an FXstreet Premium live session. It will be held on Tuesday, September 23rd at 13:00 GMT. If you are a Premium member and would like to attend, please click on the following link for more information and to pre-register: http://www.fxstreet.com/live/sessions/session.aspx?id=2ecba02d-006b-4169-977b-d9140902ca5f . Thanks again!
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
GBP/USD Alert - Near the Top of a Wedge/Pennant
Posted on September 17, 2008 at 1:02 in Analysis by James Chen6 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-16-gbpusd-300x208.jpg
(Please click on the accompanying chart to enlarge.)
As of Tuesday evening in New York, price action on the 4-hour GBP/USD chart, as shown, has reached the top of what tentatively may be considered a falling wedge formation, or possibly a pennant pattern. This consolidation occurs after a short upward correction in the overall downtrend. Since these formations are most often considered continuation patterns, a strong breakout and close above the upper line may possibly signify a continuation in that short upward correction. Watch for any potential fast break above, in which case resistance to the upside resides around the 1.7970 and then 1.8125 regions.
UPDATE: As of early Wednesday morning (New York session), price did indeed break out of the wedge and just reached up to the first noted resistance level around 1.7970 before retreating a bit. Watch this pair for any upward continuation of the wedge break.
UPDATE 2: As of Wednesday early afternoon (New York session), price has continued up on its wedge break, closely approaching the above-noted 2nd resistance level around the 1.8125 region before retreating. Watch for further potential bullish activity if this 2nd resistance level is broken in a significant manner.
UPDATE 3: As of late Wednesday afternoon (New York session), price has reached all the way up to a high of 1.8240 on the wedge break before retreating a bit once again. In the event of a subsequent strong break above this resistance, price should target further resistance up around the 1.8400 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
Webinar Reminder - Forex Multiple Timeframe Trading
Posted on September 16, 2008 at 16:30 in Announcements by James ChenNo Comments »
Just a quick reminder - I will be conducting an open FX Street webinar on Wednesday that will cover Forex Multiple Timeframe Trading. I think it should prove to be an interesting and informative session on an important subject. If you would like to attend this free webinar and have not yet pre-registered, please do so by clicking here. Hope to see everyone there!
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
AUD/USD Update - Bearish Move off Resistance
Posted on September 16, 2008 at 13:06 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-16-audusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As noted on Monday’s Chart of the Day (please click here to view), price on the AUD/USD daily chart, as shown, had pulled back to and respected the steep downtrend resistance line that has been in place for about two months now. Since yesterday, price has continued its downmove off that pullback (as of early Tuesday morning in New York), and has closely approached a long-term uptrend support line currently around the 0.7800 region. At least for the short-term, this 0.7800 level should continue to act as some significant support. To the upside, the abovementioned steep downtrend resistance line should also continue to act as significant resistance going forward.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/GBP Update - Uptrend Dip
Posted on September 15, 2008 at 17:36 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-15-eurgbp-300x185.jpg
(Please click on the accompanying chart to enlarge.)
Price action on EUR/GBP (a daily chart of which is shown) has dipped all the way back down to the long-term uptrend support line that has been in place for more than a year now. The dip stalled almost exactly at the trendline as of mid-Monday, New York session. Any break and close below the line should target the 0.7800 as immediate support to the downside. A continued bounce up off the line, on the other hand, should meet major resistance around the 0.8185 long-term high, which was reached just about a week and a half ago.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/USD Update - Another Pullback to the Line
Posted on September 15, 2008 at 12:18 in Analysis by James Chen4 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-15-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying EUR/USD daily chart, as of early Monday morning (New York session), price on this key pair has retreated substantially from resistance during early European session today. In this case, resistance is in the form of the long-term uptrend line that previously acted as strong support and was broken down in the first week of September. A couple of days subsequent to that breakdown, price pulled back up to the line and retreated for the first time. The current early morning retreat from this resistance line can also be considered a tentative pullback move. The question now is whether there will be an eventual downward continuation, or if we’ve already reached a major bottom in this pair. Any strong break below the 1.3880 support level would confirm a downward continuation after pullback, and should eventually target further long-term support in the 1.3550 region. A sustained move back up, on the other hand, should meet continued resistance at or near the same uptrend line mentioned above.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
AUD/USD Update - Retracement to the Line
Posted on September 12, 2008 at 14:13 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-12-audusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying AUD/USD daily chart, the exceptionally steep downtrend resistance line that has been in place on the pair since late July is still valid and respected as of Friday morning in New York. The bullish correctional bias that has been in effect yesterday and the early part of today so far, is nudging price ever closer to the downtrend resistance line. Currently, this trendline resistance resides around the 0.8200-0.8220 region. On the downside, support continues to reside around the 0.7900 level.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/USD Update - Correction within Down Channel
Posted on September 12, 2008 at 12:57 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-12-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As I’ve been blogging about in the last couple of days, EUR/USD (a 4-hour chart of which is shown) has been entrenched in an increasingly relevant short-term downtrend channel. After hugging the bottom of the channel on Thursday, price indeed popped back up (as of early Friday morning in New York) for a correction targeting the top of the channel once again. Currently, the top of the channel resides around the 1.4175 region. A breakout of this level should target immediate further resistance above the channel around the 1.4225 area. A bounce back down at or near the downtrend channel resistance line should target the bottom of the channel once again.
UPDATE: As of a bit before noon (New York session), price has reached and tentatively poked out slightly above the abovementioned downtrend channel resistance line. Before this can be judged a break, though, we would be looking for a close above the channel.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/GBP Update - Breaking Down
Posted on September 11, 2008 at 13:23 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-11-eurgbp-300x185.jpg(Please click on the accompanying chart to enlarge.)
As I had written for the Chart of the Day yesterday (click here to view), price had just reached down to support at the top of the triangle that it had broken out above a couple of weeks ago. As of early Thursday in New York, price has already made a clean and swift breakdown of this support, and is headed towards the long-term uptrend line that I had mentioned (represented by the longest uptrend line on the chart). In the event of a strong break below this trendline, price should target the bottom of the previous triangle, currently around the 0.7800 region. A bounce at or near the current uptrend line, on the other hand, should target the just-broken top of the triangle once again, which is currently around the 0.7975 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
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Posted on September 11, 2008 at 12:58 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-11-eurusd-300x185.jpg(Please click on the accompanying chart to enlarge.)
As I had written on this blog a couple of days ago (click here for that post), price on the EUR/USD 4-hour chart (as shown) has been “traversing a down channel”. Though price rose and then dropped substantially after that, breaking down below the 1.4000 psychological support barrier in the process, the pair is still entrenched in this rather steep downtrend channel as of early Thursday morning in New York. Currently, price is hugging the bottom of this channel. A pronounced bounce here should target immediate resistance back up at the 1.4000 support/resistance area once again. In the event of an impending break below the bottom of the channel, on the other hand, price should target immediate support around 1.3850.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
Webinar on Multiple Timeframe Trading
Posted on September 10, 2008 at 14:29 in Announcements by James ChenNo Comments »
Hello everyone! Just a quick announcement. I will be conducting an open FXstreet webinar next week on one of my favorite subjects - Multiple Timeframe Trading. If this method is new to you, the webinar should be very helpful and instructive. But even if you currently trade Forex using some form of this high-probability method, I think you will still find the webinar both interesting and informative. It will be held on Wednesday, September 17, 2008 at 14:00 GMT. For more details and to pre-register for this free webinar, please click on the following link: http://www.fxstreet.com/live/sessions/session.aspx?id=d241cd32-cb67-4a1e-8260-fdcdffa5572a . Hope to see all of you there!
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/CHF Update - A Steep Climb
Posted on September 10, 2008 at 12:40 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-10-usdchf-300x185.jpg(Please click on the accompanying link to enlarge.)
As we can see on the accompanying USD/CHF daily chart, price has been on a very steep uptrend for a couple of months now, breaking through resistance barrier after resistance barrier. From all technical angles, the pair is clearly overbought and flirting with exhaustion. At the same time, however, as of early Wednesday morning in New York, price looks like it might be forming a flag/pennant of sorts on lower timeframes, which hints of a possible upward continuation in the event of a break to the upside. In either event, very strong resistance above resides around the key 1.1600 region (the top line on the chart). A well-overdue downside correction, on the other hand, should at least return to the support offered by the steep uptrend line, which currently resides in the 1.1150 area.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/USD Update - Traversing a Down Channel
Posted on September 9, 2008 at 12:47 in Analysis by James Chen13 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-09-eurusd-300x185.jpg
(Please click on the accompanying chart to enlarge.)
As of early Tuesday morning, New York session, price on the EUR/USD 4-hour chart, as shown, has been rising within a relatively new parallel downtrend channel. Price just established the bottom boundary of this parallel channel (with a second touch) on Monday. A continued rise within this channel, which would constitute another minor correction in the larger downtrend, should target the channel’s top resistance line, which currently resides around the 1.4300 region. A return to lower price levels should meet support around the key psychological 1.4000 region, which would also coincide approximately with the bottom of the channel.
UPDATE: As of early Wednesday morning (New York session) price is consolidating around the middle of the abovementioned short-term downtrend channel. More updates to come as price action develops.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/CAD Update - Wedge Alert
Posted on September 8, 2008 at 14:41 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-08-usdcad-300x185.jpg
(Please click on the accompanying chart to enlarge.)
As we can see on the accompanying USD/CAD daily chart, price has formed a tentative rising wedge consolidation. It’s not a perfect technical formation, but watch for any fast price action breaks on either side of this wedge.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/USD Update - Pullback after Breakdown
Posted on September 8, 2008 at 12:18 in Analysis by James Chen6 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-08-eurusd-300x185.jpg
(Please click on the accompanying chart to enlarge.)
After breaking down below the long-term uptrend support line late last week, price action on the EUR/USD (a daily chart of which is shown) has pulled back up to the line and retreated back down. This uptrend line should now serve as resistance, where it originally acted as support for at least the last two and a half years. Any continued downward momentum should eventually meet key psychological support around the 1.4000 region. Before that, however, some intermediate support resides around the 1.4125 level.
UPDATE: As of Monday noon in New York, price has reached the intermediate support at around 1.4125, as mentioned above. A break below should target the 1.4000 region, as noted.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
AUD/USD Update - Yet More Support
Posted on September 5, 2008 at 14:36 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-05-audusd-300x208.jpg
( Please click on the accompanying chart to enlarge.)
Here we go again. Within the last two months, AUD/USD (a daily chart of which is shown) has broken support level after support level in its bearish run of mammoth proportions. Currently, as we can see on the chart, price has approached yet another significant support level, this time around the 0.8000 region. This level has been touched as resistance several times within the past 5 years, but has not been respected as support as of yet. Could now be the time? Watch for price action around this key level. A strong breakdown could eventually target further key support around the 0.7680 region. A clear bounce and subsequent correction, on the other hand, could target major resistance around the 0.8500 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/JPY Update - After the Break
Posted on September 5, 2008 at 13:41 in Analysis by James Chen7 Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-05-usdjpy-300x208.jpg
( Please click on the accompanying chart to enlarge.)
As noted on Thursday’s Chart of the Day (click here), if price broke down below the medium-term uptrend channel (which it ultimately did late on Thursday), price would target key support to the downside around the 105.50 area. As it turned out, price did in fact hit 105.52 Friday morning before bouncing back up. Going forward, the broken channel support line should now act as some sort of resistance to the upside (support becomes resistance). Downside support continues to reside around the 105.50 region for the near-term. More updates to come as price action develops further.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
Wedges
Posted on September 4, 2008 at 19:56 in Education by James Chen2 Comments »
I received a question about the differences between triangles and wedges, so I just wanted to write a quick post about it. Much like symmetrical triangles, wedges are generally larger chart patterns that are characterized by two converging lines. But unlike the lines of a symmetrical triangle, which slope in opposite directions, the two sides of a wedge will both slope in the SAME direction (up or down) at different angles. Therefore, a rising wedge will have two converging sides that both slope up, while a falling wedge will have two converging sides that both slope down. Falling wedges after uptrends are usually considered bullish continuation patterns, while rising wedges after downtrends are usually considered bearish continuation patterns. Other wedge scenarios are generally taken on a case-by-case basis. Trading signals, like with triangles, are triggered on the breakout or breakdown of the wedge. In the Forex market, wedges occur on a relatively frequent basis.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/CHF Update - Between a Rock and a Hard Place
Posted on September 4, 2008 at 13:40 in Analysis by James ChenNo Comments »
http://blogs.fxstreet.com/fxpath/files/2008/09/2008-09-04-usdchf1-300x185.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying USD/CHF daily chart, price (as of Thursday morning in New York) is currently between a steep uptrend support line to the downside and a rather significant horizontal resistance level to the upside (around the 1.1120-30 region). Although price poked above this horizontal resistance line yesterday, there wasn’t actually a close above. As price action on this pair decides whether to continue the steep up-run that has been in place since mid-July, or to make a correction back down, we should be able to seek some directional bias by monitoring these two support/resistance factors for potentially strong breakout or breakdown closes.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
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Posted on September 3, 2008 at 14:42 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/09/03/20080903eurusd.jpg
(Please click on the accompanying chart to enlarge.)
As of early Wednesday morning in New York, price has poked slightly below and is now fluctuating slightly above the long-term uptrend support represented by the major uptrend line. Therefore, price is currently at a very critical juncture. In the absence of any significant correction, a strong breakdown below the trendline and then the 1.4300 region immediately below it would signify a definitive end to the long-term uptrend, and a potential further freefall. In the event of this occurring, the next major support below resides around the 1.4125 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
Forex Profit Targets
Posted on September 2, 2008 at 17:26 in Education by James Chen2 Comments »
Setting forex profit targets using technical analysis can be relatively straightforward. For example, a profit target for a head-and-shoulders pattern would be measured according to the height of the pattern from the top of the head to the neckline. Similarly, a rectangle consolidation would be targeted after breakout according to the height of the trading range. Another way to set a target would be to use prior support/resistance levels, pivot points, or Fibonacci. And yet another way would be to set it according to a desired risk:reward ratio.
Although all of these methods are very neat and clean ways to determine specific profit targets, price doesn’t often do exactly what we expect it to do. The worst possible scenario in any profit situation is when price misses the target/limit by a few pips, and then turns around to transform ultimately into a loss. Another frustrating scenario occurs when a profit limit kicks in and gets executed, and then price subsequently proceeds to move way beyond that level.
Setting concrete profit targets through the use of automated profit limits is generally an arbitrary act. In most cases, it is better to let the market tell you how much it is willing to give you. The natural way to do this is through the use of trailing stops. Automated trailing stops can also be arbitrary, as one must choose a random number upon which to base the trail. Manual trailing stops, on the other hand, where the stop loss is moved according to specific price action, is perhaps one of the best ways to deal with profit situations.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
GBP/JPY Update - Pronounced Bounce
Posted on September 2, 2008 at 15:24 in Analysis by James Chen4 Comments »
http://forex.typepad.com/fxpath/images/2008/09/02/20080902gbpjpy.jpg(Please click on the accompanying chart to enlarge.)
The one-directional plummet that has occurred in the past couple of weeks on the GBP/JPY pair (a daily chart of which is shown) has been nothing short of remarkable. On Monday, price reached all the way down and bounced up off very significant support almost precisely around the 192.60 level. This is a long-term support level that was hit in July 2005 and again in March of this year before being touched again just yesterday. Any continued move up on the bounce would constitute at least a minor correction, and should target the 196.80 region as the next resistance to the upside. The 192.60 support level, on the other hand, should continue to serve as strong support, at least in the near-term.
UPDATE: Price action on this pair has broken down well below the 192.60 support mentioned above, and then rebounded somewhat as of early Wednesday morning in New York. As of this time, it appears that price is no longer respecting long-term support. In the absence of any significant correction, and in the event of yet further strong price action to the downside, the next key support level below resides around the 190.90 level.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/USD Update - Approaching Support
Posted on September 2, 2008 at 14:49 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/09/02/20080902eurusd_2.jpg(Please click on the accompanying chart to enlarge.)
It’s great to be back from the U.S. Labor Day holiday. Looking at the charts this early Tuesday morning (New York session), we’ve seen yet more extreme dollar strengthening in the past few days. As shown on the accompanying EUR/USD daily chart, price is very close to reaching the long-term uptrend support line that I’ve been mentioning recently. This line currently resides around the 1.4400 area. Any clean breakdown of this level should meet additional immediate support around the 1.4300-1.4330 region, which originally acted as some support for the horizontal trading range that occurred towards the end of 2007 and the beginning of this year. More likely, though, we should be seeing some kind of a bounce, or at least a consolidation, at or near the long-term uptrend line, as it represents rather significant dynamic support.
UPDATE: As of early Wednesday morning in New York, price on this pair has poked through the long-term uptrend support line. More updates to come as price action develops and this pair continues to fluctuate around long-term support.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
AUD/USD Alert - Bearish Overtones
Posted on August 29, 2008 at 18:03 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/08/29/20080829audusd.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying AUD/USD 4-hour chart, price has just bounced down off of a significant downtrend resistance line that has been in place since the recent bearish run began in late July. And as of Friday noon in New York, price has broken down below a short-term support line, hinting at a further extension of the dollar rally. Immediate support to the downside currently resides around the 1.8500 region, which, if broken, would potentially give strong indications of a continuation in the bearish run for this pair.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
USD/JPY Update - Key 108.50 Level
Posted on August 29, 2008 at 14:31 in Analysis by James Chen4 Comments »
http://forex.typepad.com/fxpath/images/2008/08/29/20080829usdjpy.jpg(Please click on the accompanying chart to enlarge.)
As of this writing very early on Friday morning (New York session), price on the USD/JPY daily chart, as shown, has once again reached significant support around the 108.50 level. As noted two days ago on this blog (click here), a breakdown of this strong support should target further support to the downside around the 107.30 region. Price is still showing a rough head-and-shoulders pattern, so a clean breakdown of the 108.50 region would roughly correspond to a neckline breakdown. If, on the other hand, support is respected, a strong bounce should target the top of the pattern (around 110.60) once again.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
GBP/USD Update - Big Bear
Posted on August 28, 2008 at 20:41 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/28/20080829gbpusd_3.jpg(Please click on the accompanying chart to enlarge.)
Unlike other majors, which have recently been mired in sideways consolidations, GBP/USD (a 60-minute chart of which is shown) has generally been in clear bearish mode for quite some time now. This is illustrated by the two downtrend resistance lines of accelerating slope on the chart. This downtrend has been characterized by steady declines interrupted by short upward retracements/pullbacks. Currently extended rather far to the downside (as of Thursday afternoon, New York session), the pair should soon make another potential pullback to (or near) the downtrend resistance line, before possibly continuing the general downtrend.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
EUR/USD Update - Divergence
Posted on August 28, 2008 at 14:57 in Analysis by James Chen4 Comments »
http://forex.typepad.com/fxpath/images/2008/08/28/20080828eurusd.jpg(Please click on the accompanying chart to enlarge.)
A clear case of bullish price-oscillator divergence has formed on the EUR/USD daily chart, as shown. In this case, price has recently made a lower low while the Slow Stochastics has made a higher low. This hints at a potential waning of downward momentum, and a possible impending upward turn. Divergence signals are generally considered somewhat reliable confirming indicators that are most often used in conjunction with other technical and fundamental tools.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
USD/CAD Update
Posted on August 27, 2008 at 19:38 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/27/20080827usdcad.jpg(Please click on the accompanying chart to enlarge.)
USD/CAD (a daily chart of which is shown) has recently bounced down off a long-term downtrend resistance line. Any strong break below intra-channel uptrend support (represented by the short uptrend line on the chart) could signal a prolonged bearish move to continue the long-term downtrend. For more details, please click here for Wednesday’s Chart of the Day.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
USD/JPY Update
Posted on August 27, 2008 at 14:21 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/27/20080827usdjpy.jpg(Please click on the accompanying chart to enlarge.)
As of very early Wednesday (New York session), price on the USD/JPY daily chart, as shown, has once again come close to approaching key support around the 108.50 region this morning during European session. If one looks closely at the last 3 weeks of price action on this chart, one might discern a rough head-and-shoulders pattern, possibly hinting at a potential turning point in the general uptrend. The neckline would be around the 108.50 level. If this line is broken in a decisive manner, further support to the downside may be found around the 107.30 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
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Posted on August 26, 2008 at 20:11 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/08/26/20080826eurusd_2.jpg(Please click on the accompanying chart to enlarge.)
As of late New York session on Tuesday, price on the EUR/USD daily chart is approaching the long-term uptrend line that extends back at least two-and-a-half years. For more details on this EUR/USD setup, please click here for Tuesday’s Chart of the Day.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
AUD/USD Follow-up
Posted on August 26, 2008 at 15:24 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/26/20080826audusd.jpg(Please click on the accompanying chart to enlarge.)
As noted on Friday’s Chart of the Day (click here), AUD/USD had formed an inverted flag pattern that hinted at a downward continuation. A breakdown of the flag did indeed occur yesterday, and then followed through today to hit the noted support target of 0.8500 (surpassing it by about 7 pips) before retreating back up.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
GBP/USD Update
Posted on August 26, 2008 at 14:48 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/26/20080826gbpusd.jpg (Please click on the accompanying chart to enlarge.)
As of early Tuesday morning (New York session), the GBP/USD breakdown of the long-term uptrend line has extended its bearish run. This uptrend line should now serve as solid resistance to the upside, as previous support has becomes resistance. To the downside, the 1.8150 region continues to serve as major support going forward.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
Stop Loss Placement - Arbitrary or Logical?
Posted on August 25, 2008 at 22:20 in Education by James ChenNo Comments »
Just a quick note on stop loss placement. I speak with a lot of forex traders on a daily basis, and many of these traders often ask me where they should place their stop losses. In other words, they wish to know how many pips away from their trade entry the stop loss should generally go. In asking this question, most of these traders are searching for a rule-of-thumb that can be used under all circumstances. They are looking for a pat answer like “20″ or “30″ or “50,” that represents how much they should be willing to lose on any given trade. This is what’s known as an arbitrary stop loss. When one simply chooses a number that seems reasonable from a risk tolerance perspective, the basis for that number is essentially random. It is not customized or connected in anyway to the trade at hand. In my opinion, this is not the right way to place stop losses.
Much more sensible and effective than an arbitrary stop loss is a logically-placed stop loss. A logical stop loss is placed according to the specific price action on a position. For example, if a trader wishes to trade a breakout above a resistance level, the stop loss would logically be placed a certain distance under that resistance level. If price breaks out above resistance and then turns and heads back below the line, it is probably a false break that invalidates the reasons for getting into the trade in the first place. Therefore, the stop loss placement is logical. Likewise, if a trader enters into a trade on a bounce off a trendline, the logical stop loss would be placed a certain distance under the trendline. If price reaches that level below the trendline, it is probably a trendline break as opposed to a bounce, and the reasons for getting into that trade will have been invalidated. So this stop loss placement is also logical.
Logical stop losses almost always make more sense than arbitrary stop losses. The only primary reason for a trader to set arbitrary stop losses might be to control risk more consistently with stop losses that are always of a pre-determined size. In this instance, however, perhaps a better way to control risk is actually to plan the trade ahead of time by setting a logical stop loss AND THEN setting the unit size of the trade according to where the stop loss is placed (in view of the acceptable risk parameters).
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/GBP Alert
Posted on August 25, 2008 at 17:58 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/08/25/20080825eurgbp.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying EUR/GBP daily chart, price has touched and tentatively retreated from the top resistance line of a large symmetrical triangle. This is as of Monday mid-session in New York. For more details, please see today’s Chart of the Day by clicking here .
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
USD/CHF Update
Posted on August 25, 2008 at 15:57 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/25/20080825usdchf_2.jpg(Please click on the accompanying chart to enlarge.)
Price on the 4-hour USD/CHF chart, as shown, has formed a short-term parallel uptrend channel that began in mid-July. Currently, price is approaching the bottom support line of this channel. If there is a subsequent breakdown of this line, the next support level to the downside resides around the 1.0835 region. If there is a bounce at or near this line, on the other hand, next resistance resides around the 1.1035 region.
Update: As of early Tuesday morning (New York session), price has made a pronounced bounce off the bottom support line of the 4-hour uptrend channel.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
GBP/USD Update
Posted on August 25, 2008 at 4:21 in Analysis by James Chen4 Comments »
http://forex.typepad.com/fxpath/images/2008/08/24/20080824gbpusd.jpg(Please click on the accompanying chart to enlarge.)
As of Sunday evening in New York, price action on GBP/USD (a daily chart of which is shown) has broken down several different support barriers, including the long-term uptrend support line extending back several years (as represented on the chart in blue). In the process, the pair has now hit a two-year low. With the long-term uptrend tentatively broken, where does price go from here? Further downward price momentum in the coming week could see price reach all the way down to the major support region around 1.8150. At the current juncture, if there is no major upsurge in the pair on Monday, the long-term uptrend line should now serve as resistance where it originally acted as support before breakdown.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
Cable: Correction of a Correction
Posted on August 22, 2008 at 15:48 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/22/20080822gbpusda.jpg
http://forex.typepad.com/fxpath/images/2008/08/22/20080822gbpusdb.jpg(Please click on the accompanying charts to enlarge.)
As of Friday morning (New York session), Cable has made a downward correction of what was looking like the beginnings of an upward correction. Of the two accompanying charts, one is a daily chart while the other is an hourly.
The daily is showing that price has retraced virtually the entire bounce off the long-term uptrend support line that occurred yesterday. Currently, price is right back down around the trendline.
The hourly chart is showing price traverse between two relatively well-defined support/resistance levels since the steep drop that occurred in the first half of the month. The bottom of the range is around 1.8530, while the top is around 1.8790. A move back up, therefore, should target the top of the range once again.
A continued downmove, on the other hand, could potentially breakdown both the short-term range and the long-term uptrend line. In this event, slightly below the range is the 1.8500 region, which continues to be a significant support level to the immediate downside.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
USD/JPY Update
Posted on August 22, 2008 at 5:45 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/21/20080821usdjpy.jpg(Please click on the accompanying chart to enlarge.)
As of Thursday evening in New York, price on USD/JPY (a daily chart of which is shown) has poked slightly down through, and then bounced back up above, a key support/resistance level around 108.50. This bounce lends further strength to this very significant level. A continued move up on the bounce should target resistance back up around the 110.50-110.60 region. And for the time being, support should continue to reside around the 108.50 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
EUR/USD Alert Follow-Up
Posted on August 21, 2008 at 15:46 in Analysis by James Chen4 Comments »
http://forex.typepad.com/fxpath/images/2008/08/21/20080821eurusd.jpg(Please click on the accompanying chart to enlarge.)
As of Thursday morning (New York session) on the EUR/USD hourly chart, the Asian session breakout on the short-term channel actually followed through, pulled back to the breakout trendline, and then continued up to reach the resistance of 1.4850 that I had mentioned in the Chart of the Day yesterday (click here). With any additional upward momentum on this break, the 1.4950-60 region, which represents strong previous range resistance, is the next key resistance level to the upside in this correction.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
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Posted on August 21, 2008 at 5:09 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/08/20/20080820eurusd.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying EUR/USD hourly chart, price has tentatively poked out above the gradually-sloped downward consolidation channel that the pair has been entrenched in for more than a week now.This current break/poke is as of Wednesday evening, New York time.
Could this finally be a sign of a potential impending bullish correction? Possibly. But further evidence of follow-through on the breakout is needed to avoid a false breakout play. If price happens to break strongly through the 1.4800 horizontal resistance barrier to the upside, we could potentially be looking at a long-awaited correction in the strong down-move of the last several weeks.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
The Triple Screen
Posted on August 20, 2008 at 15:57 in Education by James Chen3 Comments »
While the market is still essentially in consolidation mode, I thought I would bring up what I consider to be one of the highest-probability technical approaches to Forex trading. Many of you may be familiar with it. First originated by Dr. Alexander Elder in his book, Trading for a Living (John Wiley & Sons, 1993), the Triple Screen is a simple but ingenious multiple timeframe approach.
To trade the Triple Screen, you would begin with your favorite timeframe, and call it the intermediate chart. Multiply that timeframe by 4-to-6 times to get the long-term chart, and divide it by 4-to-6 to get the short-term chart. So for example, if you usually trade the 4-hour as your intermediate, you may choose the daily as your long-term and the 1-hour as your short-term.
On the long-term chart, which is your first screen, you would use trend-following indicators like moving averages, MACD, trendlines, etc., to decide whether to go long, sell short, or stay out of trading altogether due to a lack of trend.
On the intermediate chart, which is your second screen, you would use oscillators (Stochastics, RSI, etc.) to identify a likely pullback entry zone.
And on the short-term chart, which is the third screen, you might look for support/resistance breakouts in the direction of your planned trade to actually pinpoint the trade entry.
In sum, the Triple Screen is a classic technical methodology that, with practice and experience, can potentially contribute significantly to your trading approach.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
GBP/USD Update
Posted on August 20, 2008 at 5:33 in Analysis by James Chen5 Comments »
http://forex.typepad.com/fxpath/images/2008/08/19/20080819gbpusd.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying GBP/USD daily chart, after flirting with the long-term uptrend support line for almost a week now, price is still consolidating right around this major support line as of Tuesday evening in New York. Neither a discernible breakdown below the trendline or bounce up off the trendline has yet occurred. Soon, higher volatility should move price out of this tight horizontal trading range.
At this point, of course, momentum on the daily chart is still well in extremely oversold territory and pointing up. If Wednesday sees a true bounce up off trendline support, the 1.8830 region serves as resistance to the upside.
To the downside, major support continues to reside around the strong 1.8500 area.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
Continued Consolidation
Posted on August 19, 2008 at 15:57 in Analysis by James ChenNo Comments »
The majors are continuing to move within a relatively tight, virtually directionless consolidation range as of Tuesday morning, New York session. This is where the violent moves of the past several weeks finally take a breather. But as most traders are aware, periods of high volatility generally follow periods of low volatility (and vice versa). The real trick now, during a period of low volatility in preparation for impending high volatility, is finding the right breakout levels as well as avoiding false breaks and whipsaws when the next big move occurs.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
GBP/JPY Update
Posted on August 19, 2008 at 3:09 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/18/20080818gbpjpy_2.jpg (Please click on the accompanying chart to enlarge.)
As of Monday evening in New York (early Tuesday, Asian session), price on the GBP/JPY daily chart, as shown, has made a tentative break of the inverted pennant that was highlighted in my blog post earlier in the day.
At this point, caution should be exercised, as the break (or poke) has been relatively slow and weak thus far. Whether this breakdown has any follow-through, or if it is merely a false break, remains to be seen.
In the event that it is real, GBP/JPY tends to move quickly, and major support to the downside resides around the 202.50 region.
Update: As of early morning New York session on Tuesday, price has made a bonafide break of the inverted pennant. The 202.50 region remains as the next major support to the downside.
Update 2: As of mid-session in New York, this pair has retraced much of the pennant break that occurred earlier. The technical bias, however, should still be to the downside after this up-run exhausts itself.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
GBP/JPY Alert
Posted on August 18, 2008 at 20:28 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/08/18/20080818gbpjpy.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying GBP/JPY daily chart, price has just formed a rather well-defined inverted pennant pattern, which could potentially become a downward continuation formation. Therefore, watch for any strong break below the bottom border of the pennant.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
Sideways Action
Posted on August 18, 2008 at 16:08 in Analysis by James ChenNo Comments »
As of this writing during early New York session on Monday, we’re seeing a lot of slow-moving, sideways action on the majors. Perhaps this is a pause before a correction for the U.S. dollar. Or, maybe it is a consolidation before a continuation in the dollar rally. Either way, take cues from potential fast breaks to either side. More updates to come as price action develops.
Update: As of noon (New York session) on Monday, there has been some minor movement towards the general direction of dollar-weakening. However, price action on the majors is currently still mired within a low-volatility sideways range that is not conducive to trading.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
EUR/USD Update
Posted on August 18, 2008 at 2:28 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/17/20080817eurusd.jpg(Please click on the accompanying chart to enlarge.)
As noted on Friday’s Chart of the Day, price on the EUR/USD (a daily chart of which is shown) has approached to within just around 300 pips from the long-term uptrend support line that has been in effect since at least early 2006. Currently, this dynamic support resides around the 1.4400 level.
Even if this pair continues its almost historically extreme drop on Monday morning, the long-term uptrend line should continue to hold as strong support moving forward. If not, and there is an eventual breakdown, the long-standing uptrend in the pair will have been definitively reversed.
More likely, however, we should be seeing some kind of a correction soon, well before price actually reaches the uptrend support line. Monday morning should help set the tone for the new week’s prevailing direction. More updates to come as price action on this pair develops further.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
Wishing and Hoping
Posted on August 15, 2008 at 14:56 in Education by James Chen6 Comments »
Many forex traders often find themselves in the unenviable position of wishing, hoping (and sometimes praying) that a particular trade will go their way. Usually, this occurs when a position has gone horribly wrong and the trader refuses to let go. Needless to say, more often than not, wishing and hoping just doesn’t work.
The one thing wishing/hoping does accomplish, however, is to make the act of trading unnecessarily stressful and frustrating. As forex traders, we must remind ourselves that the market is full of unknowns and we just cannot control price direction, however much we may wish to. Each currency will go where it needs to go, and there’s not one thing we can do about it, except for react in an intelligent manner.
The most significant way in which we can react intelligently is simply to work tirelessly on our risk/money management approach. A big part of this is admitting early on when we are wrong, and then moving swiftly on to the next opportunity. There is absolutely no room for inflated egos in successful forex trading. Nor will wishing and hoping ever accomplish anything better than merely adding splashes of gray to our heads.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
EUR/USD Update
Posted on August 15, 2008 at 4:30 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/14/20080814eurusd.jpg(Please click on the accompanying chart to enlarge.)
As of this writing on Thursday evening, EUR/USD (a daily chart of which is shown) has reached the aforementioned 1.4750 support level. The 1.4900 consolidation zone has clearly been broken and left behind, and price is well within the previous trading range below the 1.4960 level. Although oscillators are displaying extremely oversold conditions, downward price momentum still appears significant. Resistance to the upside remains around the 1.4960 support/resistance region, while further support to the downside resides around the 1.4600 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
« Newer posts – Older posts »
Posted on August 14, 2008 at 17:12 in Analysis by James Chen6 Comments »
http://forex.typepad.com/fxpath/images/2008/08/14/20080814gbpusd.jpg(Please click on the accompanying chart to enlarge.)
As noted on yesterday’s post, GBP/USD (a daily chart of which is shown), was approaching long-term uptrend support which currently resides around the 1.8600 region. Price subsequently came very close to that support level (to around 1.8617 bid) and then bounced right back up about 150 pips at its height, as of this (Thursday) morning. The area around the uptrend line should continue to act as support in the near-term, while the 1.8850 region should serve as a resistance level to the upside.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
EUR/USD Update
Posted on August 14, 2008 at 5:10 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/08/13/20080813eurusd.jpg(Please click on the accompanying chart to enlarge.)
The 4-hour chart of EUR/USD, as shown, illustrates that as of Wednesday night in New York, price has been in a prolonged consolidation period above and below the 1.4900 level since the beginning of the week. After reaching down to this region on the heels of a fast and deep drop over the past week or so, price volatility has been tight and essentially directionless.
This could potentially change on Thursday. Watch for clean breaks in either direction. One possible bearish observation is what appears to be an inverted flag/pennant pattern, which may represent a continuation formation that hints at a possible break to the downside. Longer-term charts, however, are indicating that price is extremely oversold, which hints at a possible impending correction. Thursday morning should set the tone for any subsequent move going forward. Updates will be posted as price action develops.
Update: As of early Thursday morning (New York session), price is still entrenched in a tight consolidation around 1.4900. Any fast break to the downside should target support around the 1.4750 region. A fast break to the upside, on the other hand, should target resistance around 1.5140.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
USD/JPY Alert 2
Posted on August 13, 2008 at 19:52 in Analysis by James Chen4 Comments »
http://forex.typepad.com/fxpath/images/2008/08/13/20080813usdjpy.jpg(Please click on the accompanying chart to enlarge.)
As of of this writing on Wednesday afternoon (New York session), price on the USD/JPY (a daily chart of which is shown) has bounced sharply off of the 108.50 support region. At one point, this bounce pushed price all the way up more than 100 pips above support. The 108.50 support zone has thus been validated once again, and should continue to act as support going forward. Resistance, as before, continues to reside around the bottomside of the major uptrend line.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
GBP/USD Update and Alert
Posted on August 13, 2008 at 15:11 in Analysis by James Chen6 Comments »
http://forex.typepad.com/fxpath/images/2008/08/13/20080813gbpusd.jpg(Please click on the accompanying chart to enlarge.)
The remarkable drop in the key GBP/USD pair (a daily chart of which is shown), has brought price close to the long-term, multi-year uptrend support line. Currently, this support resides around 1.8600. Momentum is extremely oversold. At some point, the extreme drop that has occurred in this pair and other pairs in the last couple of weeks should wane and potentially turn. On GBP/USD, this may well occur near long-term uptrend support as outlined on the chart.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
USD/JPY Alert
Posted on August 13, 2008 at 4:03 in Analysis by James Chen6 Comments »
http://forex.typepad.com/fxpath/images/2008/08/12/20080812usdjpy.jpg(Please click on the accompanying chart to enlarge.)
As of Tuesday evening (New York time) and towards the beginning of Asian session, price on the USD/JPY (a daily chart of which is shown) has dropped substantially. As of this writing, the drop has brought price down around a significant support level in the 108.50 region that the pair just broke out of last week. Current technicals on this pair can be found on Tuesday’s Chart of the Day (click here). If we don’t see a clear bounce at or near the current support (that is, if a strong breakdown of this support occurs), further significant support to the downside resides around the 107.10-107.20 region.
Update: As of Wednesday morning (New York session), price has stalled around support as outlined above. Neither a clear bounce nor a clear breakdown of support has occurred as of yet. More updates are upcoming as price action develops.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
AUD/USD Update
Posted on August 12, 2008 at 15:49 in Analysis by James Chen8 Comments »
http://forex.typepad.com/fxpath/images/2008/08/12/20080812audusd.jpg(Please click on the accompanying chart to enlarge.)
Much like its dollar-based brethren, AUD/USD (a daily chart of which is shown) has recently been on a prolonged one-way road towards dollar strengthening. Many support levels have been broken in the process. We are currently nearing yet another of these major support levels around the 0.8670 region. The circles on the chart denote previous instances when price has turned at that level. At some point, this prolonged plummet should take a rest or turn. The most likely level(s) at which this will occur is at prior support/resistance levels.
Update: As of this writing on Tuesday evening (New York time), fast-moving price action on the AUD/USD has reached and broken down cleanly below the 0.8670 support level noted above. Overall, this prolonged drop in the pair has been extremely drastic. If we don’t see a bounce soon, and this downward momentum has the strength to continue Wednesday morning, the next major support to the downside resides around the 0.8500 level.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
7 Big Figures in 7 Days
Posted on August 12, 2008 at 2:33 in Analysis by James Chen4 Comments »
http://forex.typepad.com/fxpath/images/2008/08/11/20080811eurusd.jpg(Please click on the accompanying chart to enlarge.)
It’s no secret that a predominantly one-directional plummet of around 700 pips in about 7 days has occurred on EUR/USD (the daily chart of which is shown). The question at this point is not if, but when, a correction (or at least a consolidation) will take place.
All technical indications have been showing price as extremely oversold. In fact, the pair is more oversold than it’s been in a very long time. Support levels have been broken all over the place in the last several days. Major support down from here resides around the 1.4750 region.
In the event of a much-anticipated rebound, major resistance to the upside resides around the 1.5140 region.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
Forex Multiple Timeframe Analysis
Posted on August 11, 2008 at 16:07 in Education by James ChenNo Comments »
One of the most common and logical approaches to trading Forex using technical analysis focuses on multiple charting time frames. For example, a trader might begin by looking at a long-term chart like a weekly or monthly chart to determine the overall direction of the trend, if any. If a decisive long-term trend is in place, the trader should only trade in this direction.
Then, the trader may drill down to a shorter timeframe like the daily or 4-hour chart to look for dips, or pullbacks, in the trend. These are counter-trend moves that provide an advantageous location to enter into the trend. For example, in a strong long-term uptrend, a minor downward retracement would represent a potential high probability entry to get in on the trend at a good price.
Finally, the trader may drill down even further to an even shorter timeframe like the 30-minute or 15-minute chart to pinpoint and time exact entries. For example, if a retracement in an uptrend is identified on the 4-hour chart, the trader could go down to the 15-minute chart to wait for a resistance breakout in the direction of the trend before finally entering into a long position.
What makes multiple timeframe analysis so powerful is that it puts traders on the right side of the market while also pinpointing the highest probability entries available.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/JPY Update
Posted on August 11, 2008 at 15:23 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/08/11/20080811usdjpy_3.jpg
(Please click on the accompanying chart to enlarge.)
After the dollar rally of last week, are we finally experiencing a respite in the strong breakout moves on the majors? The USD/JPY, a daily chart of which is shown, has approached and stalled around clear resistance on the bottomside of the uptrend line that began in March. This line originally served as support and should now serve as resistance going forward. Oscillators like the displayed Stochastics, which are well in overbought territory, are also finally pointing down again. In the event of a correction to last week’s upmove, the 108.50 region should continue to serve as support to the downside.
Update: As of early Monday afternoon (New York session), the dollar has firmed and once again approached resistance imposed by the uptrend line. Support and resistance as outlined above are still in effect.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
EUR/USD Update
Posted on August 11, 2008 at 3:41 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/08/10/20080810eurusd_2.jpg
(Please click on the accompanying chart to enlarge.)
As of Sunday evening (New York time) price on the EUR/USD daily chart, as shown, has reached all the way down and dipped slightly into the prior trading range that prevailed from late October 2007 to late February 2008. This dip into the previous range follows on the heels of a massive plummet that occurred on Friday.
Currently, price has temporarily stalled around the top of the prior range (around the 1.4960-1.4980 region). Monday morning’s price action should dictate whether price descends fully into the previous range or rebounds back up for a corrective move after the momentum-exhausting drop on Friday.
Support to the downside resides around the 1.4770 level. If a rebound occurs, on the other hand, resistance resides around the 1.5140 level.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
« Newer posts – Older posts »
John Wiley & Sons), will be released in early 2009.EUR/USD Alert 2
Posted on August 8, 2008 at 5:43 in Analysis by James Chen6 Comments »
http://forex.typepad.com/fxpath/images/2008/08/07/20080807eurusd_3.jpg(Please click on the accompanying chart to enlarge.)
As of this writing, price (now at around 1.5215) has finally made what currently appears to be a clean breakdown below a 5-month-old horizontal trading range on the EUR/USD daily chart, as shown. This breakdown was of an extremely significant range support line around 1.5280-1.5300.
If this breakdown below the range carries continued downward follow-through, we could see price move towards a major support target of around 1.4960, which represents the top of the prior horizontal trading range.
A rebound of the current deep poke through support, on the other hand, should find initial resistance around the 1.5300 level from which it just broke.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
EUR/USD Alert
Posted on August 7, 2008 at 19:47 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/07/20080807eurusd.jpg(Please click on the accompanying chart to enlarge.)
Fast-moving price action on the EUR/USD (a daily chart of which is shown) has just approached strong and significant support around 1.5300 as of this writing. This support represents the bottom of the current 5-month trading range.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
Forex Range Trading
Posted on August 7, 2008 at 15:06 in Education by James Chen2 Comments »
In the past several months, we’ve seen plenty of medium-term trading ranges form on most of the major currency pairs. When this occurs, forex traders go into range trading mode. On the key EUR/USD pair, for instance, price has ascended in a general uptrend for quite some time now, but in doing so it has moved from horizontal range to horizontal range.
The most tradable ranges are bounded by two horizontal lines (but they can also be slightly-sloped parallel lines), and have enough height in pips to make trading them worthwhile from a risk:reward perspective. Usually, two approximately equal touches of a price level on top and two alternating touches of a price level on the bottom create a potentially tradable range. Sometimes, though, traders may anticipate a range by just waiting for two touches of a top/bottom and only one touch on the other side of the range.
Within a horizontal range, traders will often draw diagonal intra-range trend lines, and then trade breakouts/breakdowns of these trendlines. This can be one of the most advantageous methods of range trading. Although it gets the trader in a bit late on the turn, it provides a higher probability confirmation that the turn indeed took place. Beyond the intra-range trendline breaks, range traders will also use oscillators (like Stochastics, RSI, CCI, or similar) to confirm overbought/oversold conditions, and therefore possible impending turns.
When the forex market is experiencing prolonged ranging conditions, which it often does, range trading can be the most logical approach to tackling the currency markets.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/CAD Update
Posted on August 7, 2008 at 4:40 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/06/20080806usdcad_2.jpg(Please click on the accompanying chart to enlarge.)
Price action on the USD/CAD daily chart, as shown, has just hit a significant support/resistance level. Further upward momentum on Thursday morning should eventually target major resistance near the 1.0670 region. A correction in the recent bullish run, on the other hand, should find support around the significant 1.0350 level that price just broke a couple of days ago.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
USD/JPY Update
Posted on August 7, 2008 at 4:24 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/08/06/20080806usdjpy_3.jpg
(Please click on the accompanying chart to enlarge.)
As we can see on the accompanying USD/JPY daily chart, price has reached resistance at a key intra-channel uptrend line as of this writing on Wednesday night. Oscillators like the displayed Stochastics remain extremely overbought, but still pointing up. Current support is at the 108.50 level that price broke Wednesday morning (resistance becomes support). If there is any further upward momentum on Thursday morning, major resistance to the upside resides around 111.50.
- James
James Chen is the Chief Technical Analyst at FX Solutions,
a leading Forex broker. He is also a registered Commodity Trading
Advisor (CTA) and a Chartered Market Technician (CMT) Level 3
candidate. At FX Solutions, Mr. Chen writes daily currency analysis,
conducts forex trading seminars, and has authored numerous articles on
currency trading and technical analysis for major financial
publications. His upcoming book, Essentials of Foreign Exchange Trading
(John Wiley & Sons), will be released in early 2009.
Forex Breakouts - Pullbacks and Throwbacks
Posted on August 6, 2008 at 15:41 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/06/20080806pullback_2.jpg(Please click on the accompanying image to enlarge.)
In the Forex market, trading breakouts can be a tricky ordeal. Very often, momentum on a breakout will wane shortly after the break, resulting in a pullback/throwback move.
A throwback is simply a return to the point of breakout on an upward break. A pullback is a return to the point of breakdown on a downward break. If the breakout is true, price should hit and then bounce off the point of breakout and then surpass the point at which momentum waned and price turned, as illustrated on the accompanying diagram.
Many prudent breakout traders will wait for a pullback/throwback before getting in on a breakout move. Traders who do so may miss some potential trading opportunities, but that extra patience often pays off in higher probability breakout trades.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/JPY Alert
Posted on August 6, 2008 at 14:56 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/06/20080806usdjpy_2.jpg(Please click on the accompanying link to enlarge.)
As of this writing during early New York session on Wednesday, price on the USD/JPY daily chart, as shown, has finally made a tentative breakout of the key 108.50 support/resistance level. Keep in mind that this is currently only a tentative breakout, and it could turn out to be either a false or premature break. We should see shortly whether this break carries any real follow-through.
Update: It appears that the breakout on USD/JPY has followed through significantly as of mid-morning NY session. Price has reached some resistance at this point above 109, but upward momentum appears strong.
Update 2: As of around noon in New York on Wednesday, this pair has continued its strong upward march, at one point surpassing the 109.50 level. Next resistance resides around 110.00, and then ultimately at the underside of the uptrend line as shown on the chart.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
USD/CAD Tuesday Evening (NY) Video Update
Posted on August 6, 2008 at 2:50 in Analysis by James ChenNo Comments »
EUR/USD Tuesday Morning (NY) Update
Posted on August 5, 2008 at 15:09 in Analysis by James Chen8 Comments »
http://forex.typepad.com/fxpath/images/2008/08/05/20080805eurusd.jpg(Please click on the accompanying chart to enlarge.)
As of this writing near the start of NY session on Tuesday, price action on the EUR/USD (a daily chart of which is shown) has made a clean breakdown of the long-term uptrend support line early this morning. If this breakdown follows through further, we are looking at immediate support around 1.5360, and then major support at the bottom of the current horizontal range in the 1.5280-1.5300 region.
Update: After the FOMC rate decision today, the rate remained unchanged as expected, and so did the exchange rate on EUR/USD. As of this writing during late NY session on Tuesday, price continues to languish around support in the 1.5460 region after a brief period of volatility right after the announcement. Support targets remain as mentioned above.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
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Posted on August 5, 2008 at 4:00 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/04/20080804heikin.jpg(Please click on the accompanying chart to enlarge.)
Heikin Ashi, as shown on the current daily EUR/USD chart to the left, is a Japanese charting technique that appears similar to traditional candlestick charts. The differences, however, are extremely significant.
The purpose of these modified candlesticks is to display the trend more clearly. A series of hollow candles without lower wicks indicates a strong uptrend. Conversely, a series of solid candles without upper wicks denotes a strong downtrend.
The distinct look of Heikin Ashi charts is noticeable on the very first glance. During trending periods, virtually uninterrupted series of solid or hollow candles are the rule. This means that even during minor retracements in a strong trend, Heikin Ashi charts will essentially show a one-directional run. Therefore, during these trending periods, Heikin Ashi charts work their best in indicating whether a trend has ended or is still intact.
The formulas used to derive the Heikin Ashi candles are what really set them apart from more conventional price representations. Following are the formulas for the different components of a Heikin Ashi candle:
Close = /4
Open = /2
High = Maximum (High, Open, Close)
Low = Minimum (Low, Open, Close)
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/CAD Alert
Posted on August 4, 2008 at 18:45 in Analysis by James Chen6 Comments »
http://forex.typepad.com/fxpath/images/2008/08/04/20080804usdcad_2.jpg(Please click on the accompanying chart to enlarge.)
This is an alert on the USD/CAD daily chart (as shown). Price has just bumped up against significant resistance in the 1.0350 region, as of this writing. Please click here for more details.
Update: As of Tuesday morning (8/5/2008) NY session, price on the USD/CAD has broken out decisively above the 1.0350 resistance level.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
GBP/USD Monday Morning (NY) Update
Posted on August 4, 2008 at 16:24 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/04/20080804gbpusd.jpg(Please click on the accompanying chart to enlarge.)
As we can see on the GBP/USD 4-hour chart, price dropped substantially Monday morning and poked its head below the bottom line of the short-term parallel downtrend channel. After doing so, however, price quickly rebounded above the line once again, suggesting that some support may indeed exist at the well-defined channel boundaries. Oscillators are way oversold at this point, hinting that downward momentum may be waning and price may soon be looking to move back up into the channel. Additionally, the 1.9650 level is a significant historical support/resistance level.
Update: A swift and strong breakdown of support has occurred as of Monday mid-session in New York.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
Scale In, Scale Out
Posted on August 4, 2008 at 15:48 in Education by James ChenNo Comments »
Forex traders always hear about how important risk management is to a successful trading plan. But for the most part, the talk is generally about how one always needs to have a sensible stop loss in place. A relatively neglected aspect of risk management is the concept of scaling in and scaling out of position. The logic behind this very useful practice is to avoid over-commitment in either entering or exiting a trade.
When entering into a currency position, scaling in entails starting with a small, fractional position, where the trader can “test the waters.” Only when this small commitment validates the trader’s analysis by gaining profit would additional fractional position(s) be added. In this way, a full commitment to one direction would only be taken on after it is clear that the trend and momentum are in fact in the direction of the trader’s analysis.
Similarly, when exiting out of a currency position, profits may progressively be taken on fractions of the overall position. So, for example, if a trader is holding a full position in EUR/USD that is gaining profit, that trader may wish to scale out of the position by taking profits in stages. A third of the position might be closed for a profit at the 30-pip profit level, while the stop loss on the rest of the position might be trailed to the breakeven level. After another 30 pips of profit, the second third might be closed for a total of 60 pips profit, with the stop loss on the last third trailed to the 30-pip profit level. And finally, the last third might be closed after 90 pips of profit is reached. This method of scaling out allows traders to run their profits and also take their profits off the table, without the full commitment of taking full profits at a single level.
Overall, scaling in and scaling out can be an extremely effective method of managing risk and avoiding over-commitment in trading forex.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/JPY Sunday Evening (NY) Video Update
Posted on August 4, 2008 at 4:19 in Analysis by James ChenNo Comments »
GBP/USD Friday Noon (NY) Update
Posted on August 1, 2008 at 18:32 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/01/20080801gbpusd.jpg(Please click on the accompanying chart to enlarge.)
As shown on the GBP/USD 4-hour chart to the left, after the Non-Farm Payrolls report this morning, the dust has settled and price is near the bottom support line of the current short-term parallel downtrend channel. Oscillators are currently oversold, downward momentum may be waning, and therefore price may potentially be looking to continue travelling within this channel for the time being. If this is the case, it could mean a potential impending turn-up at or near the bottom of the channel.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
EUR/USD Pre-NFP Alert
Posted on August 1, 2008 at 14:09 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/08/01/20080801eurusd.jpg(Please click on the accompanying chart to enlarge.)
Just a quick post right before the Non-Farm Payrolls. EUR/USD (the daily chart of which is shown) is still languishing right at the long-term uptrend support line as of this writing. Watch this morning for either a potential bounce or break of this level.
- James
Post-NFP Update: Price made a relatively small, tentative break of the long-term uptrend support line during and after the Non-Farm Payrolls announcement. But it cannot be considered a true break unless there is follow-through to the downside today and in the coming days. As of this writing, price has retraced much of the break.
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
Top Trading Books
Posted on August 1, 2008 at 6:29 in Education by James Chen3 Comments »
Learning to trade forex effectively is like learning any other important skill. It takes lots of practice, experience, and knowledge. The practice and experience aspects of it are completely up to you. Free forex demo accounts are plentiful, and allow you to practice trading in a realistic environment with a real-time price feed.
Knowledge, on the other hand, can be acquired from several different sources. First of all, there are great online sources of knowledge like FXstreet.com, which provide education and analysis to help guide your development as a trader.
Another very important aspect of gaining knowledge is through reading books on trading. There are many trading books out there, but in my opinion, only a select few can truly impart the necessary knowledge to help you become a better trader. I own a library of almost all of these books, and two of the best forex trading books out there are written by my esteemed fellow FXstreet bloggers, Rob Booker (Adventures of a Currency Trader) and Dirk Du Toit (Bird Watching in Lion Country). Other than these, I have a shortlist of general trading books that have helped me a great deal in honing my trading skills. In no particular order, they are as follows:
- Trading for a Living by Alexander Elder
- Trade Your Way to Financial Freedom by Van K. Tharp
- Come Into My Trading Room by Alexander Elder
- High Probability Trading by Marcel Link
- Trading in the Zone by Mark Douglas
- Mastering the Trade by John F. Carter
- Japanese Candlestick Charting Techniques by Steve Nison
- Technical Analysis of the Financial Markets by John J. Murphy
- Market Wizards by Jack D. Schwager
- The New Market Wizards by Jack D. Schwager
- Reminiscences of a Stock Operator by Edwin Lefevre
- Elliott Wave Principle by A.J. Frost and Robert R. Prechter, Jr.
- How Technical Analysis Works by Bruce M. Kamich
- Street Smarts by Laurence A. Connors and Linda Bradford Raschke
- How I Made $2,000,000 in the Stock Market by Nicolas Darvas
- Technical Analysis Explained by Martin J. Pring
Do you have other favorites that I’ve missed? If so, please comment.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
USD/JPY Thursday Afternoon (NY) Update
Posted on July 31, 2008 at 19:48 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/31/20080731usdjpy.jpg(Please click on the accompanying chart to enlarge.)
Price action on the USD/JPY 4-hour chart, as shown, has approached and retreated today from a key resistance level around 108.40-108.50. At the same time, a short-term uptrend support line has formed. These two levels, to the upside and the downside, should now represent the short-term support/resistance levels to watch for in terms of potential breaks or bounces. Any strong and clean break of upside resistance, especially, should represent a solid potential breakout opportunity.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Trading (John Wiley & Sons), will be released in early 2009.
The Genius of Trailing Stops
Posted on July 31, 2008 at 16:36 in Education by James ChenNo Comments »
The trailing stop, especially in Forex trading, is pure genius. And I’m not just talking about automated trailing stops, but manual ones as well. The trailing stop epitomizes the concept of letting your profits run and cutting your losses short. Theoretically, a well-placed trailing stop can allow a position to extend ad infinitum as long as price continues to trend in one direction, while simultaneously locking in hard-won profits.
Setting profit limits, on the other hand, is a good and common practice, especially if there is some logical technical basis for choosing that price level. But let’s face it, trying to pinpoint a precise profit target is a hit-or-miss affair, especially in the roller coaster ride that is currency trading. One of the worst things to happen to traders is having price just miss a profit limit by a hair, and then reversing on a dime to turn a substantial profit into a loss. Trailing stops are geared towards preventing this type of disaster.
If executed properly, trailing stops can generally do wonders for Forex traders, especially for medium- and long-term trades. The most common practice for manually trailing stops is to place the trailing stop right below the last swing low, or pullback, in an uptrend. The opposite is true in a downtrend. Automated trailing stops, on the other hand, follow price by a set number of pips. Whichever method is used, whether manual or automated, trailing stops can potentially be the difference between an average trader and a consistently profitable one.
- James
James Chen is the Chief Technical Analyst at FX Solutions, a leading Forex broker. He is also a registered Commodity Trading Advisor (CTA) and a Chartered Market Technician (CMT) Level 3 candidate. At FX Solutions, Mr. Chen writes daily currency analysis, conducts forex trading seminars, and has authored numerous articles on currency trading and technical analysis for major financial publications. His upcoming book, Essentials of Foreign Exchange Tradinghttp://www.assoc-amazon.com/e/ir?t=jameschen-20&l=as2&o=1&a=0470390867 (John Wiley & Sons), will be released in early 2009.
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