Posted on July 31, 2008 at 15:36 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/31/20080731usdchf.jpg(Please click on the accompanying chart to enlarge.)
As noted on yesterday’s USD/CHF video below, the bearish technicals on the 4-hour chart, as shown to the left, were indicating that upward momentum had perhaps waned, and that a turn back down might be impending. These technical indications included a rejection yesterday near a significant horizontal resistance line around 1.0530, and clear bearish divergence on Stochastics. This morning, price indeed moved down to around the 23.6% Fibonacci retracement level as of this writing. If there is any further momentum to the downside, clear support resides around the 1.0330 region, which coincides with the 38.2% Fibonacci retracement level.
Mid-Morning (NY Session) Update: As of this writing, price has retraced most of the downward move from earlier this morning. The 1.0530 region should continue to act as resistance 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.
USD/CHF Wednesday Evening (NY) Video Update
Posted on July 31, 2008 at 4:31 in Analysis by James ChenNo Comments »
Technical Carry Trade Articles
Posted on July 30, 2008 at 19:56 in Education by James ChenNo Comments »
At my webinar on Technical Carry Trading that I gave here today, it was requested that I post some of the past articles I have written regarding this high-probability, technical/fundamental hybrid strategy. Thank you to everyone that attended. Here are some links to online versions of my magazine articles on this subject:
1) Stocks, Futures and Options (SFO) Magazine (May 2008): https://www.mta.org/eweb/docs/pdfs/Chen_0508.pdf
2) Stocks, Futures and Options (SFO) Magazine (March 2008): https://www.mta.org/eweb/docs/pdfs/Chen_0308_reprint.pdf
3) Futures Magazine (April 2007): http://www.futuresmag.com/cms/Futures/Monthly%20Issues/Issues/2007/04/Editorial/Markets/APR07TechTalkChen
- 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 Alert
Posted on July 30, 2008 at 16:04 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/30/20080730eurusd.jpg(Please click on the accompanying chart to enlarge.)
As of this writing, price on the EUR/USD daily chart, as shown to the left, has just tentatively poked its head slightly below dynamic support in the form of the long-term uptrend support line. Keep in mind that as of now, though, this was just a tentative poke. It is not yet considered a bonafide break. But keep a close eye on this pair for any subsequent fast-breaking action to the downside. If this does not occur today, we could still be looking at an impending bounce (even if a small false break occurs).
Update: As of Wednesday afternoon (New York session), support has indeed held strong, as price has made a pronounced bounce up off the uptrend support 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.
USD/CHF Wednesday Morning (NY) Update
Posted on July 30, 2008 at 14:34 in Analysis by James Chen4 Comments »
http://forex.typepad.com/fxpath/images/2008/07/30/20080730usdchf.jpg(Please click on the accompanying chart to enlarge.)
Like the breakouts on the other majors that occurred yesterday, the USD/CHF break above downtrend resistance (as shown on the daily chart to the left), turned out to be a great breakout trading opportunity thus far. As of this writing on early Wednesday morning (New York time), the dollar has held the ground that it gained yesterday on all the majors, and then gained a bit more on top of that this morning. Whether there is additional follow-through on the breaks should be evident as the morning progresses.
- 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.
Webinar Today - Technical Carry Trade
Posted on July 30, 2008 at 14:14 in Announcements by James ChenNo Comments »
Just a quick reminder - I will be holding a webinar today (Wednesday, July 30) at 16:00 GMT (or 12:00 Noon, New York time). It is on one of my favorite subjects, technical carry trading. It will be a Premium webinar, so you need to be a Premium member of FXstreet.com in order to attend. If you are a Premium member, please click on the following link for more details and to register for the webinar: http://www.fxstreet.com/live/sessions/session.aspx?id=1f00a3fc-96b0-42e6-afe5-92419b58221b . If you’re not a Premium member, I will be doing many ongoing Open webinars on various topics in the near future. 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.
EUR/USD Tuesday Evening (NY) Video Update
Posted on July 30, 2008 at 1:26 in Analysis by James ChenNo Comments »
EUR/USD Alert
Posted on July 29, 2008 at 21:07 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/29/20080729eurusd.jpg
(Please click on the accompanying chart to enlarge.)
This is a late Tuesday afternoon (NY) alert on the accompanying EUR/USD daily chart. Price has reached down and tentatively retreated from a major long-term uptrend support line today. This uptrend line extends back about a year. More updates on this pair to come …
- 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.
Breakouts on the Majors
Posted on July 29, 2008 at 16:22 in Analysis by James Chen4 Comments »
Fast-moving price action as of this writing on Tuesday morning (New York time) has prompted tentative breaks of key technical levels on several major currency pairs. Currently, EUR/USD has broken down below horizontal support at around 1.5630, USD/JPY has broken above horizontal resistance at around 108.00, GBP/USD has broken below support on the short-term rising channel, and USD/CHF has broken above resistance on the descending channel. Are these breakout moves sustainable? At least for the time being, momentum on these breaks has been swift and strong.
- 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/CHF Alert
Posted on July 29, 2008 at 15:44 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/29/20080729gbpchf.jpg(Please click on the accompanying chart to enlarge.)
As shown on the accompanying GBP/CHF daily chart, price has formed a pennant pattern after having broken out above a large triangle last week. Watch for any potential break of this pennant.
Tuesday (NY) Noon Update: Shortly after the above alert was posted, a swift breakout of the pennant pattern occurred. Momentum on this break has held 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 Trading (John Wiley & Sons), will be released in early 2009.
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Posted on July 28, 2008 at 15:32 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/28/20080728usdchf.jpg
(Please click on the accompanying chart to enlarge.)
Downtrend resistance has thus far held strong on the USD/CHF pair (the daily chart of which is shown) for the time being. Another bounce down has occurred as of this writing. Stochastics is also in overbought territory and starting to arc down. In the event of continued downward momentum, price should target the 1.0220 region as initial support to the 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 Sunday Evening (NY) Video Update
Posted on July 28, 2008 at 1:24 in Analysis by James ChenNo Comments »
The Forex Fade
Posted on July 25, 2008 at 20:27 in Education by James ChenNo Comments »
Just a quick note on the Forex Fade. These days, many traders have become contrarians, preferring to fade (or trade against) prevailing market movement. So, for example, if price is rising, fading the market would mean going short. Conversely, if price is going down, fading the market would entail going long.
One circumstance in which many Forex traders have begun increasingly to fade is in the context of breakouts. This makes a lot of sense since it seems that more and more breakouts these days are false breakouts, or fakeouts. After the false break, price will often go back in the opposite direction of the breakout, back under resistance or over support. Those traders fading the break are then in a good position to reap the rewards of the false, or premature, move.
This may be a good strategy under many circumstances, but caution should be exercised when attempting to put it into practice. Many breakouts are real, and if one doesn’t have proper risk controls in place, fading a strong one-directional move can be disastrous.
A good recent example where fading a major break would have been a great strategy was the recent 20-pip break of the all-time high on the EUR/USD last week. In hindsight, this was a solid fakeout opportunity that rewarded faders significantly.
In any event, whether trading a break or fading a break, the most important thing to remember is to manage the risk on every trade properly. Only in this way can consistent profitability be achieved.
- 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 Friday Morning (NY) Update
Posted on July 25, 2008 at 15:55 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/25/20080725usdchf_4.jpg(Please click on the accompanying chart to enlarge.)
Price action on the USD/CHF daily chart, as of this writing, continues to languish at the top resistance line of the parallel downtrend channel. Price has met strong resistance here thus far. Oscillators like the Stochastics are well-overbought. In the event of a pronounced turn back down at this resistance, strong support to the downside resides around the 1.0220 region. A true breakout above resistance, on the other hand, should target the major 1.0530 resistance region 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.
GBP/USD Friday Morning (NY) Update
Posted on July 25, 2008 at 15:18 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/25/20080725gbpusd.jpg
(Please click on the accompanying chart to enlarge.)
As we can see on the accompanying GBP/USD daily chart, price made a pronounced bounce off the parallel uptrend channel support line during the early hours of London session this morning. The bounce off this line coincided with a bounce off the key 1.9815 horizontal support level. After breaking the 1.9900 resistance, price fell short of our target at 2.0000 by just around 25 pips before falling back. Any additional bullish activity today should target the same resistance at 2.0000. A continued fall back down, on the other hand, would meet continued support at the uptrend support 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 Thursday Evening (NY) Video Update
Posted on July 25, 2008 at 1:28 in Analysis by James ChenNo Comments »
Paralysis by Analysis
Posted on July 24, 2008 at 15:40 in Education by James Chen2 Comments »
Just a quick note about this very common affliction, especially among technical traders. Paralysis by analysis can occur when traders have too many studies on their charts and seek endless confirmations before taking any action. This is the exact polar opposite of traders who initiate trades recklessly based on “gut feeling” alone. Paralysis by analysis may be the lesser of the two evils, but both of these afflictions can be extremely detrimental to Forex traders.
There is a lot of good in being cautious and conservative when deciding to take trades, but becoming paralyzed by the decision-making process can be totally counterproductive. Having all of the latest and greatest indicators on your charts can be exciting, but will it really help you become a better trader? Maybe, but probably not.
A good remedy against paralysis by analysis is a combination of solid risk control and money management. Technical analysis is very helpful in setting risk management measures like a logically-placed stop loss that’s not too tight and not too loose, and a good reward-to-risk ratio. And money management is an absolute essential for any trader who wants to be successful. With these prudent measures in place, traders need not be paralyzed by the trade entry process. A trader will never come anywhere close to 100% correct, even with 50 indicators, oscillators, trendlines and squiggly lines pointing in the same direction at the same time. But that’s OK, as long as risk and money management are in good order.
This is not at all to say that traders should ever just jump into trades without first doing their proper analysis. As mentioned, that is an evil in and of itself. But I know of several traders that are utterly unable to pull the buy/sell trigger unless all of the many stars in the galaxy are perfectly aligned. This almost never happens.
My advice? Stick to the essentials and only what works best for you over time. When a good opportunity presents itself according to your analysis, take it. But always have strict risk controls and money management guidelines in place.
- 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 Thursday Morning (NY) Update
Posted on July 24, 2008 at 14:48 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/24/20080724gbpusd.jpg(Please click on the accompanying chart to enlarge.)
As we can see from the GBP/USD daily chart to the left, price action on this pair has once again reached the bottom support line of a short-term parallel trend channel. At this writing on early Thursday morning, price has stalled near this uptrend support line. Momentum readings on smaller time frames are indicating oversold at this point, while the daily is not saying much of anything. There is certainly a possibility of a clean breakdown in this instance, in which case 1.9650 is a major support level to the downside. But if a bounce at or near the current uptrend support line occurs, the 2.0000 level should once again act as resistance 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.
« Newer posts – Older posts »
Posted on July 23, 2008 at 15:36 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/23/20080723gbpjpy.jpg(Please click on the accompanying chart to enlarge.)
As noted both on the Chart of the Day a couple of days ago as well as on an alert posted right here on this blog, any clean breakout of the very strong resistance at around 213.80 on the GBP/JPY daily chart, as shown, would represent a significant breakout opportunity. This is because the resistance at that level represented considerable historical selling pressure. Therefore, any price move with enough momentum to break this level would likely move a significant amount. As we can see today, as of this writing, the move indeed made around 200 pips from the break at its height. At this point, technical indications are showing some signs of a tentative loss of upward momentum, with oscillators on most major timeframes showing severely overbought.
- 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.
Breakouts Everywhere 2
Posted on July 23, 2008 at 15:05 in Analysis by James ChenNo Comments »
Just a quick morning update on all the significant breakouts that occurred yesterday. As of Wednesday morning in New York, these breaks have sustained themselves well for the most part. Of the majors and crosses that I track, we’ve got clean and significant breaks of either trendline or horizontal support/resistance on the following pairs: EUR/USD, USD/JPY, GBP/JPY, EUR/GBP, EUR/CHF, GBP/CHF. There was generally lots of movement with lots of follow-through. More specific updates are upcoming.
- 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 Tuesday Evening (NY) Video Update
Posted on July 23, 2008 at 2:00 in Analysis by James ChenNo Comments »
Breakouts Everywhere - Tuesday Noon (NY) Update
Posted on July 22, 2008 at 18:23 in Analysis by James ChenNo Comments »
With tentative breakouts occurring all over the place during U.S. session as of this writing, the Forex market seems to be full of volatility and surprises today. We’ve got a breakdown of short-term EUR/USD uptrend support, a breakout of USD/JPY downtrend resistance, a breakout of the large triangle on GBP/CHF, and a breakout of the downtrend resistance line on the EUR/CHF, among others. Are these true breaks? Looks like they might be, but we shall see very soon.
- 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/CHF Alert
Posted on July 22, 2008 at 15:34 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/22/20080722gbpchf_2.jpg(Please click on the accompanying chart to enlarge.)
Yes, this is the same chart I just used for my post on Forex Triangles. It’s a current GBP/CHF daily chart that shows price action at the very top of a major triangle formation. Price has currently respected this strong resistance, much like resistance is currently being respected on the GBP/JPY chart, as of this writing. Therefore, any true breakout of this significant level should represent a potential trading opportunity. Barring any fundamentally-driven upside breakout, though, we may potentially be seeing a turn back down at or near resistance, with major support residing at the bottom of the triangle.
UPDATE: A tentative breakout of the aforementioned triangle has occurred.
- 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 Triangles
Posted on July 22, 2008 at 15:12 in Education by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/22/20080722gbpchf.jpg(Please click on the accompanying chart to enlarge.)
Triangles are relatively common patterns found on Forex charts. They represent price consolidations with progressively diminishing volatility, until breakout. Usually, triangles are larger chart formations (in comparison with smaller patterns like flags or pennants).
There are generally three different kinds of triangles - ascending, descending, and symmetrical. The example that you see on the accompanying chart, which is a current daily chart of GBP/CHF, is a pretty good example of a symmetrical triangle where both lines are converging together on angles. An ascending triangle, in contrast, has a horizontal top line with an ascending bottom line. A descending triangle has a horizontal bottom line with a descending top line.
Triangles are usually considered continuation patterns, but do not always fulfill this role. They can sometimes reverse a trend. In any event, similar to wedges or pennants, triangles are made to be broken. Any true break of a well-formed triangle should be considered a significant technical event, and presents a solid potential trading 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 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 Monday Evening (NY) Video Update
Posted on July 22, 2008 at 2:20 in Analysis by James ChenNo Comments »
EUR/USD Monday Afternoon (NY) Update
Posted on July 21, 2008 at 21:18 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/21/20080721eurusd.jpg(Please click on the accompanying chart to enlarge.)
Low price volatility for most of the day today has respected the uptrend support line as notated on the accompanying EUR/USD daily chart. Price appears to have made a clean and pronounced bounce up off this line. This could be an indication that the pair may soon be heading up to test the all-time highs 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.
« Newer posts – Older posts »
Posted on July 21, 2008 at 17:32 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/21/20080721gbpjpy.jpg(Please click on the accompanying chart to enlarge.)
This is an alert on the GBP/JPY pair, which has hit and retreated from significant resistance at the 213.80 level. Oscillators are indicating overbought at resistance. Click here for more details from today’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.
Commitments of Traders (COT) Report and Forex
Posted on July 21, 2008 at 15:39 in Education by James Chen4 Comments »
The Commitments of Traders (COT) Report is issued weekly by the CFTC (U.S. Commodity Futures Trading Commission), and can be a great sentiment tool for spot forex traders. Of special note to forex traders is the futures report from the Chicago Mercantile Exchange (CME), which provides information on futures positions for the major currencies against the U.S. dollar. Though the report is issued on Fridays and delayed by 3 days, it can be very useful in figuring out the general positioning of major market players. COT data is perhaps most useful when there there is extreme net positioning on the part of the “Non-Commercial” traders. These are the large speculative players like banks and hedge funds. When these Non-Commercials are net-positioned either extremely long or extremely short, it can potentially be a sign of an impending turn. It may take some time to get used to using the COT report for trading purposes, but if one watches it every week over time, patterns begin to emerge. Here is the link to the report: http://www.cftc.gov/dea/futures/deacmesf.htm .
- 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 & EUR/USD Sunday Evening (NY) Video Update
Posted on July 21, 2008 at 2:24 in Analysis by James ChenNo Comments »
Bollinger Bands and Bandwidth
Posted on July 18, 2008 at 20:31 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/18/20080718bollinger.jpg(Please click on the accompanying chart to enlarge.)
Most Forex traders are familiar with Bollinger Bands, as they are one of the most popular indicators available. The primary purpose of the Bollinger Bands is to provide a measure of relative volatility. It does this by plotting two bands that are usually at two standard deviations above and below a simple moving average. In volatile market conditions, the Bands become wider. During less volatile conditions, the Bands become narrower.
Some technical traders view a narrowing of the Bollinger Bands (”The Squeeze”) as a potential indication that a sharp increase in volatility is impending, in either direction. This is akin to trading volatility breakouts.
One valuable adjunct to the Bollinger Bands is the Bollinger Bandwidth indicator, found at the bottom pane of the accompanying chart. This indicator shows the width of the Bollinger Bands in relative terms, and makes it easier to view whether volatility is high or low. Not all traders are familiar with the Bollinger Bandwidth indicator, but it is certainly a very useful tool for measuring volatility at a glance, as well as facilitating trading of “The Squeeze.” Thanks, everyone, and have a great weekend!
- 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 Friday Morning (NY) Update
Posted on July 18, 2008 at 15:42 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/18/20080718usdjpy.jpg(Please click on the accompanying chart to enlarge.)
As we can see on the accompanying USD/JPY daily chart to the left, price has reached up to and retreated tentatively from the top resistance line of a short-term parallel downtrend channel. This could mean that the upward momentum of the last few days has waned near resistance. Although the oscillator on the daily chart is not giving any indications, Stochastics on lower time frames are on the border of coming down from overbought. Therefore, upward momentum may indeed have waned somewhat. In the event of a move back down, the next support to the downside resides around the 105.50 region. But if a break above resistance occurs, we can look to the 108.50 region as further resistance 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.
How I Use Stochastics
Posted on July 18, 2008 at 5:42 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/17/20080717stochastics.jpg(Please click on the accompanying chart to enlarge.)
Because I tend to use the Slow Stochastics a lot as a confirming oscillator for both swing trades and my daily Chart of the Day analysis, many traders have asked me how specifically I apply this very useful tool. Here, I would like to give a quick summary of how I view this multi-functional oscillator.
One way in which I use Stochastics is as a divergence indicator. Higher highs in price with lower highs in Stochastics, or lower lows in price with higher lows in Stochastics, provide divergence indications that hint at possible impending reversals.
More importantly, though, I use Stochastics to help confirm turns when swing trading. As shown on the accompanying chart, the red area between overbought and oversold is what I call “No Man’s Land.” This means that whether price is going up, down, or sideways in this region does not mean a thing to me. In other words, when Stochastics is in this region, I completely disregard anything the oscillator might be trying to tell me.
Likewise, when Stochastics has just entered overbought or oversold, or is reaching a peak or trough in the overbought/oversold territories, I also don’t pay much attention to its indications.
The only time when I pay very close attention to my Slow Stochastics is when it is “crossing the border” (or about to cross the border) from overbought/oversold into No Man’s Land. On the accompanying chart, these two regions are labeled “Action Area.” Usually, the borders are set at 80 and 20 in the Stochastics range. For me, Stochastics that are on the verge of leaving overbought/oversold territory represent a solid confirming signal of a potential turn. It is also the only time I will consider a swing trade, provided other criteria like support and resistance are also supporting the trade setup.
I hope that clarifies things a bit.
- 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 Thursday Afternoon (NY) Update
Posted on July 17, 2008 at 21:55 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/17/20080717eurusd.jpg(Please click on the accompanying chart to enlarge.)
As we can see on the EUR/USD 4-hour chart to the left, the current price correction has brought the pair all the way back down to the first level of support that I outlined on the Chart of the Day yesterday (click here for the link). This dynamic support is offered by the short-term uptrend support line, as shown. Today, price reached down and bounced cleanly up off this line. The Stochastics oscillator on the 4-Hour chart is now showing price emerging up from oversold, suggesting a new possible bullish momentum after this bounce off support. The daily chart, however, is continuing to indicate a bearish momentum. If price continues its bounce up, short-term resistance resides around the key 1.5900 region once again. On the downside, the aforementioned uptrend support line should continue to act as immediate support for the short-term.
- 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/GBP Alert
Posted on July 17, 2008 at 17:04 in Analysis by James Chen3 Comments »
http://forex.typepad.com/fxpath/images/2008/07/17/20080717eurgbp.jpg(Please click on the accompanying chart to enlarge.)
Just a quick technical alert on the EUR/GBP daily chart, as shown. Price has just reached critical and significant support right at the 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.
Trading Divergences in Forex
Posted on July 17, 2008 at 15:16 in Education by James Chen2 Comments »
On the subject of price-oscillator divergence that I briefly touched upon in yesterday’s Forex Swing Trading webinar here on FXstreet.com, I wanted to give a real-life example of where divergence works, and where it might not work so well. Then I remembered that I wrote an article last year all about divergence. One must be cautious when a bonafide divergence signal appears. Especially on longer-term charts, these signals can certainly be reliable. But they should only be considered as hints or confirmations of impending turns, and not as all-encompassing, self-sufficient trading signals. With that said, please click on the link below to read my article on divergence. Although the charts on this article are a year old, it shows some interesting things about price-oscillator divergence. Here is the link: Click 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 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 Wednesday Evening (NY) Video Update
Posted on July 17, 2008 at 2:10 in Analysis by James ChenNo Comments »
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Posted on July 16, 2008 at 18:26 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/16/20080716eurusd.jpgJust a quick update on the key EUR/USD pair. Price has certainly made a tentative downward correction after reaching the all-time high resistance yesterday, as the technicals were indicating. Is there further room to move down? Technically-speaking, there may very well be. For the technical details, click here for today’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.
Webinar Today - Forex Swing Trading
Posted on July 16, 2008 at 14:37 in Announcements by James Chen2 Comments »
Hello everyone! As you may know, I will be doing a webinar today here on FXstreet.com. The subject is Forex Swing Trading, and it will be held at 14:00 GMT today (Wednesday, July 16, 2008). Click here for details. 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.
Trading on Pure Price Action
Posted on July 16, 2008 at 4:33 in Education by James ChenNo Comments »
I just wanted to write a quick note on price action trading. I recently came across a classic document on simple price action analysis that I had read a long time ago and that I remember as pivotal in helping to influence some of my views on technical analysis. A lot of you may have already read this simple document, but I’m posting the link here for those of you who have not yet had the pleasure. Much of it may seem obvious, especially to those of you who are familiar with technical analysis. But I believe it is extremely valuable in bringing many technical traders, who are often enamored with the latest indicator or technique, back to the basics. With the ideas contained in this document, one realizes that trading naked (i.e., without a lot of unnecessary chart clutter) can certainly be possible with the prudent use of price action concepts. Click here for the link. Enjoy!
- 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 Tuesday Evening (NY) Video Update
Posted on July 16, 2008 at 2:16 in Analysis by James ChenNo Comments »
GBP/USD Tuesday Noon (NY) Update
Posted on July 15, 2008 at 17:50 in Analysis by James ChenNo Comments »
Like EUR/USD, price action on the GBP/USD pair has also hit and retreated from resistance this morning. Strong upward momentum seems to be on the wane, at least for now. For more details, please check out 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.
EUR/USD Tuesday Morning (NY) Update
Posted on July 15, 2008 at 15:31 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/15/20080715eurusd_2.jpg
(Please click on the accompanying chart to enlarge.)
At this point it is no secret that the key EUR/USD pair (the daily chart of which is shown) has slightly exceeded and then promptly retreated from the previous all-time high this morning. The record high that was reached this morning was 1.6037. At this point, with price having just hit the ultimate resistance after a steep run up, and all technical indications hinting at an exhaustion of upward momentum, some kind of a correction or retracement should be due from a technical perspective. If price is unable to break the all-time high resistance again within a reasonable period of time, this correction could potentially occur sometime soon, targeting first the uptrend support 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.
Pin Bars AKA Hammers and Shooting Stars
Posted on July 15, 2008 at 5:50 in Education by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/14/20080714pinbars_2.jpg(Please click on the accompanying chart to enlarge.)
Pin bars, or Pinocchio Bars, are roughly the equivalent of hammers and shooting stars in the candlestick world. Though the ones shown are not the very best examples, two pin bars are highlighted on the current GBP/USD daily chart to the left. Used alongside other technical confirmations, pin bars are excellent indicators of potential turns. Their basic construction, as shown, is a long protruding bar pointing away from the direction of the subsequent turn, with the open and close very close to each other near the other side of the bar. Not only is the shape of pin bars important - the placement is also crucial. In order to be effective, these bars should follow well-defined directional runs.
I am mentioning this important bar/candle pattern now because pin bars comprise one criterion that I often use in determining whether or not to trade a potential market swing. I will talk more about pin bars during Wednesday’s webinar on swing trading. If you haven’t already registered for this free webinar, you can do so here: http://www.fxstreet.com/live/sessions/session.aspx?id=b4f993e2-6c88-4d4b-b720-6de47d593061 . Thanks!
- 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 Monday Evening (NY) Swing Trade Video
Posted on July 15, 2008 at 2:33 in Analysis by James ChenNo Comments »
NOTE: The potential swing trading setup described in the video above has been canceled. Price broke through resistance a few hours after this video was made. The trade was not triggered, but the whole setup has been thrown out because resistance was invalidated by the break. Therefore, currently this is no longer considered a valid trade setup.
AUD/USD Alert
Posted on July 14, 2008 at 18:59 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/14/20080714audusd.jpg(Please click on the accompanying chart to enlarge.)
As of this writing, price on the AUD/USD daily chart, as shown, has just hit a new multi-decade high and a critical resistance point. The pair has just touched the top of a long-term rising wedge consolidation. Breakout or bounce? Further price action will dictate, and both possibilities represent potential trading scenarios.
- 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.
Guppy Multiple Moving Averages (GMMA)
Posted on July 14, 2008 at 18:06 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/14/20080714gmma.jpg(Please click on the accompanying chart to enlarge.) The GMMA, or Guppy Multiple Moving Averages, was developed by Daryl Guppy, an Australian trader. This multi-faceted indicator combines two different sets of moving averages. One set represents long-term traders and the other set represents short-term traders. There are several ways to interpret the GMMA, the most prominent of which has to do with looking at the separation of the moving averages as well as the separation between the two sets of moving averages. These separations reveal vital information on trend strength, both short-term and long-term, and potential impending changes in trend.
- 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 July 14, 2008 at 15:46 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/14/20080714eurusd_6.jpg(Please click on the accompanying chart to enlarge.)
After punching through resistance and then promptly retreating on Sunday night (New York time), price on the EUR/USD (the 4-hour chart of which is shown) finally made a significant downward correction, as it was bound to sooner or later. As of this writing, this correction has taken price back down to bounce off the top of a parallel uptrend channel from which it broke on Friday. Any continued drop today or in the beginning of this week should target support at or near the bottom of the channel. On the upside, resistance remains in the region of the last high hit, around 1.5970.
- 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 & USD/CHF Sunday Evening (NY) Video Update
Posted on July 14, 2008 at 2:30 in Analysis by James Chen2 Comments »
Reminder: Forex Swing Trading Webinar
Posted on July 12, 2008 at 20:25 in Announcements by James ChenNo Comments »
Hope everyone’s having a great weekend! Just a quick reminder - I will be conducting an open webinar here on FXstreet.com this coming week. The subject is Forex Swing Trading, which is my favorite high-probability method of trading Forex using pure technical analysis. I will be discussing many aspects of swing trading, including criteria, entries, exits, and risk management. This free webinar will be held on Wednesday, July 16th at 14:00 GMT. Here is the link to pre-register:
http://www.fxstreet.com/live/sessions/session.aspx?id=b4f993e2-6c88-4d4b-b720-6de47d593061
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.
The Gann Fan 2
Posted on July 11, 2008 at 21:16 in Education by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/11/20080711gannfanb.jpg(Please click on the accompanying chart to enlarge.) After reading my original post on the Gann Fan below (click here), a blog reader requested to see the Gann Fan applied to the EUR/USD chart. Here it is! It’s a current daily EUR/USD chart, and I’ve drawn the Gann fan from Point A to Point B, which was the longest recent run. The results are not as precise as on the GBP/USD chart, but they are impressive nonetheless. The grey ovals denote where turns took place at or near the projected Gann Fan lines.
- 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 Gann Fan
Posted on July 11, 2008 at 16:39 in Education by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/11/20080711gannfan.jpg(Please click on the accompanying chart to enlarge.) I usually don’t use the Gann Fan to any great extent, but this tool that was originated by a very interesting trader named W.D. Gann often outlines future support/resistance levels remarkably well. Take, for example, the current GBP/USD daily chart that you see to the left. Please click to enlarge.
As we can see on this chart, after I drew the Gann Fan from Point A to Point B, the resulting Fan lines pinpointed several subsequent turning points. I’ve found that the Gann Fan works best on daily charts and longer, and will frequently show what looks like some predictive capability.
- 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 Friday Morning (NY) 2nd Update
Posted on July 11, 2008 at 16:01 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/11/20080711eurusd2_2.jpg(Please click on the accompanying chart to enlarge.) This, again, is a 4-hour EUR/USD chart. After a momentous run-up this morning to the resistance line I’ve labeled “Resistance”, price has appeared to lose some of its momentum, at least for the time being. At this point, it would take a lot to break through this resistance. Any move back down should target support in the 1.5800 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 Friday Morning (NY) Update 2
Posted on July 11, 2008 at 15:57 in Analysis by James ChenComments Off
http://forex.typepad.com/fxpath/images/2008/07/11/20080711eurusd2.jpg(Please click on the accompanying chart to enlarge.) This, again, is a 4-hour EUR/USD chart. After a momentous run-up this morning to the resistance line I’ve labeled “Resistance”, price has appeared to lose some of its momentum, at least for the time being. At this point, it would take a lot to break through this resistance. Any move back down should target support in the 1.5800 region.
- James
d
EUR/USD Friday Morning (NY) Update
Posted on July 11, 2008 at 15:16 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/11/20080711eurusd.jpg(Please click on the accompanying chart to enlarge.) The EUR/USD (a 4-hour chart of which is shown) has broken channel resistance and has swiftly approached the 1.5900 intermediate swing high resistance reached just last week. As I had mentioned in my video update yesterday evening, if a breakout of the steep uptrend channel occurred, the accelerated upward momentum would generally be unsustainable without at least a short-term correction or retracement. Therefore, we should be seeing a wane in momentum at some point soon, probably near resistance.
- 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 Thursday Evening (NY) Video Update
Posted on July 11, 2008 at 2:31 in Analysis by James ChenNo Comments »
EUR/JPY Alert
Posted on July 10, 2008 at 16:49 in Analysis by James ChenNo Comments »
This is a quick alert on the EUR/JPY. As of this writing, price (at around 168.80) is currently on the cusp of possibly making a tentative break above the large triangle formation that is probably most visible on the 4-hour chart. For more details, please see my Chart of the Day today 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.
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Posted on July 10, 2008 at 15:00 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/10/20080710gbpusd.jpg(Please click on the accompanying chart to enlarge.) As noted yesterday on this blog, the short-term upmove in the GBP/USD (the daily chart of which is shown) did in fact stop abruptly at the expected resistance imposed by the bottom of the short-term parallel uptrend channel. After the turn at resistance, price is now heading once again towards the support imposed by the long-term downtrend line. The pair is currently in a continuing consolidation, but any breakdown of the long-term downtrend support should provide a potential opportunity targeting the 1.9350 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 Swing Trading Webinar
Posted on July 10, 2008 at 14:33 in Announcements by James ChenNo Comments »
Just wanted to give everyone a quick heads up. I know it’s a bit early to be talking about it as it will be held next week, but I wanted to let all those interested know ahead of time. I will be conducting an open FXstreet webinar on Forex swing trading. It will be held on Wednesday, July 16th at 14:00 GMT. In this webinar, I will discuss how I evaluate high-probability swing trading setups, including criteria, entries, exits and risk management. Here is the link for more information:
http://www.fxstreet.com/live/sessions/session.aspx?id=b4f993e2-6c88-4d4b-b720-6de47d593061
If you would like more details on how to attend webinars at FXstreet.com, please go to:
http://www.fxstreet.com/forum/showthread.php?t=129
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 Wednesday Evening (NY) Video Update
Posted on July 10, 2008 at 0:49 in Analysis by James ChenNo Comments »
EUR/USD Wednesday Noon (NY) Update
Posted on July 9, 2008 at 17:49 in Analysis by James Chen4 Comments »
http://forex.typepad.com/fxpath/images/2008/07/09/20080709eurusd.jpg(Please click on the accompanying chart to enlarge.) As promised, here is the update on the EUR/USD pair (the daily chart of which is shown). After breakdown of the short-term uptrend support line yesterday, price moved back up today to hit the underside of this line once again, but this time as resistance. In the process, price action has formed what looks like a small inverted pennant consolidation pattern, which hints at a possible impending downward continuation. At the same time, however, price has been hugging the top of the pennant, pushing towards a break to the upside. Today’s price action will tell us whether this resistance will hold, in which case we might prepare ourselves for a subsequent drop.
- 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 Wednesday Morning (NY) Update
Posted on July 9, 2008 at 14:58 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/09/20080709gbpusd_2.jpg(Please click on the accompanying chart to enlarge.) For now, long-term downtrend support extending from the multi-decade highs on the GBP/USD daily chart, as shown, has held steady. Any continued momentum upwards on a short-term basis should meet resistance at the bottom of the short-term uptrend channel from whence it broke just a couple of days ago. Further resistance on a medium-term basis resides around the key 2.0000 level. Any clean breakdown of the long-term uptrend support line, on the other hand, would be a significant technical event, and would target strong support around the 1.9350 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.
Clean and Simple
Posted on July 9, 2008 at 5:27 in Education by James ChenNo Comments »
People often ask me why I don’t add a ton of indicators and other studies onto my charts. Other people ask me why I don’t put up elaborate chart drawings and notations (like Elliott Wave) or layers of price levels (like pivot points). Although I respect all of these tools and methodologies, the simple answer is that I don’t like a lot of clutter on my charts. The charts that I create are usually clean and simple for a reason - I truly believe that price action is revealed best when clutter is kept to a minimum. Although I have become well-versed with most technical methodologies in common use today, including the more complex disciplines, I am still of the firm belief that the basics are most often the best. For this reason, I tend to stick to a few tried-and-true tools of the trade. In approximate order of importance for me, they are:
- Visually-derived horizontal (static) support/resistance lines
- Diagonal (dynamic) support/resistance trendlines
- Parallel trend channels
- Multi-bar chart patterns (e.g., flags/pennants, triangles, doubles/triples, head-and-shoulders, rectangles, wedges, etc.)
- Single-bar chart formations (e.g., “pin” bars AKA hammers and shooting stars, etc.)
- Oscillator confirmations of turns and pullbacks (usually Stochastics)
- Moving averages for trend indications
- Fibonacci retracements for watched levels
- ATR for volatility
- ADX for trend strength
But usually, you will find only a few of the above elements on my charts at any given time. My trading/analytical style conforms most closely with swing trading (as I have been talking about recently on this blog) where I aim to take advantage of short- to medium-term swings in the market, during both trends and trading ranges. When making trading decisions, I certainly look for confirmations and confluences from different tools, but too many tools at one time have a tendency to contribute to “paralysis by analysis.”
That’s just my view on the subject. Thanks for reading!
- 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 Tuesday Evening (NY) Video Update
Posted on July 9, 2008 at 4:07 in Analysis by James ChenNo Comments »
EUR/GBP Tuesday Noon (NY) Update
Posted on July 8, 2008 at 17:51 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/08/20080708eurgbp_2.jpg(Please click on the accompanying chart to enlarge.) This is not of great urgency - just a very well-defined triangle pattern on the EUR/GBP daily chart, as shown. Watch this pair for an eventual breakout. For details, please check out the 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.
EUR/USD Tuesday Morning (NY) Update
Posted on July 8, 2008 at 15:51 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/08/20080708eurusd.jpg(Please click on the accompanying chart to enlarge.) After the premature/false breakdown yesterday of the short-term uptrend support line, price on the EUR/USD daily chart, as shown, has made yet another tentative breakdown today. Whether this turns out to be a true break remains to be seen within the next couple of days. In the event of continued downward momentum, as might be expected, the next support to the downside resides around the 1.5580 region, a significant previous support/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.
Swing Trading 2
Posted on July 8, 2008 at 15:25 in Education by James ChenNo Comments »
This is a follow-up to my original post on swing trading that I posted over this past weekend (please click here for the original post). I received an interesting comment from a blog reader, and I wanted to post my response here because it is such an important and timely subject. David writes:
“Dear James,
This is an interesting perspective which I guess could be applied with some variation to commodity trading and particularly to movements observed when we trade crude oil.
I would be interested to know your thoughts on taking a slightly longer term perspective and just using simple daily moving averages, say combined 15 and 25 days, to capture the trends.
If we accept we get in late and also exit early from a clear trend, is this not preferable to trying to get in on the swing, and possibly make the wrong call?”
And here is my response - Great question. Yes, getting in on trends is definitely the way to go. The way I apply swing trading in the Forex market is exactly in that manner. During ranging conditions, I will play the directionless turns, especially if the range is wide. But when there is a clear, identifiable trend, I will trade pullbacks in the direction of the trend. This is also a form of trading the swings, or turns. So swing trading is extremely adaptable to most market conditions, both ranging and trending. I use a highly disciplined risk management strategy, which helps a lot when the market decides to do an “about-face” right after a clear turn. With swing trading, applying good risk management controls is very straightforward - just get out as soon as you know you’re wrong and you realize that the reasons for entering the trade are no longer valid. This is made very clear in the vast majority of potential swing trades.
By the way, I will be doing a webinar here on FXstreet exactly on this subject. This should be next week or so. I will keep everyone updated on this upcoming webinar via this blog. Thanks!
- 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 July 7, 2008 at 17:36 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/07/20080707gbpusd.jpg(Please click on the accompanying chart to enlarge.) Just a quick update on the GBP/USD daily chart, which I have here. After breaking down below the short-term parallel uptrend channel, price has reached support at the long-term downtrend line, as I outlined in a previous blog post. Currently, price is stalling around this line, which might be expected from a technical perspective. A bounce here would target resistance at the 2.0000 level, while a clean breakdown would target previous support around 1.9350. Check out today’s Chart of the Day on this pair 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/JPY Monday Morning (NY) Update
Posted on July 7, 2008 at 15:47 in Analysis by James Chen3 Comments »
http://forex.typepad.com/fxpath/images/2008/07/07/20080707usdjpy.jpg(Please click on the accompanying chart to enlarge.) As we can see on the displayed USD/JPY daily chart, price action this morning has made a tentative breakout above the short-term uptrend line that I was waiting for. This break occurs after price had been lingering right below the line for several days. This is somewhat of a significant technical event, as the pair had been trapped in a consolidation between two dynamic trendlines for more than a week now. Stochastics are showing further room to move on the upside. If momentum continues, we may soon see resistance in the 108.50 region, as I have been talking about in the past few days.
- 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 & USD/JPY Sunday Evening (NY) Video Update
Posted on July 7, 2008 at 6:38 in Analysis by James ChenNo Comments »
Swing Trading
Posted on July 6, 2008 at 3:24 in Education by James Chen3 Comments »
It’s Saturday, and the markets are obviously closed. But I wanted to write a quick note about swing trading as it pertains to Forex. This is one of my favorite ways to trade. Many people think that the concept of swing trading relates only to the length of time that positions are open (i.e., 2-5 days or so), which is usually defined in contrast to daytrading (intraday) and position trading (long-term). In my opinion, this couldn’t be further from the truth. To me, swing trading is much less about the duration of the trade, and much more about the philosophy of the trade.
I would define swing trading as the use of classical aspects of technical analysis (like support/resistance, momentum, trend and volatility) to identify short-term, tradable turns (or swings) within the context of a larger trend. This could mean trading either pullbacks within a trend or price oscillations within a trading range. Common technical tools used in this type of trading include trendlines, moving averages, oscillators, trend and directional strength indicators, etc.
Swing trading, in my opinion, is technical trading in its purest form. And it’s long been used very effectively in the Forex market. Equally useful in both trending and non-trending markets, swing trading is extremely well-adapted to foreign exchange. In fact, many of my Chart of the Day setups are swing trading setups. When used with good risk management, this method of trading can offer traders an exceptional quantity and quality of high probability Forex 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 Friday Morning (NY) Update
Posted on July 4, 2008 at 16:53 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/04/20080704b.jpgJust one last note before I pack it in for the weekend. As we can see from the accompanying USD/JPY daily chart, price came very close, but did not actually breakout of the dynamic resistance that I had been waiting for. In fact, as we can see from the chart, price is kissing the uptrend resistance as we speak. As I said in a previous blog post, there is a slight bias towards a breakout to the upside, rather than a break below support. We shall see after the weekend if a clean breakout above occurs, in which case there could be a potential breakout trading 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.
EUR/USD Friday Morning (NY) Update
Posted on July 4, 2008 at 16:33 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/04/20080704_2.jpgNot a lot going on during New York session today, especially since the banks in the U.S. are closed.
Nonetheless, we can see from the accompanying EUR/USD daily chart that we’ve hit a short-term uptrend support line after price retreated from strong resistance at around 1.5900 yesterday.
Today, price bounced up off this short-term uptrend line in a relatively precise manner, right around the 1.5650 region, which I outlined yesterday as the first support target in the Chart of the Day.
Confirming oscillators like the Stochastics, however, are still pointing down fromwell-overbought. So we are receiving some conflicting technical signals.
After the U.S. holiday and the weekend, we could see a possible breakdown of the short-term uptrend line, in which case the next support to the downside should be targeted around 1.5600, and then ultimately at the trading range support around 1.5280 if there is enough momentum to get down there.
For those in the U.S., Happy 4th! And for everyone around the world, have a great weekend!!!
- 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.
Flags and Pennants
Posted on July 3, 2008 at 17:50 in Education by James Chen2 Comments »
Just a quick note. I think it’s fitting to talk a bit about flags right before the 4th of July (Independence Day) here in the U.S. Both flags and pennants are among the most common, as well as among the most reliable, chart patterns available. On the currency charts that I stare at all day long, I see flags and pennants all over the place. They are usually smaller formations (as opposed to triangles, wedges, etc.) that occur somewhere in the middle of trend runs. I personally know of a couple of traders that trade flags and pennants almost exclusively. These patterns are primarily considered continuation consolidations within one-directional price runs. They can be thought of as short rest periods in the midst of a strong move. After breakout of a flag or pennant, the target projection should be the length of the mast (or pole) preceding the formation of the flag/pennant. In short, these formations are among my favorite ways to indicate a continuation of a short-term trend.
- 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 Thursday Morning (NY) Update
Posted on July 3, 2008 at 15:07 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/03/20080703eurusd.jpgAfter the events of this morning, EUR/USD turned down on a dime. The turn occurred at a previous resistance line just below the all-time highs. This line is represented on the accompanying EUR/USD daily chart by the top black line in the 1.5900 region. Technical signs are indicating that there is more room to continue to the downside after the turn, in which case the next support resides around 1.5650.
- 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 July 2, 2008 at 18:51 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/07/02/20080702usdjpy.jpg
Going into Non-Farm Payrolls tomorrow (Thursday, July 3), USD/JPY (the daily chart of which is shown) is fluctuating between dynamic support and resistance, as I’ve mentioned in previous posts. Price is currently bounded by the two black lines, one of which is uptrend support turned resistance, and the other of which is downtrend resistance turned support. As I’ve been saying, a breakout on either side should be imminent, with a slight directional bias towards a break to the upside. Stochastics are providing some confirmation of this bias. Non-Farm Payrolls tomorrow should provide further guidance as to the potential direction of any imminent break.
- 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.
Head & Shoulders
Posted on July 2, 2008 at 16:22 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/02/20080702gbpjpy_3.jpg
Most people who have any interest in trading or the financial markets have at least some familiarity with the famed Head-and-Shoulders chart pattern. On the accompanying chart, I just wanted to show a pretty classic instance of it on a long-term GBP/JPY chart. Although this is very basic stuff, it just goes to show how chart patterns can be very relevant in the Forex markets today.
The well-known head-and-shoulders reversal pattern is similar to the triple top and bottom patterns. The primary difference lies in the middle of the pattern. In a head-and-shoulders top, the middle peak (the head) is higher than the other two peaks (the shoulders). In an inverted head-and-shoulders bottom, on the other hand, the middle trough (the head) is lower than the other two troughs (the shoulders). The line connecting the troughs in a head-and-shoulders top, or the peaks in a head-and-shoulders bottom, is called the neckline. Breaks of this neckline are considered trading signals. Targets for head-and-shoulders tops are measured using the length from the top of the head to the neckline, projected down from the neckline break.
- 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 Wednesday Morning (NY) Update
Posted on July 2, 2008 at 15:12 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/02/20080702eurusd.jpgA tentative break of resistance has occurred as of this writing on EUR/USD (the daily chart is shown), which has continued its bullish push despite many signs to the contrary. We are not far from approaching the all-time highs around 1.6000 now. The fundamental events occurring tomorrow (Thursday morning) in both the U.S. and Europe will set the stage for whether or not the current resistance break has any follow-through, and whether or not there is eventually a long-awaited reversal of the current bull run.
- 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 Tuesday Evening (NY) Video Update
Posted on July 2, 2008 at 5:41 in Analysis by James Chen2 Comments »
EUR/USD Tuesday Afternoon (NY) Update
Posted on July 1, 2008 at 19:38 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/01/20080701eurusd.jpgEUR/USD has moved back up today to re-approach the range resistance that it just visited and bounced down off of yesterday. If a break occurs in the next few days, we could easily expect a re-test of the all-time highs around 1.6000. But whether there is enough strength left in the pair to make this move is questionable. There is currently a technical bias towards a turn back down into the range at or near the range resistance. Oscillators are confirming this bias, indicating a weakening of upward momentum.
- 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.
Average Directional Index (ADX)
Posted on July 1, 2008 at 19:15 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/01/20080701adx.jpgAs shown on the accompanying chart, the Average Directional Index (ADX) is a very useful indicator for determining the strength of trending conditions. When the ADX line (the black line on the chart) is relatively high (over 40 or so) and/or moving up, the trend is considered to be strong. Conversely, if the ADX line is relatively low (below 20 or so) and/or moving down, the trend is considered to be weak, denoting ranging conditions. The ADX line itself does not indicate direction - only strength of the trend.
ADX is derived from two momentum indicators, +DI and -DI. Unlike the ADX line, these two lines denote direction. If the +DI line (in green) is moving up, the uptrend is gaining strength. If the -DI line (in red) is moving up, on the other hand, the downtrend is gaining strength.
The ADX is an important indicator that can help a foreign exchange trader determine whether to use trend-trading techniques or range-trading techniques.
- 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 Tuesday Morning (NY) Update
Posted on July 1, 2008 at 15:24 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/07/01/20080701audusd.jpgWhile other key currencies have staged a short-term comeback against the dollar this morning, Aussie is a notable exception. Coming down from making fresh, new 24-year highs, momentum seems to continue to be strong to the downside. This is also confirmed by oscillators like Stochastics, now emerging down from severely overbought. Therefore, from purely a technical perspective, we’re now looking for a potential continuation in this current downswing.
- 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.
Average True Range (ATR)
Posted on July 1, 2008 at 5:03 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/30/20080630.jpg
Just a quick note on the Average True
Range (ATR) indicator. It is one of the most useful studies you could ever put on a chart. ATR is an indicator that usually resides either vertically above or below the bar
or candlestick price chart. It is an average measure of recent volatility that is
calculated as a moving average of price ranges within a given span of periods. When the
ATR has a high reading, recent volatility has been high. When a low reading is
given, recent volatility has been low. ATR is used by technical traders to determine the recent level of trading activity and volatility for a
given currency pair. The ATR can be used for setting logical stop-losses and
price targets based upon recent price ranges, among many other uses. If you don’t already use ATR, you should definitely check it out.
- 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 Monday Evening (NY) Video Update
Posted on July 1, 2008 at 4:46 in Analysis by James ChenNo Comments »
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Posted on June 30, 2008 at 20:56 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/30/20080630audusd.jpgJust a quick note on the AUD/USD pair. Today, it just reached a new 24-year high, hitting and poking slightly through a strong resistance level before promptly retreating back down. We’re watching this pair very closely, as technical signs seem to be indicating exhaustion at the extreme highs.
- 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 Monday Noon (NY) Update
Posted on June 30, 2008 at 17:17 in Analysis by James ChenNo Comments »
Please check out today’s Chart of the Day by clicking here. This was just updated about a half hour ago, and provides an update on the technicals for the EUR/USD, which is quickly plummeting along with Cable.
- 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 Monday Morning (NY) Update
Posted on June 30, 2008 at 15:46 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/30/20080630usdjpy.jpg Depending upon how you draw the long-term downtrend line on the USD/JPY daily chart, as shown, today’s price bar has appeared to have reached down and bounced off the line after having broken down below the short-term uptrend line on Friday and Sunday. This bounce off the long-term line coincides with the Stochastics turning up from overbought. Therefore, there is oscillator confirmation of this turn up and possible bullish bias. In the event of continued momentum to the upside, 108.50 represents a major resistance region 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.
Stochastics Oscillator
Posted on June 30, 2008 at 5:01 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/29/20080629_2.jpgMany readers of my Chart of the Day analysis notice that I primarily use the Slow Stochastics as my confirming oscillator of choice. Why? From my experience, this particular oscillator provides reliable indications of momentum and overbought/oversold conditions, especially during ranging markets. Do other oscillators do similar things? Absolutely. But each trader/analyst does his/her own experimentation to find what personally works best and is most comfortable and intuitive to use. A long time ago, I settled upon the Slow Stochastics as one of my primary confirming oscillators, but this doesn’t mean that things won’t change in the future.
The Stochastics oscillators comes in several different flavors – fast, slow, and full. Whichever variety is chosen, the purpose is similar to other oscillators – identify momentum and overbought/oversold conditions, as well as to provide divergence signals. The mathematical formula for Stochastics compares the currency pair’s closing price to its price range over a set period of time. Because Stochastics has two lines as opposed to other oscillators’ (like RSI’s) one line, Stochastics can give off an additional signal that results when the %K line crosses the %D line. Slow Stochastics is a smoothed version of Fast Stochastics.
- 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 Sunday Evening (NY) Video Update
Posted on June 30, 2008 at 3:41 in Analysis by James ChenNo Comments »
GBP/USD Noon (NY) Update
Posted on June 27, 2008 at 18:03 in Analysis by James ChenNo Comments »
Cable has risen pretty dramatically during New York session this morning. It’s just managed to reach resistance at the very top of the short-term parallel uptrend channel that I have been talking about. In fact, as of this writing, it’s poked through the top line a bit. At this point, technical traders are looking for a turning point, where the quick run-up finally exhausts itself and begins a correction or consolidation. This should be coming soon. Have a great weekend, everyone, and see you on Sunday night, New York time!
- 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.
Parabolic SAR
Posted on June 27, 2008 at 15:54 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/27/20080627b_2.jpgJust some quick notes on the the Parabolic Stop-And-Reverse (SAR) indicator created by J. Welles Wilder. It is one of my favorite indicators because it stresses solid stop-loss management, and it provides logical placement of trailing stop and reversal points. Trailing stops are extremely useful elements of an overall risk management strategy.
The Parabolic SAR dots follow price such that if a dot is below the price bar, the trade should be long with a dynamic stop-loss at the dot. Conversely, if the dot is above the price bar, the trade should be short with a dynamic stop-loss at the dot.
The biggest problem with this indicator, though, is that like many other indicators, the Parabolic SAR can be prone to vicious whipsaws where the trading signals result in a string of losses due to lack of trend. But the fact that this indicator stresses a logical use of the trailing stop-loss functionality makes it a valuable tool for me.
- 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 Morning (NY) Update
Posted on June 27, 2008 at 15:15 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/27/20080627.jpgUpdate on the GBP/USD 4-hour chart, as shown. After breaking out above the long-term downtrend resistance line yesterday, price has approached the top of the short-term parallel uptrend channel that I outlined yesterday.
After price approached the top of the channel, it retreated, as a loss of upward momentum set in. Oscillators like the displayed Stochastics are confirming this loss of momentum, as they are extremely overbought and turning down. If this downward spiral continues in the short-term, we’re looking for support targets at the long-term downtrend line or the short-term uptrend support line, whichever comes first. To the upside, resistance for the time being continues to be around the top of the rising parallel 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.
USD/JPY Evening (NY) Video Update
Posted on June 27, 2008 at 1:18 in Analysis by James ChenNo Comments »
Point & Figure Charts
Posted on June 26, 2008 at 19:29 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/26/20080626eurusdpf.jpg
Some basic info on point & figure charting. It is an older, but still popular, form of technical analysis that constitutes an entire trading methodology in and of itself. Some may characterize p&f 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 volume, time, and period opens/closes, are generally excluded on p&f 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.
- 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.
« Newer posts – Older posts »
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 and GBP/USD Morning (NY) Update
Posted on June 26, 2008 at 15:15 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/26/20080626eurusd.jpg Just a quick update on these two key pairs after the FOMC announcement yesterday and the market opening in London this morning. GBP/USD shot through and broke out of the long-term downtrend resistance line, hitting and slightly exceeding (as of this writing) the resistance target of 1.9850 that I had mentioned in my earlier blog post.
EUR/USD, on the other hand, reached and bounced down off the top of a short-term uptrend channel on the 1-hour chart, as shown. Stochastics are well overbought and pointing down. Are we looking at a short-term recovery from the steep climb of yesterday and this morning? If so, short-term support evident on the hourly chart resides around the 1.5625 region. More to come soon …
- 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 Evening (NY) Video Update
Posted on June 26, 2008 at 1:33 in Analysis by James ChenNo Comments »
GBP/USD Afternoon (NY) Update 2
Posted on June 25, 2008 at 21:36 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/25/20080625gbpusd2_2.jpgAfter the FOMC announcement today, Cable climbed significantly. But as we can see on the GBP/USD daily chart to the left, there has been no discernible breakout of the key downtrend resistance line as of yet. Immediate support and resistance levels still apply. Additionally, oscillators like the displayed Stochastics are pointing down from overbought. This is certainly one of the key pairs to watch as we move into Thursday morning’s price action, especially London opening.
- 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 Afternoon (NY) Update
Posted on June 25, 2008 at 19:41 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/25/20080625gbpusd.jpgLate update on the GBP/USD 4-hour chart, as shown. Once again, this morning we saw a touch and bounce down off the significant downtrend resistance line - the second bounce in less than a week. On an earlier blog post, I mentioned this key downtrend line, which connects the multi-year high hit in November 2007 to an intermediate swing high in March of this year. Immediate support to the downside resides once again around the 1.9600 region. If, on the other hand, the downtrend resistance line is broken soon as a result of fundamental factors, we have further resistance to the upside around 1.9850.
- 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 200 SMA
Posted on June 25, 2008 at 16:15 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/25/20080625eurusd.jpgFor those of you who have seen my analysis in the past, you may have noticed that I like to use the 200 Simple Moving Average. Why? Maybe just habit. But I truly believe the functionality of the 200 SMA is pretty much unparalleled in its ability both to show trend as well as to denote support and resistance, especially on longer-term charts. The accompanying daily chart of the EUR/USD is no different. Whether price is in an uptrend or downtrend, the 200 SMA (in orange) works extremely well in showing dynamic support and resistance. For example, within the context of the current long-term uptrend on the EUR/USD, as shown, I am watching for any potential significant breakdown of the 200 SMA support. If this occurs, it would be a strong hint that the uptrend may be in serious jeopardy.
- James Chen
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.
Support and Resistance
Posted on June 25, 2008 at 15:43 in Education by James ChenNo Comments »
Just a basic note on the key topic of support/resistance. From a price memory perspective, sustainable support and resistance levels will occur partly because traders remember specific price levels, and will base their trading decisions on whether they consider these levels as relatively high or relatively low. The most basic tendency is for traders to buy at price levels they consider relatively low (support) and to sell at price levels they consider relatively high (resistance).
When a majority of large traders collectively believe that a certain price level or region is relatively low, buying pressure will often result and the price should generally go up, thereby creating a “bounce up off support.” Conversely, when a majority of these traders believe that a certain price level or region is a relatively high, selling pressure will often result, and the price should generally go down, thereby creating a “bounce down off resistance.”
For an example of resistance, if the price region surrounding 1.6000 on the EUR/USD is considered collectively by traders to be relatively high (which, as of this writing, is the case), traders without positions in the market may wish to sell short the pair if price goes up to this level, with the intention to profit by buying back (or covering) later at a lower price. By the same token, traders with existing long positions in the pair may also wish to sell at this level, effectively closing their positions. All of this selling activity places downward pressure at this 1.6000 level, thereby creating significant resistance in the form of a “ceiling” on price action. The expectation, then, is that when price reaches a significant resistance level, it will turn and go back down at that level. The same prinicipal works for support on the downside.
- James Chen
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 Late Night Update
Posted on June 25, 2008 at 5:29 in Analysis by James Chen4 Comments »
Price-Oscillator Divergence
Posted on June 24, 2008 at 17:57 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/24/20080624b.jpg Just a note on the popular topic of divergence. Technical traders often talk about price-oscillator divergence. For those that are unfamiliar with this concept, classic divergence simply means one of two things – that price has made a higher high while some oscillator has made a lower high (bearish divergence), or that price has made a lower low while some oscillator has made a higher low (bullish divergence). Bearish divergence, like its name suggests, is a sign that upside momentum may be failing and that there may be an impending downturn. Bullish divergence, on the other hand, is a sign that downside momentum may be failing and that there may be an impending upturn.
In the case of the current GBP/USD hourly chart as shown on the chart, a bearish divergence has indeed occurred within the last several days (represented by the diverging black lines highlighted in yellow), that was followed closely by a subsequent price drop. In this case, the divergence indication did in fact work – and it worked beautifully.
But it should be forewarned that divergence should not be taken as a complete trading strategy. Divergence signals taken alone, without confirming factors, can be a dangerous game. The best use of a divergence signal is to consider it a red flag. Once this red flag is raised, the astute trader will look for other factors to confirm an impending reversal. These other factors might include a reversal pattern or a key support/resistance level. In any event, it cannot be emphasized enough that divergences need confirmation.
- 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 Short-Term Update
Posted on June 24, 2008 at 15:14 in Analysis by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/24/20080624_2.jpg The short-term EUR/USD trade I outlined on video yesterday via this blog (please see the EUR/USD Afternoon Update below), has just hit the resistance target as of this writing. This resistance target is the short-term downtrend line (represented on the accompanying 1-hour chart in black). More to come on the euro …
- 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 »
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.Cable’s Bearish Turn at Resistance
Posted on June 24, 2008 at 2:47 in Analysis by James Chen2 Comments »
http://forex.typepad.com/fxpath/images/2008/06/23/20080623_2.jpgJust another update on the GBP/USD. The setup that I had posted on Friday’s Chart of the Day and Sunday’s video post right here on this blog turned out to be accurate. Price did indeed turn around right at the long-term resistance line, moving down decisively as shown on the accompanying chart.
The bounce and move down is highlighted by the yellow spotlight on the chart. This was a classic case of strong selling pressure at resistance. In addition, the target at support also turned out to be accurate - I had projected major support at 1.9600. Today, price went just a few pips more to 1.9583. Again, this is the theory of support/resistance at its best.
And the oscillator (Stochastics) confirming overbought conditions lent a lot of strength to the bearish trade setup. Where is Cable headed now? More on this key pair coming very soon …
- 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 Afternoon Update
Posted on June 24, 2008 at 0:26 in Analysis by James ChenNo Comments »
GBP/USD Weekend Update
Posted on June 23, 2008 at 3:29 in Analysis by James ChenNo Comments »
The Technical Carry Trade
Posted on June 20, 2008 at 18:26 in Education by James ChenNo Comments »
http://forex.typepad.com/fxpath/images/2008/06/20/audjpy_daily_4.jpg
As I wrote in SFO Magazine’s May issue for the Trade-of-the-Month section (I actually wrote and submitted the article in late March), the classic carry-traded pair, AUD/JPY, was looking ripe for a long trade. The rationale for this trade was twofold. First, with the wide interest rate differential and no signs of narrowing, the pair looked relatively strong as a carry trade candidate into the foreseeable future. Second, from a technical perspective, price was relatively low within the long-term parallel uptrend channel, providing a high-probability pullback entry.
Therefore, this opportunity presented itself as a potential with-the-trend trade that offered a very favorable long entry near support. The upside to this trade came from both the daily interest accrual due to the wide differential on the AUD/JPY, as well as potential exchange rate gains. As it turned out, price did indeed appreciate substantially, providing both interest rate and exchange rate returns.
As of now, though, this opportunity has fully exhausted itself. Price has just reached the very top of the parallel uptrend channel (this channel does not include, of course, the two times last year when price completely overshot the channel). As of June 20, we’ve reached highs just under 103.00.
For any carry trades still open, now might be a prudent time from a technical perspective to start taking profits and closing those positions. And by no means should new longs be initiated in this carry trade, as the current price is far from an advantageous place to enter. In fact, for those that have interest-free accounts, or who don’t mind paying significant daily interest for their open positions, now might be the right time to start thinking about potential counter-trend shorts.
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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The Disciplined Traderhttp://mediaserver.fxstreet.com/images/pierre-charlebois-author-photoMedium.jpeg 'Market and Human' Psychology perspectives with tips on how to avoid common mistakes by Pierre Charlebois, Senior Trading Coach at www.TradingPostFinancial.com
Posted on April 6, 2009 at 15:32 in Uncategorized by Pierre CharleboisNo Comments »
Here’s a snap or the dollar index on the 4 hour chart.
At this time we can see that the most recent 4 hour candle was very bullish. Engulfing candles like this are most often followed by a continuation.
So for now I would suggest that the sentiment is in favour of the USD.
Cheers
http://blogs.fxstreet.com/disciplined/files/2009/04/usdindx_apr_6_09-300x251.jpg
Tags: Dollar Index, eur/usd, forex, USD
New FX Weekly report posted
Posted on April 5, 2009 at 22:18 in Uncategorized by Pierre CharleboisNo Comments »
HI folks.
I just posted a new report on multiple pairs. teh Dollar looks to weaken a little more perhaps this week however I’m very cautious as some re-tracement is due.
Please see my report: http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-04-06.html
USD Index at another important pivot point
Posted on April 2, 2009 at 14:07 in Uncategorized by Pierre CharleboisNo Comments »
Here’s another snapshot of the Dollar Index.
The bottom trend-line should prove to be the pivot point for continuation or reversal.
cheers
http://blogs.fxstreet.com/disciplined/files/2009/04/usdindx_apr_2_09-300x272.jpg
EUR/USD potential triangle forming on the 1 hour chart
Posted on April 1, 2009 at 12:31 in Uncategorized by Pierre CharleboisNo Comments »
It loos like today is going to be a mostly sideways affair.
There is a potential triangle developing at the rising trend-line. The opportunities should come at a break outside the triangulating lines.
Cheershttp://blogs.fxstreet.com/disciplined/files/2009/04/eurusd_apr_1_09-300x182.jpg
USD Index holding at rising trend-line
Posted on April 1, 2009 at 9:21 in Uncategorized by Pierre CharleboisNo Comments »
The Dollar index price is currently sitting right on a an assending trendline.
This level should prove to be today’s pivot point and should provide direction for the next day or so.
http://blogs.fxstreet.com/disciplined/files/2009/04/usdindx_apr_1_09-300x264.jpg
USD Index at another important pivot
Posted on March 31, 2009 at 9:08 in Uncategorized by Pierre Charlebois2 Comments »
Here’s a view of the USD Index on a one hour chart.
The patterns and trend-lines suggest this yet another important juncture and pivot point.
Price action of rejection or continuation at this point should determine the larger trend for the next 24 hours or so.
http://blogs.fxstreet.com/disciplined/files/2009/03/usdindx_mar_31_09-300x280.jpg
Using Candles to indentify entry points and risk
Posted on March 30, 2009 at 23:55 in Uncategorized by Pierre CharleboisNo Comments »
In the previous post I provided a review of how to read a candle identifying the high, low, open and close levels. Now let’s examine how we can identify those candles that offer the best potential. If the wicks of a candle show us the extremes then candles with very long wicks provide a view of where price action is potently rejected.
There are multiple candle patterns that offer potential reversal signals but let’s start with the most basic. A candle with a small body and large wick where the wick is 50 % or more than that of the body and it pierces or roughly touches and retreats from a barrier or trend-line where a reversal would be expected. This provides an entry point and the stop is placed at the extreme of the candle.
Tip: Remember to wait until the candle has closed to make your trade. Also, this works on all time frames but becomes more effective from the 1 hour candles and greater.
Here’s an example on the EUR/USD 1 hour chart from just last week: You can see where a barrier had rejected the price on two previous occasions and the the trade would have produced a substantial risk reward ratio.
http://blogs.fxstreet.com/disciplined/files/2009/03/i-hour-wick-rejection-300x261.jpg
Trading Candles – Identifying good entry and exit points
Posted on March 30, 2009 at 13:26 in Uncategorized by Pierre CharleboisNo Comments »
I think it important to begin with the basics on Candles. So here is a quick review.
Candles are in a way a miniature chart within themselves. The wicks (or tails are they are sometime called) represent the high and low of the period and the body shows open and close levels. The color represents if the price was rising or falling.
http://blogs.fxstreet.com/disciplined/files/2009/03/candle-203x300.jpg
Tags: Candles, forex, trading
Trading with the tide… Being on the right side of a trade
Posted on March 30, 2009 at 12:21 in Uncategorized by Pierre CharleboisNo Comments »
I bring this up because of the very strong move down on the EUR/USD. Let me explain the big picture “sentiment” and then I will offer some explanation on how to take advantage of a strong tide flow.
How many times do you find yourself trading against the current market sentiment? Are you long when the market is going short? Are you trying to trade a trend when the market is range bound?
If you know something about tides you know that there are smaller ebb and flows as well as much larger highs and lows. Think of the market as tidal so that you don’t find yourself trying to swim against the tide.
The two most important questions that I have had to learn to teach myself to ask before every trade (trading session) are:
[*]What is the general sentiment of the market – (Range-bound or trending)
[*]What is the current session sentiment – (Up or down)
When I feel reasonably confident I can answer these questions for myself, then I decide to go long or short. Otherwise what I tend to do is see every correction as a potential reversal. This causes me to try and trade against the tide.
So what I focus on is:
Buy on dips in a rising market
Sell on tops in a falling market
The next blog will show how to do this using candle patterns and types as points for these tops and dips.
Cheers
Dollar index in middle of current range - Testing 87.00?
Posted on March 30, 2009 at 9:45 in Uncategorized by Pierre CharleboisNo Comments »
The Dollar is due for a correction however the index could be on it’s way to re-visit 87.00.
I’m sure however the path there will be choppy.
http://blogs.fxstreet.com/disciplined/files/2009/03/usdindx_mar_30_09-300x271.jpg
Older posts »
Posted on March 26, 2009 at 22:24 in Uncategorized by Pierre CharleboisNo Comments »
http://blogs.fxstreet.com/disciplined/files/2009/03/usdindx_mar_26_09-300x292.jpg
The Dollar Index is still restrained by several trend-lines. The break should result in a substantial move
I have a bias as to the direction I think it should go however when I think I’m right I get caught in a bad postion. So… I will wait for a clear direction to trade.
USD/Indx apears to be forming a triangle
Posted on March 25, 2009 at 8:49 in Uncategorized by Pierre Charlebois2 Comments »
I wrote yesterday that the USD/Index could be forming a triangle. Indeed it appears that this is the case. The triangle is not symmetrical however it is forming following a strong thrust which is the correct position.
The triangle itself should have 5 waves as its internal pattern. At this time, it is difficult to clearly see if it is best counted as 3 waves or 5. So whether it is complete is still subjective. The other thing I am observing is the confluence of several trend-lines and barriers and I am watching to see if the price action will challenge 84.50 one more time.
These triangles usualy give way to continuation. Do remember however that sometimes what looks like a tirangle may in fact be a combination of patterns that is not yet complete and the triangle patterns fails.
http://blogs.fxstreet.com/disciplined/files/2009/03/usdindx_mar_25_09-300x272.jpg
USD Indx is basing/consolidating - Which way will it break?
Posted on March 24, 2009 at 9:45 in Uncategorized by Pierre Charlebois1 Comment »
The $/Index has for several days now formed inside candles. Meaning price action high/lows, is less each day.
This is a bit like a spring being wound up and when it gets too tight it will let go. The candles could be a forming triangle that usually gives way to a sudden thrust in the preceding direction and then a reversal.
So be cautious around these levels until direction is clear.
Cheers
http://blogs.fxstreet.com/disciplined/files/2009/03/usdindx_mar_24_09-300x252.jpg
How to read and use the USD Index
Posted on March 23, 2009 at 12:14 in Uncategorized by Pierre CharleboisNo Comments »
The index is just what the name implies in that it is like any other index that uses multiple currencies/securities in order to establish an average to create a value. It is measured against six other currencies. Click here to learn more. http://en.wikipedia.org/wiki/US_Dollar_Index
1. I use it to help guide my view on whether the USD is likely to to strengthen or weaken. I don’t trade it specifically (although there may be some ETF’s available).
2. Some chart providers provide a feed so you can view it. But it is an option that not all providers have.
3. I use the same technical analysis as I would on anything I trade.
4. This helps in trading against all pairs where the counter currency is the USD. Such as EUR/USD, GBP/USD,USD/CAD.
Cheers
New FX weekly report posted
Posted on March 23, 2009 at 11:49 in Uncategorized by Pierre CharleboisNo Comments »
Please see my most recent weekly report.
Also I will respond shorlty to the queston last week about the index.
Cheers
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-03-23.html
Just posted new FX Weekly report
Posted on March 16, 2009 at 0:00 in Uncategorized by Pierre CharleboisNo Comments »
Please visit at
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-03-16.html
Cheers
Update on USD Index - At tipping point
Posted on March 12, 2009 at 17:25 in Uncategorized by Pierre CharleboisNo Comments »
http://blogs.fxstreet.com/disciplined/files/2009/03/usdindx_mar_12_09_2-300x295.jpg
We have seen some very strong moves today and we are on the verge of break-outs.
The post I made earlier suggested we may needed one more leg up, however this count is in question and there is a chance a top is in place. The lower trend-line I pointed out at 87.35 is being challenged. A pull back of some sort here is likely however… a follow up break through could lead to a strong breakout.
As a result the EUR/USD is also flirting with 1.30 which in turn could be the tipping point on that pair.
Either way, whether we have a breakout or rejection the move should prove swift.
USD index presents good clue to Dollar direction
Posted on March 12, 2009 at 9:00 in Uncategorized by Pierre Charlebois3 Comments »
http://blogs.fxstreet.com/disciplined/files/2009/03/usdindx_mar_12_09-300x254.jpg
Look at this chart closely and notice the support of the rising trend-line (red). The current move down is yet to really break out of the grips of the old upward channel. It’s a choppy move that has yet to gain any real momentum downward.
Use caution trading around the current level as renewed USD strength is still very possible.
Cheers
EUR/USD poised for Break-out or Break-down
Posted on March 10, 2009 at 9:35 in Uncategorized by Pierre CharleboisNo Comments »
I see a large ending diagonal on the EUR/USD.
Problem is it may yet need one more downward leg. However if it breaks up considerably from here it is very likely complete and we should see a dramatic move upward.
The alternative is a re-visit of the lows that will give way to a sustained rally.
http://blogs.fxstreet.com/disciplined/files/2009/03/eurusd_mar_10_09-300x227.jpg
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Posted on March 2, 2009 at 11:43 in Uncategorized by Pierre CharleboisNo Comments »
I think the USDIndx is showing some sings of pending strong volatility.
A break upward suggests renewed strength whearase a suden reversal here could change the trend direction.
http://blogs.fxstreet.com/disciplined/files/2009/03/usdindx_mar_2_09-300x295.jpg
New FX Weekly Report posted
Posted on February 28, 2009 at 10:53 in Uncategorized by Pierre CharleboisNo Comments »
Please vist my report.
This week should give way to a new trend for the next few weeks.
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-02-28.html
Have a good week.
Pierre
New FX Weekly Report
Posted on February 22, 2009 at 20:15 in Uncategorized by Pierre CharleboisNo Comments »
New post for the week ahead.
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-02-23.html
Have a good trading week.
Practice Makes perfect - Yes… just like Mom told you.
Posted on February 20, 2009 at 10:52 in Uncategorized by Pierre CharleboisNo Comments »
I received a comment recently and decided that I had not written much about Discipline in trading as of late so I think it appropriate to do so at this time. In fact I think I will purposely make a commitment to dedicate the next two weeks or so to this cause.
I’m going to use a lot of metaphors to try and get my point across as this usually helps in remembering comparisons to other things in our lives and consciousness in order to learn good habits and stay on track.
So here is the first one: Habits are habits - Some are good; some are bad
We all know this, but what do we do about it? How do we change a bad habit? How do we recognise and focus on good ones?
Here’s the bad news; Most of our habits where formed in childhood. Here’s the good news; all Habits can be changed! So how do we do this?
Here’s one of those metaphors I was talking about: Practice makes Perfect! Have you learned to play a musical instrument? How about when you learned to ride a bike. Or what about when you got your drivers license? All of these things required months if not years of practice (like piano) in order for you to become proficient. Well trading is no different. And in fact, most of us would have employed a teacher or followed a course in all other things we have learned. Have you done this with trading? All brokers offer courses.
The steps where important too: Practice in a safe manner such as drive a car in a parking lot or you used training wheels on our first bike. In the case of piano we would not have done a live performance without hours and hours of repetition and practice. Learning to change our bad habits into good ones.
One more thing. We did not attempt the next level without some sort of testing to see if we should move forward. Grades for piano, official testing for drivers license and of course help from Mom or Dad when we tried the bike without training wheels. And at best we moved slowly into the next phase of our progress in a safe manner. For sure we didn’t take our bike out into rush hour traffic until we likely had several years of practice on the local streets.
So here’s my advice. Practice your trading in a demo account and log everything you do. When you have reasonable records of success (I suggest 300 trades or more) then move to one of the mini or micro accounts offered by most brokers. Then slowly increase your risk. Starting at just .050% of your account. That’s right! Just one half of one percent of risk by way of stop-loss. Then when you have proven success at that level you can slowly increase what you trade moving up to and no higher than 3% risk by way of stop loss. Talk to your broker and be sure you understand this fully. Nothing is more important to understand. And of course Practice makes Perfect! As one of my mentors told me when I started; learning to trade is a marathon… not a sprint.
One final note: There is a book called Outliers. It describes how certain individuals become proficient at what they do. A very valuable read indeed.
Cheers
Here’s a view of the USD/CHF
Posted on February 20, 2009 at 9:10 in Uncategorized by Pierre CharleboisNo Comments »
http://blogs.fxstreet.com/disciplined/files/2009/02/usdchf_feb_20_09-300x262.jpg
This pair has been in a channel for most of a month. It’s reaction at the top of this channel should be observed for a breakout or reversal.
Cheers
EUR/USD - Correction or reversal?
Posted on February 19, 2009 at 21:29 in Uncategorized by Pierre Charlebois1 Comment »
http://blogs.fxstreet.com/disciplined/files/2009/02/eurusd_feb_19_09-300x270.jpg
I had been talking about a potential reversal at the bottom of the channel. This came to be, albeit following one final push down.
I am mildly bias to a continuation upward of this reversal following a re-tracement. However I don’t think we need guess at the direction as I think the current move has likely defined where strong breaks are likely.
The two key levels are now 1.2760 and 1.2510
Cheers
EUR/USD poised for break-out/reversal
Posted on February 17, 2009 at 9:33 in Uncategorized by Pierre CharleboisNo Comments »
The EUR/USD looks very ready to make a move.
The pair is teetering on a tipping point and will surely react when the US Markets open today. Will the lower trend-lines hold?
http://blogs.fxstreet.com/disciplined/files/2009/02/eurusd_feb_16_09-300x290.jpg
New FX Weekly Report posted
Posted on February 16, 2009 at 9:28 in Uncategorized by Pierre CharleboisNo Comments »
Please see my report:
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-02-16.html
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Posted on February 11, 2009 at 9:09 in Uncategorized by Pierre CharleboisNo Comments »
http://blogs.fxstreet.com/disciplined/files/2009/02/gbpusd_feb_11_09-300x278.jpg
In follow up to yesterday’s post, I now see where the ending diagonal likely started on the GBP/USD
This barrier will now be very important going forward. A drop below 1.4350 would likely result in another swift move down.
GBP and EUR give puzzling signals
Posted on February 10, 2009 at 9:38 in Uncategorized by Pierre CharleboisNo Comments »
Both the GBP/USD and EUR/USD pairs are are some sort of tipping point. In the last 6 years of trading currencies I have never seen such divergence in activity. Of course we have not seen this type of economy in the last 80 years so I shouldn’t be so surprised.
Here are some levels and trend-lines that I feel are worth watching over the next few sessions.
http://blogs.fxstreet.com/disciplined/files/2009/02/eurusd_feb_10_09-300x275.jpg http://blogs.fxstreet.com/disciplined/files/2009/02/gbpusd_feb_10_09-300x275.jpg
Just published this week’s FX Weekly report
Posted on February 8, 2009 at 20:20 in Uncategorized by Pierre CharleboisNo Comments »
NEW FX WEEKLY REPORT
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-02-09.html
EUR/USD retraces and finds support at 0.618
Posted on February 4, 2009 at 10:56 in Uncategorized by Pierre CharleboisNo Comments »
http://blogs.fxstreet.com/disciplined/files/2009/02/eurusd_feb_4_2_09-300x275.jpg
We are at the 0.618 retracement area. This is an important pivot point.
EUR/USD pushes higher
Posted on February 3, 2009 at 19:15 in Uncategorized by Pierre CharleboisNo Comments »
http://blogs.fxstreet.com/disciplined/files/2009/02/eurusd_feb_3_2_09-300x287.jpg
We are still making fresh highs on the EUR/USD, however a temporary top seems to have formed. New highs from here could push a lot higher whereas below 1.29 could announce new lows.
EUR/USD at important juncture around 1.30
Posted on February 3, 2009 at 13:02 in Uncategorized by Pierre CharleboisNo Comments »
We have seen a reasonable rise in the EUR/USD over the last two days and we seemed to have peaked temporarily.
If you follow Elliott Wave Theory the current look allows for two reasonable possibilities. One is that this is just the beginning of a move up and of course the other is that this is just a ‘bear rally’ that could terminate around this level and head back down.
What follows over the next 24 hours should be helpful in determining the trend.
http://blogs.fxstreet.com/disciplined/files/2009/02/eurusd_feb_3_09-300x281.jpg
We may be topping temporarily on USD pairs
Posted on January 28, 2009 at 9:53 in Uncategorized by Pierre CharleboisNo Comments »
The GBP/USD has just reversed at a key level. The last wave up looks fractal and may very well be an ending diagonal.
A strong pull-back will ensue if this is the case.
http://blogs.fxstreet.com/disciplined/files/2009/01/gbpusd_jan_28_09-300x212.jpg
GBP and EUR both possed for a break out against the USD
Posted on January 27, 2009 at 22:20 in Uncategorized by Pierre Charlebois2 Comments »
Both pairs are threatening to break-out.
Special attention is warranted throughout the Asian and London sessions. A break here would point to values that we haven’t seen in weeks maybe even months.
http://blogs.fxstreet.com/disciplined/files/2009/01/eurusd_jan_27_09-300x290.jpg http://blogs.fxstreet.com/disciplined/files/2009/01/gbpusd_jan_27_09-300x290.jpg
New Report posted in the weekly technical section
Posted on January 25, 2009 at 21:59 in Uncategorized by Pierre CharleboisNo Comments »
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-01-26.html
Will the Ten Year Low on the GBP/USD hold up?
Posted on January 22, 2009 at 20:56 in Uncategorized by Pierre CharleboisNo Comments »
Well nobody know this for sure, however the very fact that we have come to visit it for tea so to speak, suggest it may fall some time this year if not very soon.
In the meantime what about the short and medium term? will it hold up over the next few days to cause a reversal? At this time it is holding however the retreat from the price point is dull and lack-lustre. So until we move away another few hundred pips I would be cautious.
However, one thing is clear; we are very oversold on the GBP/USD and overdue for a correction. If we breach below the current low of 1.3620 I would expect a fairly dramatic move and then a very sudden and strong reversal.
The level is very significant and will act as support, resistance and even as a sort of magnet drawing the price back tothat level over the next year or so.
Let’s take a look at the USD/CAD when it reached its ten year price around 1.00 USD. It blew through the 1.00 level on the first visit but quickly reversed and spent 9 months straddling the line before finally breaking back out.
So what will happen to the GBP/USD at it’s ten year level?
Here’s a view of the USD/CAD from last year.
http://blogs.fxstreet.com/disciplined/files/2009/01/usdcad_jan_22_09_-300x290.jpg
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Posted on January 22, 2009 at 12:25 in Uncategorized by Pierre CharleboisNo Comments »
Here we are again at an important price pivot point.
http://blogs.fxstreet.com/disciplined/files/2009/01/eurusd_jan_22_09_-282x300.jpg
EUR/USD on watch to confirm trend reversal
Posted on January 21, 2009 at 20:24 in Uncategorized by Pierre Charlebois2 Comments »
http://blogs.fxstreet.com/disciplined/files/2009/01/eurusd_jan_21_09_1_hr-300x280.jpg
On my last post, I pointed out that there appeared to be repeating patterns on the EUR/USD. Very shortly after,the pair rallied 250 pips.
We are now at an important price juncture and need to be attentive as the next volatile move should provide direction.
Could the pattern repeat one more time? Or will the break-out continue? It’s a bit like a drama!
EUR/USD repeating patterns
Posted on January 21, 2009 at 14:43 in Uncategorized by Pierre CharleboisNo Comments »
I was teaching a live course a few months ago and in the class were two equities traders that use fractals in trading (Fibonacci).
They look for patterns that are repeating and use this as a guideline. The also look for patterns that repeat and become smaller and smaller to anticipate a break-out.
Here are some repeating patterns on the EUR/USD - We will have to observe to see what happens next.
http://blogs.fxstreet.com/disciplined/files/2009/01/eurusd_jan_21_09_4_hr-300x262.jpg
EUR/USD makes new low - What is the new target?
Posted on January 19, 2009 at 20:17 in Uncategorized by Pierre CharleboisNo Comments »
With the new low, the descending trend is still intact. Where will it end?
http://blogs.fxstreet.com/disciplined/files/2009/01/eurusd_jan_19_09_4_hr3-293x300.jpg
Important pivot point on EUR/USD
Posted on January 19, 2009 at 14:07 in Uncategorized by Pierre CharleboisNo Comments »
The EUR/USD retraced most of its Thursday/Friday gains. We are now sitting on the .618 re-tracement of the previous move. In this range between .618 and .764 is where the trend is most often established.
Watch this level for trend direction.
http://blogs.fxstreet.com/disciplined/files/2009/01/eurusd_jan_19_09_1_hr-292x300.jpg
EUR/USD - Next important barrier 1.3425 to keep trend ‘Alive’
Posted on January 16, 2009 at 12:52 in Uncategorized by Pierre CharleboisNo Comments »
Please observe the previous post and graphic. We have now broken the Red trend line. This may represent the beginning of an up-trend.
What I will be watching for now is a potential turn here or re-tracement towards the low of 1.3025 without making a new low and then looking for a new high above 1.3425.
1.3425 is very important as it represents the previous level of congestion.
http://blogs.fxstreet.com/disciplined/files/2009/01/eurusd_jan_16_091-300x259.jpg
Close watch on EUR/USD - Looking for a bottom?
Posted on January 14, 2009 at 23:08 in Uncategorized by Pierre CharleboisNo Comments »
The EUR/USD may be trying to form at least a temporary bottom. It may be in place but the downside prevails.
Here are the levels I am watching.
http://blogs.fxstreet.com/disciplined/files/2009/01/eurusd_jan_14_09-300x281.jpg
New Weekly Report Posted
Posted on January 11, 2009 at 21:01 in Uncategorized by Pierre CharleboisNo Comments »
Please see my report for the week comming
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2009-01-12.html
More evidence that group psychology moves the market… Not economic factors!
Posted on January 7, 2009 at 21:29 in Uncategorized by Pierre CharleboisNo Comments »
I came across this article today when reading one of the Canadian business newspapers.
As you know I believe that group psychology is what really moves the markets. This is why I study and apply Elliott Wave counts to my trading and know that we often see the market move contrary to what the news may be at the time.
A very good example of this is how quickly the USD strengthened over the last two months considering how dire their economy looks for the foreseeable future.
Here’s the article; enjoy!
http://www.theglobeandmail.com/servlet/story/GAM.20090107.RREYNOLDS07/TPStory/TPComment
What will be the direction for the EURUSD in 2009?
Posted on January 5, 2009 at 11:01 in Uncategorized by Pierre CharleboisNo Comments »
Welcome back folks.
I hope you had a good Xmas season. I certainly did. However, now it’s time to direct our energies back to more pressing matters. What will be the general direction of the currency market!
I would say that overall we should continue to see USD strength. However in the very near term we are still in a correction of the unprecedented move of the last quarter of 2008. That said I would expect a range to develop over the next several weeks with an eventual break-out to the downside Mid to late January.
Wishing you a prosperous 2009.
http://blogs.fxstreet.com/disciplined/files/2009/01/eurusd_jan_5_09-300x256.jpg
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Posted on December 12, 2008 at 12:22 in Uncategorized by Pierre CharleboisNo Comments »
The EURUSD went on a tear yesterday that came to sudden and almost unexpected stop.
So I’m watching the current barrier to see where it goes from here. It’s at another important crossroads so let’s see if it holds it’s gains next week or if it heads back down into the range it has been stuck in.
Cheers
http://blogs.fxstreet.com/disciplined/files/2008/12/eurusd_dec_12_08-300x289.jpg
BTW; I’m taking a Xmas break starting now. See you in January.
Peace…
New FX Weekly Report Posted
Posted on December 7, 2008 at 19:53 in Uncategorized by Pierre CharleboisNo Comments »
Please visit:
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-12-08.html
US Payroll Numbers Fail to Give Direction on EUR/USD
Posted on December 5, 2008 at 10:56 in Uncategorized by Pierre CharleboisNo Comments »
The EUR/USD is still not showing signs of a trend direction even after one of the most significant news events of the month. Considering how dire the news was for US employment and that the USD held its ground; suggests that the bulk of the volume traders believe the Dollar is currently the place for safety.
http://blogs.fxstreet.com/disciplined/files/2008/12/eurusd_dec_5_8-297x300.jpg
Dollar stuck in range - Play could be on USDCHF
Posted on December 2, 2008 at 13:03 in Uncategorized by Pierre CharleboisNo Comments »
The Dollar has not been able to really break up or down for some time now. A corrective rally may be trying to break-out.
However looking at the charts I think the current place to focus could be on the USD/CHF.
Cheers
http://blogs.fxstreet.com/disciplined/files/2008/12/usdchf_dec_2_08-300x295.jpg
New FX Weekly Report Posted
Posted on November 30, 2008 at 21:53 in Uncategorized by Pierre CharleboisNo Comments »
Please visit:
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-12-01.html
USD looks to weaken further
Posted on November 25, 2008 at 13:03 in Uncategorized by Pierre CharleboisNo Comments »
It does appear now that a temporary bottom is in place on USD pairs.
In particular the EUR/USD has broken out. A break of 1.31 will likely deliver the price to 1.33. A move higher would then signal a longer term bottom.
I would expect some retracement here and then renewed strength to the upside.
http://blogs.fxstreet.com/disciplined/files/2008/11/eurusd_nov_25_08-300x277.jpg
Please see my latest weekly report
Posted on November 23, 2008 at 19:37 in Uncategorized by Pierre CharleboisNo Comments »
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-11-24.html
Cheers and good trading this week.
Traders reluctant to break range on EUR/USD
Posted on November 21, 2008 at 10:13 in Uncategorized by Pierre CharleboisNo Comments »
The pattern I have been watching for weeks now is still in force. Traders are not at all willing to push the price much outside the range.
Here are the key levels to watch for breaks.
Have a good weekend
http://blogs.fxstreet.com/disciplined/files/2008/11/eurusd_nov_21_08-300x254.jpg
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Posted on November 18, 2008 at 15:18 in Uncategorized by Pierre CharleboisNo Comments »
I have been watching this pair as there is the confluence of a trend-line and barier about to be visited.
This is where we will see price action reverse or accelerate in a continuation.
Watch this area closely if we do indeed visit there.
http://blogs.fxstreet.com/disciplined/files/2008/11/eurusd_nov_18_08-300x268.jpg
New FX Weekly report published on the majors
Posted on November 16, 2008 at 12:09 in Uncategorized by Pierre CharleboisNo Comments »
Please see my report.
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-11-16.html
Cheers and good trading this week.
Close watch of USD/index
Posted on November 14, 2008 at 11:03 in Uncategorized by Pierre CharleboisNo Comments »
I’m keeping a very close watch on the USD/index. The price action (pattern) represents a real struggle between Bulls and Bears.
I am watching the 88.00 area for a break-down or break-out.
Cheers and have a good weekend.
http://blogs.fxstreet.com/disciplined/files/2008/11/usdinx_nov_14_08-300x293.jpg
Pierre
Meltdown of the GBP - Real or perceived?
Posted on November 13, 2008 at 13:55 in Uncategorized by Pierre Charlebois1 Comment »
The GBP is falling against all other majors and there seems to be no end in sight… Wait a minute… Where have I heard that before?
Often when things look and sound their worst is just when a reversal takes hold. considering the EUR has not significantly fallen against the USD over the last few sessions, leaves me to wonder if this move on the GBP is a terminal thrust. Meaning that when this thrust comes to an end a larger reversal is possible.
I would remain curious about the marked difference in direction of the the EUR and GBP. Things will need to get back into balance soon. Why indeed is the EUR/USD not making new lows?
http://blogs.fxstreet.com/disciplined/files/2008/11/eurusd_gbpusd_nov_13_08-300x155.jpg
USD/CAD is once again poised for a break-out
Posted on November 11, 2008 at 14:15 in Uncategorized by Pierre CharleboisNo Comments »
The picture tells the story.
http://blogs.fxstreet.com/disciplined/files/2008/11/usdcad_nov_11_08-300x294.jpg
Most currency pairs poised to break-out
Posted on November 10, 2008 at 21:09 in Uncategorized by Pierre CharleboisNo Comments »
Here is a perspective on the EUR and GBP vs the USD.
Both pairs appear ready to break out.
http://blogs.fxstreet.com/disciplined/files/2008/11/eurusd_nov_10_08-300x299.jpg
http://blogs.fxstreet.com/disciplined/files/2008/11/gbpusd_nov_10_08-300x299.jpg
Please see this weeks report: Are traders going to finally capitulate on the USD?
Posted on November 10, 2008 at 10:06 in Uncategorized by Pierre CharleboisNo Comments »
Please read the report and I welcome your comments
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-11-10.html
Does sentiment drive the market or does the market create the mood?
Posted on November 7, 2008 at 13:24 in Uncategorized by Pierre CharleboisNo Comments »
I was having a coffee with a friend yesterday and here’s where our conversation went.
I believe it’s our psychology and emotions that drives us all. And as such, I believe that when combined as a group the predominant sentiment is what shows up in the market. My friend Dave also agreed although his thought started out as: People really want this crisis don’t they? So I think that negativity and fear exist on a group basis as well as on an individual basis. So when we are trading we need be sure to be following the Group. But how do we address our own stuff?
Let’s face it folks; fear is one of the greatest motivators. I don’t like it but I need address and respect it. I’ve heard it said that most people are not just fearful of failure but also of success. Because the question becomes: Who will they be if they are successful. It is such an unfamiliar place for most people.
There are many ways to work at overcoming such negative ego thoughts however as simple as it sometimes seems, changing a lifetime of thinking is a very large task indeed. I came across this author and his bookrecently “Spiritual Economics” “Eric Butterworth” and I thought it interesting that as much as he takes a spiritual view it addresses key thoughts on letting go of guilt and shame and negative beliefs.
This is not the only way… It is “A” way in the many. However if we are able to change our psychology and beliefs then we can truly prosper.
Do you believe you deserve to be financially abundant?
Posted on November 6, 2008 at 12:04 in Uncategorized by Pierre CharleboisNo Comments »
I’ve been asking questions lately about how people relate to money, abundance and our own perception of what we deserve. So here’s a great question to ask yourself.
What is keeping me from being a consistently profitable trader?
Can you answer that question without defending the answer? Do you know what I mean by that? If your answer is not something within your control then your abundance will not truly improve. If you can’t truly say that you are making a choice to struggle and you are working on changing that mind-set, then you will stay stuck for some time I’m afraid.
You see, if bad trades are the market’s fault, or the annalist’s fault, or the ‘big players’ got me, or the broker was stop-hunting or I’m never at my computer when the obvious moves happen, or I was trading the wrong pair, or my favourite; I just need the killer system! etc…Get the picture!
As long as this is your thinking, you are giving your circumstances over to something else that you cannot change. However, if you take responsibility and focus on learning from every trade to improve, then you will start to see success.
I have a saying I tell my students when they ask if it’s easy. I respond; Trading is something we can all learn but the ability to stay objective in order to be profitable is what the real challenge is in trading. The only way to do this is to believe in yourself. That there is a way, and you will find it. This doesn’t mean finding a system, rather it means finding your way of dealing with loss and gain and how you relate to it, to be more objective and deserving.
Cheers
New FX Weekly report posted
Posted on November 3, 2008 at 0:02 in Uncategorized by Pierre CharleboisNo Comments »
Please see my latest weekly report.
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-11-03.html
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Posted on October 31, 2008 at 14:59 in Uncategorized by Pierre CharleboisNo Comments »
Another impressive move by this pair. I was waiting for a break above 1.24 and instead it’s headed for a double bottom.
It goes to show us that we need be very cautious on waiting for confirmations of breakouts before taking trades.
The break below 1.21 provided a good sell oppertunity. I think there are many more opportunities to come, however we can’t take our eyes off this pair for one second.
Have a good weekend.
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_31_08_22-300x277.jpg
USD/CAD turned around
Posted on October 31, 2008 at 8:01 in Uncategorized by Pierre CharleboisNo Comments »
This pair continues to make record breaking moves. A retracement is underway and could go higher yet.
Unfortunately the upload tool is not working at this time so I can’t share the chart.
USD/CAD - What goes up must come down
Posted on October 29, 2008 at 10:10 in Uncategorized by Pierre CharleboisNo Comments »
Indeed we have now seen a substantial reversal move on this pair. Some re-tracement is due and then the bigger question is where to next.
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_29_08_2-300x285.jpg
USD/CAD up against it’s next support
Posted on October 28, 2008 at 15:44 in Uncategorized by Pierre CharleboisNo Comments »
If the pair is going to continue downward it needs to break this pivot point.
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_28_08_22-300x300.jpg
USD/CAD drops slightly - Is there more downside to come?
Posted on October 28, 2008 at 8:56 in Uncategorized by Pierre CharleboisNo Comments »
So far the pattern has acted as expected. However we are now at a cross roads. Usually when these patterns announce a top the reversal is more swift. So I would use caution until more conviction appears in the direction.
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_28_08-300x285.jpg
Is USD/CAD finaly topping?
Posted on October 28, 2008 at 0:03 in Uncategorized by Pierre CharleboisNo Comments »
I’m watching the USD/CAD very closely as there appears to be a forming ending diagonal. If the lower trend-line is breached then the downside has a potential of 1.2500 or lower.
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_27_08-300x276.jpg
New report posted on FX Street
Posted on October 26, 2008 at 22:34 in Uncategorized by Pierre CharleboisNo Comments »
Have a look at my most recent report.
cheers
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-10-27.html
USD/CAD at important pivot point
Posted on October 24, 2008 at 8:39 in Uncategorized by Pierre CharleboisNo Comments »
The USD/CAD pair has been incredibly volatile as of late and is now positioned for a break-out or reversal. The current pivot point is quite identifiable. This is the second time we visit here in as many days.
Keep a close watch on this pair Sunday/Monday as the market sentiment may turn sharply in the coming days.
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_24_08_blog-300x282.jpg
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_24_08_blog_2-300x281.jpg
USD/CAD reversing?
Posted on October 23, 2008 at 10:04 in Uncategorized by Pierre CharleboisNo Comments »
It is very likely that a temporary top is now in place on the USD/CAD. As you know I like to consider the psychology as to how and why this may also be.
As such there were many articles in the news yesterday. In the US, Canada and even Europe about the dramatic decline in the CAD. (USDCAD strength). This is often the signal of a reversal. Whenever the mainstream media latches on to a story especially if they report how it seems to have no end in sight. Typically this is just the place a reversal happens.
I believe it’s time to look for selling opportunities on this pair.
Cheers
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_23_08_blog_3-300x255.jpg
Is your relationship to Money ‘Healthy’?
Posted on October 21, 2008 at 11:47 in Uncategorized by Pierre Charlebois1 Comment »
I came across some old notes about how people all have a different relationship to money and that most of us have an unhealthy one.
This is just a crude self test and doesn’t address all of what one should do to discover their personal relationship with money however it is very telling if we ask ourselves what we think when we reflect on other peoples financial success. The bigger question of course is will we think of ourselves the same way as we become financially independent or perhaps is this keeping us from having greater wealth?
Read the questions below and just answer them for yourself. Observe if you learn from your answers.
[*]Money is the root of all evil[*]It’s more righteous to be poor than rich[*]Most rich people probably did something bad or dishonest to get their money[*]Getting rich takes too much work and struggle[*]Striving for wealth won’t allow me much time for anything else in life[*]If I really strive for wealth and don’t succeed I’ll fell like a failure[*]Being successful is a matter of luck or fate[*]I don’t have time to manage money
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