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Posted on November 18, 2008 at 15:31 in Short-Term Analysis by Valeria BednarikNo Comments »
The pair is quite contained today, moving in a small range, between 1.4980 and 1.5040; the previous resistance grey zone has turned into a support, but as long as the pair remains under 1.5040, the upside seems pretty hard: Above that value, we have 1.5085 and from there, no much important resistance to the upside till the zone between 1.5160/80. Under 1.4970 next supports will be at 1.4920, 1.4840 and finally the zone @ 1.4750.
Tags: gbpusd
Some more technical education
Posted on November 18, 2008 at 13:25 in Technical Education by Valeria Bednarik6 Comments »
While majors decide where to go, maybe you like to read some more technical basic concepts. Hope you enjoy!
As many of you have read before, Forex is the most amazing and popular electronic financial market: It moves 1.5 trillion dollars a day, what NY Stocks market moves in a year. A 24 hours a day, 7 days a week market, with high volatility and liquidity, and with a plus advantage: leverage. A market where you can choose, to go bull or bear with no cost: no extra premiums to pay, no additional options. Seems pretty much convenient right?
Well let me tell you the disadvantages before I continue: high volatility, liquidity, leverage. Yes, just the same: Advantages are Disadvantages too. All these things can play against you as well as for you, with an extra: Brokers. Most retail traders must use a broker, who will be the counterpart in all transactions as there is no way to deal directly in the interbank market. And, as brokers are market makers, they can widen spread, or even refuse to trade during particular moments or conditions.
So, why are we here? What makes Forex so attractive, so popular? Where is the DIFFERENCE? A non written rule says only 10 % of Forex traders are successful, against the 90 % that blow accounts.
I remember when I completed my technical course, my Master telling me: now you’re ready, you have all the tools you need, the tools most traders don’t have: you have technical knowledge, psychological training, and effective money management rules you can and know should apply. Took me pretty much a year to understand his words, but there is the difference: believe it or not, the “90 % losers” trade without using technical analysis, without a working plan, without nothing but the ambition to become rich in a pretty short term. Most Forex traders, trade by impulse following a hunch more than a trend. Using guts instead of indicators or oscillators.
Over the years I have been here, I also discover another difference: most traders spend there time looking for The System, the unique, the perfect one, of course one developed by someone else, instead of even trying to study two or three simple indicators; of course as soon as a systems gives a bad entry, they discard it, and jump into another: the cycles repeats, and there goes their money.
One last word before diving in technical: remember here there is another important difference with other financial markets: time. For Forex traders, short term refers from minutes, to a few hours. Traders can work and profit with 4 hours, 1 hour or even 30 minutes charts.
A simple an effective way to start with technical Forex trading is using Moving Averages: as you now, a Moving Average is a trend direction indicator that calculate a simple arithmetic average of prices for a specified period, showing the average value of the price of a currency over a set of value. There are different types of MA: we use SMA for simple moving averages and EMA for exponential ones. There are others kinds of MA, (smoothed, linear weighted, etc) but we will limit this short study to the firsts ones, as they are the most used.
The SMA: Calculates the average of the price by adding the prices of the specified period together, and then divides it by the number of the prices.
SMA = Sum of “x” periods /X
Where x represent a certain number (could be almost any one from 2 to 500 depending of how many historical information your charts include); besides, many chats allows to select a chosen set to apply the calculation: Open, close, high, low, median or typical price.
The EMA, smoothes the MA by adding to the current closing price, the previous value and giving the last prices more weighted value. This type of MA reacts faster to recent price changes than SMA.
Different ways to trade with MA
There are many different methods and settings of Moving Averages a trader can use; let’s see two basic methods, with some of the common settings, useful for intraday trading, remembering that MA work better in a trend market and they are not reliable in sideways ones.
A basic trading system is to use a MOVING AVERAGE BREAKOUT. In this method, you have to draw a MA in any selected chart. Let’s see an example in a 1 hour chart of EUR/USD. I used a SMA of 20 periods (blue). When the price crosses the Moving Average down-up and there’s a new candle opening above the Moving Average indicator we buy; and when the price crosses the Moving Average up-down and there’s a new candle opening below the Moving Average indicator we sell. Your exit signal will be the price crossing the MA on the other way.
But this is not as simple as it seems, and not reliable as we need: a Moving Average Breakout must be combined with an indicator to act as filter; something that reinforce the signal, and increase the probabilities of a good trade; the best choices in this case, will be Momentum or Stochastic Oscillator. Any of these two arithmetical oscillators will act as a confirmation of the trade.
Another and off course better way to trade MA, is using MOVING AVERAGES CROSSES. Using this system, you can work with at least two MA, although some traders prefer using three. The first one will be set with a small period (Fast Moving Average) the second one will be set with an intermediate number of periods and the third with a bigger number of them (Slow Moving Average). Let’s see an example using SMA of 4, 9 and 18 periods in a 4 hours USD/JPY chart:
The light green is a 4 periods MA, the medium green represents 9 periods, and the dark green one, is for 18 periods. See how, when 4 MA crosses 9 MA and then, both of them crosses 18 MA, and you have a good trigger. The 4 periods line crossing the 9 one, is the first advice you have; this signal gets its confirmation when both, 4 and 9 cross 18. Your exit will take place when the slow MA turns back crossing 9 into the other way.
This is a quite reliable and simple system when market moves in trend; besides there are lots of combinations that can be used, using MA or EMA: as an example, a good combination with EMA is 5, 13 and 34. And as in the first case, this system would become even better if you combine it with any oscillator to act as filter.
Anyway, the question here is not only the MA or EMA system selected; this will depend also on the time frame you choose to work: a signal in a 30 minutes chart will not be as strong as one in a 4 hours chart. Also, the “life” of a trade, will depend on two main factors: first of all the continuity of the signal: as long as the conditions that gave the into the market signal remains the same, the trade is valid; as soon as any of this conditions gets lost, you are getting advise to close your trade. Second, we consider a fact that any signal is valid for the next four candles; so if you are trading using a 30 minutes chart, your signal will be valid for the next two hours. After that time, we consider the trade should be completed; if not, then again, you must close your position, as soon as any condition even start to turn.
As one of the main characteristics of the Forex market is volatility traders are force to use a tool that many dislike, but that is much more useful than you can imagine: stop losses orders. I understand is really hard to assume a lost; I don’t understand why many people risk all their capital in a single trade, when Forex gives lots of opportunities a day. Sure, you will lose some times. But as long as you trade using the right tools, loses are just another step in the way. Understanding the delicate balance of risk management is the secret of success in here. Get rid of your pride, find a simple system you like and follow these rules; you will probably close more profitable trades than you can imagine.
Tags: Technical Education, using moving averages
Usd/Jpy in the short term
Posted on November 18, 2008 at 12:16 in Short-Term Analysis by Valeria BednarikNo Comments »
The pair is tending bearish, and has just attempt again to break under the 95.95 key level: if breaks under, the pair could run to the 95.50 zone, but today things are going really slow, so don’t expect a quick movement. Over sold in small charts (15 minutes) failure to confirm under the mentioned support, could send the pair again to 96.40. See this 1 hour chart, with the pair inside yesterday’s triangle.
Tags: usdjpy
Eur/Usd for today
Posted on November 18, 2008 at 11:48 in Short-Term Analysis by Valeria Bednarik1 Comment »
Not much change from yesterday, the pair remains under selling pressure and so, bearish in bigger charts, yet moving sideways in 4 hours charts, with a strong support/congestion zone between 1.2580/1.2600 that’s holding the downside. Under that, we have supports at 1.2540 and finally the tough 1.2500/10. To the upside, as long as the pair holds here, we could see some bullish movements, with resistances at 1.2665/85, the zone @ 1.2740 and finally the descendant daily trend line at 1.2780.
Tags: eurusd
Euro/Gbp following technicals
Posted on November 18, 2008 at 10:15 in Short-Term Analysis by Valeria BednarikNo Comments »
After yesterday post, the pair reached in next candle the proposed first target in the zone @ 0.8400/10, yet remained under the 38.2% and continue moving slowly to the downside. Remember this is a quite slowmo pair, with some intraday exceptions. Today, and after almost reached the 6.8% of the Fibonacci rally, the pair recover the upside, and with indicators turning downside up, actual movement could easily extend first, to the zone @ 0.8470 above which the pair could return to 0.8514/20, followed by 0.8552 and finally the zone @ 0.8586. Supports also remain as yesterday at 0.8400/10, 0.8375 and finally 0.8340; yet considering that the 61.8% hasn´t been broken, we could consider yesterday’s movement a correction, that precede a trend continuation: watch up for next level to be broken and signal so.
Tags: Eur/Gbp
Starting the day
Posted on November 18, 2008 at 8:23 in Starting the day by Valeria Bednarik2 Comments »
Hello everybody hope you are fine. Early start today, as we have plenty of fundamental news, related with inflation and growth particularly in England and the U.S.: while is expected to ease in the first, the PPI is expected to rise in America; would this be the beginning of a turn in U.S. rate policy? Just a small light at the end of the tunnel, but we should consider it. Not today and not next month (statistically, December is a dollar negative month), and much more water should run under the bridge, but the facts are there to be considered: the right time to take them into account will come. Anyway, I’m just speculating.
Today’s news and the release time could be seen following next link:
http://www.fxstreet.com/fundamental/economic-calendar/
I’ll be back in a few minutes with today technicals. Have a great day!
Usd/Jpy holding the downside
Posted on November 17, 2008 at 15:39 in Short-Term Analysis by Valeria BednarikNo Comments »
Not the most clear pair for me today, Japanese yen has been moving in a quite tight range for the past 6 hours, between 96.30 and 96.90. Looking at 4 hours charts, the pair is forming a triangle, with the base at 95.90, so maybe we should consider that the last probable support for today, if the pair manages to move under 96.30. at actual price, only above 96.95 the pair could try to reach the descendant trend line at 97.27. A break above that line, could send the pair first to the zone @ 97.50 and finally to the most important resistance zone @ 98.10. Consider US stocks are falling and that’s helping to pressure the pair to the downside at the moment, but despite the 190 point lost there, this pair is managing to hold, so, changes are bigger of a break to the upside.
Tags: usdjpy
Eur/Gpb for the next hours
Posted on November 17, 2008 at 14:05 in Short-Term Analysis, Uncategorized by Valeria BednarikNo Comments »
Things are changing and while Gbp (against Usd dollar) is attempting to break higher, the Euro remains under selling pressure, and clearly seen in the Eur/Gbp. Last week the pair reached the proposed level @ the 138.2% of an inverted Fibonacci, and being highly over bought, begin a correction that right now, seems ready to continue to the downside: in 4 hours charts, the pair is under the 38.2% of this last 2 days upside run. with a first support 0.8437, under that level the correction could extend first to 0.8400/10, with next supports at 0.8375 and finally 0.8340, close to the 61.8% of the mentioned rally. If the pair reaches that level, we will have to wait and see if the dominant ascendant trend will be enough to provide a bullish rebound, or if a clear breakthrough will preannounce further falls. If actual candle fails to the downside and manage to close above the 0.8470 level, we could see the pair regain the uptrend, and continue first to 0.8514/20, followed by 0.8552 and finally the zone @ 0.8586.
Tags: Eur/Gbp
Usd/Chf following channels
Posted on November 17, 2008 at 12:55 in Short-Term Analysis by Valeria BednarikNo Comments »
Some days ago, I posted some daily charts analysis for the pair (you can see it in the next link http://blogs.fxstreet.com/advisor/2008/11/11/swiss-franc-daily-charts/) and is time to update the pair: see how inside that daily channel, the pair is moving inside another one, in 4 hours charts, and find support in the 20 SMA ( red in my charts) that by the way, is clearly bullish; with an important congestion zone between 1.1986/1.2007, above this last the pair wil attempt to reach the top of both channels in the 1.2060 zone. Remember, as long as time goes by the target will move higher, so 1.2082, a previous resistance zone, could also be reached this next days. supports today will be at 1.1940, followed by the zone @ 1.1890, the base of the 4 hours ascendant channel. A 4 hours candle opening under it, could send the pair lower with next supports at 1.1848 and finally the zone @ 1.1820.
Tags: Usd/Chf
« Newer posts – Older posts »
Posted on November 17, 2008 at 12:18 in Short-Term Analysis by Valeria BednarikNo Comments »
The Gbp/Usd is trapped in range, yet tending bullish in 4 hours charts: not yet confirming, above the 1.4965 congestion zone and first resistance for today, the pair will probably try to test the 1.5000 zone, and once broken, the pair will find it’s way pretty clear to the upside, with next resistances at 1.5070, 1.5180 and finally 1.5270 zone. Supports today will be at 1.4840, 1.4750, the zone @ 1.4660 and finally 1.4570.
Tags: gbpusd
Eur/Usd for today
Posted on November 17, 2008 at 11:39 in Short-Term Analysis by Valeria BednarikNo Comments »
Eur/Usd remains bearish in bigger charts, although we see divergences with indicators in 4 hours charts: quoting right now @ 1.2645, only under 1.2610 the pair could continue to the downside, with next supports at 1.2560/70, and then 1.2526, followed finally by the tough zone @ 1.2470. To the upside, above 1.2685 the pair will try to regain the zone @ 1.2715 followed by 1.2748 and finally the descendant daily trens line, at 1.2806.
Tags: eurusd
Starting the day
Posted on November 17, 2008 at 11:02 in Starting the day by Valeria BednarikNo Comments »
Hi everybody hope you are fine. A new week starts, and maybe two things to consider: Japan also fell into recession, as the third quater GDP shrank, and there is no expectations of improvement in the next months; the world leaders met during the weekend yet failed to deliver some relief for the financial markets, although they aimed to sooth volatile markets and calm consumers’ worries, without offering specific policy responses: ladies and gentlemen, we are almost officially facing a global recession. I could spend some time here and try to analyze the root and probable consequences with you, but I guess I made my point about that a few weeks ago, and to tell you the true, as there’s no much I can do to solve it, I prefer to use my time in something more profitable. But if I intent to trade the forex market, better be to know where I’m standing. The other thing to consider, is that despite is not as in September or October, volatility is still here, probably due to low liquidity; although I believe things are pointing to normalcy, don’t expect it to be like that in the short term. We will still have some more of this low liquidity/ high volatility stuff, as there are a lot of logical fears of putting too much money into the market. So, knowing this, let’s start the week!
Yo can check today’s fundamentals following next link:
http://www.fxstreet.com/fundamental/economic-calendar/
I’ll be back in a few minutes, with today technicals. Have a great day!
Away from office
Posted on November 14, 2008 at 13:29 in Uncategorized by Valeria BednarikNo Comments »
We have a bunch of fundamentals in a few minutes, but I won’t be able to be here in the next hours, so this is just a note, to tell you about it. If I could make it back in a couple of hours, I will try to post something else. if not, have a great weekend and see you on Monday!
Usd/Jpy in the next hours
Posted on November 14, 2008 at 12:52 in Short-Term Analysis by Valeria BednarikNo Comments »
The pair remains under bearish pressure, and has just tested an important support zone a @ 96.30; with indicators pointing to the downside, and if the pair pass recent minimum at 96.26, we could see more bearish from there with next supports at 95.82, followed by 95.40 and finally the zone @ 94.90/95.10. To the upside, we have some free space between 96.80 and the tough zone at 97.10, followed by a congestion zone between 97.38/50, and above this last, 98.00
Tags: usdjpy
Eur/Usd for today
Posted on November 14, 2008 at 11:07 in Short-Term Analysis by Valeria BednarikNo Comments »
One of the things that get’s me into forex market is that you can never get bored here. Always some different pair or time frame to look. Instead of the classic 4 hours charts, today I will try to follow, at least for the next hours, this 30 minutes chart you can see after the explanation: the pair has made a straight 400 pips rally late yesterday in the American session, and beginning a downside corrective rally, contained in a small channel that we could consider a flag. quoting @ 1.2700 and if remains here, just above the 38.2% of the rally, we could expect the pair to move upwards to the roof of that channel, @ 1.2740/50, and probably rebound there, as major bearish trend continues. However a break and confirmation above it, will confirm the figure, and should trigger some more bullish rally, first to the zone around 1.2790 and finally to 1.2854, today maximum and also a daily descendant trend line. On the other hand, under 1.2684 the pair will try to reach the base of the figure, at 1.2635 at the moment. If passes trough, the figure should not be taken into count, and the pair will find next supports at 1.2597, 1.2526 and finally the strong 1.2470. Anyway, 4 hours indicators are pointing to the downside, so I will try to find entry points following that direction.
Tags: eurusd
Starting the day
Posted on November 14, 2008 at 10:24 in Starting the day by Valeria BednarikNo Comments »
Hello everybody, hope you are fine. European corrected against greenback yesterday, after hitting intraday lows, (look at Gbp or Chf) helped by some dissapointing commnents the Treasyre Secretary Paulson made; however, let’s not forget recession is over the U.K. and extending it’s wings to all Europe. Market does not move straight never, and maybe this scary movements make some of us doubt, others take their chances in rebounds, but as long as we have a trading plan, I guess we, the small players if fits, will remain ok. Not more talking today let’s go to what matters: I will start posting technical points in a few minutes, you can check today fundamental releases following next link:
http://www.fxstreet.com/fundamental/economic-calendar/
Have a great day!
Eur/Usd how far the correction could extend?
Posted on November 13, 2008 at 20:30 in Short-Term Analysis, Uncategorized by Valeria BednarikNo Comments »
The pair begin a sudden correction to the upside, and is quoting right now at 1.2740. The correction has plenty of room to the upside, and if the up trend continues, above 1.2766 the pair could reach the 1.2800 level quickly, yet a more long term correction could be triggered only above 1.2880 zone, a daily descendant trend line. Small charts are over sold, so we could see some corrections in 15 or 30 minutes charts, yet as long as the pair remains above the 1.2710/30 zone, chances to the upside grow.
Tags: eurusd
Eur/Gbp update
Posted on November 13, 2008 at 16:45 in Short-Term Analysis, Uncategorized by Valeria BednarikNo Comments »
Why I choose to talk about this pair today? Because Gbp is probably the weaker currency these days, and is falling against all other majors, including the Euro, although both pair usually move the same way. I was commenting the pair was clearly bullish, but with a resistance @ 0.8450/75, and here we are, with the pair fighting that zone of monthly maximums back to 1995/96 when the Euro was not the Euro, just a basket of currencies, meaning we have an all time high in the pair, since Euro begin to circulate back in 2002. Is the pair over bought? no doubts. Can we see some falls? just corrections! from a technical perspective, the pair remains bullish in daily and weekly time frames, and while the Euro seems ready for an upside correction, Gbp is unable to find a bottom. From actual price, we could see the pair correcting a bit to downside, only to take aims to continue to 0.8580 first, and then to the 0.8670 zone, mentioned earlier today.
Tags: Eur/Gbp
Trading the trend and breaks
Posted on November 13, 2008 at 15:48 in Technical Education by Valeria Bednarik6 Comments »
I always post here, that we should wait for breaks, or confirmations. Breaks of key levels of support and resistance, or trend lines, so I will tell you the basic rules to trade with trend lines, hope you enjoy some more of this basic education tips!
As you may know, we always say that is better to trade following trend. This means in a bullish market we must buy to take profits by selling. Of course we can trade against the trend in fact I do it all the time, but we must be aware that against trend, movements will have less strength and probably be shorter, meaning the number of pips accomplished will be less that following the trend.
But of course, while a trend line remains unbroken the market trend is consider still valid. If we are working with daily charts, (the example is valid for any time frame of course) and during that session price pass the line but then close above it we shouldn’t consider that a break and we will wait for a confirmation. When the session close under an ascendant trend line, we are on our way: now, we will have to add a filter, like as example, the percent meaning, ok, line is break, but still we will have to wait until that break reaches the xx %; or time filters, like wait till at least one more session close under the line. These kind of filters are subjective and so will depend on each trader decision, but is important to use at least one that helps us confirming the new trend. On the other hand, filters delay signals, so we should not use more that one, may be two because we will find out we are getting into market to late.
So in a bullish market, we must buy every time price reaches the ascendant trend line, but if price breaks the trend line, we must stop buying: we buy waiting for a rebound, and when the line is broken as it will sooner or later, well we must close the position and assume the lost. See is highly possible that we take more profits during the trend duration, and so, a small loss will not affect our winnings.
Primary trend, Secondary trend and correction movements
Generally, inside the same chart, you can see different trend lines. One of them will probably define primary trend, others the secondary and so on.
In any big chart, daily or weekly, we see there are corrective movements that in fact are small descendant trends of a minor range. In smaller charts, like one hour ones, we will find out that there are small bearish trends against the bullish major one. So how can we solve and understand all these lines? Well the question here is to use one basic rule: We set our primary trend in the following bigger chart that the one we use to trade, meaning if you trade 1 hour charts, you set your trend lines in 4 hours chart.
In case we are daily traders, meaning we use daily charts to analyze a buy or sell signal, then we will have to define our primary trend in a weekly chart. If the weekly trend is bullish, we should try to trade buying, taking advantage of valleys or corrections we can see in daily charts.If we work with one hour charts, then we must look for the primary trend at daily or 4 hours charts, and use valleys and corrections of one hour to trade.
I won’t extend longer not to bore anyone, yet if you like this readings, let me know, and I will add one or twice a week.
Tags: rules to trade, Technical Education, Trend
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