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Posts Tagged ‘forex’

dow.jpg Stocks got a HUGE “denied” today as they failed to overcome former support/now resistance (was the old head and shoulders neckline) and came down forcibly from it. See the green oval on the lefthand chart.

 

 

eurusd-triangle.jpg This is a classic “retest”, having broken out from a technical level. What does it mean for the pairs? In my book it’s a big signal to get frisky again with the yen and franc, and back to be careful/be bearish with the more aggressive currencies such as the euro. Look at how the EUR/USD has come down hard from the resistance we’ve been watching.

This is also a good example of how intermarket analysis can help in currency trading. Disclaimer: if you are starting out, don’t think you have to know all this and do it! You can do fine without. But I’ve found it helpful to me as I’ve adavnced over the years.

dowvolume.jpg Stocks have the bonus of having volume attached to their prices. Rising volume supports price movement, falling volume weakens it. We can put volume on DIA (mirrors the dow, and has volume on it) and see a picture of the bears being strong and the bulls being weak (see chart on left). As we see this unfolding, it helps us feel more bearish and bullish of certain pairs because stocks continue to lead currencies in a lot of ways.

Bottom line: as stocks continue downward, so will most pairs, and the yen and franc will strengthen!

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shaysworthy.jpgG7 talks this week should show muted trading even with the big slew of news this week

Carry trade appears to be back on a risk takers are looking to the bailout measures to turn losers into winners = risk appetite. This results in GBP/JPY rally and Commodity JPY crossed pairs performing well.

First up this week the AUD rate announcement, looking to go 25 basis up. If no action takes place the AUD should fall to its peers, particularly the USD

BoE and ECB up this week – is Trichet going to be a hard ass or not? If he is, the EUR rallies, if not it stays put or lowers to appease Merkel, Brown Sarkozy & Co. then should lead to a significant slide in the EUR

Relative strength shows AUD with Kiwi up while Loonie moves down. The GBP is the weakest compared to the EUR.

Help! – How to get back on track when you find that you can’t do anything right, how to get out of a funk or dig yourself out of a hole????

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audjpy.jpg The hunt for a reversal candle came up empty. Rather, the AUD/JPY broke out to the topside. Wow! Technically this is a power move. But I’m leery of it because of my bearish posture toward global economic fundamentals.

 

 

 

euraud2.jpg The breakout also happens on the EUR/AUD and that looks cool too, but yikes, trading bearish on the strong euro?

There must be something that’s as so scary as taking on the euro …

 

 

 

audusd.jpg Who do we (as FX traders) loooove to beat up? Who’s the little kid with freckles that gets its lunch money taken week in week out? The dollar!!

But yuck check this chart out. I haven’t been following the AUD/USD lately and decided not to try and find a “pattern” or support and resistance – if nothing jumps out at me (like it didn’t) then that tells me something …

Well if you had to wrestle something out of me I’d say the AUD/JPY is the winner, but I’m not too enthusiastic about it …

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gbpjpy.jpg Looks like we are getting a bounce lower off a small resistance level on the GBP/JPY, unsurprisingly. All is well with the downtrend.

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bernanke-helicopter.jpg The scoop on the Fed is that they lowered rates 0.50% and said more were to come. Obviously that is bearish for the dollar and can be bullish for carry trades too since it is a balm for economic pain. Were it so simple to “fix” economies. Yesterday afternoon U.S. stocks sunk as bad news came out about some bond insurers – more weakness in the financial sector.

So now the big “event” (Fed) is out of the way and what are we left with? Carry pairs and others which benefit from growth are at resistance. You’d think the Fed could have obliged by being more hawkish to help a pair out!

Case in point, two pairs we’ve looked at lately: AUD/JPY and EUR/USD. My opinion on which way they’ll go? Down, following continuing economic weakness. But, opinions are irrelevant (and often wrong, the world is complex) and we follow that which we see happens.

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candle.jpg Candle hunting sounds like some sort of freaky hobby, when really we’re talking about looking for candle patterns.

The AUD/JPY has had a couple in recent bearish bounces.

First off, to be clear, the trend is down and that’s the mood we want to be in here (… not down, but bearish) Name of the game is to find a bearish signal.

Candles are NOT the entry signals. They do not supersede the studies and are not stronger, technically, than either the studies or support and resistance.

Candles are meant to be little helper bees, confirming other stuff. If you get a signal, it is more powerful accompanied bya candle pattern.

audjpy.jpg Case in point, if using the MACD and Stochastics, they both rounded lower heading for red arrows as the price bounced down from resistance recently. There’s an entry signal. They were accompanied by a beautiful evening star (first green oval on the price) and by a so-so harami (second price oval). I put ovals on the studies showing the entry signals that occurred with them.

audjpysignals.jpgHopefully we will see some another candle pattern with a bounce down in the next day or two. The candle pattern that just happened today? A hammer.

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copy-of-bouncesmaller.jpg We’ve talked about it – all hail the Koruna, right? Still doing its thing. On the left, below is the chart as I’ve had it drawn out for months now. I thought it might help some to see how I made a subtle change to my chart to account for some recent price action.

gbpczk1.jpg Sometimes when a pair is in a channel (parallel support and resistance) it will run another more subtle, parallel support/or resistance within it. As price bounces between the channel lines, it’ll pull back only about halfway and then go back again. You’ll see what I mean by this other chart on the left with the extra line added in the middle of the channel.

gbpczknew.jpg Anyway, it is what the pair is doing now, and the whole point is that if you missed an entry recently, like when it bounced down from resistance, this affords you another chance to sell into the bounce.

 

(Green ovals mark how the mid-line in the channel developed by rejecting the price. Notice it may now become resistance and we may be in a new, down-shifted channel)

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