Hi, there is not so much red flag scheduled news this week, so barring any surprises or Trump Twitter rants, it should be easier to plan your trades.
The main pairs I have an issue with at the moment are the Gbp/$ and the €uro/Gbp.
Technically they have broken out and therefore I would normally not hesitate to short one and long the other. However these are not normal times, so I will either trade them on the M3 system on Monday or wait until all the news is released on Tuesday morning, see the video.
I explained last week why you should not trade the Gbp pairs on Thursday and boy was I correct! I recorded a short video in real-time as the news came out.
This was a classic example of why it is not a good idea to try trade this type of release. Before the news price dropped 50 pips. Then it surged up during the news before falling 150. Bottom line its a mugs game in my opinion.
On the subject of news, I explain in today’s analysis video that I use this free service for news (there is a 5-minute delay), but as we don’t trade until after the dust settles, there is no need to pay for it:
https://newsquawk.com/zerohedge
If you are new, I use a “top-down” approach. I focus on trading from longer timeframes with my M2 method. I am looking for potential trade setups on weekly charts, areas that scream at me 🙂
I then go to daily charts looking for multiple reasons why I believe price will react in an area.
I then look at the fundamentals and what is my bias for the week, ie $USA strength or weakness. Finally, I check which news releases are scheduled. Wherever possible I place orders at the market open and walk away or daily candle closes.
However, if you like to day trade, check out the brand new M3 day trading system in the members area.
You still need to fully understand my M2 & Pierre’s Earth & Sky system before using this strategy.
Pivot points: Generally I only use the main ones, Monthly & weekly when trading the M3. However, if I see a decent setup on a pair and I am struggling for multiple reasons to place the stop I will check out where the pivots are. I don’t use all the time on the M2 because if you have emas, fibs, trendlines AND pivots, there is always something in the way and you end up with “paralysis by analysis” ie overkill!
The Forex Week Ahead
Not too much scheduled news, but Tuesday could be key for the Euro/Gbp and Wednesday is the Nzd interest rate news and statement. Don’t open new trades a few hours before and if there are big moves afterwards, wait for the dust to settle before getting involved.
Friday was an EU conference call about financing the COVID crisis. Not surprisingly for the EU, they didn’t arrive at a decision, but the fact that they didn’t kick it out is being seen as a positive for now.
The UK debt is now greater than the size of its economy, so that’s not good for the Gbp either. At the moment fundamentals consist of which the economy is in the worst state. As all countries are printing fiat, paper money out of thin air, its anyone’s guess!
I will watch gbp & especially the €uro/Gbp on the M3 for possible trades on Monday.
€uro/$: Same as last week. It’s in no man’s land for me right now. A lot of pairs have reacted repeatedly at whole numbers in recent months, the €uro being one of them. 1.1000 is the A grade trade for me, but 1,1100 is also a strong contender to long. Watch the Chf for confirmation. If it moves higher I will look to short at 1.1450. Intraday M3 traders watch 1.1400.
Chf: My bias is to short it. I show in the video how I scale into a trade. This is if I can’t decide between a number of areas. I half the risk for 2 trades. 0.9600 is the big area on a weekly I split my order into half at 0.9590 & 0.9625, see the video and last Tuesdays live session for a full explanation.
I want to short it OR use its correlation to long the Euro.
Euro/Gbp: It has broken and closed above 0.9000 which is a HUGE area, so it’s an M2 breakout, pullback long BUT I am a bit wary. The stop is an issue and Tuesday sees news for both of them I will wait for that or look to trade it using the M3 on Monday. See the video
Gbp/$: Technically broke a daily trendline, so short, but again I am wary for the same reason. Let’s see how it develops and I will update you in Tuesday’s live training session.
€uro/Aud: Australian member Mark asked me to look at this in last Tuesday’s live session. I don’t usually trade it as the spreads can be too big at the daily candle closes BUT Mark is correct, 1.6600 is a big area to short with the added benefit of the 200ema just above for the stop and it has over 200 pips daily range. Last week it bounced to the pip off a weekly trend line after the drop. The trend line is at 1.6060 so watch there for a possible long and definitely at 1.5960/1.6000.
$/Yen: Still too messy for me. Too many EMA’s above. Leaving alone.
Cad: I have two main areas for the Cad this week, long and short. The way I will play this is to split the orders in half and scale in. See the video. The principle is if you risk eg $100 on a trade usually, this time you place 2 x $50 trades.
The Cad to short I will do so at 1.3800 & 1.3825 & longs at 1.3070 & 1.3000. Remember any levels I post here I place long orders 10 pips above and shorts 10 below.
Nzd: Same as last week when I said “As expected it rejected once more at 0.6500 as per last weeks analysis. However, it spiked through so look there for M3 shorts.” I show in the video how it was a good M3 trade. There is nowhere to place a stop for me, so no forward order.
If it breaks and closes above 0.6500 on a daily candle close we start to look for a long with a target of 0.6720. Other than that keep your eye on emas on the daily/weekly charts for possible bounces if it drops to long at 0.6720.
Aud: Same as last week when I said “Broke higher, stopped at the HUGE area of previous support and resistance of 0.7000.” again it was an M3 due to a lack of a strong area to hide the stop. If it pulls back its another one I will look to split the entry/scale in 0.6650 & 0.6700.
As with the NZD. I would need a break and close above 0.7000 on a daily to think about a long on a move higher.
Yens: I show 3 of them in the video. I am only trading them using the M3 at the moment.
M3 Shorter timeframes
I have added a few more live trade examples in the course, including how to filter (which trades to leave alone).
See the new course & recent blog posts as to how I do this: I do my analysis on daily and weekly charts first and make a note of the MAJOR areas of support and resistance. Then copy them on to Pierre’s Earth and sky template. Then I make a note of the weekly & monthly pivots points and add them to the charts. You will see lots of opportunities line up during the week. The important thing then is to select a bias for the next few days and do NOT take trades if price is too near a trend line or pivot. Ideally, you want to buy when price is near a major support and or pivot point line and has the potential to make at least 40 pips. Vice versa for a short.
New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
For more up to the minute, updates do not forget to drop by the forum.
Watch the video for more detailed explanations of this week’s detailed analysis and trade plan.
If you would like to learn how to trade like a professional check out our 5* rated forex mentor program, RISK FREE; by clicking on the “Get Started Today” Button below
