Looking for Clues $ Strength
Hi, I cautioned last week that “There are clues on many charts that price may be about to retrace….”
I was talking about Macd divergence, of which there is a LOT on weekly charts. The longer the timeframe the stronger the likelihood.
See the image.
When the price is making new highs but MACD is making lower highs THAT is a clue that price is going to run out of steam and reverse.
The opposite is true if price is dropping.
There is currently a LOT of MACD divergence and on weekly charts which is really strong.
Price does not usually do a “hand brake turn” in these situations, but often runs out of steam, then reverses or at least pulls back.
I describe it in more detail in the video.
I also explained last week that: “price is often is erratic until after Martyn Luther King Day (the 18th January this year) and of course, there is Biden’s inauguration to come on the 20th unless Trump somehow manages to stop it.”
It would appear that Trump has played his cards in trying to stop it.
Remember if you want to trade for clients and receive a substantial profit share you only need to make 3 to 5% per month. You can find a copy of the brochure here: Trade for Clients
$ Strength Returning?
Another thing to note re trading in January is that statistically, it is often the strongest month for $ strength.
This year will be interesting, to say the least as to how the markets react once Biden takes office. The fact is that whoever is in power the money printing will continue. Longer-term the Democrat’s more liberal spending plans and possible tax hikes could come into play. Before that Covid needs to be dealt with worldwide.
If you look at the USD index chart (the $USA versus a basket of other major currencies) you can see that it has come down to a MAJOR area of previous support and reacted. The significance being is that the current slowing down of moves higher on the Gbp, Euro; Aud, Nzd etc may be coming to an end. Rebounds on the Cad and CHF would then be expected too. Tie into that narrative the technical signals like Macd and reversal candles, these are all clues as to the price at least drying up and more likely reversing or at the very least pulling back.
This Weeks Trading Ideas
Looking for Clues $ Strength
The practical significance of the technical and fundamental “clues”?
When it comes to trading do not be in a rush to buy at the recent highs nor sell at the bottom as per my analysis last week.
Some of the longer time frame setups are the same or very similar. However, even though I do not usually swing trade, there are a couple of potentially decent setups to do so, notably on the Cad and some of the Yen crosses- see the video.
There are a lot of pairs that look technically very tempting, don’t take too many once.
€uro/$: same as last week: 1.2020 multiple reasons for a possible long. There is a possible reversal candle suggesting a move lower but nowhere for a stop on longer time frames.
Chf: Possible move back up but nowhere for a stop. Not interested.
Euro/Gbp: Leaving for now. Need to see clear direction after Brexit.
Gbp/$: 1.3340 looks good for a possible long. If there is a bigger pullback then 1.3210 is the next. Considering splitting the trade in half, risk 50% at each.
$/Yen: I only want to short 106.80 is the area for me.
Cad: broke below 1.3000 which was HUGE previous support & resistance. 1.2990 is the spot for me to short it. Possible swing trade around 1.2600 with monthly 200ema to tuck the stop behind. See the video.
Nzd: Nowhere for a stop to swing. Possible longs at 0.7100. If that fails I would long again if it drops to 0.6830.
Aud: 0.7350 long is the most conservative/strongest, but it may not get there. If trading intraday watch: 0.7620 & 0.7510
Euro/Yen 124.60/125.00 is a long for me. Possible swing trade 127.70 see the video.
Cad/Yen 80.00/ 80.50 long. Possible swing trade 82.50.
Aud/Yen: Looking to long at 79.00 Possible swing trade 83.30
M3 Shorter timeframes
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 the price is too near a trend line or pivot. Ideally, you want to buy when the 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 analysis and trade plan.
Looking for Clues $ Strength
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