Hi, here is a copy of the detailed analysis and trade plan I share with members of our 5* rated forex mentor program every Sunday before the market opens.
Before I go into that I would just like to point out a cautionary tale from last week.
My trading partner Pierre du Plessis explained how he had convinced himself last week that the €uro was going to swing back up.
Technically and fundamentally it made sense (still does) and yet the €uro tanked last week and fell through a MAJOR area of support/double bottom.
A n other pro trader we know (there will be others) got in too heavy on buying into the same conviction.
Why Its Best to Trade the Trend:
Pierre explains in the start of this article what he did and why you should not! Even the Pro traders get it wrong
I explained in last Sunday’s analysis video that although it was of interest, I would not take it.
I cautioned that if you were going to take it “Swing traders will be interested to long at 1.0900. If you do take it, half the risk.”
As you are trading against the trend, ergo the majority of traders at that moment in time, you should at the very least minimize the risk.
The issue with the Euro; Nzd and other similar setups was that there were not enough reasons for where to place the stop.
I showed in the live training session HOW to pick what I thought was the better one, the Aud which did work. However, I only did this for educational reasons as I was showing a new student how to trade it. I did not take it on my live account as I prefer to stick to the trend where I can usually find multiple reasons for the stop entry and target
Why Its Best to Trade the Trend
This is why I rarely swing trade, instead, I prefer to stick with the trend. If everyone and his dog (the majority) are selling, I just don’t feel comfortable, nor able to walk away and leave a counter-trend trade.
This is not to say that swing trading can not be profitable, but it suits my more cautious trading personality better. Ultimately, you need to pick a strategy that you feel comfortable with AND you can “set it and forget it.” If you decide swing trading is for you then the important thing is managing the risk and do not get “married” to a trade if it goes against you.
The Forex Week Ahead
It is “Presidents Day” in the USA on Monday. As a result, many traders will be missing from the markets. Recently, major bank holidays have been very slow, with hardly any movement. Occasionally the opposite happens and the price goes crazy for the day. The best advice is to leave the markets alone tomorrow. The €uro especially has made hardly any movement on a Monday for the last few months and after last weeks events, its anyone’s guess where it is going to rebound.
I have not changed my bias on any pairs. We still see $USA strength and nothing has changed fundamentally thus far to make me believe there will be a sudden crash. There is always, of course, the chance of something extra ordinary occurring, but there have been none seen so far this weekend. I did my analysis on Saturday so if anything does change I will update you here and in the live session on Tuesday.
Many pairs continue to bounce off whole numbers, so pay attention whenever price gets there. Remember I don’t take trades just for one reason, I want to see multiple reasons for entries, stops and targets.
Gbp/$: “I am Neutral”(this is what the experts on the TV say when they have no idea)!- If in doubt leave it alone. Last weeks surge was because Boris Johnson lost his finance dude, the Chancellor, Sajid Javid quit unexpectedly. The new guy is seen as a “yes man” for Boris who is more likely to open the purse strings and spend, spend spend 🙂 especially on infrastructure. The experts took this to be a good sign. Most of them explained this after the event!
Euro/$: Same as last week “My bias is still short” Do NOT try to pick the bottom on this. Yes, it is oversold, but sometimes sentiment takes over. If most traders think it’s going to drop more, guess what? It will. It has now broken and closed below 1.0900. If you are trading intraday it is the first place to consider a short BUT it is miles away from emas and anything to place your stop behind, so not for me. I will feel a lot more confident to place a forward order at 1.1000. If it moves higher then 1.1100 is the next.
Another reason why the Euro could keep dropping is that late on Friday, after the European markets closed, the US increased tariffs on European aircraft manufacturers, more details from Reuters here:
Chf: This is correlated with the €uro most of the time. So if the Euro keeps tumbling this should keep going up. I am leaving alone until things become clearer.
Euro/Gbp: Bias is still short. There is a double bottom on the weekly at 0.8270. I will not long it here. If you do ( I do not recommend it as I have nowhere to place the stop) then at least half the risk. I want a pullback. This pair tends to stop at whole number more times than the other pairs. 0.8500 is the first area I will look to short. If it moves higher I will take it again, half at 0.8550 and the second part at 0.8600
Aud: It worked again last week “swing trading” but once more I did not take it for reasons already stated. It’s in a multi-year downtrend, I only want to short. Personally I prefer a pullback to short and 0.6800 is the place for me for multiple reasons. If it shoots higher then I will take again at 0.6900 and 0.7000 which are also huge areas.
Nzd: My bias is still short. I would not swing trade it back up for the same reasons as the Aud. 0.6500 is the spot for me to consider a short. I will split this order in two. Half stake at 0.6490 and the 2nd half at 0.6530- explained in detail in the video.
$/Yen: Same as last week, and it went nowhere, predictably struggling at the emas which is why we use them. It’s still stuck in a small triangle, back up at 110.00 which is MAJOR previous support and resistance. To long I need it to break and close above 110.30 on a daily chart. If it drops then I will consider a buy again at the daily trend line around 108.40- see the video
Cad/Yen: 83.00 is still key but this week I prefer the Aud/Yen.
Aud/Cad: Still interested to short at 0.9000 & definitely if it spikes higher after the news. at 0.9100.
Gbp/Aud: Thanks to new member Keith who asked me to look at the Gbp/Nzd. Technically it IS a good area to consider a long at the MAJOR support area of 2.000
Cad: Stopped again at the trend line I have had in place for ages; 1.3320. To long above there I need a daily and even weekly candle to clearly break, close and then price to pullback in a standard M2 move. If it drops again then 1.3200 is the place BUT don’t be greedy as it will probably stop once more at 1.3320
Aud/Yen: In recent weeks I felt out of sync with this pair, suddenly it now stands out as the best Yen set up in my eyes! I show in the video how I will play this around the numerous news announcements this week. A head and shoulders pattern has already worked on this pair recently, I am looking for a pullback to short. 74.40 is an intraday, 75.00 is a forward order for me.
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 in Pierre’s corner.
Watch the video for more detailed explanations of this week’s detailed analysis and trade plan.
Click on the square button bottom right to watch in full-screen mode
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Why Its Best to Trade the Trend