September, 2010

Play of the Week — Comments Off
26
Sep 10

EUR/USD Bullish Trend Continues

The larger time-frame trend can’t be any clearer. Price has been pushing new high after new high and making significant progress on the bigger picture. The recent swing high 1.3439 put in on 9/20 was exceeded Friday after pulling back into a new swing low support of 1.3282 in the middle of the week . The pair then closed near its highs for the week, another bullish sign. In this environment, trend and momentum are clearly up. This means NO shorts on the bigger picture as tempting as it may be. The market is giving us the answer, we simply have to wait for price to reach a new support and then we look to establish a long position. At the same time, you don’t want to just buy into this pair at any price, especially on highs because the risk is too great. Waiting for support is what helps you define your risk. The key support to watch is the 1.3282 swing low. If price breaks below and sustains the move, it means the bullish momentum is changing to bearish, but this does not mean the trend is turning bearish just yet. If price takes out 1.3282, I would look for evidence of a range bound market and look to identify the next support which should be around the 1.3050 area. Remember in a bullish trend, supports should hold and resistances should break. If price can continue this trend, the next area of significant resistance is in the 1.3680 area which comes from the consolidation going back to March/April of this year This resistance area is where we can anticipate a change in price action. If you happen to be in long positions as price approaches this area, you should consider taking profits on signs of price hesitation.

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19
Sep 10

EUR/USD Bullish Trend

In the previous email, I indicated that the EUR/USD was in a consolidation and needed to choose a direction.  Early in the week it chose to break the range resistance of 1.2930-50 area and sustained it.   This price action confirms that the trend in this pair is now bullish.  An important note here is just because  the trend has gone from neutral to bullish, doesn’t mean you just jump in with longs at any price.  You must WAIT until a price is reached that offers the best potential reward for the amount of risk that the market is presenting you with on the larger time frame.  This means that now that the trend is up, you wait for a support level to be reached by price.  The only way for this condition to be met is you must WAIT for a retracement.  The support levels that I am watching are 1.3000-30 area which we are near at the time of this analysis.  If that breaks, then I am looking for 1.2930-50 area next.  If price trades below the 1.2930 area, then the bullish trend becomes questionable and we must reevaluate from there.  Also remember that if one of these areas are reached, give price some time to prove itself by waiting for it to trade in a small range.  If price can hold one of these levels, it is a sign of further strength and I would expect this pair to push new highs beyond the 1.3120 area this week.  One other condition that I would like to point out is that if we trade below the 1.3000 level, the momentum will be more bearish even though the trend would still be up. In this situation, I would wait for additional confirmation before getting long.

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General Information — Comments Off
12
Sep 10

Triangle Setup for GBP/USD

Looking at a 4 HR Chat for $GBPUSD we see a few interesting things. Firstly, we’re approaching a support level at 1.5320 that coincides with the 38.2% fib retracement. We also see convergence of 3 moving averages that has provided with selling pressure since mid-August. We are expecting this 38.2 level to break and move lower towards the 50% retracement level at 1.5115. However, short term bullishness is expected and perhaps a retest of that downward trendline from mid-August. Because of this, we are not yet jumping into a short, but waiting for the retest of that trendline or an actual break of the 1.5320 support level to enter a short towards the 1.5115 level. To get these trade alert LIVE: Follow us on Twitter http://bit.ly/axzM2z

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12
Sep 10

EUR/USD CHOPZONE

Previously, I reported that the EUR/USD had bullish momentum and this was true until the larger time-frame support gets broken.  Well it broke this week. 1.2750-80 area.  This means the momentum switches back to bearish.  This doesn’t mean you go short right away. Momentum and trend are two separate variables of price that we observe.  In terms of trend, the EUR/USD refused to make a new high at 1.2900 area and so far refuses to push lows beyond the 1.2655 area.  This is a 250 pip range.  In a range bound market you want to WAIT for a new trend to emerge.  If the EUR/USD can push above the 1.2785 resistance again, it will have to also break the 1.2930 area to prove that it has bullish momentum AND trend.  If the pair breaks below 1.2655 and also 1.2585, then it will be proving that the overall momentum AND trend are bearish on the larger time-frame.  In order to trade using this information, you must WAIT for one of these support or resistance AREAS be reached and then look for confirming price behavior before entering the position. 

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General Information — Comments Off
5
Sep 10

EUR/USD Momentum Bullish

One week ago, we explained how we were watching for a momentum change from bearish to bullish in the EUR/USD.  The confirmation came during the week when price broke through the 1.2750-82 area and sustained the move.  That resistance level represented a swing high which should not have been taken out if this pair was going to remain weak.  Presently, 1.2750-80 represents a support and swing low that if price trades below will represent a momentum reversal back to the bear side.  Price has been pushing highs and as long as it stays above the 1.2780 area, we will be looking for longs on the bigger picture.  Keep in mind, 1.2915-30 area represents an important swing high.  If price can get through this level and stay above, watch for am upward push to 1.2985 – 1.3055 range.

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