December, 2010


31
Dec 10

Update: EUR/USD Short Squeeze into End of Year

Here’s an update to a post we put up about 10 days ago expecting a short squeeze of the EUR/USD into the 1.3400 area into the end of year. As we enter the last day of trading, and most of you are just enjoying your New Years, so we’re suggesting anyone who’s taken this trade to close it out and take profits, we were about 12 pips short of the 1.3400 level on my trading platform, but otherwise a successful trade. Happy Trading to everyone and Happy Holidays from us here at Cashmechanics.

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31
Dec 10

US Dollar Index Update

Here’s a look at the US Dollar Index going into the end of 2010.  Here’s a look at a 4 HR Chart and we clearly see the formation of a triangle here and we’re approaching the apex of it into the end of year. This should give us some idea of sentiment going into the new year and keep an eye out for this once we start trading into the New Year. Happy Holidays everyone and happy trading!

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29
Dec 10

USD/JPY Support Turns into Resistance Swing Trade

Here’s a look at a 4HR USD/JPY Chart and we see a clear range-bound trade since mid-Nov and we just broke that 82.50 support level of the range and today retested it and it seems to have held as resistance, (Classic Old Support = News Resistance) which would signal a Short Swing Trade. This is very simple Technical Analysis 101 stuff here, nothing complex and trading doesn’t have to be at all. The great thing about this trade just like our last few ones is the ability to put a very tight stop, around the 82.70 area should suffice with a target around the 80.20 area. Currently at the time of this post, we’re trading at 82.20 area, which is about a 4:1 risk/reward ratio for this…

Hopefully from this not only can one take away a trade idea, but start to learn how to see these setups yourselves, we try to keep the ideas here fairly simple.

Beginning in January Cashmechanics.com will be conducting the Weekly Swing Trade Analysis Chat Room every Tuesday from 8 – 9 pm ET. Register HERE.

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26
Dec 10

EUR/USD Holiday ChopZone

The previous week for the EUR/USD has been a difficult one in terms of directional volatility. There is a general lack of conviction in prices. Lower lows have been attempted at the 1.3050-60 area, but can not be sustained. We still have another week of holiday action so the best thing to do in my opinion is avoid trading this pair until it makes a decision. Remember we are “listening” to the market, not predicting. The levels to watch for during the upcoming week are as follows: Any break above 1.3170-80 area that is sustained, meaning price trades into the 3200′s and stays there would imply bullish momentum which can take the price into the 1.3250 – 1.3300 area. Any break below the 1.3050 area can take the price to the 1.2950 area which is a major swing low support. When these price breaks occur, look for price to sustain these breaks by spending a considerable amount of time outside of the break-out levels. Minimum is 4 hours. Overall, don’t expect too much follow-through during the week. Volume is low all around and this is a common characteristic of tight range-bound markets that cause a great deal of frustration for swing-traders. Consider taking the week off, enjoying the holiday and conserving your energy for the start of a new year.

Beginning in January Cashmechanics.com will be conducting the Weekly Swing Trade Analysis Chat Room every Tuesday from 8 – 9 pm ET. Register HERE.

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21
Dec 10

EUR/USD Short Squeeze into End of Year

Looking at a 4HR EUR/USD chart today, we noticed that the 1.3060-1.3110 Support zone that we were looking at held pretty well, it was also a Trendline support area, and as we enter the last 2 weeks of trading we expect many traders to close out some positions before end of year and very light volume all of next week, making a potential short squeeze quite possible. We’re expecting a pop up in EUR/USD into the close of this week and into early next week into the 1.3400-1.3450 area with the rising RSI supporting it. This would put it about 300-350 pips away and with this trade I would put a relatively tight stop right below 1.3060 support area giving us around a 5:1 Risk/Reward ratio on this trade. Keep an eye out for this one for the week, because Euro and Dollar will be the primary drivers in FX going into these last 2 weeks of trading, I would stay away from many of the crosses.

Beginning in January Cashmechanics.com will be conducting the Weekly Swing Trade Analysis Chat Room every Tuesday from 8 – 9 pm ET.  Register HERE.

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21
Dec 10

GBP/JPY Triangle Swing Trade Idea

Today I was looking at the 4HR GBP/JPY Chart and noticed this very nice support at 129.60 level. With a lower high’s we have formed a descending triangle here. This is a shorter term swing trade but should yield about 200 pips in either direction and since we’re right at this support level, stops can be fairly tight, 40-50 pips, giving us a 4:1-5:1 risk/reward ratio. With the descending RSI reading, we have a bearish bias, but keep an eye on the RSI, if we break above that descending trendline, a Long would be in play.

Beginning in January Cashmechanics.com will be conducting the Weekly Swing Trade Analysis Chat Room every Tuesday from 8 – 9 pm ET.  Register HERE.

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As a reminder if you are not already a member, sign up for a 30 day trial of our Daily (8AM-10:30AM ET) FX Chatroom with Live Analysis and Trade ideas. http://bit.ly/cFpIgc

You can register for our weekly Webinars here, every Wednesday at 8PM Eastern.http://bit.ly/bvlIuE

And if you are trading FOREX, joining us Earns you 1/2 pip Rebate on all FOREX trades with access to our Chatroom for free. Click here for more information:http://bit.ly/a4OF24


19
Dec 10

EUR/USD Consolidation or Lower High?

The EUR/USD has been fluctuating in a very large range over the previous couple of weeks. The range low is 1.2967 and the range high is 1.3496, that is over five hundred pips. When trying to estabish positions in this these types of conditions, it can be very difficult to define the overall trend. Momentum on the smaller time-frames will change constantly and this offers plenty of trading opportunities for the shorter-term trader. For the longer-term trader, this can be choppy. The key here is to zoom out and observe trends on daily or weekly charts. Observing the EUR/USD from the larger time horizons, we can clearly see it has been trading within a bullish formation and consolidating within a major support area which is in the 1.3300 to 1.2950 area. Price has attempted to rally from here but evidence from this previous week suggests it doesn’t have the strength. Zooming back into the 4 hour chart will clearly present you with a lower high made at 1.3496 and a second lower high made at 1.3357. These are bearish signs. The main level to watch now for bearish confirmation is 1.3150. A sustained move below this level will signal that it is time to look for short opportunities only. The next major support level is the 1.2967 low. If price closes below that in a sustained move, then you are looking to go back into the 1.2600 – 1.2700 area which would be bigger picture progress on the bear side. Remember if price immediately recovers from a break (immediately in this case can mean a bounce within a 8 – 16 hour period) then it is not a true break. Be patient and once the break is confirmed, wait for new resistance to establish itself, especially at previous support levels.

Beginning in January Cashmechanics.com will be conducting the Weekly Swing Trade Analysis Chat Room every Tuesday from 8 – 9 pm ET.  Register HERE.

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15
Dec 10

US Dollar Index Update

I know many of our followers like to keep an eye on the US Dollar index as a way to guage sentiment of the FX Markets. It is also something we keep on top of and tweet everyday. I noticed something interesting today on the 1 HR chart for our longer term swing traders. We have Dollar moving up aggressively over the last few days towards a major Resistance level. I would highly suggest keeping an eye on this, as we can get some nice moves either way. Break above would be significant for $EURUSD to move lower and $USDJPY to move higher and really get some trends going (Great for swing traders). We’ve had some really choppy days the last few weeks and this will either give us a nice trend, or get rejected and keep us in a range bound chop (not ideal conditions for swing traders, Great for scalpers!) Good luck with trading and keep an eye out for this 80.50-80.60 level.

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12
Dec 10

EUR/USD Consolidation Pattern

Recently, EUR/USD has shown much weakness on the 4 hour and larger time frames. We have been writing about looking for positions on the short side only and if you managed to take any trades from the price areas mentioned in previous analysis, you should have been able to capture some significant movement. Observing the price action this week has brought our attention to the fact that price refuses to push significantly lower. The recent low of the EUR/USD in the 1.2965 area was made on 11/30. Since then there has been a good retracement which has offered shorting opportunities, but the problem is, there is too much price overalap and a lack of progress to the bear side in the recent price action. When there is lack of price progression, that is usually a sign that it is getting ready to turn. In this case, if you draw parallel lines across the highs and lows of the recent consolidation pattern, you have a bull flag classic chart formation. These types of formations imply continuation of the previous movement which in this case is the retracement up. If price continues to consolidate and stay above the key support in the 1.3130 area, then watch for a break above the upper trendline within this bull flag formation. A breakout like this can take the price to the previous high of 1.3420 and possibly into the 1.3630 area. A sustained break below 1.3130 will imply further weakness and we would expect news lows to be next. From the present price action, be cautious on any additional shorts until a clear break of the support is achieved. The market speaks, and we must listen. It has to choose which way it wants to go and we simply wait for one of these scenarios to materialize before taking further action.

On Tuesday 12/14/10 we will be conducting our swing trade chatroom at 8pm ET. This is the final free trial for the month of December. Register HERE.

Sign up for our Daily Swing Trade Email Alerts here: http://bit.ly/bjnGd7

As a reminder if you are not already a member, sign up for a 30 day trial of our Daily (8AM-10:30AM ET) FX Chatroom with Live Analysis and Trade ideas. http://bit.ly/cFpIgc

You can register for our weekly Webinars here, every Wednesday at 8PM Eastern. http://bit.ly/bvlIuE

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5
Dec 10

EUR/USD Retracement

The EUR/USD has pushed to a low near 1.2965 and has since retraced back up to the 1.3400 area in about a week. The 1.3445 price level is an extremely important one. During this pair’s sell-off, it needed to hold that support level in order to maintain its over-all bullish trend. Since it has broken this support, it made new lows and since then we are only considering swing trade short positions. The price is now rallied back up over 400 pips and is now reaching this old support/ new resistance area of 1.3445. This means that this week we will be on the look out for price behavior to change around this level. If the price action can show some bearish signs, such as a shooting star, spinning tops, a lower high, etc. on the 4 hour time frame, and price is still trading within the 1.3400 – 1.3465 area, we will look to establish a short swing trade. The nearest support and first take profit target is the 1.3250 area. Stops should be set somewhere between 1.3480 – 1.3520 depending on your risk tolerance and your actual entry price. Remember entry does not have to be as precise as it does on smaller time frames. Also do not get short as a result of impatience or fear of missing a move. It is important to wait for the market to indicate that it no longer wants to go higher. This can take at least 8 hours or even a day or two. At the moment, there are no signs of bearishness in the price.

Coming Soon! Tuesday 12/07/10 we will be opening our swing trade chatroom 8pm ET. Free for the month of December. Register HERE.

Sign up for our Daily Swing Trade Email Alerts here: http://bit.ly/bjnGd7

As a reminder if you are not already a member, sign up for a 30 day trial of our Daily (8AM-10:30AM ET) FX Chatroom with Live Analysis and Trade ideas. http://bit.ly/cFpIgc

You can register for our weekly Webinars here, every Wednesday at 8PM Eastern. http://bit.ly/bvlIuE

And if you are trading FOREX, joining us Earns you 1/2 pip Rebate on all FOREX trades with access to our Chatroom for free. Click here for more information: http://bit.ly/a4OF24