February, 2011

Play of the Week — Comments Off
27
Feb 11

EUR/USD Watch For Bullish Continuation

Recently, the EUR/USD confirmed a break-out from a bull flag chart pattern observed on the 4 hour time frame. Since the break-out, there has been some buying opportunities, but trading has been very difficult because of the choppy nature of the price action. I always tell our traders to make sure to analyze larger time frames, especially when the intraday charts become confusing. A weekly chart will tell you that a higher low has been formed, and if you look at the candlestick that just closed, there is a long tail on the bottom. Also, notice the upward sloping trendline on the 4 hour chart is still intact. These are bullish signs. The most recent action may have been bearish intraday, but I believe this is a buying opportunity in the bigger picture. For the upcoming week, watch for price to hold above the 1.3700 area. If a 4 hour candle or larger time-frame closes below the 1.3700 swing low support, I would stop looking for longs and wait to see how the market behaves from there. As for long positions, it is important to wait for momentum to shift back to the bullish side. This means price should take out a swing high from a smaller time frame atleast, and not break below support levels. If the bullish signs persist and we see some price action follow through, we can see a break of the 1.3850 high and push into the 1.4000 area this coming week.

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Play of the Week — Comments Off
20
Feb 11

EUR/USD Bull Flag Break-Out

The Bull Flag pattern has been present on the 4-hour chart for atleast a week now. If you read my previous analysis, it specifically emphasizes this pattern. Price action has also broken the upper resistance trendline and has sustained the higher prices. At this point, I will only look for swing trade longs. I am going to watch for a retracement on the 4 hour and/or 1 hour time frames so that I can have a better risk measure. I anticipate the next significant resistance area to be in the 1.3850 – 1.4000 zone and will use this area for my price targets. The alternate scenario that will cancel out my buying plan is if price sells back below 1.3500 and stays below. The 1.3550 – 1.3500 is a very significant swing low that should not be broken if this pair is going to maintain its bullish momentum. If price breaks this support, I will stay flat, and wait for the market to give me more information before looking for any more trading opportunities.

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16
Feb 11

GBP/JPY Long Entry for Swing Trade

We  mentioned about this pair a week ago, stating the potential breakout from the triangle that’s formed since early December. Since that post we’ve broken to the upside as as per our post last week, this would have been a entry for a long, since then we’ve had a 2nd chance to enter a long positions after pulling back to the 133.50 area after getting rejected at the 134.00 resistance area, and since has broken that to the upside and again, has pulled back to the 134.50 area to retest that resistance that we broke as support now. This would be a 3rd chance to enter this as long if you were not able to the last 2 times. We would still be looking for the 137.50 area as target and stops right below the 134.00 level, putting us at a 6:1 risk/reward ratio on this trade. Reminder: Webinar Tonight on Using Pivot Levels with Trading FOREX at 8PM Eastern. Click here to register!

Cashmechanics.com now offers the Weekly Swing Trade Analysis Chat Room every Tuesday from 8 – 9 pm ET. Register HERE.

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14
Feb 11

AUD/CAD Channel Breakout Swing Trade Setup

We’ve had AUD/CAD on our radar for a while now but here is a possible swing trade setup that we just got. We mentioned about this pair back when I was unable to breach 1.0200 resistance back in late December and after selling off about 500 pips, we entered an upwards channel since early January until late Friday, when it finally broke to the downside. One reason we didn’t immediately enter a short positions is because at the time of breaking the trend line support it had already moved 250 pips to the downside and generally that would not be an ideal point to enter a short position. So at the time of this post, we’re still waiting for a retracement back into the 25 to 38.2 fib retracement levels from this latest selloff to enter into a Short position. So ideally we would want to enter a short in the .9930-9960 area. On this short we are looking for the .9750 area as a target with stops right above 1.0000, giving us a risk/reward of around 4:1 for this trade.

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Play of the Week — Comments Off
13
Feb 11

EUR/USD Sitting on Major Support

Another wild week for the EUR/USD pair. Beginning with a strong push off the 1.3500 area, peaking near 1.3750 area and then concluding the week back at 1.3500 – 1.3550 area support. If you are focussed on smaller time frames, you may find this price action confusing at times. If you observe this behavior on a 4 Hour chart, it can give you a better idea of what is going on here. Presently, the appearance of a bull flag can be observed on the 4 Hour chart. The price formation fits the criteria for this classical chart pattern because of the parallel trend lines that connect the recent highs and lows of the formation. Bull Flags are trend continuation patterns and in this situation if price pushes the 1.3650 – 1.3700 area and can close within or above this range, then we will have a confirmation of the pattern and can expect higher prices. A break of the bull flag can take this pair up to the 1.3900 – 1.4000 over the upcoming week. As always, you must consider the alternate scenario as well. If you examine a weekly chart (not shown) you will notice three long weekly upper tails in the most recent data. This is a sign of selling pressure that cannot be ignored. If the selling pressure reasserts itself, a break of the major support of 1.3500 can happen. If this support area is cleared and 1.3450 is also taken out in the process without any immediate reversals, then the bull flag formation is cancelled out. As far as how to trade in this environment, as long as price stays above 1.3500, I will consider longs on this time frame and use that level to define my risk. If you are going long, make sure to wait for some form of reversal patterns that atleast confirm bullish momentum. If the selling pressure resumes and proves itself, I will look for shorting opportunities on any retracement back up to the 1.3500 area.

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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

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11
Feb 11

GBP/USD Coiling Tighter into Triangle

Over the last 2 weeks we’ve seen the GBP/USD trade into triangle. This last week we saw the Sterling finding support in the 1.6030 area with lower highs throughout the week. This brings us towards the apex of a triangle that’s formed since 2 weeks ago up against a rising trendline. Usually when we see this type of price action, it usually breaks to either side quickly, and in this case, we have a bearish bias, since we’re bullish on the Dollar and expect to some dollar buying across the board. Refer to our article a few days ago on our view of the dollar. But we are not ruling out the idea that this could break higher as GBP/USD has shown suprising strength in the last few weeks, but keep an eye out for this pair. Update: We’ve just started offering Managed Accounts for Cashmechanics! See our Website for more info.

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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

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10
Feb 11

NZD/USD Channel Breakout Swing Trade Setup

Looking at a 4 HR Chart of NZD/USD we see that it has been trading in a bullish channel over the last month or so, and just today it broke the trend line support to the downside, almost an exact inverse of what we saw in the USD/JPY today, as it broke out of a descending triangle. This would be a dollar bullish trade, and expect to see NZD/USD trade lower towards the .7530 level first as we have some minor support, before heading lower to test a major support level at the .7350 area. This gives us 2 targets with risk/reward ratios of about 2:1 to the first target and around 5:1 to the 2nd target with stops right above the .7650 area. I would prefer to wait for a pullback towards the .7650 area before entering short since we just had about a 120 pip move down as this article is published. Update: We’ve just started offering Managed Accounts for Cashmechanics! See our Website for more info.

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9
Feb 11

GBP/JPY Triangle Swing Trade Setup

Today I was looking at the some cross pairs and came across a 4 HR GBP/JPY chart and noticed a huge triangle forming with a top at 133.00 and continuing higher low’s since the end of December. This should give us a decent move in either direction once it breaks to either side. We saw 133.00 tested multiple times today and promptly rejected so if we break it, should see some nice moves. We have targets towards the 137.50 area to the upside and 129.50 to the downside. With rising low’s we have a bullish bias but we have to be patient for the entry and a clean break to either side before getting into the trade. Risk/Reward on this trade should be around 5:1. Update: We’ve just started offering Managed Accounts for Cashmechanics! See our Website for more info.

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

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8
Feb 11

US Dollar Index Inverse Head & Shoulders Formation

This is an update on the Dollar Index that I know a lot of our traders like to keep on top of. Even though we cannot trade this instrument on the FOREX market, there are futures available for trading, but it gives us valuable information on FX market sentiments and many times a gauge for most dollar based pairs. Currently the Dollar Index futures are trading at 78.05 and we see a formation of a Inverted Head & Shoulders which would be a sign of reversal and recovery from the strong selloff we’ve had in the dollar over the last month. This is a pretty textbook example of a Head & Shoulders formation and very clean setup here and should expect this to head higher towards the 79.10 neckline which coincides with what was a major support level before we broke it and we’re likely to see a move back to test that level as resistance. This should see EUR/USD and GBP/USD lower while seeing USD/JPY and USD/CAD trading higher. Reminder: We have a Webinar Tomorrow at 8PM Eastern with Real-Time Analysis of the Asian FX Session. If you have any questions about trading, come and ask. 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

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7
Feb 11

USD/CAD Quick Swing Trade Setup

We’ve had some really choppy trading conditions on the USD/CAD recently but here is a quick setup for a swing trade. .9910 area has been a solid support area for USD/CAD until it broke last week and has been our resistance area. Since then we’ve formed a triangle with some higher low’s as we’re waiting for a breakout to the upside above that .9910 level before we consider a long position towards 1.0030 area. Key here is to wait for a breakout above that .9910 level before entering a long position which still gives us a bit over 100 pips to the upside, with a stop loss in the .9875 area. This gives us a quick short trade which should play out within the next day or two with a 3:1 risk/reward ratio.

Update: We’ve just started offering Managed Accounts for Cashmechanics! See our Website for more info.

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

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