April, 2011


24
Apr 11

EUR/USD Trend Still Intact

Previous week saw some serious increase in volatility and still price made new highs. Siginificant supports were broken temporarily but were recovered very quickly. This week I am looking for retracement to the 1.4350 support area for a long position. Stop place should be around 1.4230 area and target 1.4650. 3:1 risk reward is acceptable. Overall support area is 1.4000 to 1.4150. If broken and lower prices sustained, hold off on any new positions and re-evaluate conditions.

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17
Apr 11

EUR/USD Consolidating

The EUR/USD pair has maintained a 200 pip range this week. In terms of weekly volatility, this is a very small range and appears as a small spinning top on the weekly chart. This range-bound condition implies indecision and a lack of buying near the newly established 1.4500 area resistance level. The broader trend is still bullish because price has not broken below any significant supports. The nearest support level is 1.4350 area. If this price breaks, watch for the next support around 1.4250 – 1.4300 area. If this trend is going to stay intact, these levels should hold. Also if you look at a 4 Hour chart, a negative sloping trendline can be drawn from 1.4515 to around 1.4490 highs and a positively sloping trendline can be drawn from the 1.4350 area low to the 1.4370 area low. Together these trendlines present us with a triangle price formation which is a classic chart pattern. Triangles are trend continuation patterns. As long as the supports mentioned above hold, look for an upside break of this formation toward the 1.4600 – 1.4650 area this week. As a result of this analysis, I am looking to go long near the lows of the range. I will look to buy around the 1.4370 area with a stop around 1.4290. My take profit order will be place around 1.4540 area. Risk/reward is slightly over 2:1. Keep in mind, there are not many bearish arguments in the price action at the moment, but it is possible that this pair can correct a good 300 pips or more from these levels. This means if the 1.4250 area support breaks and lower prices are sustained, I will stop looking for longs and wait for the market to present new information.

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10
Apr 11

EUR/USD Watch For Retracement

Once again, the EUR/USD pair has closed out the week on its highs. This pair has been nothing but strong and every pullback has been a buying opportunity. On the bigger picture, this pair is in the process of breaking a weekly bearish trendline resistance that may still be in play at these levels even though there are no particular bearish price action confirmations at this time. Also on the 4 Hour chart, take notice of the new high on price and the subtle lower high on the 14 period CCI. This price warning is also present on the weekly time frame. This information suggests that the current bullish price momentum is weakening on the larger time frames and points to greater potential for a healthy correction in the next week. From the bullish perspective, there are two bullish trendlines intact on the 4 Hour time frame, and our new significant support level is around the 1.4350 – 1.4250 area. This week, I will be looking for price to pullback into this range and find support. I will be watching for bullish candle reversals and other chart formations to confirm that there are buyers present. Once I am satisfied with the supportive price action, I will look to get long somewhere within the range. My risk will be measured by how near I am buying to the 1,4250 area. I will be referencing the 1.4250 area to place my stop which means it will be somewhere around the 1.4230 area. Remember there are no exact numbers in this. Also keep in mind because of the nature of this advance, this pair may experience a broader correction and you must be ready to step aside if the corrective scenario unfolds. A break of the 1.4250 area will imply further weakness and it is possible that price may work its way back to the 1.4100 – 1.4050 area overall. Since the trend has been so bullish, I have no intentions to go short at this time. If price can break the 1.4000 overall, then I will re-evaluate and consider larger time frame shorts. If you are interested in participating in a corrective movement in an environment that is generally bullish, consider trading smaller time frames only in order to reduce risk.

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4
Apr 11

AUD/USD Swing Trade Setup

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3
Apr 11

EUR/USD Strength Continues

The EUR/USD has been somewhat choppy during the previous 2 weeks. It has been fluctuating between a 1.4000 low and a 1.4250 high. From observing this price behavior from a larger time frame, you will notice that the 1.4000 area is an extremely important support. As long as this level holds, this pair is bullish. This becomes clear when you draw upward sloping trendlines that originate from early February and March. Also recognize the bull flag breakout that occured in the middle of the week. These are all important signs of strength. Realize during this time, a great deal of conflicting news reports have been coming out. Not even the dollar bullish NFP report was enough to push this pair below the 1.4000 support level. The lesson here is: don’t be distracted by news, focus on price. Once again the EUR/USD has closed out the week strong and is now on the verge of breaking a very important resistance level at the 1.4250 area. At this point I am still looking for longs as I have been for weeks now. In my opinion, a good place to buy will be on a pullback into the 1.4150 area, with an initial stop at 1.4040. If you can get it at this price, I would look to take profit around the 1.4390 area. Also once you enter at that price, manually trail the stop if the price moves your way by at least 50-80 pips in order to reduce risk as soon as possible. Keep in mind, the EUR/USD can also break out here and never pullback to our entry price. In order to participate, you will have to find a more shallow retracement and look for a new level of support to work with for your stop. After a significant breakout, I would expect the 1.4250 area to become a major support. What will negate my long idea? At this point, a sustained break below 1.4000. That means I will stop looking for longs and not take any new positions until additional analysis is complete.

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