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So far Eur/Usd has done pretty much what I predicted it would do last week.
It’s consolidated and dropped back to the 21 MAE on the daily chart but not below it.
Let’s take a look at some charts below and then make a new analysis for the week ahead.
(Click on a chart for a larger view)
On the weekly chart above, it seems that there is a long-term uptrend which still has not been broken. However, the Weekly MACD is below the 0 line, the price action is below the moving averages and the moving averages have crossed negatively.
I expect the weekly 21 MAE or even the 50 MAE to be reached which could be as high as 1.3600.
On the daily chart above you can see how the price action has consolidated around the 50 MAE and down to the 21 MAE but not below it. The MACD is still in positive territory.
I expect Eur/Usd to move up to at least the 100 MAE around 1.3300 or higher.
On the 4 hour chart above it is evident that the price action is consolidating in a wedge. I expect a breakout to the upside but in order to take position you have to be patient and wait for a good setup.
This would mean go long near the bottom of the wedge around 1.3090 or wait for a breakout of 1.3220ish to go long.
You could also attempt a short near the top of the wedge around 1.3200. All these trades can have a relatively short stop of 100 pips or less, thus with a high reward, low risk.
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My call for a bottom in Eur/Usd the last few weeks has been correct and it’s rallied over 500 pips from the 1.26 level low.
Although I entered a long position too early and got stopped at -200 pips, I entered a second long position and profited +320 pips so that leaves me with a positive +120 pips off this call. Not too great to be honest but still here to kick ass for the rest of 2012.
Just going to do a bit of an updated analysis on the Eur/Usd pair so let’s take a look at the daily charts below.
Longer-term, Eur/Usd has fallen back to an ascending trend line and has bounced up from there nicely. It seems in a multi month time-frame that the Eur/Usd pair is stuck in a trading range of between 1.2500 and 1.4300.
However, we’re not here to trade monthly time-frames so let’s take a bit of a zoomed-in look how you can profit from trading Eur/Usd over the coming days and weeks:
I think the medium-term trend has turned bullish on the daily time frame, but since we’ve seen such a violent rally in the last few days, it’s only natural that there will be a bit of a pull-back or a consolidation before that trend can continue.
I would say that a pull-back to the 21 MAE on the daily chart is possible, meaning a pull-back to about 1.30000 or even 1.2950. I would like to enter a long position around the 1.3000 level with a stop of about 100 pips. The profit potential would still be the 1.34000-1.36000 level over the next 4-6 weeks.
However, in case there is a straight upward move without further consolidation, then it is possible to attempt a short position at the 100MAE on the daily chart, with a short stop above it (50 pips or less).
I’m personally counting on a decline to the 21MAE though, and will wait to go long around that level.
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I’ve been waiting for a bottom to form in Eur/Usd for the last 3 weeks and it looks like it’s finally taking place.
Although I got stopped out on my initial trade from 26 Dec 2011 (-200 pips) and almost got stopped out of this last trade, fortunately Eur/Usd bottomed and I’m currently +140 pips on the Long Eur/Usd trade from 1.2790.
I think that Eur/Usd will head towards 1.3400 or higher over the coming 3-4 weeks so I will be holding my Long Eur/Usd position. I will however move the stop to break-even to eliminate any risk from the trade.
Let’s take a look at a daily chart of Eur/Usd and do some analysis:
(click on the chart for a larger view)
- Eur/Usd bottomed at a level of 1.2626 which is also the same level it bottomed at in August 2010.
- The MACD daily histogram has crossed above the 0 line. The last time this happened in October 2011 we saw a rally of 1100 pips.
- The daily RSI is almost above the 50 level, meaning it’s heading towards bullish territory.
- Daily stochastics have crossed upwards and are pointing up, this is bullish.
- The first resistance was the daily 21 MAE at about 1.2890 which has been broken to the upside. It was then tested again but proved to be support. This is very bullish in my opinion.
- The second resistance will be the daily 50MAE which coincides with the level of the last major low in October 2011.
- After this the next resistance will be the daily 100 MAE which is currently around 1.3370, but as you can see on the chart, in October 2011 it shot through that daily 100 MAE with a daily spike. This means that there is good potential for Eur/Usd to head to about 1.3600 over the next weeks.
- I don’t expect Eur/Usd to drop below 1.2850 before it heads to at least 1.3100 first.
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First of all, let me start by wishing you a very happy, prosperous and healthy new year!
In my last analysis on 26 Dec of Eur Usd I indicated various reasons why I think this pair is bottoming and ready for a rally of weeks and possibly hundreds of pips.
I entered a long trade at 1.3066 with a stop below 1.2920, but since the holiday markets were rather thin, the powers that be tried to run stops and squeeze out all long positions (in my opinion). Eur/Usd was pushed down all the way to 1.2860-ish and I decided to lower my stop to be able to hold the position.
So far it seems I am right with my decision since Eur Usd is trading at 1.3030 again. Let’s have another look at an updated daily chart (click on it for a larger view):
- The positive RSI divergence is still in place.
- 29 Dec 2011 was a reversal candlestick pattern on the daily chart.
- The MACD histogram has crossed above the 0 line.
- On 10 January 2011 (Vertical line on chart above), Eur Usd started a huge multi month rally.
All in all, I’m still holding the long Eur Usd position from 1.3066 with a stop below 1.2900 and a target of 1.35 or higher.
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Besides being able to determine good entry points for your trades, trading risk management is the single most important aspect of profitable online forex trading.
If you do not have excellent trading risk management it’s unlikely that you’re going to make money in the long run as a forex trader.
You see, the main reason why the majority of forex traders blow their accounts is because they simply do not have good trading risk management. No matter how good a trader you are, you will make losing trades. It doesn’t matter if you’ve been trading for 20 years or you have a phd in finance, no single person is able to make correct calls for profitable trades 100% of the time.
Where most traders go wrong is thinking that they don’t need trading risk management. Sometimes consecutive winning trades trick you into thinking that you’re the greatest trader in the world and that you simply can’t make mistakes. But even if you get 9 out of 10 trades correct and make a profit from them, that 1 wrong trade can cause you to lose everything you made in those 9 winning trades and more.
In order to prevent you from losing significant money on a single wrong trade you need to have strict trading risk management.
Continue Reading…
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This is my last trade analysis and recommendation for 2011 and the first for 2012.
According to my analysis I have reason to believe that Eur/Usd has made a bottom and is ready for a multi day or multi week rally of a few hundred pips.
Let’s take a look at a daily chart to help you understand why I expect the above to occur:
I’m basing my expectation on various indicators and signals. The fact that my analysis is confirmed by multiple indicators makes this a high-probability trade.
1- The positive RSI divergence:
Back in Nov and Dec last year there was a similar positive divergence with price action and the RSI. This resulted in a multi month rally of almost 2000 pips! Currently there seems to be a similar divergence between price action and the RSI.
2-The MACD Histogram:
The daily MACD histogram has just crossed over above the zero line and this often results in at least a few days rally if not more
3- Slow Stochastics:
The slow stochastics indicator has recently dipped below the 20 level and crossed to the upside. This is usually an indication for a rally.
Trade Recommendation
I recommend going long Eur/Usd at market (1.3065) with a stop below 1.2920.
Target 1: 1.3180
Target 2: 1.3390
Target 3: 1.3600
Keep your stops in and your emotions out of this trade as with any trade.
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This post is all about a MACD histogram strategy for online forex trading.
The MACD is a very useful indicator to help you to determine whether your entry point is a good one or not. In fact, the MACD is such a good indicator that you can actually use it on it’s own to find profitable trades, on all time frames!
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If you’re looking for a moving average strategy then this post is what you’re looking for.
To be a successful forex trader and make consistent profits for the long-term, you need to have a solid trading strategy (and of course the correct money management to go with that strategy).
You don’t necessarily need to have just one trading strategy. Personally I have a few different trading strategies that I use, like divergence trading fore example.
Another popular trading strategy I like to use is called a moving average trading strategy.
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A single forex trading strategy that I’ve had a lot of success with is something I call divergence trading.
It’s based on finding divergences between the price action of a currency pair and between the relative strength index (RSI). The divergence trading strategy works on all currency pairs, on charts of all time-frames. It occurs on a 1 minute chart right up to a weekly chart, but of course the smaller the time-frame, the smaller the expected movements will be.
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Hey Everyone,
A quick update on Eur/Usd today, since I’ve been watching it like a hawk over the last couple of weeks.
I’ve been expecting this pair to drop under 1.4000 for weeks now, but it just hasn’t been able to do it. Everytime it gets close, it’s been pushed towards 1.4500 only to come back down again.
Here’s a daily chart I made over the weekend:
I really think that this time it’s time to sink for the Eur/Usd, and that the last few weeks of consolidation and futile attempts to bring it higher are over.
I expect the rising trendline at around 1.3850 to be reached sometime in the next 2 weeks, and what will happen after that is still a mystery.
For now I’d recommend shorting 1.4280 if it gets there this week (or if you want to take a risk, short with a stop above 1.4300), and otherwise wait it out for a better opportunity.
