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.

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.

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.

Firstly, happy Independence Day to all Americans.

Last week we saw a violent rally in currencies and global indices. This kind of thing always happens before a holiday weekend in the US and I should have seen it coming. Hence, my short trade on Eur/Usd didn’t go as planned and I got stopped out for -150 pips.

It’s not that important that the trade went wrong, as long as I kept to my stop order as I set out last week. Even the best trader or analyst will make wrong calls at times, but the only difference between someone who does this for a living and someone who goes broke is discipline. Never let a single trade cost you more than 5% of your account. If you’re a good analyst and trader, you will win more than you lose.

U.S. Markets are closed today for Independence Day, and I just wanted to give a quick update on the Eur Usd.

From the 4 hour chart above I just want to point out a similar negative divergence in the RSI as with the last big decline.
Eur/Usd is under a descending trend line and it has the negative divergence, so my bet is that it’ll head lower early this week.

I’m not too sure what will happen later in the week though, with the Europe situation, Greece bailout, multiple countries being downgraded and defaulting.

For now I’d just be very careful trading this currency, and I’m still inclined to short it, but will do so with very short stops.
(Maybe a short around here at 1.45 with a stop at 1.46 or so.)

In last week’s Eur/Jpy analysis I recommended shorting 115.20 up to 116. Eur/Jpy hit a high of 115.80 and then closed the week at 114.10, so last week’s recommendation would have ended you with at least +100 pips or more in profit.

I still think that Eur/Jpy will head much lower, probably next week. I expect a target of 110.50 to be reached, but let’s look at some charts:

From the weekly chart above I see the following:

• Strong weekly reversal candle for the downside.
• Under a descending trendline.
• Under the 21MAE and 50MAE which acted as resistance for last week’s rally.
• Stochastics and RSI under 50 on a weekly basis, which is bearish.

From the daily chart above I see the following:

• Under the descending trendline.
• under the 21MAE,50MAE and the 100MAE.
• Daily stochastics and RSI both under 50 but not oversold yet, this is bearish.

Eur/Jpy Analysis Conclusion

I think there has been enough consolidation and moving about for the downtrend to resume.

I expect Eur/Jpy to reach 110.50 in the next 2 weeks, but possibly even in the week ahead.

This analysis will be deemed invalid should Eur/Jpy break above 116.

If you are still short from last week’s analysis 115.20 up to 115.80 I’d suggest moving your stop to breakeven to eliminate all risk from the trade and then letting it ride. 110.50 would be an almost +500 pip profit which is very sweet (and has zero risk). Let’s hope it gets there.

P.S. Once again, I’m planning to open a real forex account to make public to all of you very soon. If you want to contribute, a donation via Paypal (to be added to the forex account) would be awesome.

Last week’s Eur Usd Analysis resulted in a profit of +150 pips because my stop got taken out on a spike.

I went short at 1.4395, Eur/Usd first went above that point but didn’t take out my stop at 1.4480. Then Eur/Usd dropped to around 1.4150 at which point I moved my stop down to 1.4245 to lock in +150 pips profit. I do this because forex markets are very volatile, so when you have a profit, make sure to eliminate risk as soon as you can. I still think Eur/Usd has to go far under 1.4000 but unfortunately there was a spike from that 1.4150 level up to around 1.4300 which took out the stop. Oh well, profit is profit.

Apologies if that all sounded way too complicated. Let’s have a look at some charts:

From the weekly chart above I see the following:

• A nice reversal candlestick UNDER the descending trendline.
• Weekly stochastics under 50 which is bearish.
• But still above 21MAE on weekly. I’m thinking it will break through that next week, and the next target will be the 50MAE on weekly at 1.3867.

The daily chart above tells me the following:

• Daily stochastics and RSI are under 50 which is bearish.
• Under the descending trendline.
• Under the 21MAE and 50MAE but resting on the 100MAE.

Eur Usd Analysis Conclusion

I think in the week ahead we should see a clear break to the downside, below 1.4000. My actual target is 1.3867. This deduction won’t be valid if we break the high of Wednesday.

I would short 1.4200 up to 1.4300 with a stop above 1.4350.

P.S. I’ll soon be opening a real money forex account that I’ll make public, so you can see that it’s possible to make REAL profits from the analysis I put out on a weekly basis. If you would like to contribute to my cause, feel free to make a donation via Paypal for the Forexhabits trading account. (Any amount will be greatly appreciated).

The last couple of weeks I’ve only been analyzing the Eur/Usd currency pair, so I thought today I’d add in another pair, namely Eur/Jpy.

Eur/Jpy is an interesting currency pair, because just 3 years ago it was at a high of 170.40 and it traded as low as 106 this year. That’s a whole lot of pips to be traded if you ask me.

Let’s look at some charts to see what’s going on and how you can profit from trading this currency pair.

From the weekly char above I see the following:

• After the mass decline in 2008 there was a big bounce and sideways consolidation for almost a year between 130.00 and 138.00.
• Beginning 2010 saw a decline down to new lows of 106 and another sideways consolidation of 8 months.
• 2011 Saw a rally up to around 123.00 (just above the 100MAE on weekly) and now a decline back to 114.47.
• Eur/Jpy is currently under its 100MAE, 50MAE and 21MAE which is bearish.
• Slow stochasics are pointing down which is bearish.
• RSI is at 48.20 which is bearish.
• Eur/Jpy is under a strong descending trendline and at a horizontal level that has proven to be strong support and resistance over the last 2 years

I expect a break down to the 110.50 area, starting in the next week or 2 weeks.

• The daily chart above shows that 1-4 days upwards movement are possible.
• The 100MAE,50MAE and 21MAE are all around the 116.00 level.

• From the 4 hourly chart you can see how the upwards movement was halted by the 21MAE.
• Once again, the 4 hourly 100MAE is near to the 116.00 level so a rally for 1-4 days is a possibility before heading lower.

Conclusion for Eur/Jpy Analysis

I want to short this from 115.20 up to 116.20 with a stop above 116.50.

Target 110.50 area.

In last week’s analysis I said that Eur/Usd would head lower to a possible target of 1.4150. Unfortunately it first bounced to 1.4500 (and took out the stop that locked in our 200 pip profit) before heading to a low of the week at 1.4076 and closing on Friday at 1.4305.

Currently Eur/Usd is at a point where it either needs to break the 1.4000 level or it’s going to break out to the upside. I still favor the downside break, and let’s look at some charts first:

From the daily chart above I see the following:

• Eur/Usd bounced up off the 100MAE but is still under the 21MAE and the 50MAE which should provide strong resistance.
• Eur/Usd is still under the 2nd descending trendline which means an accelerated move down should still come.
• I don’t see any divergences and daily RSI is under 50 which is negative territory.

From the 4hr chart above I see the following:

• Eur/Usd is under the 2nd descending trendline as on the daily chart.
• Eur/Usd is under the 100 MAE on 4 hourly, and that 100MAE should be strong resistance.
• The 3 circles could represent a head and shoulders formation on 4 hourly, meaning that the current price action is testing the neckline of that head and shoulders formation. If it is indeed a head and shoulders, the neckline could be strong resistance and Eur/Usd could continue to head lower from here.
• Also, the last 2 lows on 4 hourly have not made a divergence on the RSI, meaning that there could still be more downside. I would be a lot more worried if there was a positive divergence on the 4 hour RSI, but there is not.

Conclusion for Eur/Usd Analysis

I would attempt short positions from 1.4300 up to 1.4400 with a stop above 1.4420.
Target is sub 1.4000

Hi traders,
last Wednesday’s Analysis I thought that a top was reached in Eur/Usd and that we would head down.

I made a call to short Eur/Usd at 1.4670 and from that point it pretty much dropped straight down and ended the week at around 1.4350. I like to follow a system where when a trade goes in the anticipated direction (in this case, lower), you move your stops down and keep them 100 pips above the price point. In this example, when Eur/Usd was trading at 1.4570 I would move the stop to break even to eliminate risk. When it dropped to 1.4470 I’d move my stop down to 1.4570 to lock in at least 100 pips profit.

The reason behind this is to remove emotional attachment from your trade. I’ve seen many whipsaw actions where your trade moves hundreds of pips in the right direction and then goes all the way back to and beyond your entry point, and you make zero profit and end up losing on the trade. This system prevents that from happening. I like the 100 pip distance so that you have enough room for daily fluctuations and your stop doesn’t get “taken out” by the big boys (big player who push the market in one direction to take out stops).

Anyways, I’d still hold on to this short position (but your stop is now at 1.4470 to lock in 200 pips profit). Let’s look at some charts and you can see why I think Eur/Usd is still heading lower:

On the daily chart above, the ascending trendlines are the same ones I drew it the last analysis where I said Eur/Usd was at a top. Currently Eur/Usd has pulled back to it’s 50MAE where it ended the week.

I think that it will continue to move lower, where the next support is the 100 daily MAE at around 1.4150 which should be reached early next week. However a bounce or sideways action (I’d say up to 1.4450) is possible before it heads lower.

Medium-term target (in the next 3 weeks) I see at 1.3750.

On the 4 hourly chart above you can see how the price action moved in the direction of the divergence I pointed out on Wednesday.

4 Hourly indicators are getting to oversold levels so that means sideways action is likely for the conditions to be cleared, but more downside seems to be ahead of us next week.

Conclusion

As I mentioned above I’d still hold on to this short position from Wednesday at 1.4670 (but your stop is now at 1.4470 to lock in 200 pips profit).

Just a quick update and analysis of Eur/Usd today:

After a drop from 1.4900 to 1.4000 we saw a sharp rally back to 1.4700 over the last couple of days (all approximate levels).

I have various reasons to believe that Eur/Usd made a lower high and will now decline to below 1.4000 over the next days/weeks.

Reason 1: Technicals on the chart
Reason 2: Many US and European Indices have moved significantly lower over the last 2 weeks and look like they will continue to head lower. Usually the USD strengthens when markets head lower, meaning that Eur/Usd will head lower also.

Let’s take a look at 2 charts:

On the daily chart above you can see how sharp the recent rally from 1.4000 up to 1.4700 was (again approximate levels).

I also drew in a trendline and wedge shape that coincides with a few other points on the chart which would make it very possible for a top to be in and a further decline to the horizontal line on the chart (below the most recent low of 1.4000).

But one reason is not enough to make a decision, so let’s look at the 4 hourly chart:

AS you can see on the chart above, the RSI and Slow Stochastics are very overbought meaning there is a good chance for a correction.

Not only are the indicators oversold, but there is a negative divergence between the RSI and the price action (blue lines on chart) and this usually means that the price action will follow in the direction of the divergence (i.e. down).

Conclusion

I would take a short position here at market (1.4670) with a stop above 1.4800.

As always, keep your stops in and your emotions out. Never risk more than 5% of your account on a single trade!