Here is Omar Eltoukhys detailed forex analysis AND he shows you how he uses forex candlesticks to help make his trading plan. In the previous article Confused About Candlesticks? he explained how he concentrates on just a few AND in the video below he gives practical examples of how he uses the “clues” they give, to enter winning trades. There is also a whole section on candlesticks that you can find here: Forex Candlesticks
Forex Analysis for Week Beginning October 20th, 2013
Despite the continued trickery on the US political front, the market seems to finally be “waking up” a bit and I saw some bigger daily moves on many pairs last week than I had seen in quite a while!! Although we do NOT have “ideal” market conditions at the moment, things are certainly looking better than they were a month or two ago!! We sometimes must be flexible in our approach and I have been taking some smaller range trades lately that I would not normally look for in a “bigger” Fall market. There are some pairs with potential out there, but be careful as there are also many pairs doing silly sideways dances.
Euro/$: Nice bullish move last week, stopped cold at 1.3715 just where we predicted several weeks ago. I would use this area to look for trades first as there might be a nice counter-trend trade there for a short. If price makes it back down to 1.3485 I will long there, but I have my doubts after last week’s move it will get back there. To the upside, if we M2 break above 1.3760, I will look for a long somewhere in the 1.3715-.13760 neighborhood. Explained in the video.
Gbp/$: Continues its bullish run upwards and plenty of reasons to think long on this pair going forward, especially a pullback to 1.6075-1.6100, BUT I have outlined an alternative approach. Many of you have asked in the past “why this area, but not this one instead?”. It’s all about perspective. Multiple perspectives can be different and they can all be right, none of them be right, or any mix in between. The key is sticking to what you have confidence in and not “approach hopping”. Check my breakout trades in the video.
Aud/$: I hold great hope in my heart that many of you grabbed that trade from .9400 I reported a couple of weeks ago. Has rushed onward for almost 300 pips!!! Yaaahhooeey!! But moveon.com because that’s already happened. What now?? Pullbacks to .9600 would be ideal for longs OR shorts form .9750-.9700 area. This pair really seems to be bullish so that short is a counter-trend, but that area seems to have quite a bit of traffic so could put up a big fight. Check the vid for more details.
Euro/Gbp: Booooooorrring!! This pair has been a snoooozer. Up a little, down the same amount. Those adventurous among you can trade the range between .8435 and .8500-8480. Not for me, but look for solid breaks of these areas before taking this pair seriously again.
$/Yen: This pair has been a bit of pain in the rump lately, but I grabbed some good trades last week short from 98.50 EVEN THOUGH, I was looking for a pullback to there for a LONG!! Staying flexible is key and I seek to long at 97.50 and check out what happens to price if the pair reaches 98.50 again. A topside daily breakout of 98.50 would have me seeking a long until 100-100.50.
Euro/Yen: 132.50 exerted its strength last week, but going forward this pair looks “yucky”. Stay away, better trades elswhere.
Aud Yen: So you didn’t catch the almost 300 pip ride on the Aud/Usd at .9400. Don’t beat yourself up, because 93.60 on this pair looks to be a similar situation. Price hadn’t stayed above this area on the weekly……….until last week. Not only that, we have a trendline and 93.00 (a strong S/R) below!! I’m going to be very interested to see if I can grab a trade on this key zone to the long side sometime this week. Check the video for more info.
Cad: Voting time……If there are those among you who would rather see me do analysis on Eur/Cad (my CAD favorite pair to trade), please let me know and the weeks that I do my analysis I will include it in addition to this pair OR replacing this pair. Looking at this pair this week………looks ridiculous in only the way the USD/CAD can. But that shouldn’t stop us from trading it. Aggressive traders look for 1.0290 to long and 1.0400-1.0375 to short from to continue this range. Conservative- minded among you check out my Eur/Jpy written analysis for cues as to what to do.
New members please note: If I am looking to take a trade long, at for example 1.5000 , I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.
We are NOT a “tipping service” our aim is to teach you how to trade for yourself. For more up to the minute updates do not forget to drop by the forum
Hope you enjoy the analysis!! See you Wednesday for an update!! Best wishes and happy trading to all!!!
Weekly Outlook Video
http://www.youtube.com/watch?v=wuF2AUqjG2Q&feature=share&list=UUh9jKEbExtwL0MnwLBeyoyQ
Forex Candlesticks
Great question from one of the forexmentorpro.com members, Rick: It was interesting about your comment on NFP and red flag news.What I have noticed is that often with Red flag news and NFP especially, after the initial large move the Forex acts like a gap, settles down and reverses back. for example om yesterdays NFP the USD/JPY eventually went back a long way. I played the AUD/JPY and pulled about 40 pips on the reversal in about 10 minutes. Eventually it overshot and went up over 100 pips but I wasn,t watching so didn,t play it. I usually fib the drop and just try to pick off about 50%. I am looking at this as one of my many possible strategies. Want to get the management right.
Interested in your comments
RICKUS
Omars reply: Hi Rickus!!!
Awesome insight!! Yes, news is tricky but completely manageable. I have “studied the game” with news for years now and I have come to a few conclusions: 1) DON’T try to predict which direction news will send a market at release, even if you had the knowledge before it was released what it would be because forex is one of the most irrational markets and can switch directions for no reason during the news liquidity onslaught. 2) If you make a big, fast gain on an open trade from a news announcement, get some off the table because 3) News generally causes big moves to retrace strongly. (all that volume wants to bank profits and wait for the next round) 4) On higher timeframes, news is usually very hard to pick out. So working around strong areas of S/R EVERY trade with stops set conservatively through “multiple areas” generally protects you from news hurting any of your trades.
Another thing that I have noticed, and this is something everyone should pay VERY close attention to, is that news trading is extremely dynamic. What I mean is if we could jump into a time machine and we could all sit in for various NFPs throughout the last 5 years, we would see a different picture many times along the way. Some NFPs would simply amaze us in running over 300 pips in one direction within minutes. Others would bore us to tears by taking a quick but smaller “jerk” and then retrace back to where we started and then flatline into the weekend. And yet others would make us sick to our stomachs as we watch price rip 100+ pips up one moment, then plummet 200 the next, followed by another move up (those are scary to trade).
As far as your approach, I see a person who is clearly logical, and thinking here. I would say that when planning “red flag” news trades particularly NFP, you should take a few extra steps that we might not consider if we are merely “going with the trend” at a pullback and great S/R. You must have a trade plan ready for what you will do to both protect orders and how to trade news both directions. I have successfully placed “bracket orders” around news which include both stop entries and limit entries, with very fast trailing stops. Try to work the numbers in your favor from the TOTAL NUMBER of trades, rather than banking on just 1 “perfect” outcome from a single trade. What I mean is plan on losing some orders, but winning others, making sure that you have the winners setup to beat the losers. Tight chop will upturn this notion though and hurt, but that’s part of the extra risk of news trading.
I am extremely impressed that you are using fibs to calculate how to manage your trades. As crazy as news seems to the naked eye, the majority of the time it is just doing what the market always does, which is bounce from one S/R (Fibs are S/R) to another, or through. News just makes it happen at an accelerated pace. For further study, check out “volatility expansion trading” as this was a very popular approach when news announcements did the classic “spike, retrace, spike, retrace”. You essentially play the roller coaster by figuring out when it has run out of steam, take a reverse order as close to the turn as possible and trail a stop like the last car…..quickly.
Again, news trading is DIFFICULT, and RISKY, but it can double an account quicker than any other form of trading I have seen other than extreme pyramiding on a strong move. I will discuss some more news trading in a future article soon. One more thing….Your broker is the KEY piece of the puzzle here. Slippage and huge spreads can kill even the best news approach. I wish you all the very best in your trading and I hope you rack up those pips!!!
Kindest Regards,
Omar Eltoukhy