Eur/Usd analysis Thetradersclub
Weekly Trend direction: Bullish
Weekly trend reversal level: 1.3434
Key G7 support levels: 1.3550, 1.3500, 1.3450
Counter-trend opportunities:
Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal.
Today’s trade suggestion: After being stuck in the same range between 1.3500 and 1.3700 for over a month, there is little to add to the past few week’s analysis. I continue to be bullish on the euro after a series of weekly Doji candles, however, the longer we stay like this, the more likely a false spike lower becomes. Support below is clearly demarcated at 1.3550 (yesterday’s intermediate bottom) and 1.3500, with the weekly reversal level at 1.3450. Continue to look to buy into dips after a clear G7 entry signal, aiming for the top of the range at 1.3700’ish. Remember that ranges can often be broken falsely on the “wrong side” and euro longs should be treated with care. Keep stops tight. If we don’t rally back to the range ceiling this week, be prepared for a sudden drop below 1.3450 – perhaps with a dramatic weekly spike low somewhere below.
Summary: Buy dips to supports after a clear G7 signal. Short term target 1.3700.
Non-farm payroll today
Just a heads up to all you traders, the monthly NFP results are announced today. The market can be really unpredictable over this time so after being caught out before, I always play it safe and make sure I have no open positions when the announcement is made. So what does this means for us traders…our weekend starts early!
Good week for G7 traders
For all of you using the G7 trading system its been a really good week, especially if you combine those signals with the candlestick patterns I’ve been talking about these last few weeks. The week has been so good, that I’ve hit my monthly pip target already and the month is only three days old! I’m fairly conservative though and only aim for between 200-400 pips per month (equates to 10-20% return per month), and in the last three days I’ve netted 354 pips, so I am not going to trade real money for the rest of the month as I don’t want to give back my profits to the market!
Lets take a look at the week so far and the trades taken and why I took them. All of the trades were on the EURUSD or GBPUSD. Lets take the EURUSD first.
The first entry signal was a classic G7 trade, there was a touch on the bottom bollinger band, and oversold stochastic, and then a reversal candlestick, in the form of a bullish engulfing candle. This also coincided with the 100% Fibonacci resistance level. The signal was obviously a buy. The next important thing, once in the trade is to try determine where a likely take profit point would be. I set mine to the 50% Fibonacci as that level coincided with previous support/resistance levels. I got in at the close of the bullish engulfing candlestick pattern and set my take profit to the 50% fibonacci level so the overall result was 53 pips. It turns out that this was a good place to take the profit as the next candle was a reversal candle and if I hadn’t taken profit I would have ultimately been stopped out as the price retraced dramatically. That retracement however allowed me make more pips as the retracement ended with another great entry candlestick pattern, the huge spike low candlestick. This candle bounced off the 100% resistance of the Fibonacci. I bought straight after that candlestick closed, and again, set the target for the 50% Fib level. The trade resulted with me earning an extra 86 pips. The final EURUSD trade I took was off the double spike low candlestick pattern. My target for this was the weekly high price, rought 1.3640. It hit this price during the evening so I had a nice suprised when I logged in the morning to see an extra 74 pips in my account. You can see these trades on the chart below.
I also took a trade on the GBPUSD. This trade was more of a long term trade, with the aim of taking a larger pip haul. I got into the trade at the beginning of the week after a large spike low candle. The trade steady increased (although at some points after being 70 odd pips up, I was down to 10 pips) but I persevered and closed it this morning with for a tally of 141 pips. The trade seemed to be meeting some resistance and to I figured better to take a guaranteed 140 pips than give it back to the markets. You can see the trade in the chart below. If you’d like to find out more about the G7 system,and how to trade forex, checkout The Traders Club, you can click on ‘The Traders Club’ name at the top of this post to take you to the site.
Training Session Video Replay
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apply for some complimentary follow-up training here…
More on candlesticks: trading the doji
When utilising Japanese candlesticks to trade forex, being able to judge the sentiment of the market is of key importance in being able to predict when a reversal is likely to happen (important for both entering and closing trades). In this next in the series of article about the use of candlestick analysis we will review an important type of candle, the doji. When encountered in a strongly trending market, the doji can offer quite a powerful indication of shift in market sentiment. When seen alone or in a two- or three-candle pattern it may signify that the current trend is losing steam and that a shift in market trend may be approaching.
The doji is formed when the opening and closing prices are the same and represents a market that is equally balanced between supply and demand. This represents an indecisive market and could be an early indication that the current trend is losing momentum and a reversal could occur. Although an ideal doji occurs when the opening and closing prices are the same, a candle may be considered a doji when the opening and closing prices are only slightly different.
Doji’s are however more significant in predictive value when they appear in an up-trending market than in a downwards moving market. When found at the end of a long up-trending market they may signify an exhausted market, when appearing during a downwards trend they may not represent the same thing. This is because a doji represents market indecision and indecision in an oversold market may merely be a resting point before the market continues to decline.
Doji candles have several nicknames depending on the placement of the open/close price on the session. These specially named doji are still reversal indicators but may be more strongly associated with a change in market sentiment. A couple of the ’special’ doji candlestick patterns are dragonfly doji (looks like a capital ‘T’) and the gravestone doji (an inverted ‘T’).
The dragonfly doji looks a capital ‘T’ with the open and close near or at the top of the candle. This candle has good bullish implications as it indicates that the market fell sharply during the session (shown by the long lower shadow), but then rose back again under buying pressure to close at or near the sessions peak. It resembles the hammer candlestick pattern, but lacks a real body. The dragonfly doji is of particular importance for candlestick trading when it is found in an oversold market. As mentioned previously, a doji that is found in a decline is normally of little importance, but the dragonfly is an exception.
The bearish equivalent to the dragonfly doji is the gravestone doji and it resembles an inverted ‘T’. The open and close is found at the bottom of the long shadow and represents a market that was initially bullish but then prices fell and closed at or near the low of the session. The gravestone doji when found at the end of a uptrend could indicate a trend reversal.
Trading forex can be risky business so we always want to stack the odds in our favour. Therefore, when examining candlestick charts involving the doji pattern, it is important to wait for a confirmatory candle. The doji represents a potential trend reversal (especially when found at the end of an up-trend), but it is not as strong an indicator of reversal than the previously discussed candlestick patterns. In order to consider the doji a valid trend reversal indicator, the subsequent candle should close at a lower price than doji (remember we only trade off the doji when it is seen in an uptrend).
Below are some examples of when to use and not to use the doji. In the first example (moving from left to right), a doji appears during the down trend (not an ideal doji as open and close price differ slightly). If you waited for the next candle to confirm the trend reversal, you may have been tempted to go long, but remember, don’t trade the doji in a downtrend! If you had entered the trade you would have been stopped out. In the second example, another doji appears, this time in an uptrend. If you entered this trade straight away, again you would have lost money. You need to always wait for a confirmatory candle, and in this case, the subsequent candle closed at a higher price than the doji, invalidating the potential trend change. In the final example on the far right, we see a gravestone doji. This is quite a strong indicator of trend reversal, and as the second candle closed lower than the doji, it represents a valid trade. In this case I probably would have waited for the price action to retrace before entering the trade as the required stop would have been quite large (above the top of the doji).
Thetradersclub EUR/USD analysis
Weekly Trend direction: Bullish
Weekly trend reversal level: 1.3440
Key G7 support levels: 1.3600, 1.3540/70, 1.3500
Counter-trend opportunities:
Strategy: Whilst above the weekly trend reversal level buy dips to support levels after an entry signal.
Today’s trade suggestion:
Another weekly “doji” candle and an “insider” candle mean that the probabilities have shifted towards a bullish week for the euro this week, and perhaps even a medium term bottom. We shall have to wait and see. In the meantime, I’m now looking to buy dips whilst we are above the weekly reversal level at 1.3440. As I write, we treat first support at the key 1.3600 level, which also happens to be a confluence of S/R, the 38% retracement level and the 200EMA. This gives a high probability trade, but more importantly, a tight stop loss and a decent target.
Look to buy here, stops below 1.3590, for a target of at least 1.3700. If support at 1.3600 fails, then I’ll be looking to buy lower down at 1.3540/70 or 1.3500. Although this is a good setup, be aware that market turning points can take a while to “solidify” and we may still get a lot of movement between 1.3600 and 1.3400 for the next week or so.
Summary:
Buy dips to support after a clear G7 signal. Short term target 1.3700.
Forex vs shares spread betting- Article 1
Ever been in the situation where you have 3 forex entries….all against the same currency? So what do you do now? Enter them all knowing that they will probably all go in your direction or all against? Or what about if there are no entries so you scan every currency (only about 12 on my list) and every time-frame to try find a trade … knowing you are breaking all the rules?
These articles will give you a bit of insight into how I have diversified my trading portfolio and spread my risk using shares spread betting.
Basic Differences: Forex vs shares spread betting
eg: Below you can see Googles (NASDAQ:GOOG) quote and you will notice the spreads get larger the further the period (expiry) is away from the current date.
- I find I don’t have to search for trades any more. I day-trade the NYSE (+-3500 companies) and the LSE (+-2500 companies). I know what you thinking – now i have created a new problem! With so many stocks how do I find my trade setups? I can’t search through them all. In the upcoming articles I will explain my methods of identifying possible trades.
I hope this helps you understand the basic differences between these 2 trading types.
Next Article:
Getting Started: I will show you how to get up-and-running, which charts and broker I choose and why.
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