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  #1  
Old 26-08-2013, 02:58 PM
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The Forex Market: Retracement or Reversal? That is the Question.

EUR/USD

The Forex Market: The week that just ended was characterized by mixed price action and no clear control from either the bulls or the bears. Fundamental data did not favor decisively the US Dollar or the Euro and the pair remained inside the range, after a failed attempt at breaking resistance.


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Technical Outlook
Probably this week we will see price breaking out of the range created between 1.3300 support and 1.3400 resistance. Last week the pair moved above 1.3400 for the first time in a long while but it was soon reversed and touched the lower part of the boundary before rising again. This bouncing movement is likely to end but the direction of the breakout will probably be determined by the fundamental data. If 1.3400 is broken, the next resistance (minor) is located at 1.3520 followed by the key level of 1.3710.

Fundamental Outlook
The first important indicator of the week comes out Monday in the form of the US Durable Goods Orders. Goods with a life expectancy of at least 3 years are considered Durable and usually such purchases are made in times of a stable economic situation because they require a larger investment.

Tuesday the German Business Climate and the US Consumer Confidence are announced, both being leading indicators of economic health which are known to create a hefty impact on the market. Wednesday the US Pending Home Sales are announced; the indicator measures the change in the number of houses under contract to be sold but awaiting the final transaction and it’s a leading indicator of economic health because the purchase of a house triggers additional expenditures.

The US Preliminary Gross Domestic Product is announced Thursday and although the main components of this indicator are known in advance, it still remains one of the most important for any economy.

Friday the German Retail Sales numbers come out, followed by the Euro Zone Unemployment Rate which is also the week’s last important indicator.


GBP/USD

Fundamental data for the GBP was scarce last week but the pair touched the key resistance located at 1.5720 for the first time in a long period. However, price did not have enough power to pierce through and it dropped below 1.5600 support.


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Technical Outlook
The move below 1.5600 does not invalidate a trend continuation and a break of the important resistance located at 1.5720, but the first hurdle is a move back up above 1.5600. If this move will occur early in the week, it will be a hint about the underlying strength of the bulls and will show us that the latest move lower was just part of a retracement, not a reversal. If price stalls too much and fails to break quickly to the upside, we are likely to see lower moves throughout the week.

Fundamental Outlook
Monday UK Banks will be closed celebrating Summer Bank Holiday and the most important event of the week is Governor Carney’s speech scheduled Wednesday in Nottingham. As always, his speech is likely to generate a lot of volatility and strong movement so we recommend caution if trading during this event.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

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Old 03-09-2013, 10:05 AM
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Forex Technical Analysis: Interest Rates week – Volatility almost guaranteed.

EUR/USD
Forex Technical Analysis: Last week we finally saw good movement for the pair and a break of the channel created between 1.3400 and 1.3300. Overall the economic data was mixed but a better than expected US Preliminary Gross Domestic Product strengthened the US Dollar and helped price to move below 1.3300.


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Technical Outlook
The major support located at 1.3300 was broken decisively by a strong bearish candle on the daily chart but the “battle” is never over and at the moment we are seeing rejection off the support represented by 1.3200. This is the week’s most important level as a clear break would indicate price is out of the ranging period and a new medium term down trend may start. The latest momentum belongs to the bears but moves to the upside are a distinct possibility.

Fundamental Outlook
Monday the US Banks are closed celebrating Labor Day and the Euro will be influenced by the Spanish and Italian Manufacturing Purchasing Managers’ Indexes which are leading indicators of economic strength with a focus on the Manufacturing sector. Tuesday the US indicator with the same name comes out and Wednesday’s headlines are the Euro Zone Retail Sales and the US Trade Balance.

The week’s most important day is Thursday when the ECB Press Conference takes place and the ECB Interest Rate is announced. This combination of events is usually a strong market mover but price movement can be very unpredictable during Mario Draghi’s speech.

Friday volatility will most likely be present at the time of the US Non-Farm Employment Change release. This is the most important US indicator related to the employment and it almost always generates a huge market impact.


GBP/USD
During the course of last week the pair continued to move below 1.5600 but trading was made difficult by whipsaws and sudden price reversals seen on the lower time frames.


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Technical Outlook
Last week’s daily candles show wicks on their lower side, which is a sign that bulls are still present and price is not entirely controlled by the bears. However, since the bounce off 1.5720, price has been moving steadily to the down side and we anticipate this movement to continue until 1.5400 is reached. Once this occurs, a bounce higher is very possible; a break below 1.5400 will probably bring in more sellers and price may continue lower.

Fundamental Outlook
The first three days of the week are characterized by UK Purchasing Managers’ Index releases: Monday the Manufacturing PMI comes out, followed Tuesday by the Construction PMI and Wednesday by the Services PMI. All three are leading indicators of economic strength for their respective sectors and better than expected values usually strengthen the Pound.

The week’s most important day is Thursday when the Asset Purchase Facility value and the UK Interest Rate are announced. Friday the UK Manufacturing Production is announced, representing the change in the total value of output produced by manufacturers. Of course the US events already mentioned will have a direct impact on the pair.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

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Old 09-09-2013, 10:44 AM
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Forex Technical Analysis: Small chances for an extended bull move

EUR/USD

Forex Technical Analysis: Last week’s price action was mostly influenced by the fundamental aspect: the pair dropped at the time of the ECB Press Conference on the back of dovish comments made by Mario Draghi but then rose Friday on the back of worse than expected US Non Farm Employment Change.


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Technical Outlook
At the moment the pair is still trading below 1.3200 but the latest momentum is bullish and another move into 1.3300 resistance is very possible. However, the latest surge generated by worse than expected US data can be just a single move because although the initial impulse was big, price did not manage to break the first resistance (1.3200). The levels to watch this week are 1.3200 and 1.3300 as resistance and 1.2990 as support.

Fundamental Outlook
The week ahead is pretty slow in terms of economic data but the first notable indicator of the week comes out Tuesday in the form of the French Industrial Production. Wednesday the German Consumer Price Index is released, representing the change in prices paid by consumers for a certain basket of products. The CPI acts as a measurement of inflation and can influence the ECB Interest Rate eventually.

Thursday’s most important event is the release of the ECB Monthly Bulletin which reveals the statistical data that was analyzed when the ECB made its Rate decision and contains the Bank’s analysis on future economic conditions. The US Unemployment Claims are announced the same day, representing the change in the number of people claiming unemployment related benefits.

Friday is the most important day of the week for the US as the Retail Sales, Producer Price index and Consumer Sentiment are released. These are high impact indicators and have the potential to move the market strongly.


GBP/USD
The entire last week was bullish, each day finishing higher than it opened. However, price moved just around 150 pips to the upside and failed to touch the important resistance located at 1.5720.


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Technical Outlook
Friday’s candle shows long wicks in both its upper and lower sides which is a sign of indecision; furthermore, we don’t consider the break of 1.5600 to be a clear and decisive one and price did not make a higher high. All these signs make us favor slightly the downside but the picture is not very clear. The levels to watch this week will be 1.5720 as resistance, 1.55000 as support and of course the current level of 1.5600 holds a lot of importance.

Fundamental Outlook
Two important UK events will influence the pair this week: Wednesday’s Claimant Count change and Thursday’s Inflation Report Hearings. The first indicator shows the change in the number of jobless people claiming social help and at the Inflation Report Hearings, BoE Governor Mark Carney will testify on inflation and economic outlook. The Hearings will probably generate a lot of volatility, depending on the Governor’s attitude so we recommend caution if trading during the Hearings. This week’s US events will have a direct impact on the pair.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

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Old 09-09-2013, 03:19 PM
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GDMFX FREE WEBINAR 22 FEB 2013 Ask John Hopson

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Old 09-09-2013, 04:01 PM
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Bollinger Bands and MACD – Volatility and Direction.
One of the best tools for gauging the volatility of the markets is the one developed by John Bollinger in the early 1980’s and named simply, Bollinger Bands. This tool has the ability to contract when the market is slow and quiet and expand when the market moves like a rocket. In a previous article regarding the Bollinger Bands, we told you not to trade in the zone where you see the Bands contracting more than usual because a strong move is next. Well, the strategy that we are presenting today tries to identify the direction of the strong move that follows. And it does so by using the Moving Average Convergence Divergence indicator, commonly known as MACD. Volatility can be good for the trader, but it also implies more risk, because if price goes in the opposite direction of our trade, the Stop Loss will be quickly hit so we must use good money management rules when we are trading a volatility strategy like this one.

After plotting Bollinger Bands and MACD on our charts, both with default settings, we must wait for a contraction on the bands. Remember, the distance between the Bands changes almost all the time, but we need to see them contracting more than usual, until they form a very thin channel, containing price This contraction is commonly known as the Bollinger squeeze. After a Bollinger squeeze, we know for sure that price will move strong in one direction or the other. Then we must let the MACD give us an indication of where price will go. Here is a picture of what we are looking for:


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In the picture above we can see the bands very close together and we know a strong move will follow. When price moves up, we see that the move is confirmed by the MACD lines which are moving up (same direction as price) and diverging. So now the move up on price is confirmed by the MACD and we can take a long trade. Also, we must previously see a Bullish cross of the MACD lines. This means that the fast line must cross the slow line going up. In our trade example, the Bullish cross already occurred.

Ok, now that we are in a trade, we must manage it and find a way to minimize risk but at the same time, let a winner run for as much as possible. For this we will use a Trailing Stop Loss, but first things first: our Stop Loss goes behind the Support or Resistance level created by price while it was confined in the Bollinger squeeze. Here is the picture:


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As for the Take Profit, that will not be predefined before we enter the trade, but when the trade moves in our favor by the same amount of pips as our original Stop Loss, we will move it to break even and set a Trailing Stop Loss of the same amount of pips. Here is an example: if for our trade we use a Stop Loss of 20 pips, when price moves in our favor by 20 pips, we will move the Stop Loss in the same place where our entry was (now we cannot lose anything on this trade) and set a Trailing Stop Loss of 20 pips. Using this technique, we will be in the trade for as long as price continues to move in our direction without retracing for 20 pips. If it retraces 20 pips, The Trailing Stop will close it automatically. Remember, our Trailing Stop stays 20 pips behind price as long as price moves in the desired direction, locking in profit.

Bollinger and MACD strategy summary:

Entry rules:
1.Wait for the Bollinger Bands to squeeze close together, with price inside them.
2.Look for a breakout in any direction.
3.MACD must agree with the direction taken by price and must have a previous cross that also agrees with our direction.

Exit rules:
1.Stop loss goes behind the Support or Resistance created by price during the Bollinger squeeze, enough pips away to give the trade some room to move.
2.Move to break even once the trade moved in our direction by the same amount of pips as the original Stop Loss.
3.Set a Trailing Stop Loss of the same amount of pips as the original Stop Loss.

Bollinger and MACD strategy – advantages and disadvantages:
The MACD is sometimes lagging too much behind price and that can give a late signal, but on the other hand, the signal is pretty accurate in normal market conditions. However, this strategy just like all presented here must be thoroughly tested on demo accounts until you are comfortable with the rules and you see that it is profitable.
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Old 10-09-2013, 12:50 PM
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GDMFX FREE WEBINAR 1 MARCH 2013 Ask John Hopson


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Old 11-09-2013, 02:51 PM
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The MARS Strategy – Easier than going to Mars
This is a more advanced strategy than the ones we presented until now, with more conditions for a valid entry, but having more rules filters out bad entries, giving us fewer but more reliable signals. Ok, down to business: the MARS strategy uses two Moving Averages, a RSI and Stochastic. For the two Moving Averages, we will use the Exponential method, with periods of 5 and 10. The RSI will remain at the default value of 14 (you will have to manually add the 50 level on it) and for Stochastic we are going to use 15, 3, 3 settings. The chart should look like this after you placed all the indicators on it:


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Now for the entry rules: for a Sell trade, we must wait for the 5 EMA (blue one on our chart) to cross the 10 EMA (the red one) from above, and going downwards (bearish cross). The RSI must be under the 50 level and pointing down; the 50 level of the RSI is often used for trend confirmation: once it is crossed, a trend is considered to be in place. However, this is not a trend definition, but it helps in our strategy. Finally, the Stochastic must be pointing down but not in oversold condition. If the Stochastic shows oversold, we shouldn’t enter a trade because a reversal could be coming. Remember that Stochastic is a leading indicator, which informs us about a possible change in the direction of price by going below the 20 level (oversold condition) or above the 80 level (overbought condition). Just like the other strategies, this one also requires us to wait for the close of the candle corresponding to the cross of the two EMAs. For a Buy trade, all the rules must be reversed. A valid Sell signal should look like this:


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A good strategy/system should also focus on the exit point, whether is at a profit, or at a loss. The MARS strategy requires us to place the Stop Loss at a logical point, above the previous peak for a Sell trade and below the previous low for a Buy trade, at a safe enough distance, giving the trade some room to breathe. Even if our Stop Loss is not hit, but the RSI crosses the 50 level in the opposite direction, we will also exit the trade. The same is valid for a trade that is in profit: we exit it if the RSI crosses the 50 level in the opposite direction. So the RSI acts in this case as a manual Stop Loss and a manual Take Profit level. Here is an example:


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In the picture above we have a short trade example so when the RSI crosses the 50 level in the opposite direction (i.e., going up) we exit the trade in profit. In our example, the RSI crossed up, signaling an exit, but immediately crossed back down making us realize that was a too early exit, but it’s always better to protect your profits and exit early than waiting to see if RSI goes back down. Besides, we can enter again if all the conditions are met when the RSI goes again below the 50 level.

Mars strategy summary:
Entry rules:
Buy:
1. 5 EMA crosses 10 EMA upwards (bullish cross).
2. RSI 14 is above the 50 level.
3. Stochastic 15, 3, 3 is pointing up, showing bullish momentum, but it is not in overbought territory.

Sell:
1. 5 EMA crosses 10 EMA downwards (bearish cross).
2. RSI 14 is below the 50 level.
3. Stochastic 15, 3, 3 is pointing down, showing bearish momentum, but it is not in oversold territory.

Exit rules:
Buy: exit if the RSI crosses the 50 level downwards.
Sell: exit if the RSI crosses the 50 level upwards.

Mars strategy - advantages and disadvantages
The MARS strategy needs a lot of conditions to be met for a trade to be entered and this makes the signals more accurate than the ones provided by other, simpler strategies, but at the same time, it gives us less signals. We consider this to be a good thing, because nobody needs a lot of non-accurate signals. The disadvantage of the strategy is that a novice trader could find it a bit complicated at first, because of all the indicators and rules, but once you get used to it and learn how to use it properly, you will see that it can bring very good profits and that it also can be modified a little, in order to fit a trader’s personality.
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Old 13-09-2013, 05:21 PM
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GDMFX FREE WEBINAR 8 MARCH 2013 Ask John Hopson


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Old 13-09-2013, 05:22 PM
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Pin Bar Strategy – Price action still rules the Market
It is believed that Japanese candlestick charts were developed by Munehisa Homna, a rice trader from Japan, during the 18th century. However, Steve Nison, who introduced them to the Western trading world, thinks that most likely Homna did not use candlestick charts and that they were later developed, during the late 1800s. Whether Homna used or not candlestick charts is of little importance to this strategy, because we are going to focus on a single candlestick – the Pin bar. This is an important and powerful reversal candlestick and if it appears at an important level of Support or Resistance, it can be traded with pretty much confidence. The Pin bar is a candle with a small body and a long wick; the best Pin bar is considered to be a candle where the wick is 2/3 of the whole candle, but other candles are accepted as Pin bars. Here is a picture of a Bearish Pin bar and a Bullish Pin bar:


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The Pin bars shown in the picture above have a long wick (much longer than the body) and a small body, with price closing near the highest point of the candle (for the Bullish Pin bar) or near the lowest point of the candle (for a Bearish Pin bar). Now we will focus a little on the psychology behind the development of a Bullish Pin bar: assuming that we are talking about Daily candles, in the first part of the day, the sellers are in control of the market and are able to take price lower, but this strength fades away towards the later parts of the day and the buyers regain control of the market and start to push prices higher and eventually, even manage to close the day higher than it’s opening, resulting in a Pin bar on the Daily chart. This is indicative of the fact that sellers, even though they were strong in the first part of the day, lost the battle and now the buyers are clearly in control. Price will fluctuate during the day and we cannot divide the day in two distinct periods. It doesn’t matter when the buyers took back control of the market (that can even happen in the last hour of the day – although it is not usual). The opposite applies for a Bearish Pin bar.

Like we said, the Pin bar is a strong sign of reversal and we can trade it if several conditions are met. Remember, we are not just trading any Pin bar. When a proper Pin bar is formed we must carefully determine the importance of the level where it was formed. First we must draw Support and Resistance levels and then, if we see a Pin bar forming at one of our previously drawn levels, we must determine if it’s formed in the direction of the trend or counter-trend. Here is a picture to exemplify better:


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Although not all of the Pin bars shown in the picture above are perfect, they clearly show rejection from a level of Resistance (or support turned resistance), mark the end of the retracement and are indicative of the continuation of the main trend. This kind of Pin Bar can be traded once the next candle opens, placing a Stop Loss a few pips above the highest point of the Pin for a short trade and a few pips below the lowest point of the Pin for a long trade. Take Profit order must be placed at the next Support or Resistance level. Here is the picture for Stop Loss placement:


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Pin Bar strategy summary:
Entry rules:
1.Determine the trend.
2.Draw Support and Resistance levels.
3.Wait for the a retracement to begin (counter trend move).
4.If in a downtrend, during the retracement, a Pin Bar appears at a Resistance level, go short.
5.If in an uptrend, during the retracement, a Pin Bar appears at a Support level, go long.

Exit rules:
Any trade will be exited if the Stop Loss or Take Profit is hit.

Pin Bar strategy – advantages and disadvantages:

In this strategy we use the pin bar to determine the end of the retracement and the continuation of the main trend; we can say the Pin is a reversal candle for the retracement and a continuation candle for the main trend. It is sometimes difficult for a new trader to understand how one candle can be at the same time a continuation and a reversal sign. This, on top of the fact that the strategy relies heavily on S/R (which needs a trained eye to identify), makes it somewhat difficult for a novice and this constitutes a disadvantage. On the other hand, the Pin Bar strategy gives a high percentage of winning trades if it is used properly. There will be losing trades, but taking only trades with a good R:R ratio, increases the chances of a positive balance.
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Old 17-09-2013, 10:33 AM
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Forex Technical Analysis: Full week ahead – the Fundamental aspect prevails

EUR/USD

Forex Technical Analysis: Last week’s control belonged to the buyers who scored a big victory by managing to take the pair back above 1.3200 and to push it in 1.3300 territory. The second part of the week was characterized by range-bound trading close to 1.3300 resistance.


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Technical Outlook
During the last two days of the week, the bears tried to drag price lower but failed and this resulted in sideways movement above and below 1.3300. This level is currently the one to watch because it may determine the next direction of the pair. At the moment price is printing indecision candles but these may be generated by buyers taking profits and closing out their transactions. Another Daily close above 1.3300 suggests that price can go higher, into the resistance located at the important 1.3400 level. The first support is located at 1.3200, followed by 1.3100.

Fundamental Outlook
The first major event of the week is the Monday release of the Euro Zone Consumer Price Index which is highly correlated with inflation and can strengthen the Euro if its value increases. The German ZEW Economic Sentiment comes out Tuesday and it’s a survey based on the opinions of about 275 German analysts and professional investors who are highly informed due to the nature of their jobs. The same day the US Consumer Price Index is released, representing the change in prices paid by consumers for their purchases; higher numbers for the CPI are usually beneficial for the US Dollar.

Wednesday’s most important event is the US Federal Funds Rate decision and FOMC Statement which are followed half an hour later by the FOMC Press Conference. This is likely to be the main market mover of the week and huge volatility is anticipated at the time.

Thursday the US Existing Home Sales numbers and the Philly Fed Manufacturing Index are announced. Both events can generate US Dollar strength if their values are better than anticipated. Friday is a quiet day, with no major events scheduled.


GBP/USD
Last week’s UK Claimant Count came out much better than anticipated and this, coupled with Mark Carney’s positive attitude towards an economic recovery, generated massive bullish pressure with the result being a touch of 1.5850 resistance.


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Technical Outlook
The current level of 1.5850 may push price lower especially considering the overbought condition of the Relative Strength Index on a Daily chart and the fact that price didn’t make a proper retracement the entire month. However, the control belongs to the buyers and probably price will start to move higher after a retracement. The level of 1.5720 is the first major support and may reverse falling prices if it is touched.

Fundamental Outlook
Tuesday the United Kingdom announces the Consumer Price Index which shows the change in the price consumers pay for the goods and services they purchase. Wednesday the Bank of England will provide details on the Official Bank Rate votes and the Asset Purchase Facility votes, offering insights into the stance of the members of the Monetary Policy Committee regarding future monetary direction.

The final UK event of the week comes out Thursday in the form of the Retail Sales which hold special importance because the retail sector accounts for the majority of economic activity in the United Kingdom.

Written by: Bogdan Giulvezan

The article above is based on the writer’s 4-year experience and it does not constitute trading advice or investment recommendations, just a personal opinion and view of the market.

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