Forex daily technical analysis -

EUR-USD

The pair is defying the direction of technical analysis for the rest of last week due to strong fundamental impact on the market. As a result it follows the down trend direction way too early where it should be undergoing correction process between 1.3164 and 1.3711 support resistance level.

As of today it the pair direction is still hanging in the balance without clear direction where it should go. The possibility of moving up or down is still unknown as fundamental influence can easily the market into turbulence. By rights based on technical perspective the pair should be going down gradually at small scale retracement at every twist and turn.
Intermediate Trend (Weekly time frame) - Upside correction
Long trend (Monthly time frame) - Down or bearish trend
Today direction - Unknown (due to fundamental disturbance)

GBP-USD

Likewise the pound-dollar pair also following the same course of direction as eur-dollar during last week movement but in a smaller scale. Unlike eur-usd it is only having a minor correction and still having the chances of moving up to continue intermediate terms retracement.
As of today still we cannot determine the clear direction as fundamental factors i.e. economic data release can affect the movement in any direction. However based on technical perspective we the market should be moving down to 1.4603 level and then continue the intermediate term process upside.
Intermediate Trend (Weekly time frame) - Upside correction
Long trend (Monthly time frame) - Down or bearish trend
Today direction - Unknown (due to fundamental disturbance)

AUD-USD

The only pair between that going the right direction for retracement is this australian dollar-us dollar pair. It follows correctly the intermediate correction process for the rest of last week. You can see this as the market moving upside following the slow stochastic. On weekly time frame candlestick is getting smaller indicating the market is weakening to move further upside. However we will never want to underestimate an overbought situation if the fundamental factors affect the market so much.
As of today we expect correction downward to 0.7142. Or if not then it could be still moving upside to go for overbought.
Intermediate Trend (weekly time frame) - upside intermediate correction
Long Trend (Monthly time frame) - down or bearish trend

Fundamental Analysis Dilemma

Experience traders usually rely heavily on the fundamental analysis more than technical in their daily trading. This is because they have already study for so many years about the behavior of market movement affected by each of the economic data. Despite of their overall success there are certain times they still at least incur some losses. And their only solution to cut that losses is by putting a stop loss limit so that the market will not slide away too far of the expectation.

As for the beginner forex traders please don't mess up with the economic data if you totally have no idea how it works. However I would suggest take your time to make a thorough study in order to build your own experience on the market behavior for each of the economic data such as interest rates, non farm payrolls, Gross Domestic Product (GDP), Consumer Price Index (CPI), etc. These are the unexplainable facts that you cannot find in any forex books written by any experts because they don't know the effect on the market either. This is where you have to be your own experts in forex trading.

The very problem of fundamental factors is because they are so unpredictable especially its immediate effect which can drive you crazy. Take for example during non-farm payrolls data release, some traders consider it as profitable and some others see it dangerous time of trade. The fact is no one really knows and when it happens they either could be wrong or right. No matter what figures comes out whether it is as expected or not the market still can go crazy moving at any directions i.e. ups, downs, or up and downs defying all the technical rules. As a result some traders will make huge profits in matter of seconds i.e. 200 pips or more and others may suffer great losses. Some can even profit in both direction to double their pips earning.

Now in this topic I will discuss how can we use technical advantage to solve the problems of fundamental factors dilemma. And for that reason I am not going to discuss how to make profits in both directions or straight win on the first setup but rather to identify the point of overbought/oversold positions. Furthermore I will not guarantee you will make profits because the market will be very fast moving and the likelihood for you to miss the boat is very high. In this case if you miss it just let it go.

In order to make discussion easier to understand i am going to use 4 hourly time frames which is one of the most difficult for the market to break its resistance without solid support. During non-farm payrolls data or significant economic data the market may shake vigorously without any direction. The quicker it moves the weaker the foundation of the movement. Most often it will pass the resistance level in this case 4 hourly time frames and create overbought/oversold positions. You can see this on the Bollinger Bands indicator. So this is chance for you to setup your position, but don't do it too quickly when it is still moving underway and let it go slide further away from the resistance level to create super overbought/oversold position. As it is reside far outside the B. Bands resistance lines then just setup your position.

At this point even the most powerful trader with most money including those brokers traders use to call "bucket shop" will not dare to try any further move because it is already too far from the moving average.

The market will eventually make corrections to normalize the overbought/oversold situation to the ideal position where the market supposed to be. Or in fact you may get lucky if the market make total reversal you will make good profit for the day.

I am sorry for unable to provide visual image of the non-farm payroll data because it happens less regularly at this point of time. Therefore i am unable to get the recent chart. You will find out yourself someday and check economic calender here at forexfactory

Path of the unknown

Even though the combination of MACD, Slow Stochastic, Bollinger Bands combination is very powerful still there is limited where they will unable to trace the path of the unknown. As they rely on the time frames historical records these combination will not be able to trace any record beyond monthly time frame since there are no trading platform that provide the data. Therefore we have to rely on our instinct to analyze the market movement.

To illustrate this problem we can see it on GBP-JPY monthly time frame where stochastic is moving up while MACD is still moving down. At this point we will not know how far the market is following stochastic direction. There are two possibilities which is the middle of weekly time frame or further more to the middle of monthly time frame as shown below. Now that the weekly time frame seem to be broken it is possible that the market might continue moving upside to its upper band or making a sudden reversal. Beware of sudden reversal!!! Because it will have little stopping when it happens. This is very dangerous position to trade because of the unknown situation.

Although we know that eventually the market will go down because of the MACD still moving downwards. But that is only to be confirmed when stochastic is moving inline with the MACD moving downwards again.

GBP-USD statistical pips volume record per day

I was thinking of an idea to calculate the average volumes statistic of the GBP-USD pair in a single day movement. Surprisingly the record shows a very consistent data that one single day most highest volume pips is around 273 on average. And anything that go higher than that for example to 300 pips or more will trigger significant amount of reversal.

You can study this further on yourself on other pairs using the candlestick you will see the high and low points and minus them see to get the difference. This is a piece of useful data that can help you in technical analysis to estimate the overall movement on daily basis. Then you can use it to measure the likelihood of reversal or continuation on the next day of trading.

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Systematic Technical Analysis

Today i want to show you how to develop systematic technical analysis using the Moving Average Convergence/Divergence (MACD), Slow Stochastic, and the Bollinger Bands manually. As you can see below you can use all the three indicators to determine your setup points and target profits in multiple time frames.

The idea of using multiple time frames is because the currency market is so dynamic and volatile. Each of the volatility occur differently in each of the time frame therefore it is very important analyze each of them.

Waking up everyday before you start trading create this kind of analysis to look at the overall market structure. And of course the first to look at is the highest time frame which is the monthly period. This is to figure out the overall market structure throughout the whole month. After that move down into small time frame to look into details and any particular opportunities that arise during that day.

Hopefully this method will provide you the basic foundation how you can develop your own technical analysis system on daily basis to help you make better decision in forex trading. Happy trading!!!


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Time Frames Limit

Even though frequently i have been discussing using extended time frame up to monthly time frame but what matters the most for daily traders is actually up to daily time frames only. Why so? it is simply because we want to trade within that one day period only and tomorrow will be another matter. Unless you are willing to suffer on the rollover charges for at least one week period then it is ok just to leave your open positions to float within a week period.

However i believe nobody want to have that kind of losses especially for rollover charges which we know it deliberately. Therefore our job should be trying to avoid that to happens strictly by whatever means and by doing that our concerns of time frame trading is starting from 5 minutes up to daily only. Anything more than just a guide for us to look at the big picture of the market so that we know the overall directions.

I hope this will becomes a reminder for every traders especially novice out there not too obsess with the weekly and monthly time frames. It is because practically within daily trading it is not applicable at all. This will keep your focus within the range of 5 minutes up to daily time frames in order to get a sharper perspective on the daily market movement.

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EUR-USD post analysis

Today i am going to discuss the candlestick counting method once again to prove that this is one of the most reliable systems out there. OK let's take a look back at the end of May when i was predicting that the EUR-USD pair will form a white candle at the end of June. This is my second analysis on candlestick counting as you can read here....

Even though in the early days of the months the market is struggling ups and downs but it never break the resistance level of 1.5286. And after the month of April and May both is producing black candlesticks it is time for the white to form again as you can see below.

Now i leave it to you to integrate all the relevant indicators that i have discussed here and also remember to sharpen your instinct by practicing to compare the market movement and the indicators behavior.

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EUR-USD Technical Analysis

As oppose to previous analysis what we are witnessing now on the EUR-USD is simply an extra-ordinary phenomena that happens in forex. This is no surprise, that's why forex is more riskier than any trading even in comparison to stocks or anything else.

The pair should have been moving downward further based on the technical indicators position for MACD and Slow stochastic in monthly time frame. Even if it is going up it should be residing at its normal resistance level at 1.3699 but instead it goes up all the way to 1.4730.

Another failure of technical analysis that we all witnessing here is not uncommon in forex. And in fact for those who have the best discipline in trading could be losing as well on this kind of situation. It is totally super correction with an extreme ovebought position.

So from time point onwards should we expect another month of upward movement. Perhaps yes, however technical analysis still showing that the tendency of downward is more likely than upwards. Therefore i strongly voted for the down trend continuation movement.

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EUR-USD Technical Analysis

Correction is in the process for the euro-dollar pair as you can see the market is closely moving on the correct line of the middle moving average for weekly time frame. So the expectation for advance movement in the major trend is still bearish as indicated by the monthly time frame MACD line is moving downwards.




Looking from the fundamental perspective

Mon
Jan 26 4:30am GBP BBA Mortgage Approvals 22.1K (increased) 17.3K (decreased)
9:59am USD Existing Home Sales 4.74M (increased) 4.45M (previous)
10:00am USD CB Leading Index m/m 0.3% (increased) -0.4% (previous)

Tue
Jan 27
2:00am EUR German Import Prices m/m -4.0% (decrease) -3.4% (previous)
4:00am CHF UBS Consumption Indicator 1.15 (increase) 0.96 (previous)
4:00am EUR German Ifo Business Climate 83.0 (increased) 82.7 (previous)
4:00am EUR Current Account -16.0B (decreased) -6.0B (previous)
6:00am GBP CBI Realized Sales -47 (increase) -55 (previous)
9:00am USD S&P/CS Composite-20 HPI y/y -18.2% (decreased) -18.1% (previous)
9:59am USD Richmond Manufacturing Index -49 (increased) -55 (previous)
10:00am USD CB Consumer Confidence 37.7 (decreased) 38.6 (previous)

Wed
Jan 28
2:00am EUR GfK German Consumer Climate 2.2 (remains) 2.2 (previous)
All Day EUR German Prelim CPI m/m -0.5% (decreased) 0.3% (previous)
Day 1 ALL WEF Annual Meetings
5:30am CHF KOF Economic Barometer -0.87 (decreased) -0.45 (previous)

As shown from the above economic data released from Monday until half of Wednesday. There are mixed data from the US and European zone that caused the market to move according to mathematical behavior of the technical indicators. If there was extreme one sided data it might goes overbought or oversold as happened in the first place.

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Forex daily technical analysis

EUR-USD

The pair is defying the direction of technical analysis for the rest of last week due to strong fundamental impact on the market. As a result it follows the down trend direction way too early where it should be undergoing correction process between 1.3164 and 1.3711 support resistance level.

As of today it the pair direction is still hanging in the balance without clear direction where it should go. The possibility of moving up or down is still unknown as fundamental influence can easily the market into turbulence. By rights based on technical perspective the pair should be going down gradually at small scale retracement at every twist and turn.
Intermediate Trend (Weekly time frame) - Upside correction
Long trend (Monthly time frame) - Down or bearish trend
Today direction - Unknown (due to fundamental disturbance)

GBP-USD

Likewise the pound-dollar pair also following the same course of direction as eur-dollar during last week movement but in a smaller scale. Unlike eur-usd it is only having a minor correction and still having the chances of moving up to continue intermediate terms retracement.
As of today still we cannot determine the clear direction as fundamental factors i.e. economic data release can affect the movement in any direction. However based on technical perspective we the market should be moving down to 1.4603 level and then continue the intermediate term process upside.
Intermediate Trend (Weekly time frame) - Upside correction
Long trend (Monthly time frame) - Down or bearish trend
Today direction - Unknown (due to fundamental disturbance)

AUD-USD

The only pair between that going the right direction for retracement is this australian dollar-us dollar pair. It follows correctly the intermediate correction process for the rest of last week. You can see this as the market moving upside following the slow stochastic. On weekly time frame candlestick is getting smaller indicating the market is weakening to move further upside. However we will never want to underestimate an overbought situation if the fundamental factors affect the market so much.
As of today we expect correction downward to 0.7142. Or if not then it could be still moving upside to go for overbought.
Intermediate Trend (weekly time frame) - upside intermediate correction
Long Trend (Monthly time frame) - down or bearish trend

Forex daily technical analysis - 13 April 2009

EUR-USD

The pair is defying the direction of technical analysis for the rest of last week due to strong fundamental impact on the market. As a result it follows the down trend direction way too early where it should be undergoing correction process between 1.3164 and 1.3711 support resistance level.

As of today it the pair direction is still hanging in the balance without clear direction where it should go. The possibility of moving up or down is still unknown as fundamental influence can easily the market into turbulence. By rights based on technical perspective the pair should be going down gradually at small scale retracement at every twist and turn.
Intermediate Trend (Weekly time frame) - Upside correction
Long trend (Monthly time frame) - Down or bearish trend
Today direction - Unknown (due to fundamental disturbance)

GBP-USD

Likewise the pound-dollar pair also following the same course of direction as eur-dollar during last week movement but in a smaller scale. Unlike eur-usd it is only having a minor correction and still having the chances of moving up to continue intermediate terms retracement.
As of today still we cannot determine the clear direction as fundamental factors i.e. economic data release can affect the movement in any direction. However based on technical perspective we the market should be moving down to 1.4603 level and then continue the intermediate term process upside.
Intermediate Trend (Weekly time frame) - Upside correction
Long trend (Monthly time frame) - Down or bearish trend
Today direction - Unknown (due to fundamental disturbance)

AUD-USD

The only pair between that going the right direction for retracement is this australian dollar-us dollar pair. It follows correctly the intermediate correction process for the rest of last week. You can see this as the market moving upside following the slow stochastic. On weekly time frame candlestick is getting smaller indicating the market is weakening to move further upside. However we will never want to underestimate an overbought situation if the fundamental factors affect the market so much.
As of today we expect correction downward to 0.7142. Or if not then it could be still moving upside to go for overbought.
Intermediate Trend (weekly time frame) - upside intermediate correction
Long Trend (Monthly time frame) - down or bearish trend