Market trend analysis for 6th of July (updated) - forex trading advice

Market trend analysis for 6th of July (updated) ~ forex trading advice

Euro was the best currency to trade today

 

Hi, everyone. Let me do some market trend analysis for today. I cannot look at all the securities that are available and that exhibited nice moves today, but let me show you one currency that moved pretty much today and how you could have traded some of the currency pairs. The currency which I want to single out today is Euro. I hope you saw how badly beaten it was today. I do not see any specific reason for that except the fact that traders (big dogs) might be getting ready for the macroeconomic news that is due to be released from Europe at 11: 45 GMT tomorrow (European Central Bank Rate Decision). This could have also been a technical reversal which one could foresee by watching price action at various technical levels in Euro pairs. Let me discuss the best technical breakout today and it was in eur/jpy. 

Nice reversal pattern in eur/jpy pair

 

Although the pair did not move as much as eur/usd, its technical breakout down was almost ideal for taking a short breakout trade. Firstly, by looking at 1 or 4 hour chart you could see a reversal pattern that from 4^th to 6^th of July. The pair made lower highs and kept hitting lower support levels by going lower. It finally reached 116.66 level (yesterday) jumped a little from it and during European session today it started collapsing. The above mentioned level was very important for it was visited not long time ago and acted as support. When a pair forms such a reversal pattern while going up as it did during these last two days and then lands on a previous support level for the second time, it could be a good possibility to place a sell stop order below the support and wait for it to be broken. 

How you could have trade a down trend in eur/jpy

 

The decision would have been dead right today. The pair broke the level and did not look back till it reached 115.52 level (114 pips move). It looks like the pair is consolidating now and traders are getting ready for tomorrow event. So, you could have entered a sell stop order below 116.66 support and gone at least an even number of 116.00 and taken your profit there (in one position) and left the second one (if you play with two positions) to ride till another support level, which was at 115.75 (previous resistance, now support). 

I think that was the best technical trade today. I hope you benefited from market trend analysis.

See also:

Breakout 

Head and shoulders

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

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HOW TO TRADE BEARISH ALT BAT HARMONIC CHART PATTERN - forex exchange trading for beginners

HOW TO TRADE BEARISH ALT BAT HARMONIC CHART PATTERN ~ forex exchange trading for beginners

Bearish alt bat harmonic chart pattern suggests a short entry upon completion of the pattern. It is an XABCD harmonic chart pattern. This post is to explain the way to find or draw a bearish alt bat harmonic chart pattern with and without the fibonacci retracement tool, and the way to trade a bearish alt bat harmonic chart pattern. 

How to draw/find a bearish alt bat harmonic chart pattern on price chart?

To draw a bearish alt bat harmonic chart pattern, first of all we need to find the X and A points of the pattern. X and A points of the pattern is found at the top and bottom of a bearish trend respectively. In the second step, we will draw a fibonacci retracement tool from X to A to find the B point of the pattern. The B point should be at the 38.2% fibonacci retracement of XA. 

To find the B point without fibonacci retracement tool, we will use the following formulas-

(IA) AB= (price at X point-price at A point) X 0.382
(IB) Price level at 38.2% of XA= (result found from formula (IA) + price at point A)

The B point of this pattern should lie on the price levels found from formula (IB). This satisfies the AB/XA=0.382 condition of the pattern. Look at the following illustration.

In the above image, we can see a little failure in confirming the B point of the pattern. B point is confirmed little higher than the 38.2% fibonacci retrcement level of XA, but still we will accept it as the B point of bearish alt bat harmonic chart pattern. We will find so many cases similar to this while analyzing the price chart.

In the next step, we are going to find the C point of the pattern. to find the C point of the pattern, we will draw a fibonacci retracement tool from A to B. The C point should be between the 38.2% and 88.6% fibonacci retracement of AB.

To find the C point without fibonacci retracement tool, we will use the following formulas-

(IA) BC= (price at B point-price at A point) X 0.382
(IB) Price level at 38.2% of AB= (price at point B-result found from formula (IA))
(IIA) BC= (price at B point-price at A point) X 0.886
(IIB) Price level at 88.6% of AB= (price at point B-result found from formula (IIA))

The C point of this pattern should lie between the price levels found from formula (IB) and (IIB). This satisfies the BC/AB=0.382-0.886 condition of the pattern. Look at the following illustration.

In this step we are going to find the D point of the pattern, to find the D point, we need to draw a fibonacci retracement tool from B to C. The D point should be between the 200 and 2.618% fibonacci retracement of BC.

To find the D point without fibonacci retracement tool, we will use the formulas- 
(IA) CD= (price at B point-price at C point) X 2.0
(IB) Price level at 200% of AB= (price at point C+result found from formula (IA))
(IIA) CD= (price at B point-price at C point) X 2.618
(IIB) Price level at 261.8% of AB= (price at point C+result found from formula (IIA))

The D point of this pattern should lie between the price levels found from formula (IB) and (IIB). This satisfies the CD/BC=2.00-2.618 condition of the pattern. Look at the following illustration.

Now we need to reconfirm the D point of the pattern. To reconfirm the D point, we will draw a fibonacci retracement tool from X to A. The D point should be at the 113% fibonacci retracement of XA. 

To find the D point without fibonacci retracement tool, we will use the formulas-
(IA) AD= (price at X point-price at A point) X 1.13
(IB) Price level at 113% of XA= (price at point A+result found from formula (IA))

The D point of this pattern should lie between the price levels found from formula (IB). This satisfies the AD/XA=1.13 condition of the pattern.

Remember, the D point is the entry point of the pattern and it is confirmed by two conditions. A reliable D point should satisfy the both conditions, but it is also accepted, if the one condition is satisfied.

How to trade bearish alt bat harmonic chart pattern?

A short entry is suggested when the D point of the pattern in confirmed. The stop loss for the order should be placed at the upper resistance level. The take profit for the order should be placed at the 38.2-88.6% fibonacci retracement of CD, depending on the fundamental analysis. 

B and C points can also be traded, if the entries are confirmed by other technical analysis tool(s). 

Dear Traders,

If you want to join the discussion with other traders, you can drop a comment below. You can also subscribe yourFXguide to receive updates right into your inbox.

Thank You and Good Luck.

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GOLD AND CURRENCY MARKET - forex trading companies in ghana

GOLD AND CURRENCY MARKET ~ forex trading companies in ghana

Central banks and interest rate also play crucial roles in determining the price of gold. The monetary policies formulated by the central banks to keep inflation below its target affect the prices of gold. Interest rates are inversely proportion to the prices of gold. If the interest rate increases, it is expected for the prices of gold to decrease because it earns no interest. As the result of monetary policies formulated by the central banks about interest rates, the prices of gold are closely correlated to the central banks.

Source: trunews.com

The dollar is the main drive in the currency markets. Most currency pairs have USD as their base or counter currency and so, the slightest change in the value of the USD affects a whole lot of currency pairs. Whenever the price of gold rises, the value of USD depreciates and vice versa. This can be a helpful tool for fundamental analysis traders. If the USD is trending more weaker, there is more confidence in buying EUR/USD, GBP/USD or selling USDCHF. If the USD is trending stronger, we can feel more confident in selling EUR/USD and buying USD/CHF. If the price of gold trends stronger, then we can consider selling any currency pair with USD as its base currency and buying any currency pair with USD as its counter currency.

For forex traders who deal using fundamental analysis, they pay critical attention to diverse news related to gold which can have a maximum impact on the USD due to their negative correlation. Gold has enjoyed strong correlation to some currency pairs known as commodity pairs ; AUDUSD, NZDUSD and USDCAD. AUD has the strongest tie with gold because it is regarded as one of the largest gold producers.

In the first paragraph, I talked about how the supply of gold can affect its prices. When there is a lot of influx of gold in the market; that is the supply of gold into the market increases, the price of gold decreases and the demand for gold becomes very low. If the supply increases, it brings out about excess supply which causes the price of gold to decrease. Any country who invested a lot of money in gold will experience losses even though countries rarely invest in gold.

I hope you have all heard of gold reserves? Gold reserves simply means the amount of gold held by a central bank intended as a store of value. As at September, 2014, United States is the country with the highest amount of gold reserves; about 8,133.5 tones. Germany has the second highest amount of gold reserves worth 3,384.2 tones. International Monetary Fund has the third highest followed by Italy,France,Russia,China,Switzerland,Japan and Netherlands. If the countries above start selling their gold reserves, it could decrease the value of gold because the supply will be higher than the demand. The price of gold generally declines when central banks decide to sell gold reserves.

Its amazing how United States have the highest amount of gold reserves but are not the top producer of gold. And its also amazing how the top gold producer in the world doesnt have the highest amount of gold reserves. For many years, South Africa was the worlds dominant gold producer, but recently other countries with large surface area have surpassed South Africa, including China,Russia,United States, Peru and Australia. China is the worlds dominant gold producer with about 420 metric tones in 2013 due to its large surface. Australia is the second largest followed by the United States, Russia,Peru,South Africa, Canada, Mexico, Uzbekistan and Ghana.

The amount of gold produced by a country and also the amount of gold reserves a country has can have diverse effects on its currency value. Gold is mainly used to hedge against inflation. When a country experiences high inflation, investors turn to buy large quantities of gold. The demand of gold increases during inflationary times due to its limited supply. The value of a currency is strongly tied to its imports and exports. If a country imports more than it exports, it will witness a depreciating currency. If a country produces large quantities of gold and exports it, it increases the value of its currency. If a country has gold reserves or produces and exports gold, it will see an increase in the strength of its currency when gold prices increase, since this increases the value of the countries total exports.

Demand and supply are the two major factors that affect the price of gold. But unlike most commodities, consumption doesnt play a major role in determining its price but rather saving and disposal. The two renowned gold prices are the gold fixed prices and the gold spot prices. The gold fix price can also be referred to as the London fix and are determined by the London Bullion Market Association(LBMA) which includes more than 100 of the world largest banks, perfectionism metal stakeholders and financial institution. A twice daily telephone meeting of representatives from five bullion-trading firms of the London bullion market.

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Trading supply and demand - trading forex dengan robot

Trading supply and demand ~ trading forex dengan robot

I believe most of us are familiar with the terms of supply and demand in economy. These help to determine prices for goods, services and also securities. If a lot of people are willing to buy some product, the price of it will increase. If, on the other hand a lot of folks would be willing to sell some product (get rid of it) the price of it will fall. If these two are in equilibrium the prices will probably stay at the same level for some time or fluctuate a bit. The principle of supply and demand is important in financial markets too. A smart investor or speculator will look for areas where demand increases and supply decreases to start buying and for areas where supply increases and demand decreases to start selling. 

Back to eur/cad trends

 

Hi, market trend analysts and independent traders. Let me talk today a little on eur/cad pair. I discussed it a few days ago and want to come back to it today. If you remember I told you that I expect Canadian dollar to strengthen against Euro and other currencies. I also indicated levels of possible reversal that have to be watched carefully. It looks like eur/cad has reached the point of critical resistance and will go down sooner rather than later.

Data from Great Britain can push eur/cad lower

 

Friday is the last day of the week and as many reversals happen on this day I think we could see eur/cad start going down today. I do not see any data coming from Canada on Friday, but we have some very important coming from Great Britain and this could trigger moves across the board. EUR/CAD will be influenced too. By the way, gbp/cad has already started moving down sharply and could be a leader in this Canadian dollar strengthening. 

Important level of support in eur/cad

 

Below you see a chart with eur/cad and a support level. If it is broken I believe we are going to see much lower prices in the pair. 1.4100 is the level. If it breaks down we can see a very sharp fall in the security. So, be aware of data from Great Britain (Gross Domestic Product) and data from US (the same data). There will also be Ben Bernanke speaking at Wyoming. This can impact financial markets a lot. So be on guard and not overexposed to too big positions for market can take severe hits during news releases and you might find yourself unprotected against them. Good luck in trend trading and see you tomorrow. 

See also:

123

Follow the leader

Disclaimer

Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.

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