In the previous article I showed you how important it is to only take trades where there is at the chance of winning at least twice the amount that you stake. If you missed the article CLICK HERE This is crucial in becoming a successful trader. One skill is teh ability to pick entry points but there is no point taking trades if you are risking say $50 to win only $30. Here are some practical examples of trades I was looking for this week. Did they all win? Nope. BUT a couple of decent wins will still result in a winning week:

If you traded last week you will understand now why we were warning about the Euro. Thursdays surprise announcement of a further cut in rates to 0.25% clearly shook the markets. This major move was was preceded by days of price going absolutely nowhere. After the big move price pulled back and again went into waiting mode until NFP came out. Another surprise and bang the $ shot up and Euro down once more. My conspiracy theory that the Fed & Ecb are managing the pair within a range is now back on the table 🙂

The Week Ahead

Price on many pairs is at a crucial area.

Is price going to rebound or could we see breaks that could give 1000’s of pips in the run up to Christmas?

We are not here to guess.

As pro traders we make a plan based upon “what if”?

“If price goes up on the Euro I will………. If price breaks down I will “……… Sometimes the option is simply, “it looks too messy/  I have no idea,” if that be the case then the simple answer is to walk away.

Monday’s have been slow in recent weeks and tomorrow could be even more so as the U.S, Canadians & French have a bank holiday. Later in the week there are Euro group and Ecofin meetings, all of which could rock the Euro again, so plan your trading around these events. The problems of the Eurozone never went away and talk of recovery is now on the back burner as the big concern now is de-flation which could stagnate the reason for years to come. SO expect more political manoeuvring and swings in the weeks ahead

Watch those calendars carefully for news (I use Forex Factorys and you can find it here: CLICK HERE, especially “red flag” and don’t get too attached to a trade. Always check up to date news before taking trades.

Gbp/$: Fundamentally stronger than the Euro, If anything is to go up against the $USA this week then this seems most likely BUT as I explained above you also need a plan in case it drops! 

Price is currently sat at 1.5920 which is THE crucial area on an intersection of the weekly 200ema and a trend line. This area has held as support for over a month now, so consider longs if it pulls back to 1.5920 but limited potential move up. More conservative entry is a break out below the trend line and ema followed by a pullback for a short – plenty of room below OR wait for a break and close above the monthly 55ema at 1.6070

Intraday possible range trading between 1.5940 and 1.6150

Euro/$: I said two weeks ago “Illogical to me that its still going up and making new highs……..” so I got that bit correct J In many ways I prefer the Chf this week as the risk reward is better if we have a break out.

The eurozone crisis trundles along, despite politicians attempts to talk their way out of the crisis, its not going anywhere soon and in fact could get much, much worse. The big fear was deflation so last week the ECB cut interest rates to a record low of 0.25% and say they can go further…. There’s not a lot left to cut! SO we have had a major move made worse by the positive NFP results so what do we do now?

As ever I need a pullback and 1.3475 is the zone for me for a number of reasons: 5/8 cross, trend line break, ema break, 61.8% fib break, did anyone mention a break out J ? and the good thing is it has the potential to fall a couple of hundred pips so there is a decent risk reward ratio as well, as shown in detail in today’s video.

If it breaks 1.3300 the Chf should break upwards and has less in the way

Chf: Number of options. If it breaks above 0.9300 I will look to long on a pullback. If 0.9280 doesn’t break then look at 4 hour charts for possible bounce back down. More conservative options are short at 0.9590 or longs at 0.9000 IF we get big moves.

 Euro/Gbp: Do not be in more than one Euro trade at a time. Technically and fundamentally I only want to short but not from current position. I either need a pullback to 0.8400 for multiple reasons OR a clear break and close on at least a 4 hour chart below 0.8300 for an M2 short. This could be the start of a 500 pip drop!

Aud: Another pair at a crucial point/weekly trend line. I only want to short (keep your eye on gold which broke down on Friday) If gold shoots back up then so should the Aud. I prefer a pullback, 1^st area of interest is 0.9500. Main area is 0.9700 but that seems optimistic this week.

We are currently sat on the daily 78.6% after a break of 0.9400 so you could look for a break and close below 0.9380 for a pullback entry. The difficulty is that weekly trend line so the more conservative entry is a break and close below that at 0.9350 then a pull back to short.

IF it breaks this one could go 500 pips as well

 $/Yen: Broke out of the weekly triangle and bullish weekly candle so looking to long. Best area for me is pull back to 0.9865 which has been huge on this pair. I show in the video options for stops.

Euro/Yen: We had a trend line break and 132.00 after the interest rate news so is this the pullback already in which case an entry at 132.75 is in order. The thing I don’t like is that 132.00 needs to break again so the more conservative entry is to wait for a break and close of that

Aud Yen: At a trend line I am not going to long here though its an option, problem is if price breaks the trend line the 200 ema is not too far below and therefore it’s a poor risk reward, so not for me. Break and close below the 200ema and 92.00 later in the week will be of interest.

Cad: We had a lot of winning trades on this pair in September and October. Now new support at 1.0400 seems a good place to long

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

Pierre, Vassilis (Capsmart), Raa, Omar, Mary, and other experienced members will be available in the forum to give you a more up to the minute assessment & whether they see any potential trades lining up in the next few days. Many members tell me this is the best forex forum there is (no back biting & bitchiness, nor spam, that spoils most forums) and all members are happy to help new visitors. Its a great resource, USE IT: Forex Forum

To View the Video full screen, click on the square shape, bottom right hand corner.

http://www.youtube.com/watch?v=mwNDTlQOPCM&feature=share&list=UUh9jKEbExtwL0MnwLBeyoyQ

Author: Marc Walton