$ £ € ¥
GreenForexTrading.com
ForeX forX-tra Gr€€n
Hi everyone,
In this e-mail I am going to give you my review for the year past and view on the market for Sunday the 9th to Monday the 10th of January 2011 and the week.
We have a Monster Trade update since first recommended at 1.000.
The “Monster” Trade. NOTE: The AUD/USD has corrected and retested a key pivot area at 0.990 and is now poised to resume its advance. As given earlier, an initial entry was placed at 1.015 and buy points added later on weakness. With AUD/USD now at 0.9980, I now recommend scaled in BUYS (0.2 contracts at a time) if not done so already with current existing positions being HOLDS. The looser stops than usual is moved up from around 0.984 to just under 0.989 with the expectation to move the stop up to 0.995 should the 1.007 be reached (so explains the very small position size) as any further decline would invalidate the rationale for the trade (see below). The AUD/USD is expected to yield 1000 to 1500 PIPS over the next 2-3 months, maybe even sooner. Again, NOTE: All position trade stops are HARD stops, NOT mental stops. Remember, hard stops for overnight positions, mental stops for day trades.
About Scaling In
Scaling in simply means breaking up the initial entry position into multiple parts and deploying them at selected intervals, instead of firing the entire trade magazine all at once. The only reason we might resort to scaling is if we have good reason to believe our expected support zone may have become obsolete.
We usually take an initial position in our expected support zone with a fairly tight stop. Obviously if we get stopped, we were early to the trade. Early is just another word for “wrong.” If stopped, we reassess and adapt to the new market reality. If we were not early, and our position shows us that we are right, then we add to that position once the trade has managed to “prove” itself by advancing out of the support zone box, raising our trailing/trading stop in the process. The two or more portions make up a full position. When we speak of scaling, it means we have become willing to break up the trade entry into two or more parts, with the first part at the very top of the expected support box and the second part within it. Rarely will we ever take a new position outside our expected support box.
Why the “Monster Trade”? In the AUD/USD sideways action of recent weeks has served to further unwind the earlier overbought condition while forming a Head and Shoulder bottom continuation pattern on the 4-hour chart with the neckline coming in the 0.996 area. The interpretation of the pattern in the AUD/USD presented in the last update, which was that it is marking out an upwardly skewed bullish "running correction”, remains unchanged. All that has happened in the past few weeks is that it has reacted back across the up sloping channel to arrive at support near its rising 50-day moving average and has retested that area again. As we can see on the chart this reaction has resulted in a further easing of the medium-term overbought condition as shown by the PPO indicator, which is now neutral on the daily moving up while the weekly is moving towards a BUY signal. The noted convergence of the short-term downtrend channel earlier last month was an indication that the AUD/USD would soon break out of it to the upside to resume its advance and make new highs, which it has. The AUD is seen here, http://www.stockcharts.com/charts/gallery.html?$XAD.
WEEK AHEAD: If the AUD/USD is set to rise in the near future, it follows that the dollar is probably, although not necessarily, set to drop. Our 6-month chart for the USDX shows that this is indeed the case, as the rally of recent days appears to be sputtering beneath the falling 200-day moving average, there is certainly scope for renewed decline although further gains are still possible as the recent gains in the U.S. Dollar have come on very weak volume, it is not expected to last perhaps making a final push to key fib and pivot area of 82-83 in the USDX. In the absence of more unrest in Europe the QE campaign should work its magic and drive the dollar lower again, reducing the real debt burden of the US - provided that it falls far enough and fast enough of course. The dollar was given a stay of execution last two months due to the chaos in Europe, but with the U.S. intent on eroding its value via more rounds of Q.E. the outlook is not exactly bright for next year and with the USDX clearly overbought in a downtrend the downside potential is huge....thus the given monster trade.
The USDX is now at a sustained move above 80.5 that could possibly lead to further strength to the 82-83 area. The 80.5 area is still the key area to watch this week for any signs of a reversal move or renewed/further weakness in US Dollar. Should such a reversal take hold, then that should lead to breakouts of many currency pairs after some period of consolidations. This week players are back in force and we will let them show their intentions should you decide to trade this week although watching position size is still advised. That being said, let’s look at the charts. The USDX has carved out a very range bound by the 200-day moving average (DMA) and now 50-day M.A. for the dollar as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD.
The EUR moved higher into resistance at the 1.340 level for a test of the underside of the declining 50-day moving average at 1.35 now that another pullback to the 1.287 area has happened. Technically a bounce is possible here in key support zones while the EUR is very oversold, but do not bet the farm on that. Should the EU hold it together higher prices would be expected on U.S. Dollar weakness. I am neutral in this area in the EUR but should this key area give way then continuation shorts to the 1.250 area could be played as seen in the chart here, http://www.stockcharts.com/charts/gallery.html?$XEU. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
On to the Sterling, I had always thought that the US dollar would hyperinflate and collapse before any other major currency. Lately, I am not so sure. The bottom line is that the UK’s huge deficit is not sustainable. It will lead to ever greater amounts of so-called “quantitative easing” by the Bank of England, and inevitably this money printing – the turning of UK government debt into British pound currency – will sooner or later lead to hyperinflation. Government spending and borrowing in the UK look even worse than the dire levels being reached in the US. Therefore, the dubious distinction of being the first currency to hyperinflate in the months ahead may end up going to the British pound. Recent sterling strength has given way to weakness on Dollar strength. The GBP bounced from the the 200-day moving average and PPO daily BUY against a weekly SELL signal leaves us still neutral, as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP.
Traders should continue to use caution should the JPY pairs being neutral also bound by the 50 and 200-day moving averages and a PPO daily BUY signal against a weekly SELL but moving up soon for a weekly BUY but we are still in a wash and rinse scenario with a slight bullish bias for the time being as the Yen attempts to recapture the 50-day M.A. as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.
Most of this week’s key reports are spread throughout the week along with some banker speak with more reports later in the week. They are:
1. Mon. Jan. 10, 2011 - (3:00am EST) UK Halifax HPI and (3:15am) CHF Retail Sales. ECB Banker speak at 7:00am EST.
2. Tues. Jan. 11, 2011 - (8:30am to 2:00pm EST) US FOMC Banker speak.
3. Wed. Jan. 12, 2011 - (5:00am EST) EUR Industrial Production.
4. Thurs. Jan. 13, 2011 - (4:30am EST) UK Manufacturing Production; (7:00am EST) UK Official Bank Rate; (7:45am) EUR Minimum Bid Rate and (8:30am EST) US PPI, Trade Balance and Unemployment Claims.
5. Fri. Jan. 14, 2011 - (4:30am) UK PPI Input and (8:30am) US Core CPI and Retail Sales.
The swing trade for today’s Asian-London-U.S. session is to BUY the EUR/USD @ 1.2900 with a STOP @ 1.2860 and a TARGET of 1.3000 for 100 PIPS. Looser stop so smaller position size recommended with the option to go short should the 1.2865 level give way.
That's it for today. Remember that I trade in the Live Forex Trading Room between 1am-6am Eastern Time. I will be hosting my regular 3-4 hour session and assessing and exploiting PIP opportunities as they arise.
Enjoy trading and good luck everyone!
Trade with Mr. GREEN for $49$ for a 1 week trial. Don’t miss out on more PIPS!!!
For those who join with this special, the service costs only $179$/month after the trial expires, unless you cancel the membership. Trades are issued in real time, including exact entries, exits and detailed explanations. The service costs $179 per month. So go to GreenForexTrading.com now and take advantage of this offer.
Mr. Green
Risk Warning! Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. All information posted on this website is of our opinion and the opinion of our visitors, and may not reflect current situations and occurrences. Please, use your own good judgment and seek advice from a qualified consultant, before believing and accepting and acting upon any information posted here or on this website.
No comments:
Post a Comment