Euro showing signs of consolidation

from the weekly chart, we can see some solid consolidation signs at the moment. A look at the daily chart might suggest strong resistance at the support turned resistance area at 1.3850/00 area. if price finds sellers at this area, a shorting opportunity might arise aiming the low at 1.3450. News from today sees Germany and France agree to buy debts from Greece, so with the current technical outlook, we might expect some buying/short covering price action in EU next week.

Riots in Greece adds pressure to the Euro

Clash with cops in Athens

With mounting tension in Greece and accusation made by Greece on Germany we may expect further Euro weakness. EU is now trading below 1.3500, looks like 1.3400 is not too far away now.

EU might aim to retest 1.3450

With problems in Greece remains, the pair now faces downward pressure again. There are talks of EU coming down to 1.3200. well, for now if the low breaks we will see 1.3400 in the short term. Maybe at that time 1.3200 wont be too far out too.

Dojis in the weekly suggest likely consolidation ahead

with the economic calender looking rather bare yesterday, the pair traded in a lackluster style in a range of roughly 80 pips. This week we will see data from US and also Ben Bernanke's testimony. The fed surprised the market by raising the discount rate last week, following this they had tried to reassure that the fed's rate will still be kept low for an extended period of time, well, this does sound like some broken record and worse still the broken record is playing some false tunes huh ? well, the most important cue here is that the fed is now beginning to implement an exit strategy which might be a positive news for the Dollar. Well, if this adds to the dollar strength will we see another round of sell-off in the risky assets or will we be expecting another leg of bull rally coming soon as investors view this as a sign of optimism in the global economy recovery? We will see soon enough!

Likely consolidation from 1.3400 to 1.3800

Strong earnings coupled with fed raising discount rates had managed to send investors back to risky assets. The EU managed to stem its fall after breaking below the 1.3500 level. the pair is now back above 1.3500. I would expect some consolidation ahead for the pair in between 1.3400 to 1.3850. If we can see a clear break above 1.3850 the pair might stage an oversold rally towards the 1.4000 level.

The importance of organizing your trading strategy and sticking to it.

From my experience i guess i can generally classify trading strategy into 2 main categories, either your strategy is designed to take short trades or swing trade (position trading).
Short trades or scalping is usually done in the lower time-frames, and with tight stop loss levels e.g. 15,20 or 30 pips or so as oppose to swing trades which generally have wider stop loss level and normally executed in the higher time-frames and are held for a longer period of time which might range from a few hours to a few days or weeks. For those who are just starting out in trading i would strongly recommend you guys to try out both strategy and see which of these best suites your characteristics and lifestyle. of course there will be a vast difference in these 2 trading style.

For scalping one must have enough time to monitor the market from time to time in the lower time frame to spot trading opportunities and this strategy will usually yield more trades and thus is also more prone to having losing trades as well. One must also be prepared to withstand the stress of monitoring price movements and cutting losses fast when scalping. If a trader wishes to adopt this strategy in trading, they must be psychologically prepared also to face more losing trades. Imagine if your chosen scalping strategy yields a winning ratio of 70% then it can be assumed that you can have 20-30 trades in a day, so it might be fair to say that you will need to face around 7-10 losing trades in a typical trading day. or you might also face a series of losing trades before making any profitable trade in a day. All these will definitely add burden to ones psychology if we are not prepared to face it.

As oppose to scalping, swing trading does not yield as many trades compared to scalping. This strategy normally uses the higher time-frames i.e. the Hourly chart and beyond. So one will expect to find less signals generated and ALOT of patience is needed to wait for the right opportunity but this strategy will not require the trader to continuously monitor price movements minute by minute. instead they can monitor the price action in an hourly interval or 4 hourly interval depending on which time frame the trades are being taken. and of course, in this strategy one must also expect to hold trades for longer, sometimes a trade might not be in profit for hours or days, and also to refrain from taking premature profits. Patience is the key here in swing trading.

To sum it all up, a stop loss level in a swing trade cannot be confused with a stop loss level in a scalp trade. in other words, if your stop loss level is at the recent swing high in the 4 hourly charts, your scalp trades must not adopt the same stop loss level as the swing trade which tend to have a wider stop loss level, if these happens the law of large numbers will not apply and we will end up with negative growth in our trading account since your loss will inevitably be larger than your profits in a scalping strategy. I would suggest opening a separate account for these 2 strategy to monitor your progress. lastly, its very IMPORTANT to stick to your rules of taking losses as well as taking profit. LOSSES must not be taken too slow and have it make a dent in your account and PROFITS must not be taken too prematurely leaving too much money on the table. For every trade, make an effort to measure the RISK & REWARD ratio before jumping in (applies to scalping and position trading) no matter how tempting the trade might be if it does not yield an RR of ATLEAST 1:1 then just SKIP it! haha sounds like talking abt learning to say no to temptations huh? (i would go into how to identify RR in my next article in Research and tactics, do stay tuned!) if you have done your homework of waiting for the right signals with good RR then just sit tight until one of those levels hit, and repeat this process(that's the hardest part in trading to stick to your rules).

well, i hope this article would do some good to you guys out there. Trade safely and follow your rules no matter what, and you would be successful in this business. Stay tuned n happy trading !

Earnings report and growth data VS Greece debt crisis

with good earnings report from wall street overnight and also good US data which suggest growth is geared for recovery, we expect to see upward correction for this pair. the next most important resistance area for this pair would be the 1.3850 region. As debt matters in Greece is waning but not yet addressed completely, I expect the pair to stall at the 1.3850 region. If the downward pressure is still strong, a test of the prior low at 1.3530 might materialize in the short term.

correction might aim 1.3850

on a broader view, the correction leg up for EU might aim for 1.3850 if we do see the pair getting back above 1.3700 in near term. with pressure in Greece still mounting and also worries in Dubai defaulting, we might see the pair will be still under pressure below 1.,3850

Happy Chinese New Year!!!

let the roar begin !!!

wishing all a prosperous and bountiful year ahead in the year of the TIGER !

Greece matters

The EU leaders will be holding an EU summit on the 11th Feb 2010. among the important agendas will be the aid for PIIGS, if we do see positive outcome i.e. a bailout for Greece, EU might find temporary support here and might have upside risk; however if the opposite do materialize, we might see further downward pressure on the pair. Well we will see how things unfolds into the week.

Facing a string of agoniszing losses?

How often do you find yourself facing a string of agonizing losses in the markets? when every trade you place just seems to find a way to go against you and you just feel that your luck just took a bad turn and subsequently making you doubting your ability as a trader? Well, i guess its normal for us traders to go through this stage of development especially when we are just starting out in this industry. In my opinion, its not our technical skill nor trading method which is the main culprit in this situation, again i deeply believe that these are all linked to our psychology. Again, i would like to strongly remind myself and others who aspire to become a successful trader in near future do pay attention to your thoughts as they develop, learn and master the way to control your emotions when you are in the markets, learn to let go of your emotions and bad past experiences in the market before you put on another trade prior to a loss. Countless of times that in my own experience that a negatively charged emotional trade will often result in a bad one. this is how a string of losses develop which will eat into your profits, i acknowledge that this is the hardest part to master in trading that is to face and accept a loss with a CLEARED HEAD, but i believe that through enough practice and patience one will certainly master it and be successful in this industry. Remember we are here to make money and making money is the only purpose that we are in the markets and one WILL NOT make money when one is trading out of emotions rather than out of a well thought out strategy plan. So, if you have profited from the recent volatility of the market, i congratulate you on the other hand if you had faced with a string of losses because of placing too many emotionally charged trade; DO NOT blame yourself nor the market, accept the loss humbly as a lesson learned from the markets and move on. May you all trade happily and prosper in the near future! remember that control not the markets, but your OWN EMOTIONS, that's the only way forward.

EU diving again after retest on the swing low

with the problems in Greece unsolved and more were uncovered, the EU now is again under pressure, a move lower might be expected here if the prior low breaks at 1.3850