Thursday, April 23, 2009

Quick updates on few charts

First the GBP USD (4 hour chart)

gbp usd support turns into resistance 22.04

Crystal clear. Break below channel support. Rally back to previous support line, which now acts as resistance, and prices fall back. Picture perfect. Suggests more downside coming. Notice the huge down candle and the consolidation after that – should break below tomorrow.

AUD JPY – 240 mins

aud jpy

Head & shoulders neckline break. Rally back to test neckline. Supply at former support level. Prices turn down from there. Break below rising trendline support would be final nail in the coffin of this pair which has rallied around 32% in past three months (that’s crazy for a currency pair !!!)

 

USD CAD – 240 mins

usd cad

Trendline guiding move up. Sees support from former resistance line of wedge. Note – this pair moves opposite to euro, pound, australian dollar etc, cause base currency switched.

CAD JPY – daily chart

cad jpy daily

CAD yen breaks below parallel channel support line.

 

NZD JPY daily

nzd jpy

well this one broke support long back.. its even reached the .382 fib.

Wednesday, April 22, 2009

GBP Test of previous support line

gbp usd 240 mins 21.04

Again , as with the AUD JPY chart – the most optimal place to take a trade. After a break of a major trendline, price goes back to test the trendline and faces resistance/support and continues with the new trend. High reward, low risk trades.

Tuesday, April 21, 2009

AUD JPY – Perfect place to take short trade

aud jpy 240 mins 21.04

Its bounced back sharply from support line and now testing resistance from neckline of head and shoulders pattern. Ideally, since we expect that the trend has turned for the overall market and are looking to take short positions, this area provides the most optimal point of entry – with resistance defined one knows where to place the stops. And if trade does move in the direction we anticipate (which it does in 80-90% times) the reward for taking a small amount of risk is huge. The potential risk:reward ratios in such trades often are 1:4-1:8

GBP JPY Daily chart

gbp jpy daily 21.04

The pair has found support at the channel support line. The region also coincides with an area of former resistance turned support. Should see a meaningful pullback here. This is one of the few pairs which hasn’t seen a break below support levels, but my guess is that it would do too pretty soon.

AUD USD Charts

aud usd 240 mins 21.04

Price broke below support line from early March. The move down after that has been quite stunning. Relentless selling – one can count six 240 mins bars of over 50 pips each. Look at the daily chart below. The range for the pair yesterday was around 250 pips – more than 2 times the Average Trading Range for yesterday at 115 pips. This kind of move with a break of support definitely calls for an end of the uptrend and for the downtrend to resume. Though after such a big move, we should a few bars of consolidation before bears can gather fresh energy to push things further down.

aud usd daily 21.04

EUR JPY Chart update

eur jpy daily 21.04

I spoke about a break of support line from Feb last week. The same happened and the move after that on the pair has just been phenomenal. Currently near support level (marked on chart). 4 hour chart below.

eur jpy 4 hour 21.04

USD Index & MSCI World Index

USD Index

US dollar index chart – Chart as of Friday. Saw a break above both resistance level & 50 day moving average today – a very aggressive and definite breakout. Should see USD strength to continue in coming days. The MSCI World index chart below gives more confidence to outlook as its near top end of range and resistance. Should head down from here, giving buoyancy to USD.

msci world index

EUR USD Chart

eur usd 240 mins 19.04

EUR USD 240 mins chart 19.04

The support line at 1.31 was crucial. A break below saw consistent selling pressure on the pair. Infact this pair has been a multi touch support/resistance line in the past few months. The bear trend for the pair has resumed. We have this parallel channel guiding the move down. Currently near lower end of channel, might see slight bounce from here. If it comes anywhere near the 1.31 level, traders can go short.

GBP Head & Shoulders target complete. Testing .382 fib level support

gbp usd hourly 19.04

The target for the Head & Shoulder pattern i wrote about last week was achieved today, with a drop below 1.46

Price is now testing support from the .382 Fibonacci retracement level.  Any rallies from here should be used to take short positions. Any drop below could then target the 50% level below 1.44 (levels more clear on 240 mins chart below)

gbp usd 240 mins 19.04

USD CHF Chart update

usd chf daily 19.04

USD CHF has been moving up in this channel, which is infact quite steep. Currently trading at top end of channel since Friday. Short term trend not clear whether we shall see a move back down towards lower end of range or a breakout and test of the resistance line above drawn from highs in Nov & early March.

Friday, April 17, 2009

A lot of pairs at crossroads while others have broken below key levels

aud usd 240 mins

AUD USD 240 mins. Testing a rising trendline from where it broke out in March.

 

aud jpy 240 mins 17.04

AUD JPY 240 mins – Head and Shoulders in the making ??

chf jpy daily 17.04

CHF JPY Daily – Clear break below channel support line

 

gbp usd hourly 17.04

GBP USD – Head & Shoulders neckline break

usd cad 240 mins

USD CAD – Clear break above trendline holding down price since beginning of April

Update on EUR JPY trendline break

EUR JPY 240 mins chart

eur jpy 240 mins 17.04.09

Update on the EUR/JPY chart i posted yesterday. We did finally see a break of trendline, a retest which was sold into multiple times. Aggressive traders can take short positions right now itself, more conservative ones can wait for a break below the low formed yesterday for a confirmation. That should be a very high probability trade.

EUR USD Break below crucial support line ??

EUR USD 4 hour chart

eur usd 240 mins 17.04.09

This support line drawn across the chart is crucial. As you can see on the chart, it has support price action twice in the past month, leading to very good bounces off it. But wait here's more - look at the daily chart below and then you realize that this support level is really crucial. Any close below the line on a daily chart would mean that we would be looking for much more downside in coming days.

eur usd daily 17.04.09

EUR USD Daily chart

Wednesday, April 15, 2009

EUR JPY Price moving about a key trendline

eur jpy 240 mins

EUR Yen 240 mins chart

As i have labelled on the chart itself, price action for the past few candles has been moving about the trendline, a small close beneath it, pullback above, a candle wick below etc. Now, if we do see a sustained close beneath the line (two bars closing below it) then it would open much deeper downsides over the coming few days. Remember if we have rallied over 15% since the rally began, and it may be on its last leg with the bulls exhausting their energy and looking to book profits.

USD CHF channel

usd chf daily 15.04.09

USD CHF Daily charts

A parallel channel similar to that on the Eur-Usd charts (though opposite in direction, which makes sense as base currency is different) is visible on the USD CHF daily charts too. This channel has been guiding movements since late March, is now firmly established with 2 tests of resistance and multiple of support.

Again, we seek to long/short at support/resistance respectively, and if a break happens on either side, take a trade in the direction the trend.

EUR USD Parallel Channel guiding its move down

eur usd 240 mins

EUR USD 240 mins chart

The move down since the start of April is being guided by the parallel channel drawn above on the charts. We seek to buy near support line and sell near resistance line. Will be posting updates. Do sign up for feeds either through a feed reader (Google Reader) or via email.

USD Yen rally might be turning

usd yen 240 mins 14.04.09 The pair has broken through the upward parallel channel which it had been for last 2 weeks. Further, after the break we’ve also seen a lower top. The downmove itself is developing in a parallel channel and is currently near the bottom end of the channel.  A small push to the upside might be seen from here. That should be sold into. We might see the longer term downtrend resume here onwards.

Friday, April 10, 2009

EUR USD Head & Shoulders pattern complete. Support on daily charts.

EUR USD Hourly chart 10.04.09

eur usd hourly 10.04.09

First an update on the head & shoulders pattern i wrote about a couple of days back. The pattern is complete, its target was just achieved and the pair reversed from there. Head & Shoulders usually have a pattern suggested target equivalent of the vertical distance of the head from the neckline, which in this was 220 pips. On a break below the neckline, the target of 220 pips below the neckline was achieved, following which market sharply reversed higher.

The gains were not to be sustained though with price moving down again, but this time took support at the 1.3080-90 region, which is a support area on daily charts (shown below). A closing below this support area would be highly negative for the pair, giving much more support to the idea that the pair has resumed its long term bearish trend.

eur usd 10.4.09

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EUR-GBP Possible break of trendline?

eur gbp daily 10.04.09 

The pair is currently at the trendline arising from November swing lows, and in fact is trading slightly below it since the last few hours. A decisive close below the trendline would mean that the long term trend is now down after seeing an intermediate lower high at .95  and we would ultimately see much lower levels for the pair.

I had pointed out the presence of a Head & Shoulders pattern clearly visible on the 4 hour chart last week, and this whole week we’ve been seeing price action on the downside (updated chart below).

 

eur gbp 240 mins 10.04.09

Infact, on the 4 hour chart, price has already broken through the trendline, tested it briefly once and continued with the downtrend. We might see a proper retest of the line though once, before it continues south. The minimum target as suggested by the Head & Shoulder pattern is below .8850, but a break of trendline would mean I would seek a more lasting trend & much lower levels.

Wednesday, April 8, 2009

EUR-USD Breakdown from channel

eur usd 240 mins 8.4.09

EUR-USD 240 mins chart

The pair had been moving inside the confines of the parallel channel for the past several weeks, ever since the huge 400 pip candle in mid march on Bernanke’s decisions to buy more treasury & mortgage bonds. We saw a break below in end March, but again a pull back into the range happened. Now again, we have seen a break below with a retest of both the support line as well as the other rising support line. It seems that this move down is all set to continue over the coming few sessions.

There is minor support at 1.3110, where we had the previous swing low in late March.

AUD NZD rally off .618 fib support level (update)

AUD NZD Hourly chart

aud nzd hourly 7.4.09

This is an update on an earlier post a few days earlier. That can be found here.

Well in my last post I had marked out the .382 Fibonacci retracement level as a key support area for the pair which it has tested multiple times & which has withstood the tests and provided support on numerous occasions  (marked on chart above). After the second round of testing of the level yesterday, the pair took off on a major 300 pips + rally. This support at a key fib level & the subsequent large sharp rally suggests that the long term uptrend which started sometime in 2008 is all set to continue, and we should stick to the major trend and thus look to go long on any dips.

AUD USD Range – Trade on breakout

aud usd hourly 8.4.09

AUD USD Hourly charts

The pair has formed this range over the last few days, and the appropriate way to trade this is to take a trade on breakout in either direction. So if we get an hourly close below this level then we go short with a stop 50-60 pips above the support line. Similarly, if we see a breakout above the resistance line then its appropriate to take long positions with stop 50 pips below the resistance line. Breakout trades are the trades which make one money regularly in the long run. Range based trades or small pops from support/resistance will in the long term result in losses because the average gains will be lower than average losses. We should aim for a minimum of 2:1 ratio between avg gain/avg loss, better if its near 3:1

A 2:1 ratio means that if  my win ratio is anything above 33% I will make money. For a 3:1 ratio, I  will make money if my win % is anything better than 25%. Most people struggle to achieve anything better than 50-60%, but 25% is easy to do.

Tuesday, April 7, 2009

Eur Chf – Channel breakout & .618 Fibonacci support

 

eur chf 240 mins 7.4.09

First the 240 mins charts. I have marked the downward trending channel on the chart. Last week we saw a break above the resistance line of the channel.  That was good. Market was attempting to fill the gap after the huge 500 pip candle in early march after the Fed announcement. Now that some of that work was done, it decided to continue with the uptrend. So the breakout.

 

Now the hourly charts -

eur chf hourly

A correction to the upmove shown on the 240 mins charts happened, and it then took support at the .618 fib level & has bounced back up from there. This would mean that we should now see a continuation of the uptrend started by that huge bull candle. Would look to go long on any dips.

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EUR-GBP Head & Shoulders Pattern

EUR-GBP 240 mins chart

eur gbp 240 mins 7.4.09

A Head & Shoulders pattern is very clearly visible. The downside break happened sometime last week after which consolidation was going on in abroad range of around 100 pips. Today we have seen a fresh offensive on the downside, with resistance coming off the trendline from .94 swing high around the 25th of March. That trendline has acted as resistance thrice now, and seems will guide price movement in days to come. There is a minor support at .9036 off which we saw two bounces last week.

Any rallies off it should be sold. The pattern suggest target is below .8850 , which should come about over the next few weeks.

USD-Yen sees bounce off channel support line

USD JPY 15 mins chart

usd jpy 15 mins 7.4.09

I have marked the parallel channel lines on the 15 mins chart. This is the third time that price has bounced off the lower channel support line. Last time we had the pair take support at the line, saw a decent rally following it, but I do have my doubts this time round.

Cad – yen breaks through support

Cad-Jpy 240 mins chart

cad yen 240 mins 7.4.09

The pair has broken through the .382 fib support level of around 80.5 in the past hour. This area was also where we had two previous swing highs in mid march, and as such was expected to act as support (earlier highs & lows go on to act as support/resistances). I expect there will be much more downside. Across the market, all pairs are giving off a bit of the exceptional gains made over the last few weeks.

Monday, April 6, 2009

Eur-Usd Charts

eur-usd 240 mins 5.4.09

Correction to the whole upmove from the lows in early march found support near the 50% retracement level & also took support multiple times on a rising trendline from early march. The rebound from the .5 fib level faced resistance at the lower channel line, falling back from which it again took support from the trendline & this time rallied to break back into the channel. Looks like we are all set to challenge the channel top again, and a successful break should take things much higher from here.

Thursday, April 2, 2009

Head & Shoulders on Eur-Gbp charts

eur gbp 240 min 1.4.09

As can be clearly seen on the 240 mins chart of Euro-pound (Eur-Gbp), a potential head and shoulder pattern has formed. What is now needed is a decisive break of the support line. If such a break does occur one should take short positions in anticipation of a decent size downmove. Eur-Gbp has been in a short term uptrend in the long term downtrend after peaking at .98 in mid December. Thus we will potentially continue with the major trend now after seeing a very very sharp rally over past few weeks.

Which would imply then that price should ultimately dip below the intermediate low marked on the daily charts below.

eur gbp daily 1.4.09

Wednesday, April 1, 2009

AUD-NZD pair take support at .382 fib level

Daily chart of AUD-NZD pair

audnzd daily

I have marked the fib retracement levels. Price has bounced off strongly from the .382 fib level. This has also coincided with a head and shoulders formation on the intraday charts on NZD/USD which is leading to selling pressure on the kiwi (nzd) and making this pair shoot up.

This kind of price action at key support level does tell us that the pair can now be expected to continue its existing uptrend. Would look to buy at a dip since we’ve had a 220 point bar already, when its just the start of the day and we’ve the whole European and US sessions to look forward to. So though 220 point bar is not something we haven't seen before on the pair, its not something common too. Price should give back some gains sometime during the day and that’s when we look to enter into a long trade.

Cad-yen resumes downtrend

cad jpy daily 01.04.09

Canadian dollar-yen daily chart (cad-jpy)

As you can see and I have marked on the chart, the previous swing high in December end provided significant resistance & price after seeking to for four days to find way above it, finally failed to do so & has now begun a downtrend. The short term trend has turned down.

Now the 240 mins chart -

cad yen 4 hour 1.4.09

Just wanted to show a couple of things -

a. The number of attempts at the resistance line

b. After initially moving down, price again went up to test the previous support line, but faced selling there from traders who were looking to enter into the trade. Again, this provides us with more confidence in taking a short trade.

Further, as i have written in the last few posts, the whole market is looking weak and thus can be traded on the downside.

NZD-USD Head & Shoulder Pattern

nzd-usd 4 hourly

One can clearly see the formation of a head and shoulder on the 240 minute chart of the New Zealand-US Dollar pair. The formation has been triggered with price breaking below the support line with a big candle. This gives us more confidence in the move. It also broke through a rising trendline since the start of this upmove a couple of weeks back. Look to take short trades on any little move up.

Head & Shoulders is one of the few patterns which has a target implication – the distance of the head from the support line (called neckline in H&S pattern), this size of downmove will be seen from the neckline below. So the pattern implied target is around .5360 (240 pips off .5600).

Have a look at the hourly chart below. Once price broke through both the support lines, it pulled back to test them. At both attempts it could not hold on & faced selling pressure at those areas again. This increases confidence in the trade.

 

nzd-usd 4 hourly1