Learn To Trade Price Action with Nial Fuller...
PRICE ACTION FOREX TRADING COURSE
Another very solid forex trading strategy, this video shows traders how I use simple support and resistance in Forex Trading and the DOW mini.
View Forex Strategies Video -Trading Support And Resistance VideoTraders have slashed the price of the U.S. dollar. And that’s terrific news! Now you can get your hands on greenbacks far cheaper than you could only two weeks ago.
If you are a regular reader, you know that my long-term theme is that the dollar will climb sharply through most, if not all, of 2009. And now’s certainly not the time to deviate from those expectations.
Let me explain …
One Head, Two Shoulders, and
Some Juiced Dollar Bears
The recent move against the buck wiped off roughly 9% in 9 days—that’s a bunch! At the same time, the dollar tore through multiple support levels on the charts. And while I had expected the dollar to correct, the decline was deeper and faster than I thought we’d see.
The volatility in the U.S. Dollar Index is at record levels. Just take a look at its weekly chart below.
At the bottom of the chart, in blue, is the Average True Range. This represents the Index’s daily trading range from high to low. As you can see, it is now well above where it has been over 12 years.
And I expect these huge moves will continue.
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The initial catalyst for the two-week assault on the dollar had a lot to do with the technical picture. Traders keyed in on a common reversal pattern rearing its head in the U.S. dollar daily chart shown below.
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This pattern delivered exactly what it had forecast … and then some. If you acted on this signal, it paid off. But now this same chart is throwing off another signal, in the opposite direction, that will likely pay off equally as much. I’ll explain in a minute.
First, let’s look at the market rationale for this sell-off in the buck, beyond the technicals …
Fed-Speak Added Extra
Momentum to the Dollar’s Fall …
On Tuesday, the Federal Open Market Committee opted to go beyond consensus expectations. Instead of dropping 50 basis points to 0.50%, they targeted a range between 0.0% and 0.25%.
The Fed said it will do whatever is necessary with monetary policy in restoring order to financial markets and shoring up the U.S. economy. That includes purchasing any asset from anyone at anytime if said asset is causing financial stress.
The Fed’s words added fuel to the inflationary fire-breathers. These pundits are pointing at the inflationary impact of the drastic measures being taken by the Federal Reserve and U.S. government.
They believe that if the Fed succeeds in propping up the economy, it’ll happen by re-inflating asset prices. And by that time excessively easy money and easy credit is going to knock down the buck’s value.
Hence, the dollar’s big sell-off.
I think these people are looking too far out at this point. And that means the dollar sellers overreacted. Two reasons why …
So This Is the Super Deal
You’ve Been Waiting For …
Right now, buying the dollar might offer the clearest and most profitable opportunity we’ll see for quite some time.
Have a look …
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I’ve circled three price bars in the above chart. When such a three-bar pattern occurs at a significant intermediate-term low, it generally represents a key daily reversal pattern. Based on each part of each bar — open, high, low, close — you can see how the bulls have overtaken the bears.
So what had been strong momentum for the bears has turned on a dime.
After pushing to new lows with the second bar, sentiment changed dramatically that same day and became bullish with a close above the close of the first bar. Confirmation of this sentiment change occurred with the third bar closing above the high of the second bar.
Is this a Holy Grail trade setup? No. But given the bullish fundamentals, this new technical pattern tells me that there couldn’t be a better time to own dollars.
Note the Pin Bar reversals at the lows of this chart, suggesting downside exaustion at support, and renewed buying interest enters the chart. Subsequent action has been bullish, with support noted at 50.00
That forex analysis is a basic part of any trading method is accepted and understood by everyone. The usefulness of technical analysis for the determination of entry and exit points is also recognized by most traders. It is a pity that the other branch of forex analysis, the fundamental study of currency markets, is neglected by a significant number of beginners, and even by some experienced traders
Continue Reading Forex Fundamental Analysis ArticleGBPUSD forex trade setup forming
Potential for GBPUSD to move up to 1.5500 after bullish oin bar reversal on Friday
The following article describes the future of the US Dollar
Martin here with a few words from my father, J. Irving Weiss, about the Great Depression. Before he passed away, he wrote:
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“In just three short years between the peak of the stock market boom in 1929 and the bottom in 1932, it felt like the entire world was falling apart.
“The financial bubble burst.
“Giant companies failed.
“America lost 13 million jobs as unemployment surged to 25 percent.
“Industry cut its production nearly in half, and home construction plunged by more than four-fifths.
“Over 5,000 banks failed.
“And yet, despite it all, there was one all-important investment vehicle that not only survived, but actually thrived: The United States dollar.
“Why? Because of deflation and fear.
“Thanks to deflation, prices fell on virtually everything — commodities, farm land, homes, automobiles, consumer goods, even labor. And because of fear, investors shunned risk and sought the safety of cash in greenbacks. Result: The dollar’s purchasing power and value surged.”
That’s What’s Happening Today!
Today, like in the early 1930s, unemployment is surging, with over a half million jobs lost in the month of November alone.
As in the 1930s, America’s largest financial institutions — Fannie Mae and Freddie Mac, Washington Mutual and Wachovia, Bear Stearns, Lehman Brothers, and Merrill Lynch … even giants like AIG and Citigroup — have gone under, been bailed out or forced into shotgun mergers.
Most important, as in the 1930s, prices are falling, with fear driving millions to the safety of hard cash.
The net result: The U.S. dollar — virtually given up for dead not long ago — is now gaining steadily and rapidly in value.
In this midst of all the bad news, this is the one, outstanding ray of hope — for two reasons:
First, it indicates that, despite all the economic pain still ahead, the United States dollar will survive and thrive.
Second, it means you are now witnessing the first phase of a dollar rise that opens up some of the largest and steadiest profit opportunities of our lifetime.
A great forex video – My favorite Forex Price Action Trading Strategy – The Pin Bar Reversal on a 4 hour chart. Trading with the trend, from the 50% swing point.
View Best Forex Trading Strategy – Pin Bar Reversal Method VideoThe USD/JPY has found itself trending down in a channel since the start of November.
The 1HR Chart shows us the continuation of this channel and the movement of the USD/JPY pair as it has bounced around the highs and lows of this channel.
Traders should be aware of the top of this channel is containing the market lower. It looks like more falls are due.
After reaching a low of 1.0010 on the 15th of July, the US/Swiss has proceeded to march upwards on the back of significant US Dollar Strength.
Price action on the 28th of November has produced a Mother Candle (Outside Bar) as the pair seeks to consolidate from a recent dip.
The last 4 Daily Bars have all been Inside Bar Days (that is, they have formed within the range of the Mother Candle.)
The range of the Outside Bar is a High of 1.2199 and a Low of 1.1960.
Traders should keep on eye on these levels as they could prove significant in any short term breakouts.
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