EUR/USD Simple Analysis on Daily Chart using basic tools

[James Alejandro]

I have traded this currency pair for quite sometime, and my current winning ratio for EUR/USD has been very constant. Except for USD/JPY I do not trade on any other currency pair. It is very important to stay focus. Therefore, I would only want to know news about US, Europe & Japan, to give me an overview about the economic so that I can apply some fundamental analysis from there.

Among all the currencies pair EUR/USD is so far the most traded and popular pair, that is why I am choosing only EUR/USD to do my analysis and sharing with you how I analysis and make money from this pair.

Please read the below DISCLAIMERS before you continue.

The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade.

The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition.

EUR/USD Technical Analysis

1) Starting of 4 May 2011 EUR/USD has started to turn bearish and trend down ward. The downward price movement continue until somewhere mid of July.

2) And after slightly more than a month of consolidation, an increase movement of downward pressure sends the price down even further. With the blue moving average cutting through the rest of the longer period moving averages, it gives me an understanding of how strong this trend movement was.

3) It went through my solid red down trend line and support line, and makes a reverse price movement up and now we can all see that it has made a false break-down and almost touches the 3rd point in my upper down trend line.

4) The thick blue dotted line was the major up trend line broken on the 3rd point of contact, you will be able to draw this line if you zoom out to weekly time frame chart. So the blue dotted line which before was the support trend line has turn to become a resistance line. As you can see it touches nicely and started to trend down ward.

5) Support and resistance line was drawn at this point because it touches most of the previous peak and trough and it was also the point where strong reversal takes place.

6) As to date it is current consolidating at this point, due to support line and down trend line is very close together. Volatility may increase sharply within this week.




Click the below thumbnail to view my trade for this period I have done


Total winning trade : 9/9 (100%)
total winning pips : 636.1

Currently I do not hold any open position for EUR/USD. I would like to see how the candlestick is going to form first, and what is the news speculation on both Europe & US.

I shall continue to update my trades in this threads. If you like what I am doing.

[James Alejandro]

Continuing from my earlier posting EUR/USD traded at 1.35169, and I have said that there will be an increase with volatility by this week. True enough it has made a 200 pips downward move in a single day. Touching the lower part of my downward channel line.

I would like to emphasize on a few important point in this posting. In every trades it is very important that you know how to assess your risk, and I would like to point out some useful tips for you.


1) The picture above is a weekly chart of EUR/USD. And if you have follow my eariler posting, you will realize that I have drawn an addition trend line marking with number 1. As it is not a confirm trend line yet, I used dotted line to represent a potential support trend line to assess whether it will make reverse upward move later. As you can see, it touches nicely on the blue dotted trend line. Therefore, price should consolidate for a while to gain strength and momentum for next move. So what you want to know is, which side will it go? up or down? Now let’s zoom in to view day chart.


2) All moving average are above the candlestick. The blue MA has cross red and green once, but fail to meet yellow MA. That doesn’t mean it will not try to touching the yellow MA again.

3) What you want to see from here is that whether will the candlestick go above 1.34439 and stay there. If it does stay, there is a chance that it will at least go up 150 to 200 pips from 1.34439.

4) There is an important news announcement from German Ifo Business Climate later at 4am (GMT -5:00) today. This news will create a short spike depending on how market read the news, it can go at any direction. Therefore, if you intend to enter and hold position. You might want to enter after the news release, to avoid stop-loss trigger.

As to this point, I will like to see if a double bottom or a higher low will form. If this pattern appear probability of winning by going long will weight higher than shorting.

There are a lot of false break in forex trading, and these might be just one of them false breaking downward and may have a reversal effect. I would prefer to wait for the “false break” to happen first and decide later if the trend is really going down.

[James Alejandro]

In my earlier post I have spoken about the possibility of a reversal move from my new dotted blue trend line. And the consolidation due to the surrounding trend line and resistant line at that point.

Let's take a look at how the chart has progressed so far.


1. Black Friday on 25th Nov has helped US retailer to gain much earning and has created a short period demand on US dollar, which caused the EUR/USD to go down on that day. But it did not test the previous low of 1.31539, if it would have touch and rebound, upward certainty would be more clear. Since it has not touches the previous low, the risk of downside still remain. (Please refer to the attached day chart)

Market as to this point have not decided on the direction, buyer and seller are still waiting for clearer view of Europe and USA development.

2. However if we zoom-in to hourly chart. Since the beginning of this week it has made a very nice higher low and the candlestick is trending nearer to my upper side of the downtrend channel. If it can make a 3rd higher low and break through 1.33990 without false breaking, we should see a very good run of at least 100 to 200 pips on the upside. (Please refer to the attached hourly chart)


DISCLAIMER
The information provided here is of the nature of a general comment only and neither purports nor intends to be, specific trading advice. It has been prepared without regard to any particular person’s investment objectives, financial situation and particular needs. Information should not be considered as an offer or enticement to buy, sell or trade.

The risk of loss in trading can be substantial. You should therefore carefully consider whether such trading is suitable for you in light of your financial condition.

[James Alejandro]

See how a simple technical analysis by using moving average, trendline and reading candlestick chart can really help you to strategist your trade.

All this is done without the need of using MACD, ADX, Parabolic SAR, Bollinger Bands and etc...

In my earlier post I have said:

a) It has made Higher Low.

b) Breaking Through 1.33990.

c) A Good Run of 100 to 200 Pips.

James Quotes:
Technical Analysis on EUR/USD Day Chart 29.11.2011
However if we zoom-in to hourly chart. Since the beginning of this week it has made a very nice HIGHER LOW and the candlestick is trending nearer to my upper side of the downtrend channel. If it can make a 3rd higher low and BREAK THROUGH 1.33990 without false breaking, we should see a very good run of at least 100 TO 200 PIPS on the upside

I will re-cap over here again that on my earlier post, I have mention that "If it can make a 3rd higher low and break through 1.33990 without false breaking, we should see a very good run of at least 100 to 200 pips on the upside." And YES I have said it RIGHT AGAIN. It has MOVED 130 PIPS from 1.33990 before retracing back.

1) In forex trade there are many false break, and most of the time the first break-out is always a false one. Take this good example, it first breakout on the upside moving about 70 pips, and then break-out downside and moved around 30 pips.

if you are not familiar with false break-out you might have enter upside and cut loss, enter again on downside and cut loss again. After suffering two loses of maybe around 80 to 100 pips, you might decide not to enter because you think market is going against you.

But the fact is false break-out is very common in forex trade and you always have to be vigilant in identifying them.

2) After the 2 false break-out, see how the candlestick has move significantly. I have now already enter my trade to long and waiting to hit my target price.

News dated 30 Nov 2011 has reported that EU are given 10 days which they call it the 'critical period' to resolve their debt crisis.

This is a very important period and you should watch closely if you have an open position, volatility will be strong during this period and post period after the 10 days.