Welcome to my investing and Forex trading blog. This is where I share my analysis of the Forex market (primarily, I plan to expand into other markets in the future) and talk through the trades that I make. Read on for today’s analysis — I typically do a morning analysis for the markets each morning that I trade, but today I’m doing things a little bit differently.
Today was a strange day. I went to bed at a decent time last night, but just couldn’t drag myself out of bed this morning. I ended up cleaning first thing, and by the time I got to the charts, it was after 9:30 and I didn’t want to be just getting started at that time. So, instead of doing a regular analysis and a regular trading day; since it’s Monday, I’m going to look at the baskets and do a longer-term RSW to set myself up for the rest of the week.
I’m not going to use this analysis as gospel, and I’ll still be able to look at charts based on volume, but this is going to give me a good jumping off point starting tomorrow morning. Depending on how this week goes, maybe this is something I’ll do every Monday from now on. But that’s getting ahead of myself. Let me focus on today and now, and see how things play out.
Without further ado, let’s dive in to the baskets and see where opportunities may lie this week.
USD – Neutral
I don’t see much that excites me here, even looking forward to the rest of the week. Starting on the 4 hour chart, price has been up all year, but there have been fairly long periods of inactivity. Last week, price made a pretty strong push up, peaked at a key level from back in early December, and has mostly moved sideways from there (maybe with a slight pullback).
Some more strength has seemingly come back in this week, but price is still sitting a little far off of the highs that were recently made. It looks, to me, like there’s going to be another period of largely sideways movement; so I’m going to just take USD charts at face value if I come across any and not have any bias.
CAD – Long
Between Mid-November and the middle of last week (mid-January), this moved largely sideways. There were some wild swings within that movement, but price mostly stayed within a range. At the end of last week, price made a strong push up, and took out the highs of that range, reaching the highs of a key area that held up in early November.
Price peaked around those highs this morning, and as of right now is on a pullback, which might be exactly what I need to get in to this trade. It’s not an incredibly deep pullback, and it looks to be well within the confines of an overall uptrend.
I’ll have to look at individual charts here, of course, but I think I wouldn’t mind being long Cad, when price starts to push up — I also wouldn’t mind waiting until price comes back enough to touch the Moving Average. I’ll keep an eye out here, but overall, I’m bullish CAD.
EUR – Long
I’m cautiously long here because I could just as easily see this create a fakeout and not a breakout. Price has been steadily pushing up since the beginning of the year, and peaked in the middle of last week. The price where the peak occurred, also, was a minor key area back in late-November/early-December.
After reaching that recent high, price pulled back, and for the last few days has been moving sideways/basing. If price can push up out of those highs it could make a strong run since this resistance level has held up pretty strongly.
That said, though (based on the levels from last November where price is currently stalling), there are other levels where price could stall again just outside of the current highs. To put it another way: even if price does break out of it’s current consolidation, the highs it could realistically reach are so close that it would be difficult if not impossible to get a good R:R.
All of this is in EUR’s basket, though, and individual charts might look better. A breakout might be very much in play vs one currency, instead of looking at this as a whole. I’m going to remain bullish here, and do my best not to chase anything or force any trades.
GBP – Long
This has been very strong since the beginning of the year — stronger than EUR — and looks like it could be ready to break out. This peaked at the end of the week last week, pulled back, and as of this morning price is back up to those highs that were made.
Zooming out a bit, the key level price is hovering around now was support back in late August, and a bit of resistance prior to that. If this makes another push up, not only does it look like a clean break, the next key level looks like it would offer a good return.
I will say that RSI is showing this as being overbought — and as being overbought (or close to it) during the majority of this up-move; so this may be exhausted. But A) this is the basket, so I’d like to see what individual charts look like and B) markets can stay irrational for longer than you can stay solvent, so if this is indeed strong I’d rather ride that strength and attempt to catch pips than sit out because of an indicator.
Once again, I’m going to do my best to use this information to make the most informed decision I can; but at the same time I don’t want to force anything — taking trades in one direction because of my bias despite what the charts say — or avoid anything that looks great but is in the opposite direction of this. This is just a guideline. It’s a balancing act, and hopefully one I can succeed at this week.
JPY – Short/Neutral
I figured this would be bearish given how bullish everything else looks; and it has certainly been down all year. It bottomed out last Friday and has been on a bit of a rally, which may be the move that’s needed to make for a good trade.
That said, though, on this rally I could almost argue a higher-high, higher-low, then subsequent higher-high. It may be making reversal moves, and I don’t want to get burned because of it. I’m cautiously bearish here right now, so we’ll see how price actually moves throughout the week.
AUD – Long/Neutral
This is interesting this morning. Price has been pushing down for the last few weeks (since the beginning of the year); there was some sideways movement a couple of weeks ago, but price made another push down at the beginning of last week.
By Wednesday, though, price had bottomed out and was on a fairly strong rally. The rally pushed through some resistance, through the 20 MA, and got up to the 50 EMA line. It’s a pretty strong move, and, as it’s pulling back, looks more like the continuation of an uptrend. Price pulled back to the now-upward-sloping 20 MA. Within this week, I see more upside than downside, I think.
Aussie tends to move a lot overnight, so we’ll see how it’s charts are in the morning when I actually dive in.
NZD – Short
Holy crap, this has been dropping strong since noon. It looks like it’s reaching some old support, but this is down a lot right now; who knows how far it could go. It might even be too late to look for shorts — it looks extended so I’d be nervous about it if I were trading right now, but we’ll see how it moves overnight.
If it rallies back up to that prior area around .691 – .692 by tomorrow, it might be a good opportunity to get in. I feel like I got away from doing this analysis because, by the time I got to any charts, the move had been made. I don’t want to fall in to that trap again. So I have to be diligent tomorrow, but it will be tomorrow. I’m giving the prices a full day/night to move, and I’ll check tomorrow to see if these thoughts still hold up, rather than going and looking for opportunities right away.
Either way, this was a strong drop and I’m bearish in the short-term. We’ll see if, by tomorrow, that bearishness will continue, or if this was a bottom before a reversal.
CHF – Short
CHF seems prone to long periods of sideways movement. There’ll be a couple swings, and occasionally a breakout; but price tends to stay within a range. Since the beginning of the year, price had been in a range until last Wednesday when it broke out to the downside. It pushed down through the lows of the prior range, even through some lows that were made on a couple of those random swings outside of the range and bottomed out at the end of the week.
Since the market’s opened back up yesterday, this has been on a rally and is close to touching the 20 MA. It looks like a good rally to me to short in to. If price ultimately fails at the 20 MA, then I think it could make for a good short, even if it’s only back to the recent lows. That move could also happen overnight, which would be unfortunate, but we’ll see in the morning.
I want to point out that the up-move that price is making looks more like it’s rolled back to the upside, rather than simply retested/rallied. That can sometimes mean a reversal. So I wouldn’t be surprised to see this push up more from here. I’m not trading right now, though, just getting an idea of how things are moving, so (again) we’ll see in the morning how this has moved. Hopefully there’ll still be time to short it.
Thanks for reading! What did you think about today’s analysis? Let me know in the comments below. And, let me know below here (or below one of my future posts) if you were able to capitalize on any movements in the markets. Let’s learn together, stay tuned for more analysis and trades!