learnforexsecret.com

With the daily, hourly, and 15 minute charts for the pound all showing downward price action, according to the 89 and 144 EMAs, it was logical to expect further erosion in price coming into today’s session. That we got after the London open, facilitated by negative divergence on MACD. Further, today was declared an M1/M3 day, by virtue of the close at midnight ET being lower than the open 24 hours earlier. It’s interesting to note that the ‘Jeff Hughes trade’ was also helpful in nailing the collapse in price that occurred shortly after 4 am ET. The 10 EMA punched down through the 80 EMA (read, 40 smoothed) on the 5 minute at 4:15 am ET, whilst STO (Stochastic) on the hourly went from being slightly overbought to trending down

We appear to be going through another period of price consolidation (or equilibrium) on the daily chart for the euro –while MACD has fully neutralized on the hourly. This normally means traders are just taking a breather, before action heats up again.

In the meantime, yesterday I got into Jeff Hughes’ approach to day trading, and showed you how to apply his technique. I no sooner finished the am review when out popped another one of his gems – at 8:10 am ET. STO was over- subscribed on the hourly, and the 10 EMA punched down through the 40 EMA on the 5 minute. Ka-ching - a nice ~60-pip freefall!

Traders are now just chopping wood, getting ready for the next move up, I would surmise. Now, I know the 8:10 trade flies in the face of everything I have ever said about being out of the market during news hour (read, 8:30 am ET), but it is my humble opinion that, if a good set-up occurs before that bewitching time, then so be it, with the proviso, of course, that we are not expecting any life-threatening news.

Today, we are going to focus on the ‘Jeff Hughes Trade.’ Pretty simple stuff, and yet so powerful in its simplicity. This is the ~ system that is used by Jeff, who is a full-time forex trader (and stay-at-home dad).

• Symptoms: daily chart – price above 89 and 144 EMAs (read, longer-term trend is UP);
• hourly chart – price in an uptrend, MACD neutralized, STO oversold at 23:00; 15 min.
• chart – price in a downtrend, MACD divergence immediately before 23:00;
• 5 min. chart – price in an uptrend, 10 EMA punches up through 40 EMA at 23:00.

Translation: BINGO! Easy and simple (KISS)!

In the grander scheme of things, the euro is hanging in there - being supported by the 144 EMA on the daily chart - and MACD is bullish at that level. Negative divergence on the hourly saw price collapse to 2036 on the 15 minute, before recovering at London open - then “reading” for M3 on an M1/M3 day - coming in almost precisely at the price projection performed just before the London open. A nice 40-pip run up. No particular news that I am aware of that is propping up the euro. it seems to be gaining strength on the back of a whole raft of negatives coming out on the U.S. dollar, not to mention the posture of the dumb money, who have a bid on the euro - thanks to the big dogs setting them up.

Two things to be said about the euro today: If you look closely at the daily chart, you will notice what appears to be a channel in an uptrend – which is normally bullish. Secondly, on the 15 minute, we had a channel in a downtrend on the pound towards the end of the Asian session, which was bearish, and manifested itself in downward price action for that currency pair, as well as the euro. Both pairs usually move in tandem, except in cases of extraordinary news affecting one versus the other. So, by seeing that formation on the GBP/USD, it was fairly logical to conclude that the euro would break down too.