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We’re back to the USD/CAD pair today. Here I see us still in an uptrend long-term on the weekly chart, but still experiencing a short-term retracement southward.

The weekly chart is displaying what would appear to be a nice 1-2-3 bottom, all the while MACD at that level is trending up, from below the water line. During periods of retracement, you want to keep an eye on the lower level charts, as in the 15 minute chart, for good trading set-ups.

Today, for instance, we had the classic turnaround in price at the London open, after a swoon in price, from the conclusion of the Asian session. Price then headed up to the bellwether 200 EMA, where it was repelled. I see any weakness in this pair as a good chance to grab a long position trade, subject to proper TA technical analysis),and trade execution.

Today, it’s off to see the pound. The higher level charts (weekly, daily) clearly show what appears to be a head and shoulders pattern, and price is now testing the right shoulder.

If it holds, price has nowhere to go but down – what with the Big Dogs shorter than longer, with respect to their sentiment (COT).

Further, MACD has turned down on the hourly chart, and there Is evidence of MACD divergence on the 15 minute. Methinks the pound is running out of gas. We’re either going to have an explosive rally up, up and away above and beyond the right shoulder, or price is going to tank. Should be interesting, to say the least.

For more on how to pick tops and bottoms, please see what we have in store for you in the members area at forexmentor.

And now on to the Aussie folks. Last night, price was clearly above a down-trending 200 EMA on the hourly chart – i.e., going the wrong way – and MACD was turning turtle on the 15 min.

It was no big surprise to see negative divergence on MACD to price occurring on the 15 min. shortly after midnight ET. Translation: price had nowhere to go but down – through the end of the Asian session, and on into the London session. A Joe Cheung price projection just before midnight foresaw the eventual swoon in price down to the 7540 level – and there it went – just like magic folks.

For more on the finer details of how to perform trendline analysis, price projections, etc., check out the members area at forexmentor.

Today, we are focusing on the Canadian dollar, fondly called the loonie
by some enthusiasts (of which I am not one). They could have done
better when they picked that name. But, what do you expect from politicians
anyway? Every country has its share of them (the not so good ones, that
is, eh).

Anyway, the weekly and daily charts are clearly displaying what looks
to me like a 1-2-3 bottoming-out pattern. And, the 200 EMA on the hourly
and 15 minute charts is clearly trending up. Up she goes.

So, guess what folks? Buy the xxxx in the xxxxxxx. Yes, you heard it
right. Buy the dips in the uptrend. Wait for weakness, and then go for
it.

The challenge for most of you will be the waiting game. Most of you are
impatient, and want it all now. We can thank McDonald’s for that
culture. But, wait you must. Wait for ironclad set-ups, and a confluence of
events to take you in. In other words, do what everybody else isn’t.
When they’re selling, you should be buying – using good ole fashion TA
(technical analayis). That’s my sermon for the day.

Back to the euro today folks. According to the latest COT stats. (commitments of traders report, as at last Friday), the hedge funds and the street money (read,dumb money) are now selling the euro. Of course, this move was set up by the
Big Dogs (commercial traders) as far back as June. It can take upwards of three months for their sentiment to finally kick in. The euro has a ways down to go yet.

Narrowing the focus, last night, although MACD was bullish (albeit overbought),price was above the 200 EMA on the 1 hour chart, which was trending down. Another chance to sell a rally in a downtrending market. Where have I heard that before? Well, sure enough, we had negative divergene on MACD to price on the
15 minute chart coming into today’s session, facilitating a nice drop in price. Any further rallies should be viewed with similar suspicion.

For more on the finer subtleties of trading the forex market, get all the latest and greatest ideas in the members area at forexmentor.

I’m going to make it easy on you folks … sell the rallies on the Aussie, euro, and pound, and buy the dips on the loonie (a.k.a. Canadian dollar).

We’ve had quite a fall-off in the first three, and the USD/CAD
is on the rise (read, the loonie is softening due to weak fundamentals). We have put in a 1-2-3 bottom on the weekly and daily charts, MACD is strong there, and the 200 EMA is trending up on the hourly. I am personally heavily committed to this pair, and have a lot riding on it. I see the Aussie and loonie as representing good position trade opps., as they are in the early stages of their moves.

Study Gary Gray’s module on position trading in the members area at forexmentor.

Today, I’m focussing on the Aussie, as the Big Dogs are going shorter that currency. And, all chart levels are reflecting bearishness – especially with the 200 EMA trending down on the 4 hr., 1 hr., and 15 min. charts.

Today, the dumb money pushed the Aussie up to the hourly 200 EMA, after the London open – and that’s where it stopped its ascent almost bang on. Not only that, but we had a Tom DeMark trendline break at that point on the 15 min., confirmed by MACD punching down through its trigger line. Sell the rallies in this downtrending market folks. Also, keep an eye on the loonie (read, Canadian dollar). There, you should buy the dips in the up-trend. Check out the daily chart. We are experiencing a retracement – perfect buying opportunity.

Let’s do some big picture thinking here, and forget the details today. The loonie (USD/CAD)is in an uptrend, the Aussie (AUD/USD) is in a downtrend, the euro (EUR/USD) is in a down- trend, as is the pound (GBP/USD) – all supported by the 200 EMA on one chart level or another.

The 200 EMA is the bellwether indicator. So, accordingly, you should be looking to sell the rallies in a downtrending market, and buying the dips in an uptrending market. Capiche? During periods where the underlying market goes stale on you, then crank the microscope down to the 5 minute level and scalp, using OB/OS readings on Bollinger bands and RSI. Regardless of where the market is going, you can employ the Jeff Hughes technique of watching for OB/OS readings on Stochastics (STO) on the hourly chart, and going short/long, when you have a death cross/golden cross of the 10/80 EMAs. So, there you have it folks. Lots of trading opps. abound with these four currency pairs.

I didn’t plot the daily pivots for the euro today, because I wanted to accentuate the power of the 200 EMA – especially on the 15 minute chart.

As at this writing, price is above that level, but its overall trend is STILL down – as it is on the 1 hour. I see what’s happening right now as nothing more than another of the many dumb money rallies, flying in the face of the bigger picture, which is bearish.

The same could be said for the pound. The commercial trades are STILL extremely short the euro and the pound, as at last Friday’s COT report. I do not see either currency as having legs at the moment. The stool has been kicked out from under both pairs.

There was a nice move up in the EURUSD from yesterday until today. Just as a reminder, I do not use the pivots for Sunday trading because I have not found a reliable CONSISTENT way to calculating them to help produce high probability trades. If, you have found a way that seems to be successful, please send it in.  However, it is nice to see just plain old support and resistance play out very nicely.  Please keep major support and resistance in mind for the week ahead. I have also found the following article very insightful; please take a few moments
to read it.

Details Matter:

Sometimes a small, seemingly insignificant detail can make a huge difference. Details do matter, but many traders minimize this fact of trading. For instance, it is essential to outline a detailed trading plan and to follow it, but many traders, especially novices, believe they can leave the plan open, and fill in the blanks later. And that would be all right, if they could afford to live with the consequences.

Many people, however, cannot afford the losses that result from ignoring the details of a trading plan.There are many ways to mess up a trade. If you misjudge volatility, for example, and buy too many shares based on an inaccurate estimate of the possible fluctuation in price, you may end up risking, and losing, more than you had planned. Some traders do simple, preventable things to screw up a good trade like forgetting to put in a stop loss order, or going on an errand or vacation without taking precautions to close a trade should the market move against them. When they return and monitor the trade, they wonder how they could have been so negligent. It didn’t seem like such a big deal at the time, but in retrospect, failing to pay attention to seemingly minor details and then trying to undo the problems, is tantamount to doing nothing to prevent the fall of Humpty Dumpty and hoping to put him back together again with ease. It can take more time and energy to fix a problem than preventing it from happening in the first place. This is especially true of trading, where you have to make many more trades to make up for a loss than it took to lose the money in the first place. Rather than take a haphazard, lipshod approach to trading, it is vital to pay attention to details.

How can you increase your ability to pay attention to details? First, reduce the amount of trades you are trying to make. When you try to make too many trades, you feel pressured to get more done. And when you feel the pressure, it’s hard to pay attention to details. By reducing the number, you can pay more attention to the trades you do put on. Don’t substitute quantity for quality. It is better to make fewer trades that are well thought out instead of many trades that are poorly conceived and are likely to lose money. Second, do whatever you can to make sure you are calm while trading. When you are tired or pressured, it is difficult to concentrate and pay attention to minor details. You will not have enough mental energy to devote to addressing essential details of a trading plan. Your ability to pay attention is a limited psychological resource. Coping with stress saps up limited resources, so the more you can remove background stress from your life, the more likely you will have the required psychological energy to earmark for paying attention to details. Third, you can create a checklist of procedures to follow to ensure you attend to essential details. Some traders actually devise worksheets that require them to outline all parameters of a trade before it is executed. Such a form would have blanks for target entry price, stop loss rules, and exit price. Additional details of the trading plan can also be noted, such as market conditions that must be present before a trade is executed. The goal is to add structure and organization onto chaos. If you have to write it down, you will be likely to address it. Rather than try to remember what you should do, you will force yourself to actually go through each step before you execute. It may seem pedestrian, but going through the process of completing each step in a checklist can increase your ability to pay attention to details.

Trading is challenging. It’s easier to lose than to win. In order to survive, you must do everything possible to increase your chances of success. One of the most important steps you can take is to get organized, plan carefully, and pay attention to vital details of your trading plan. The more you pay attention to details, the more likely you will follow your plan and take home profits.—- Innerworth

Good Hunting in the week ahead,

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