Another Slow Day in Forex Market But Get Ready for the Big Waves Again

Hello my friends

Today was a slow day again but don’t worry. Forex market will not be stopped and we will have big changes and movements again and again.

You have two options when the market is slow. You can stop trading and just check the one hour and 4hrs charts while you have plotted the trends and patterns and you know what you are waiting for. Then you can take the proper position when the price breaks out of the range.

The second option is scalping using the small time frames like five minutes, two minutes and even one minute chart. This is what I did today. Please keep in your mind that even when scalping, you have to have an eye on the bigger time frames (at least one hour) and know the main direction. You also have to plot all the trends, supports, resistances, wedges, triangles and … on your charts and be aware of them.

On the other hand, you have to be so fast to get in and get out. This needs a lot of practice. While scalping you can not leave the computer unless you place an OCO order because sometimes you will have to close your trade in a few minutes.

Also depend on the market condition, currency pair and time frame, you should not expect to make more than 10 to 15 pips from each trade. I will write an article about the strategies that can be used for scalping. Scalping has a lot of fun specially when you learn it properly but for inexperienced traders, it can be a disaster because in scalping you may trade against the bigger time frames and also the main trend and if you hold a wrong position, you may lose a lot. You have to be fast enough to close a wrong trade before it drains your money.

So be careful not to try scalping with the real account if you have not tried it before. Just practice with the demo account and then try it with the real account. You also need to have enough knowledge and experience about the candlesticks.

So wait for my scalping article. I have developed a lot of good systems for scalping and I will share them with you.

Fundamentals: Tomorrow at 10:00 AM - Pending Home Sales

1. Euro against US Dollar (EUR-USD)

11:47pm GMT

Today the new weekly candlestick comes which means the current one will be fully formed. The weekly chart and candlesticks give a lot of invaluable information about the market direction. Sometimes one single candlestick in the weekly chart shows the direction of the market for several next months.

This is the EUR-USD weekly chart for the past 7 years. As you see it has been going up strongly during all these years specially in the last two years. But it seems it is the time to make some corrections.

See the power of Fibonacci. The price is stopped right under the 161.80% level. Plot your Fibonacci levels from W53 Dec 2004 to W47 Dec 2005 from top to bottom of the trend. Then you will see what I mean.

Now lets put the chart under the microscope and see more details!

Look at the last candlestick which has only two minutes to become completed at this moment. Its open price is exactly the same as the close price of the previous candle. It went up for about 125 pips to retest the 161.80% but failed and went down for about 372 pips and finally was closed at 1.4614.

If you read my candlesticks articles you will know that the last candlestick has formed a Bearish Engulfing pattern.

So what?

If the next candlestick goes down and breaks the low price of the last candlestick (the small thick red line), it will go down and you can take a short position (if you like to trade according to the weekly chart). The price could not go higher than the 161.80% level since 11 weeks ago. So I expect a double top that will work as a reversal and will break down.

The daily shows that the 261.80% level is broken but the market was uncertain to go down. It is possible that the level becomes retested several times.

The 4hrs shows that the market has a higher tendency to go down.

The one hour shows that the price is moving between 50% and 61.80% and is inside a triangle right now. So any new position should be according to the triangle breakout.

2. US Dollar against Swiss Franc (USD-CHF)

3:22am GMT

The weekly chart shows a Bullish engulfing pattern formed by the last candlestick but the problem is that this candlestick doesn’t break out of the Bollinger band and doesn’t even touch it which means it is not a strong signal.

The daily chart shows that why the weekly signal is not strong enough. The price is stopped from going up by the 261.80% level.

The 4hrs shows that although there was a strong sell signal yesterday but the Bears are not strong enough to take the price down. The market shows an indecision and none of the Bulls and Bears are strong enough to take the control.

And the one hour shows a narrow range. The one hour shows that the price is stopped by the 161.80% level from going down and the last a few candlesticks shows that the price is going up slightly to retest the Bollinger middle band. We have to wait by now.

3. British Pound against US Dollar (GBP-USD)

The weekly chart shows a big Bearish engulf. This is big warning for those who took a long position last week when they saw the big Bullish candlestick.

The daily chart shows that the price is retesting the 38.20% level to go down.

The 4hrs shows that the market is trying so hard to break down the wedge and go lower. However the Bears didn’t have enough power in the past 24 hours but the candlesticks shows that the price will go down finally. We have to wait and see.

The one hour chart shows that the Bears are a little stronger and so the price will go down to retest the Bollinger lower band.

4. US Dollar against Japanese Yen (USD-JPY)

4:03am GMT

The weekly chart shows that Bears are exhausted and the price wants to go up or at least make a correction.

The daily chart shows that the price is still inside the symmetrical triangle but it is in No Zone area. The last 1/3 of a symmetrical triangle is named no zone and when the price goes to this part it becomes harder to make any prediction and it is possible that the market stays in a range status for a longer time.

The last candlestick in the 4hrs charts shows that the market is in an indecision status but Bears look stronger and it is highly possible that the triangle becomes broken down.

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