Forex Analysis Report - 24 January 2008 (morning)

Hello my friends

I have been too busy making the weblog in order and just started to check the forex market. I hope you could take the advantage of the good opportunities we had last night. Some of the currency pairs were trapped in triangles last night but they broke out. All the orders I placed went to the direction I had chosen but I had to place a limit to collect the profit on time because I was too tired and I knew that I would not check the trades at the early morning.

I have not started to write the article I had promised to write about breaking the support/resistance line but hopefully I will do it today. Let’s see this lazy guy can keep his promise or not.

Again, I appreciate your kindness and attentions. Some of you posted some comments and made me embarrassed by their kindness. I will reply all the comments after posting this report. You can read the comments here and here.

Fundamentals:

Not any special news for today.

1. Euro against US Dollar (EUR-USD)

Last night the daily candlestick was formed as a Hanging Man and I said that the market is in indecision. Then I checked the smaller times frames like 4hours and one hour and they showed that the price is trapped in a triangle. I suggested to wait until the price breaks out of the triangle and it did it about 4-5 hours ago. I hope you could take the chance to go long.

For those of you who are interested to know when we can say that a support or resistance is broken, you can see it in the below chart. The 24 Jan 10:00 candlestick confirms that the triangle is broken up.

It seems the price will break the 61.80% level and will go higher.

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

When the EUR-USD goes up we expect the USD-CHF to go down. It is trying to go down but have not been able to break the triangle yet. You can go short as soon as it breaks the triangle down and visa versa.

The 5min chart shows some nice opportunities to trade. You can do that as long as you have an eye on the one hour chart because the 5min chart moves inside the one hour chart and will finally follow the one hour chart direction. Of course, when the one hour chars wants to change its direction, you can see it in the 5min chart first.

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

GBP-USD shows the same pattern you see in the EUR-USD. It also broke out of the triangle and went up.

This one was a little tricky in breaking the resistance. This is the time that you can choose the wrong direction. Look at the below chart:

1. First it went down and broke down the triangle (candlestick #1). You could think that the triangle is broken down and you can go short but the candlestick #1 tells you “wait”.

This candlestick has a long lower shadow, doesn’t it? It means the Bulls are trying hard to take the price up. Although the price went down, the Bulls could take it up over 50% of the way that it had gone.

Learn the language of the candlesticks!

2. Candlestick #2 admits this. The price went up and tried to break the triangle upper side but failed. Up to now, the price is still in an indecision status because it is still inside the triangle.

Also look at the Bollinger middle band. It has been working as a strong support and didn’t let the price go down.

3. Candlestick #3 confirms that the Bulls are stronger and have taken the control.

4. Candlestick #4 can panic any trader but the candlestick golden rule says that you have to wait for the candlestick to be formed completely. If you would do that you could say that the triangle is broken up and the price retested both the triangle support and resistance and couldn’t break them down.

5. Candlestick #5 says that those who have a long position are on the right track and should keep their positions.

Now look at the 5min chart. I want to show you why experienced traders say do not trade against the one hour chart and go nothing but long in an uptrend and nothing but short in a downtrend.

The red arrows show the false Bearish signals that may cause inexperienced traders to go short and then lose.

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

If you went short last night using the one hour chart signals, you should have made about 40 to 50 pips.

Now the one hour chart is at the end of the triangle and so has to break it out and take a direction. We have to wait again.

The 5min is moving inside a channel. The market is slow (range) now and you can know this from the Bollinger Bands that have become so close to each other. When the market goes to a range status, you have to wait and you have to know that a big move is on the way. In the case the big move is breaking out of the triangle (in the one hour chart) and taking a direction.

5. British Pound against Japanese Yen (GBP-JPY)

It broke out of the channel and is going up. You should have gone long at about 2 hours ago.

The 5min chart is testing the resistance but has not been successful so far. So It is possible that the price starts going down. So be careful.

6. Euro against Japanese Yen (EUR-JPY)

The same situation can be seen in EUR-JPY. This currency pair moves like the GBP-JPY. It has a good volatility and the good thing about it is that its spread is much less than GBP-JPY. So it is better than GBP-JPY for intraday trading.

Further Reading:
Read and learn more about forex trading and technical analysis