Forex Analysis Report - 29 January 2008 (night)
Hello my friends 
Today was a slow day and most of the currency pairs were ranging. This is not good because we can not trade properly but it has a good aspect too. When the market is slow, a big movement is on the way and if you get ready for that, you can take the advantage of it.
What do I mean by “get ready”? It means you keep your charts updated with the last support and resistances that you could find. The big movements come after a support/resistance breakout. So if you find all the supports and resistances and patterns, it will be easy to ride the incoming big wave.
You have to check your charts and see if the price is moving inside a continuation pattern (like a pennant that becomes formed after an uptrend or downtrend) or it is forming a reversal pattern like Head and Shoulders. Then it will be easy to take the proper position when the support or resistance of the pattern becomes broken.
Fundamentals: 2:15 PM - FOMC Policy Statement. FOMC is an important news so be careful.
1. Euro against US Dollar (EUR-USD)
1:12am GMT
So we have to know what will happen.
If the price goes higher than the upper thick red line, or on the other word if it breaks the high price of today candlestick, the price will go higher. Also if it goes lower than the low price of today candlestick, you will have to be careful because it is possible that it tries to retest the Bollinger middle band.
The small candlesticks in 4hrs shows the market silence and indecision. This indecision doesn’t mean that the traders are on a vacation and have stopped trading. In contrast, they are all at the computers and checking the market but they are waiting for each other to act earlier. The market is over bought. The Bulls don’t dare to buy more and Bears think that the price may still go up and so they don’t dare to sell.
The one hour shows that the price has tried so many times to break the 23.60% level and go down. In many cases it seems that it succeeded to break it down but went up after that and then retested the 23.60% level. This means indecision. It means Bulls and Bears have the same power currently.
The one hour shows a flag after an uptrend. The rule says that flag is a continuation signal. So it should break up. On the other hand, this uptrend has been started very strongly. When a trend has a strong start point, it will be a strong trend. So I guess it will go up but again please note that we do not trade according to what we guess. We trade according to what we see. If the price goes up and breaks the thin red line, it means it has started to go up again.
2. US Dollar against Swiss Franc (USD-CHF)
2:02am GMT
It is still inside the descending triangle.
If you look at the last few candlesticks carefully you will see that both the Bulls and Bears have become weaker and weaker.
The 4hrs shows that the triangle is broken up. It also says that the Bollinger middle band is broken up too. So the price should go up but currently it is retesting the Bollinger middle band.
And the one hour shows a smaller symmetrical triangle. Also it shows that a small double top is formed inside the triangle after retesting the triangle resistance that was unsuccessful. Now if the price goes down and breaks the purple dotted line (double top neckline), it will go down to retest the triangle support. We have to have an eye on it. USD-CHF shows better signals and patterns than the EUR-USD tonight. So we’d better to check this one and then decide about EUR-USD if you like to trade it.
3. British Pound against US Dollar (GBP-USD)
The 28th Jan candlestick retested the broken channel and went up. It is going up slowly.
The 4hrs admits this but it seems the Bulls are not strong enough yet. If you don’t have a long position, go long only when the price breaks the thin small horizontal purple line (the yesterday high price).
The one hour shows that Bulls are stronger currently.
4. US Dollar against Japanese Yen (USD-JPY)
3:22am GMT
Like the previous currency pairs, the daily chart in USD-JPY shows indecision. The downtrend resistance was broken few days ago and the Bulls are trying to take the control.
The last several candlesticks have been moving along the Bollinger middle band in the 4hrs chart. This time frame had a strong sell signal on 25th Jan and so it is highly possible that it breaks the support down.
The one hour chart is inside a narrow symmetrical range. Naturally we have to wait for the price to break our of this candlestick.
5. British Pound against Japanese Yen (GBP-JPY)
It is trying so hard to break the 23.60% up. It has not been successful so far.
The 4hrs shows that currently it is trying to break the resistance down.
The on hour shows the same thing. We can go short if it breaks the support.
Check back for the updates in few minutes.
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hi vahid
nice report as always. i need your proffesional comment on tomorrows fed rate cut.
what will happen for eur/usd and usd/jpy if;
no cut,
.25 cut
or .50 cut.?
thanks
ateeq
When you say go short on the GBPJPY what is the TP you are looking for? Last night it broke the support line then started to follow the line. Would you use a less agressive TP due to its counter trend direction? (4H and 1D show bullish) Do you ever use trailing stops?
Hi Vahid,
The EUR/USD went up nicely, as you predicted. At about 9:00 am GMT it broke the resistance and went up 36 pips. I went long. At 13:00 GMT it fell 47 pips. Fortunately I got out before the plunge and made 20 pips. But then it rose 132 pips to the close of the 20:00 candle.
Here’s my question: Would you have closed your position at 13:00 or was the shape of the one hour candles enough to tell you the price was still going to rise?
Regards
Talita
Ateeq,
It is all dependent on the increasing or decreasing the value of USD.
No cut means no significant changes on the forex market. Just following the same trends that the currency pairs were used to follow.
.25 or .50 cut means USD will be weaker and so the EUR-USD will go up and USD-JPY will go down.