FX Daily Signals, Analysis and News - 16 January 2008

Yesterday was a great day. I hope you could take the advantage of all the trading opportunities and make a lot of money. I am sure some of you could do that. Congratulations!

But I am also sure that some of the others took the wrong directions and lost some money. They can be mad at themselves but I have a message for them. Don’t worry. Everybody is like that at the beginning. You will learn it. Don’t be disappointed and don’t give up. Keep on practicing and if you feel you are not experienced and knowledgeable enough to trade with the real money, keep on practicing with the demo account. Don’t listen to the brokers who push you to open a real account. They think about nothing but making more money. They don’t care if you lose your money. You have to take care of your capital.

Happy Trading

Tip of the day:

I have received some emails asking about Fibonacci and the way that we can use it. As you see I use it a lot and it is really a big help. I wanted to explain about it under the tip of the day but I prefer to have a separate article for that. Stay tuned. Hopefully I will post the article tomorrow if I can.

For today, I have an idea. Again for those who lose more than what they earn because this group need more help than those who are in profit.

Let’s try something. Make a list from all your trades. Record the exact buy and sell price and the number of pips that you have made or lost in your trades. Then check them carefully and see what would happen if you had made the trades at the opposite direction. For example you have made the below trades:

- EUR/USD: Sell at 1.6706; Buy at 1.6804 (-96 pips)
- USD/CHF: Buy at 1.0996; Sell at 1.0911 (-85 pips)
- GBP/USD: Buy at 1.9574; Sell at 1.9636 (62 pips)
- USD/JPY: Buy at 107.78; Sell at 107.05 (-73 pips)

So your total loss is -192 pips. What if you had entered to the trades at the opposite direction? If so:

- EUR/USD: Buy at 1.6706; Sell at 1.6804 (96 pips)
- USD/CHF: Sell at 1.0996; Buy at 1.0911 (85 pips)
- GBP/USD: Sell at 1.9574; Buy at 1.9636 (-62 pips)
- USD/JPY: Sell at 107.78; Buy at 107.05 (73 pips)

and your total profit would be 192 pips. Even you could make more if you would close the third trade sooner or would place the stop loss in a better position.

If you listed your trades and you saw that you would be in profit in case you would do them at the opposite direction, then you have found your problem:

You try to hit the top and bottom of the market and don’t wait for enough confirmation. You trade against the market and as soon as you see a small reversal signal you enter to the trade whereas the market doesn’t change its direction.

First way: Do not wait for a reversal signal. Go long when it has already started to go up. Go short when it has already started to go down. Do not try to hit the top and bottom of the market. Enter to the trade when the market is on its way and is moving to a special direction.

Second way: Act against your primary decision. For example if you came to this conclusion that the price wants to go down, don’t go short. Go long!!!

and visa versa …

Then you will see that you are in profit at the end. Try this in a demo account or on the paper and you will admit that it works.

Ok! Let’s check the currency pairs:

Compare the yesterday report with the current one. You will need to refer to it while I am explaining about the current situation.

Fundamentals:

I made a mistake yesterday. Sorry about that. Yesterday we had Retail Sales ex-auto at 8:30am. Today we have Fed’s Beige Book at 2:00pm. Click Here to learn more about the Fed’s Beige Book.

1. Euro against US Dollar (EUR-USD):

Yesterday I had a small triangle in the 4hrs chart and advised you to take the right direction when any of the sides of the triangle becomes broken. If you followed my advice, you should have gone short after the 12:00 candlestick was completed. Hope you did it.

The market is completely Bearish right now. Just the last candlestick has a long lower shadows that tells me that the price will go up a little or will stay in an indecision status for a while (we will have Doji candlesticks). Then it is highly possible that it keeps on going down.

The last daily candlestick is formed as a big Bearish candlestick that has completely engulfed the previous candlestick. This is a big reversal signal but it needs confirmation. So if you are a swing trader, it is not the time to go short yet. We have to wait a little more.

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

You should have kept your short position. It didn’t move up. It tried to break the 1.0885 support once but failed. Now it is going down to try once again. Let’s see if it can break it or not.

The daily shows the same thing. I think it will be able to break the support and will go down.

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

Hope you read my 14th Jan report. If you take a look at it you will see all the possible directions that GBP-USD can take. It became clear on 14th Jan at 4:00 GMT time that it will take the #2 direction. It did and now it is on the #4 direction.

The daily is completely in an indecision situation: 7 candlesticks trying to break the 38.20% level. Bears are still strong and I think the 38.20% support will be broken and it will go down. But we have to wait and see. We do not trade according to our thoughts. We trade according to the signals we see.

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

It went down strongly and broke the 107.20 support. It is still Bearish strongly.

The one hour chart has formed a descending triangle which is a continuation signal. If you like to make sure, you have to wait for the price to break down the triangle lower side.

The daily is strongly Bearish.

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

It went down and broke the strong support I talked about it yesterday. It was because of the Japanese Yen. It became so strong since yesterday.

I don’t see any significant reversal signal so it should keep on going down by now.

6. Euro against Japanese Yen (EUR-JPY)

Yesterday I told you that it is highly possible that it breaks the channel down and it did. Hope you had the chance to go short.

The daily is strongly Bearish but the 38.20% level is on the way.

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

Was this article useful? Let my latest articles be delivered to your inbox automatically. Enter your email address here and click on the subscribe button. You can unsubscribe at any time and your email will not be given to any third party: You can also subscribe for my feed:  FeedBurner