FX Daily Signals, Analysis and News - 3 January 2008

Wednesday is the day that the weekly candlestick becomes completed and the new one comes. So we have a completed weekly candlestick now. It can give a lot of information. Sometimes it can tell us even about the direction of the market for the next months. Let’s see.

Tip of the day:

Where should you place your stop loss?

A stop loss should be placed somewhere that can be triggered only when your trade and the direction you have predicted is completely wrong. Only in this case the stop loss will protect your capital otherwise it will cause you lose more and will change a profitable trade to a failed trade. When you lose a tight stop loss, it will be triggered even when you have not made a wrong trade because the price usually goes up and down several times before it goes to the right and predicted direction.

Fundamentals:

Today we will have the Initial Claims at 8:30am. Click Here to learn more about the Initial Claims.

Ok! Let’s analyze the currencies.

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

It went down but has not tested the 1.9752 support yet.

Lets check the completed weekly candlestick.

What does the completed candlestick tells you?

The weekly candlesticks are much stronger than the daily and the other smaller time frames. Such a strange candlestick can not be ignored. It tells me that something is going to be changed. When it was started, it went up strongly. It was a strong Bullish attack but Bears proved that they are still very strong. They took the price below the open price. So what will happen? If the Bears can take the price below the 1.9752 support, the price will go lower. I think this is the biggest possibility because the price has not touched the Bollinger lower band for several months. So it will go down to do that.

Something I am sure about is that we can not take any position according to the weekly chart by now because it is in an indecision situation. If you have already been short, just keep it if you are in profit but I think the big shadow has already triggered your stop loss. But forget about going long by now. It is too early.

We can trade according to daily. It seems it will go down for a few more days or even more if it breaks the 1.9752 support.

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

Wow! It went down nicely. Hope you went short last night.

In the weekly chart, we have the biggest Bearish candlestick we have ever had in USD/JPY in the past few years. Bears are really strong by now.

3. Euro against US Dollar (EUR-USD)

It went up nicely. I thought that it will go down but I didn’t go short.

But what is going on now and what will happen? Obviously there is a resistance at about 1.4750. On the other hand it seems it has not been able to break the 61.80% level and so I think today we will have a Bearish candlestick finally.

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

It went down nicely but jumped up right when it touched the 61.80% level. Bears are very strong and it should go down and break the 61.80% level.

Like the USD/JPY, we have a very big bearish candlestick in the weekly chart. It should go down to test the the 1.0890 support but it is a long way to do that. So I think it should have one or two Bullish candlesticks until there.

Ok! I started checking a little late tonight. So I can not finish the report for all of the 18 pairs. Sorry about that.

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

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