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Daily Commentary on various currencies

As Expected, Friday has once again been crazy so far in many ways with all currency pairs making wild whipsaws. GU went down just below its support and threatened to fall off the cliff. But the fact that it did manage to hold on just below support showed that there was some strength in the background.

This was proved later in the day with all pairs spurting againt the dollar and GU also broke through its resistance and is now trying to break its next resistance which is yesterdays high.

EU continued its onward march and it looks like this march would continue.

The most interesting pair today and rather the whole of this week has been USDCAD. It had been loitering around one of its major support levels and i had even pointed out the same in one of my previous posts. That big support has been broken today and we should see the pair drop down to close to 1.2.

GBPJPY again showed that it has huge support right from 140.6 to 141.5 and so any visit to this region would give good risk to reward ratio for longs. But this region has been visiting a few times this week which has made this region a bit weak. So any further visits to this region could spell danger. I expect the price to go back to 144 where again it should be facing strong resistance and it would be interesting at this point to see if the ranging continues.

Daily Analysis of GJ

The Asian session seems to have a knack of reversing all the gains made during the previous day. This has been happening each day of this week and today has not been an exception. This throws off a lot of traders as they are confused about the trend. I am sure that it would be a nightmare for the swing traders. Anyway, GJ made at attempt at breaking the strong resistance at 144 and went uptil 144.5 before it was met with a wall of sellers.

Now GJ has retreated more than 200 pips and has found some decent support at 142.2. This is not a very strong support but as we go lower, we would find stronger and stronger supports at around 141.5 and then a very strong support at 140.6.

The hourly chart again shows a pin bar at the top which should have been a good indication of the down move. On the upper side, there should be resistance at 143 and then at 143.8 and yesterdays high at 144. Today, being a Friday, should be interesting.

Daily Analysis of GBPUSD

GBPUSD also made a nice run up yesterday. It went till close to 1.4750 and as it happens usually, during the late US session and then the Asian session, price started to fall. One important aspect of the run up was that GU was able to break through major resistances yesterday. One of the major resistances was at 1.4648 and now, this price is serving as the support. As can be seen from the attached hourly chart, there has been a nice pull back from this support area and we have to see whether this bullish pin bar would work. You can also see a bearish pin bar at the top which did the trick earlier.

On the upside, we have further resistances at 1.47 and 1.4770. I expect ranging to take place between the current price and 1.4770 before any kind of breakout happens. As can be seen from the attached 4H chart, there has been ranging earlier also in the same price range and i expect the same now as well.

Daily Analysis for EURUSD

EURUSD had a nice breakout yesterday and by the look of things, there seems to be no stopping it today. As can be seen from the attached hourly chart, from the round number of 1.30, the price kept on going up and up and the high for yesterday was about 1.3150 where it faced stiff resistance.

It has since dropped down a bit. From the daily chart, you can see that it is going to face strong resistance at yesterdays high of 1.3150 and then also at 1.3180. It will be interesting to see whether both these resistances are broken for today.

On the downside, we have good support at 1.3123, where we have had some nice pull back on the hourly, and then at 1.3093 and then at 1.3060.

There should be some pull back in the Euro before it starts going up again.

Price action around SR levels

Attached is a EU 5M chart with 1H MM levels on it...Lemme take this one by one.....lets go to the first circle...in that, you see that price breaks thru resistance...but it does not run away...so u can wait for the retracement and when the retracement comes u see how it goes....the retracement carries price just below support and then stops and stalls....u also see a small pin bar...so u know that some support is building and maybe u could risk a small long...as expected, after stalling, it goes up again, breaks the resistance again and then u see a long bar and again a retracement back to support...this time, the retracement does not break the support and so u can take this as confirmation that the resistance has been broken...if the retracement had taken the price below support, then the break was false...

now on to the second circle...in this, there is a long bar which breaks the resistance and then price retraces back to the resistance turned support but does not go below the support...again u see a bullish pin bar as well..a retracement after a break above resistance with retracement not going below resistance turned support and a pin bar...all classic signs to tell u that the break is genuine and then u go long...

lets move on to the third circle...at the beginning of the circle is the first attempt at breaking the resistance which fails...u can see high volume bars in the attempt to break and then the volume falls off after the failure to break...then u see a bearish pin bar as well..someone is trying to push the price down....then u see another attempt to break the resistance with normal volume...this time it breaks and maybe u go long...it would be better if u waited for the retracement....as expected, the retracement comes along which goes below resistance turned support but pulls back above the resistance turned support...so u enter long thinking that it is a good break...but then as u watch PA, u see that the high of the previous break is not broken and price starts falling down again....this is a sign that the up move is weak and is an indication for u to exit longs at BE or with minimal loss.

Why do breakouts happen and how to trade them?

There was a question posted on my thread at FF today by one of the readers. Early in the day, there was a breakout of more than 100 pips in GJ and GU for no apparent reason. Why did this happen and how do you trade this ?

In technical terms, this is called consolidation and breakout while in volume terms, it is called accumulation and the result of the accumulation which is an upmove.....in technical terms, a ranging period or a consolidation period is followed by a breakout. the size of the breakout is always directly proportional to the time of consolidation and inversely proportional to the price range during consolidation....in other words, the smaller the price range and the more time the price spends within the price range, the bigger the breakout....how do u trade this ? when the price is ranging, just draw lines between the high and low of the range and wait for the breakout....when it happens, take a trade in the direction of breakout....

why does this breakout happen when there is no news or anything special?? for this, u need to understand volume and vsa....during consolidation, the big boys keep buying the pair....as the keep buying , the price goes to top of range, then they push it down and small traders get scared and sell and the big boys buy it...they keep buying and again price goes to top of range and they again push it down to scare the small guys into selling it to them...they keep doing this till there are no more sellers and once they r happy that it is true, they start pushing the price up and start buying everything in sight...seeing this breakout, others join in...big and small and the price starts to accelerate in the direction of breakout....this is what happens....

Daily Analysis of USDCAD

USDCAD still seems to be going around in a 150 pip range for the whole of this week. With a lot of news being released later in the day, hopefully we should be seeing some sort of a break out. USDCAD has strong support at around 1.2350. A clean break below that would take it to 1.20.

Considering the strong support close below, i guess the likely direction would be up but it could be anything considering the news day. If it does manage to go up, then we should be looking at a target of 1.26. All these will not happen in a day but are likely to happen within 3-4 days.

It should be an interesting day.

Classic Example of Price Action and Volume

Attached is the classic example of a perfect synchronisation between PA and volume on the GJ chart. Attached is the 5M chart of GJ with the 1H SR lines drawn on it using MM levels. Yesterday, GJ never went below 140 and you could see strong support there. From the chart, you can see price stalling around 141.5 which has been an area of previous support and stalling of price there provided you a good opportunity to go long with minimum risk.

So, now you are long and price starts going up , up and up. So where do you exit ? You could exit at 142.2 which is a strong area of resistance and that would be just fine as anyway you would have made a profit. There is a previous high there as well and so that would be a perfect place to exit. Then you see the resistance and the previous high being broken and u enter long again. And you ride it all the way up to 142.9 and there you see a beautiful pin bar. Whats more, the bar prior to that has a high volume and shows a climax and the pin bar with high volume confirms that this is the end of the move and you exit the long with good profit. The pin bar can be used as a good place to short and you could short as well. Since the pin bar is on a very low timeframe, you cannot expect too much profit but anyway you could take this short for a few pips.

As expected the price goes down and you exit when you see price stalling around 142.4 and again you wait. You see price making a revisit to 142.9 where again you see a pin bar and again you can enter a short and ride it down to the place of price stalling and you can continue to play this range for atleast 10 pips each time.

Just an hour or two's work and you could have made hundreds of pips. Easy !!

Daily Analysis of USDCHF

Attached is the daily chart of USDCHF. As you can see, for the past few days 1.1719 has proved to be a very strong resistance and price has been unable to break above it. Yesterday, with the euro making an upward run, we saw the price of UC going down to its support level at 1.16. Now the range is between these two prices.

I believe this range would go on for a few more hours. With several news items lined up for today, we should see a breakout from this range. I would rather wait for a breakout from this range before i jump in with a trade.

Daily Analysis of GBPUSD

Now lets move on to the GBPUSD. This pair had a lot of action yesterday and the annuncement of the budget caused it to breakdown to its strong support level at 1.4404. Then it made a jump back up and went up and up to its resistance level at 1.4526 and has since meandered down to 1.4460 during the late US and Asian session. Like the other pairs, it is in consolidation right now and 1.4400 should continue to serve as strong support.

On the upside 1.45 and yesterday's high of 1.4530 should serve as strong resistance followed by 1.4650. On the downside, as specified, 1.44 should serve as strong support followed by 1.43. With lot of news being released today, this should be interesting.

Daily Analysis for EURUSD

Lets start our day with the analysis on EURUSD. As expected, EU found some huge support at around 1.29 and after few days of consolidation, we finally had an upmove and EU broke through 1.30 and went up near 1.3050. As it usually happens in the Asian session, a large part of the gains have been reversed now and we are back below 1.3. EU does not have any major direction at this point of time and is loitering around 1.3 now.

This consolidation should continue for some more time with 1.2970 as the low and then if and when we see the next upmove, there would be good resistance at 1.3030 and then at 1.3060. Of course , the supports would continue to be at 1.2970 and then a strong one at 1.29. I would like to go long at one of these supports for today.

Market Commentary on the day so far

GU, GJ and UJ had huge breakdown along with GC. the Euro has shown surprising strength in the middle of all this. Now we can see that each of the currencies are retracing back to their last supports. This is again a crucial juncture. These last supports have now become resistances. So, if price does break through these resistances and keeps going up, then we can assume that the uptrend is intact and can go long again.

But if the retracement back to the support turned resistance fails and it continues its down move, then the bearish trend has set in and we can expect some more fall. For eg. for GJ, 141.5 was a major support which has got broken now and now price is retracing back to 141.5. If price breaks this and keeps going up, then this would be a wonderful place to buy. But if this retracement stops around the 141.5 region, then we are going down again.

As for USDCAD, as said, the low of yesterday has not been broken and the pair seems that it might want to go up. I guess the move up on the USDCAD would continue.

Daily Analysis of USDCAD

USDCAD is at a crucial position. Yesterday, there was a bit of good news for USD which made the pair shoot up but later the pair settled down and it ended up with a bearish daily pin bar. But we would not want to take the pin bar unless the pin bar is confirmed. One of the ways to confirm a pin bar is to wait for it to break its bottom. The bottom of the pin bar for yesterday is at 1.2325 and this is also a place of good previous support. So taking all this into consideration, if this support / bottom breaks, we should be going down to 1.21 else , if this holds then we should be moving upwards.

Daily Analysis of GBPUSD

GBPUSD closed above its crucial resistance at 1.4648. Today, we will have to see whether the break above the resistance holds good. Of course, there would be a bit of retracement to get some more sellers but unless we see a clear breakdown of the support at 1.4648, i guess we should be going up a bit more.

As can be seen from the attached hourly chart, GU did make a high around 1.47 and has since dropped down. Asia usually reverses all the gains made from the US sessions and so i guess this is kind of expected. The London session would be crucial as this would set the tone for the rest of the day. Except for a small breach of the support, we have not had a break of the support so far which should set up a target of 1.47 for the bulls. Break of that should lead to 1.4770 and then on to 1.4830. Breakdown of support should lead to 1.4587 and then on to 1.4526..

Daily Analysis for GBPJPY

GBPJPY has been having an interesting couple of days. At the beginning of the week, we saw it making a huge fall and it went down to 141.5. Then we saw some accumulation happening and we saw a lot of whipsaws within a 150 point range yesterday and then we finally saw the breakout towards the close of yesterday and it went on to close above its crucial resistance at 143.75.

So, unless GJ has a clear break below 143.75, we should see the upmove continue for today. As seen from the hourly chart, first target would be to clear 144.5 and then clear 145.2 which proved as a good resistance yesterday. Then , we should be aiming for 146 and finally 146.8 which should be a major resistance.

On the downside, a break of 143.75 should take it down to 143 and then to 142.2 which has proved to be a very good support for the past week or so.

Should be an interesting day !!

Daily Analysis of EURUSD

EURUSD seems to be at a very crucial juncture now. Yesterday, it managed to close very slightly above its major resistance at 1.2939 which is a resistance at several time frames including the daily. But, for those who expected a run up from there, that still has not come yet today. In fact, today morning, we have seen EU drop to 1.2920. EU has strong support at 1.2909 which has held several times during the past couple of days and so we can expect price to stay above that for some time. A clean break of that could take price down to 1.2878 and then to 1.2817.

We will have to see whether this fall is a retracement of the small upmove yesterday or whether it is a continuation of the fall which has been happening for the past few days.

Review of price movements for the day

What has been threatening right from the morning has become true towards the end of the day. One of the major and best signs of a trend change (bull from a bear in this case) is the stalling of price. Right from today morning, we could see that in the major currencies, the price refused to fall below the low of yesterday. The price did threaten and it did whipsaw up and down but it did not break the lows of yesterday in many of the currencies. This showed that something was in the works behind the scenes.

Some of the major currencies broke through major resistances. GJ broke through 143.75 while GU broke through 1.4648. It remains to be seen whether this break of the resistance will hold good. If the price of these currencies falls back below the support by the end of the day then we should be seeing a continuation of the fall tomorrow as well. If it closes above, then we should see a continuation of the upmove tomorrow.

But for scalpers like me, an upmove of more than 200 pips is more than enough and can be construed as a minor trend change even if it continues falling down tomorrow.

We need to be watching the price carefully for the rest of the day and see the PA and the close. We need to analyse the volume as well and see which direction the big boys are and see whether the break of resistance holds.

Are you a scalper or Swing Trader ?

Before we start out trading using PA or any other system, we need to be clear on what type of trader you are. are you a scalper who goes for 15-20 pips or someone who hangs on to trades for several hundreds of pips ? You need to sort this out first...the reason why this should be known is that, this is what that determines what kind of SL you should be having in mind...if you r a scalper,you typically have a SL of 30 pips for major pairs...for long term traders, you have much bigger SLs of around 200 pips....

let me tell you my own story...when i started out trading, i did not know what kind of a trader i was.....i did not know whether i wanted to be a scalper or a long term trader...in fact, i thought i could be both....i could scalp some trades and i could take some long term trades if i feel right....its easy, i thought..little did i realise that being either a scalper or a long term trader was in itself a tough job leave alone being both at the same time...

so, i scalped a few trades for 15 pips only to see the price move 200 pips in my direction making me think 'if only i had done a long term trade...' ...i tried a long term trade only to see the price move 15 pips in my direction and then 150 pips against me to end up in a loss and making me think 'if only i had scalped and closed it with 15 pips..'.....all this affected me psychologically and i got confused on what trades to scalp and when to trade long term.....cos of this confusion in taking profits, there was the confusion in the SL as well....i start off a trade to scalp with TP and SL as 20 pips and then i find the trade 20 pips against me, i think 'lets go long term on this one, i am sure it will turn around'...the trade does not turn and i end up with a 200 pip loss....imagine a loss of 200 pips aiming for a TP of 20 pips !! likewise, i take a long term trade and i see the trade go against me for 20 pips immediately...i think 'eeks...this cannot be right' and i close my long term trade with a loss of 20 pips !! only to see the trade work out beautifully later on....after i closed it...

this confusion keeps compounding and more than affecting the TP, it affects my SL a great deal and thats where the problem begins....now i am vey clear...i realise that i just dont have the patience for long term trades...i can only be a scalper....so i aim for only 15-20 pips a trade and i am happy to get it...i really dont worry if the trade continue in my direction even for 200 pips....i am happy with my 15....i know the market will be there and i am happy with what i get cos i know that if i keep getting 15 pips for every trade i make, i will be rich soon....but i ensure that i stick to the SL precribed for scalp trades....i really dont have any confusion in that...

so my daily target is also only 50 pips though i easily exceed it....it is this understanding of what kind of trader u are is the one that determines all the other stuff....

you might have seen some big trades from me....those happen cos my confidence has grown...they also happen cos it just so happens that i am away from the screen for sometime after opening a trade and i come back and see it with a profit of 100 pips....!!!

How to locate Support and Resistance

How do you locate areas of high resistance and support ? This is a question on many traders minds and several traders find this very difficult to understand as well as locate. One way of looking at SR regions is that it is a price range where the buyers and sellers are almost equal and the entity or the pair that is being traded is getting exchanged between the buyers and the sellers within a narrow price range. Why does this happen ? If and when we are in an uptrend, it simply means that the demand is more than the supply. The buyers easily outnumber the sellers and hence price increases without any major opposition from the sellers. But during this, there will be a price range where the sellers will be waiting and when price approaches this range, the buyers are met with lot of sellers. So the buyers keep buying but the sellers also keep selling whatever and howmuchever the buyer wants and hence the price does not move much at all. This is the place of SR (Support/Resistance).

How do you locate this ? Open any chart with any time frame.Please note that SR regions can be seen in any TF right from 1 minute to a monthly chart. So, open any chart in any TF and look for places in the chart where there is stalling of price. As pointed above, when buyers and sellers are equal, the price does not change and so the price ranges where you see that the price is stalling would be the SR regions. You can see that in all pairs and all charts easily. Of course, you can find those using Fibs and MM as well but even without any of these, just by having a look at the charts, you should be easily be able to find SR regions.

Intraday Movement for GBPJPY

GBPJPY had a huge fall yesterday and with the stock markets around the world also being down, there does not seem to be any end to this in sight. GJ broke through major support at 142.8 yesterday and went down to 141.5. There was a good retracement to 142.8, which was the previous support now turned resistance, but the fall has continued again over the last couple of hours.

For the bears, the first target should be 140.6 and then on to 137.5. For the bulls, first, 142.8 has to be broken cleanly and only then can they look for higher prices the first of which should be 146.8.

I would be on the side of the bears today until 142.8 is broken cleanly. On the hourly chart, the bar that went up to 142.8 ended up as a pin bar which shows that there has been huge selling pressure at around 142.8.

Intraday Movements of EURAUD

A strange currency pair indeed. Contrary to expectations, my expectations atleast, the EA pair did not go lower. The support at 1.8066 proved quite strong and it made a strong run upwards yesterday mainly based on the surprising strength of the euro. As can be seen from the charts, this pair faced resistance to its upmove at 1.8555.

It can also be seen that the price closed below this resistance yesterday. 1.8555 is a strong resistance on the weekly as well and hence unless there is a daily close above this level, there might be ranging between the resistance at 1.8555 and 1.8066. A break of 1.8555 should take the price to 1.8670 and then on to 1.89.

Intraday Analysis of EURUSD and EURJPY

EU and EJ were the suprise packages for today with both of them showing very good strength as compared to the other currency pairs. EJ has strong support at around 126.4. This needs to be broken for any more movement further down. If this does not get broken, then we could see a slow retracement towards 128 but if this does get broken, we could go down all the way to 125. Considering the strength of the down move so far, this cannot be ruled out.

EU is in the middle of a very strong support region. I say 'region' as there is support all around from this price till down to 1.2820. So, i really dont see EU dropping much more than 80 pips, even if the fall were to continue. EU has broken through a strong support at 1.2940. We will have to see whether this break will hold and if yes, we should see a very slow move to 1.2820 as there is a lot of wood to chop.

Analysis of todays currency movements Part 1

Today, there was a huge fall in a lot of currency pairs and i hope everyone made some nice money. Usually the London session is the one with a lot of action and that was again proved yet again today where all the pairs saw a large drop during that session.

So, now, where do we go from here ? As all regular followers of this blog should already be knowing, i am not one for predicting any long term direction for any pair. I just trade what i see. I try not to have any bias and i just go by the charts and i believe that this is the best way to succeed.

But despite that, lemme try and stick my neck out and see whether i can predict the upcoming direction of currencies.

For GJ, it went down to support at 142.8 and then made a good retracement to 143.8 and now is back to 142.8. Break of this low, is a good confirmation that the downward trend would continue for some more time. This is because, it would then be showing all the trends befitting a trend continuation, which is, break of support, retracement and then continuation with the downward trend. But if 142.8 is not broken cleanly, then we should see some ranging for some time during which accmulation would take place and then we might see a slow movement upwards. But so far, things look like continuing downwards. If it does continue downwards, the first target would be 140.6.

I will analyse the other currencies and post an update in my next post.

An Important Lesson for PA Traders

One of the most important lessons that anyone, who wants to trade using Price Action, needs to learn is the retracement philosophy. Whenever price breaks any support or resistance, 80% of the time , price will retracement back to the support or resistance and it will then continue with the break. For eg, if the price breaks a support, price will retrace back to the support 80% of the time. When the retracement happens, that is your crucial period. If the price retraces back to the support plus or minus a few pips and then continues downwards, thats confirmation of the support break. This is the place where you either take a short or add to the short that you had already taken.

If the retracement pushes back above the support and continues upwards, then that shows that the support break was false.

Intraday movements for EURJPY

All the pairs have had a nice fall so far and i hope that the beginning of this week has provided all of you some good pips. Now let us take the pair EURJPY for our analysis. As posted in the attached 1H chart of EJ, it came down to its strong support at 128.13 and has since bounced. 128.13 is also strong support at higher timeframes and this support needs to be broken for any further down move. London should provide the direction for the next move for the day. On the upside, 128.5 has proved as a resistance so far and the next resistance would be 128.9.

Weekly Outlook for EURUSD

Attached are the daily and weekly charts for EURUSD. As can be seen from the weekly chart, EU broke thru strong support at 1.3184 this week. So, the coming weeks should see a retracement towards 1.318 and then the fall should continue. If the fall does continue, from the daily chart, we can see first support at 1.2950 and then it could go down to 1.27.

I am not sure it will go up too much but if it does start to go up, it should face strong resistance at 1.3184 as it is both a daily as well as a weekly resistance.

Weekly Outlook for EURJPY

Lets move on to the favorite currency for a lot of traders due to its slow and predictable movements, the EURJPY. As can be seen from the daily chart, it has broken thru strong supports and it has good support below at 128.1. This should prove to be a strong support and with strong resistance between 131.25 and 132, i believe that the coming week would see ranging between 128 and 132 for this pair unless something very drastic happens.

The weekly chart shows a strong support at 125 but i doubt whether the price would reach there just yet !!

Weekly Outlook for GBPCHF

Now lets move on to the analysis for GBPCHF. As predicted last week, GC did manage to break the strong resistance at 1.70 and then using 1.7050 as strong support and as a springboard, it leapt to 1.73. Now looking at the daily chart, we can see that its further progress would be hampered by a lot of resistances at the upside. It has a resistance at 1.7330 and then resistance through a previous high at 1.7481 and then a major resistance at 1.7570.

With these resistances above, it would be ideal to day trade this pair rather than look for any swing trade on this pair. Just look for 30-40 pips every time u take a trade and once u get it, run with it.

The weekly chart also shows a strong resistance at 1.7570.