GBPUSD - 450 Pips Box

I have said it several times in my previous posts, it is always helpful to have the bigger picture in mind when trading.



For the past 10 weeks the cable has been trading withing a 450 pips range. For 11 weeks, it has been Bull+Bear+Bull+Bear, etc, the only exception being last week and this week which is currently Bull+Bull. If the pattern is to continue this week's candle might end up being a bear. The pair has thus create a 450 pips concrete zone. This a strong manifestation of consolidation between 1.60000 and 1.64000, the middle of the zone is somewhere around 1.62000. To break out of this zone, a weekly candle need to open and close.



How do you trade concrete zone? Short as near as possible to the top of the zone and go long as near as possible to the base of the concrete zone using H4 candle as guide and M15 for the best entry. As for stop loss, set them outside the zone (It can as low as 3 pips or as high as 50 pips depending on your risk appetite). A false breakout outside the zone of about 50 pips is possible. Trading this way, you avoid chasing every price movement. It is most profitable and less stressful to have the bigger picture in mind.





I attach the weekly, daily and H4 charts clearly illustrating the above analysis.

My view on some majors

EURDUSD



EURUSD is currently making attempt to break out of its trading zone depicted by the blue zones.



Recommendation:



SELL. Wait for price to rise back to 70 point mark on the daily RSI, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit.



USDCAD



The downward pressure is still on USDCAD and the pair is still respecting the downward trendline on the weekly chart. Every attempt to rise met resistance at the 50 point mark. History has shown no currency pair remain low for ever.



Recommendation:



Wait for price to fall back to the 30 point mark on the daily chart and watch out for the 50 point mark to take profit or lock your profit.



GBPJPY



GBPJPY concluded its pward movement from 125.45 by a 1000 pips to 135.50. As I mentioned earlier the pair usually move at least a 1000 pips divided in 500 pips to complete a circle. The Japan earthquake brought the currency down to 122.14 (1200 pips). Prompt intervention by the G7 brought the price to 130.00 (800 pips reversal) within the week. If the intervention continues the dragon is expected to trade between 130 - 140. The current move is expected to reach around 137-139 area. Price is currently trading above the 50 point mark.



Recommendation:



Wait for price to rise back to 70 point mark, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit. Personally I would prefer to short between 136-138. I actually have a current pending order at 139.00. I can enter a trade manually if daily gives signal



GBPPUSD



Price was unable to break the blue zone I mentioned in one of posting and went down below 1.60000. What we are trading now now 1.64000 - 1.60000. The blue zone is still important for a break out. 1.61500 is the stumbling block for the bulls for now. Price is stalling around 50 point mark

Recommendation:



Wait for price to rise back to 70 point mark on the daily chart, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit. Remember whenever a daily candle opens and clososes outside the concrete zone the direction is confirmed.





AUDUSD



AUDUSD broke out of the its trading i.e. 1.02500 and 0.95092 (our current concrete zone). The middle of the zone is established at 0.98038. Where the weekly candle closes this week is very important. If it close above 1.02500, that will be the new base for attacking 1.04000 and above.



Recommendation:



SELL. Wait for price to rise back to 70 point mark, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit.



USDJPY



For USDJPY the currrent top is at 86.69 while the bottom is at 80.00. circle. The Japan earthquake brought the currency down to an all time low of 75.98. Prompt intervention by the G7 brought the price back to 80.00 within the week. If the intervention continues price might touch 86.69 before any major reversal. Price is currently trading above the 50 point mark and getting closer to the blue zone on the daily RSI.



Recommendation:



Wait for price to rise back to 70 point mark, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit. Personally I would prefer to short between 85-86 area.





See the relevant daily charts attached. These recommendation should suffice for the next few weeks or months. It is important to note that the close of the week today is crucial to all major currency being the last day, week and month and first quarter of 2011.



Happy trading weeks ahead.
EURDUSD



EURUSD is currently making attempt to break out of its trading zone depicted by the blue zones.



Recommendation:



SELL. Wait for price to rise back to 70 point mark on the daily RSI, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit.



USDCAD



The downward pressure is still on USDCAD and the pair is still respecting the downward trendline on the weekly chart. Every attempt to rise met resistance at the 50 point mark. History has shown no currency pair remain low for ever.



Recommendation:



Wait for price to fall back to the 30 point mark on the daily chart and watch out for the 50 point mark to take profit or lock your profit.



GBPJPY



GBPJPY concluded its pward movement from 125.45 by a 1000 pips to 135.50. As I mentioned earlier the pair usually move at least a 1000 pips divided in 500 pips to complete a circle. The Japan earthquake brought the currency down to 122.14 (1200 pips). Prompt intervention by the G7 brought the price to 130.00 (800 pips reversal) within the week. If the intervention continues the dragon is expected to trade between 130 - 140. The current move is expected to reach around 137-139 area. Price is currently trading above the 50 point mark.



Recommendation:



Wait for price to rise back to 70 point mark, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit. Personally I would prefer to short between 136-138. I actually have a current pending order at 139.00. I can enter a trade manually if daily gives signal



GBPPUSD



Price was unable to break the blue zone I mentioned in one of posting and went down below 1.60000. What we are trading now now 1.64000 - 1.60000. The blue zone is still important for a break out. 1.61500 is the stumbling block for the bulls for now. Price is stalling around 50 point mark

Recommendation:



Wait for price to rise back to 70 point mark on the daily chart, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit. Remember whenever a daily candle opens and clososes outside the concrete zone the direction is confirmed.





AUDUSD



AUDUSD broke out of the its trading i.e. 1.02500 and 0.95092 (our current concrete zone). The middle of the zone is established at 0.98038. Where the weekly candle closes this week is very important. If it close above 1.02500, that will be the new base for attacking 1.04000 and above.



Recommendation:



SELL. Wait for price to rise back to 70 point mark, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit.



USDJPY



For USDJPY the currrent top is at 86.69 while the bottom is at 80.00. circle. The Japan earthquake brought the currency down to an all time low of 75.98. Prompt intervention by the G7 brought the price back to 80.00 within the week. If the intervention continues price might touch 86.69 before any major reversal. Price is currently trading above the 50 point mark and getting closer to the blue zone on the daily RSI.



Recommendation:



Wait for price to rise back to 70 point mark, sell and watch out for the 50 point mark on Daily RSI to take or lock your profit. Personally I would prefer to short between 85-86 area.





See the relevant daily charts attached. These recommendation should suffice for the next few weeks or months. It is important to note that the close of the week today is crucial to all major currency being the last day, week and month and first quarter of 2011.



Happy trading weeks ahead.

Double & Triple Tops

Double tops on both the daily, the weekly and perhaps triple top on H4. The blue zone is the area to watch that requires our attention for now. If we break the blue zone, then a re-test of 1.70000 is a real possibility. A daily candle closing outside the blue zone will confirm this. As long as the blue zone holds, a big fall is a matter of time.

It is always better to plan ahead!

Re: Understanding Price Action

Please read my last post

For GBPUSD price finally touched 1.61850 to replicate the move I envisaged in my last post. Our range for now is between the area mark in red boxes. Until the daily RSI reaches 30 point mark, the ultimate direction is down.

for GBPJPY my pending order at 135.00 was finally picked yesterday after pending for almost 3-4 weeks. The dragon has now completed 1000 pips move and a huge drop (another 1000 pips down is almost guaranteed) is very imminent it is only a matter of time. The only recommendation for GBPJPY now is SELL using H4 to pick bargain SELL

See the charts below. It is always helpful to plan ahead.

Understanding Price Action

I have always emphasised, most especially to new traders, that price movement is never random. It is an organised chaos designed by the big players to confuse the novice. However, the daily chart will exposes the intention of the big boys.



As you can see from the daily chart below from its height of 1.62795 the daily candle touched 1.59593 and is now pulling back as at the time of writing. Where will it close? Please note that until a candle closes it is still a moving target. Concidentally, the last time the daily candle fell from 1.62795 it touched t.59593 (indicated by the red box in the chart) and pulled back to 1.61750 area. On the first occassion, the daily RSI kissed 50 point mark and turned back. Will it behave the same way this time around? Coincidentally these key areas are respected on the weekly chart.



What is the meaning of the above observation? Whenever price gets to 50 point mark on the daily RSI price could go either way, it could either reverse or continue the journey. The key to success in this business is TIMING (TIME TO SELL, BUY, WAIT OR TAKE PROFIT). If you are trading using the daily chart as a guide 50 point mark is neither the time to buy or sell but to take profit and wait for other opportunities.



How do you trade this? As long RSI is still above the 50 point mark, the ultimate direction is down (30 point mark) before any major reversal. If this is a pull back, watch out for opportunity to sell between 1.61750 and 1.63000 when daily RSI would be around 70 point mark. In simple term, you can either wait for daily RSI to get back 70 point mark to sell or 30 point mark to buy.





See the daily and weekly charts below and the key areas to watch out for. It is always helpfull to plan ahead.