Categorized | Forex Stock News, GBP | USD

Taking A Pounding

This is going to be an interesting year for the Sterling & the Euro, with many political issues coming to the forefront in Europe.

The pound is going to taking a pounding so to speak this year. Many trading opportunities are going to be available during this pounding moments, savvy traders will be able to take advantage of these moves in the coming weeks.

Lets have a look at a few charts here.

forex-chart-gbp

forex-gbp-4-hour-chart

learn-to-trade-forex-gbp-usd

Starting with the daily GBP/USD chart. I covered support and resistance in my Forex trading book which you can find on Amazon. You can see we have had a break of the support line on the daily FX chart below. When a major or important support line has been broken, you can almost always anticipate a short pull back or buying.

In this case, as is evident in the 4 hour & 1 hour chart, after the sell off there was a short rally. This is common and to be anticipated when trading not only Forex but just about every financial instrument, it boils down to psychology.

It doesnt always happen but it is very common. The only time you wont see a pull back is when a major news announcement comes out and the Forex pair is sold short.

So in anticipation of these sell offs, for scalpers – you can take short term profits on the 5, 15, 40 min, 1 hr, 2hr, 4hr charts – though the shorter term time frames work better when trying to catch these short term rallies,  but be careful and anticipate the support now being resistance.

Day traders or those taking longer positions can go short on a full confirmation of support being broken but use the 4 hr chart as a timing tool when going short.

The long tail at the end of the candle tells me there is a bit of buying pressure, which can be seen in the short term trading charts – the 1hour & the 4hour chart.

My favorite/preferred charts are the 1 hrs, 2hr, 4 hr and daily but I always look at long term support/resistance charts going back a few months to even years. I use the daily/weekly chart to see longer term trends but use the 4 hour chart as a confirmation, as well as the 1 & 2 hour chart when placing trades on the daily time frame.

There is no 100% guarantee in any business & trading is the same. You enter your positions & add your stops, its that simple! Knowing that your life is not going to be dependent on one single trade but that your trading journey is going to be a tens, if not hundreds of trades, possibly thousands.

The saying, ” A journey of a thousand miles begins with one step” and many successful traders will tell you that your Forex journey or trading journey begins with a single trade.

You simply want to be right more times than wrong but anticipating or trying to be 100% correct with every market call is a fools game. The traders or newbie traders sucked into this mindset hunt for years looking for the holy grail! They look for automated tools and want someone else to do all the work for them! Thats a fools game, dont get sucked into it.

Its not nice taking losses but losses are an essential learning tool but learn from them and then dont make the same mistake twice.

Dont get me wrong and I think many traders get this wrong, you dont need to lose to be a winner. You dont need to lose before you start profiting. You can start trading the correct way, with the most odds in your favor but expecting or thinking that EVERY single trade is going to be a home run, well thats just setting you up for failure.

Always trade with stops, know that not every trade is going to work out. Know that you could be wrong 9 out of 10 times but still make a profit when you apply risk management.

If you can aim for 50-65% win-loss ration, protecting your profits, minimizing your risks, you can trade any market I.E Stocks, bonds, commodities, ETFs, soy beans, if there is a market, you can be successful with those odds.

The book I wrote about the 15 most profitable Forex moves, identifies the highest probability Forex moves. In fact if you combine all the major moves mentioned in the book, you will find that you have more than 15 profitable forex moves and more like 30-40 – sorry I have counted but its more than the average trader needs to be profitable.

I wrote the book, as a guide for new traders not wanting to spend years learning how to trade. Learning is good but can be steep and once you have finally learned to trade, you will come to the conclusion that there are only a handful of profitable moves.

There are millions of ways to trade but they all center around the 15 ways to profitably trade the Forex market, as outlined in the book.

forex-chart-gbp

forex-gbp-4-hour-chart

learn-to-trade-forex-gbp-usd

 

* Dollar climbs against yen, steady against euro

* Sterling drops around 1 percent in reaction to PM Brexit comment

* Graphic: World FX rates in 2016

By Marc Jones

LONDON, Jan 9 Talk of Britain dramatically reworking trade ties with the European Union after Brexit sent the pound tumbling to two-month lows on Monday, as signals the United States could raise interest rates three times this year lifted the dollar.

The pound slid around 1 percent against both the dollar and the euro in early trading after weekend comments from British Prime Minister Theresa May that she was not interested in keeping “bits of membership” of the European Union.

May said she instead wanted a bespoke deal and also denied criticism that she was “muddled” in the pursuit of what she called the right relationship with the EU, the country’s largest trading partner.

Sterling fell 0.9 percent to as low as $1.2164, its weakest against the dollar since the end of October. It fell 1.1 percent against the euro too, hitting 86.65 pence per euro, the lowest since mid-November.

“The most significant thing is May’s comments over the weekend (on a Brexit deal) triggering a significant sterling slide,” said Saxo bank’s head of FX strategy John Hardy.

“My feeling is we kind of knew this so what did the market expect really, but her making it explicit gives another reason to short sterling maybe.”

The dollar, meanwhile, crept ahead after signs of wage pressure in the December U.S. jobs report on Friday proved enough to lift key 10-year Treasury yields from 2.33 percent to 2.42 percent after a sizable fall earlier in the week.

Chicago Federal Reserve President Charles Evans added following the jobs numbers that the central bank could raise interest rates three times this year, faster than he had expected just a few months ago.

The euro edged up 0.2 percent to $1.0550, as the steepest monthly rise in German exports in four-and-half years helped the bolster the shared currency which had ricocheted between $1.0339 and $1.0621 last week.

“The New Year started with some mildly good news,” ING economist Carsten Brzeski said, adding that the latest batch of figures brought evidence that the economy gained momentum in the final quarter of the year.

Cross-asset traders though are still focusing primarily on the dollar and whether the reflation theme, that finally took a firm hold after Donald Trump’s November election win, is priced in sufficiently.

Two non-voting Fed presidents will speak later on Monday, and there are no less than five speeches lined up for Thursday. The main economic release of the week is not until Friday, when retail sales figures for December are out.

Dealers in Asia will also be keeping a wary eye on the yuan after Beijing engineered a sharp tightening in liquidity last week that squeezed speculators out of short yuan/long U.S. dollar positions.

China’s central bank kept up the pressure on Monday, setting a firmer fix for the yuan than many had expected at 6.9262 per dollar, even though that was down from the previous fix.

Yet the defence is proving costly.

Figures out over the weekend showed China’s foreign exchange reserves fell to nearly six-year lows in December as Beijing fought to stem an outflow of capital that could ultimately force another devaluation of the currency.

 

 

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