Hi Tom,
In your selection of th GBP/JPY you cite that it is one of the few pairs that stayed above June 5th support. What is the significance of this date? Non Farm Payroll release? Is this one thing you analyze when you are looking for the strongest trending pair?

Certainly the Nonfarm Payrolls resulted in many pairs that had been in uptrends to pull back down off of the highs. Most of those pairs then rallied up to new recent highs. This recent pullback saw most move down through the lows printed after the NFP release. However, the GBP pairs were able to stay above those lows. The GBP/USD is in a similiar position, but my choice of the GBP/JPY has to do with my uncertainty about the strength/weakness of the USD. I think that the USD might be stronger than the JPY as the 4-hour chart of the USD/JPY seems to be making higher highs and higher lows. It is not that much of difference, but to me the USD does seem stronger, so I chose to buy the GBP/JPY instead of the GBP/USD. It might not be that much of an edge, but I will take any edge I can identify. I do try to match the strongest currency with the weakest. I think that the relative strength of the various currencies can increase our chance of success, so I think it is worth the time to take a look first before opening a trade.

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Thanks, yes I have been looking at the GBP/USD that you mentioned. I was looking back for the past couple of months on the daily chart. I notice at least a couple of times, the pair trended for 2 weeks, then was stuck in a range for one, and then continued with the trend. How much weight should something like this be given??
MACD, RSI and Stoch are all where I want them. I like moving when stoch crosses on daily, which it did today, it seems to have yielded success in my backtests.
I missed a triangle breakout with the trend on the h1 chart that occurred today and has gained 100 pips since the breakout.
I think I am beating myself up too much about missing the breakout. I wrestle with waiting for a pull back or a break out of another resistance line, or just go with the stoch cross on daily as mentioned. The ADX seems to be weakening on the daily so I have concerns on that as well. Thoughts on the triangle breakout and ADX? Any other comments are valued. Have a nice weekend!

Sorry for not being more timely in my response as I was out for a couple of days. I think you are on the right path and the only thing I see that might be missing in the equation is confidence in your approach. You have to be okay with losing trades, as long as you don't make a habit of it. I keep a daily log of all trades that I take and all trades that I see setting up and do not take. With time, you will see if your thought process is sound or needs improving. This is the game that we must play with ourself to prove our worth as a trader. The only person that matters is us. When we become confident in our approach, we start to take these setups without hesitation. It isn't easy and as a matter of fact is one of the big differences between new traders and experienced traders. The perfect entry does not exist on the chart but rather is our own mind. It may lead to a winning trade or it may lead to a losing trade, but in the long run, if it leads to profitable results and we take the trade with confidence, that is what makes it perfect.

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The GBP/CAD is in an uptrend on the daily chart and shows a pullback down to support on this 4-hour chart. This is a buying opportunity. As usual, there are a number of approaches one can use to time their entry and on this chart I have the MACD plotted. The MACD is typically one of the last technical indicators to signal an entry, but that is not always a bad thing. Early entries can sometimes result in losing trades as the pullback is not always completed when first noted. No matter what entry method is used, traders should still indentify their risk before entering into the trade and look for twice that risk in potential profit. This is our 1:2 risk:reward ratio and allows us the chance to be profitable without having to win more than half of our trades.

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The AUD/CAD has moved into a range between the .9290 and .9170 areas. Both the 4-hour and daily charts show an uptrend though, so a move up through resistance represents a buying opportunity for breakout traders. The idea is to let the market confirm strength to the upside before entering into the trade. The entry may not be as good as one would like, but waiting for confirmation of the break to the upside could increase the chance of success on the trade. Protective stops should be placed below support with targets to take profits set at twice that risk for our 1:2 risk:reward ratio.

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In a low volatility environment like we have now, it can be helpful to move down to the hourly chart to find a trade in the direction of the trend on the 4-hour chart. Normally we trade on the 4-hour chart in the direction of the trend on the daily chart. Another choice is to take a closer look at the daily chart to see if there are any potential trades. Volatility can decrease just before a change in direction on the daily chart, so we need to be aware of that possibility. Here is a daily chart of the GBP/JPY and we can see a series of higher highs and higher lows within a channel. This pair has now pulled back off of the high to a level where it may have found some support. This is a classic buying opportunity and traders who use the daily chart for their trading are now looking to use their favorite approach to time their entry. This is worth watching since most of the big traders trade off of the daily chart. If you are a short-term trader, this is also worth watching to note that moment when you should be looking for buys instead of sells on the shorter-term charts. Trading with the momentum of the market can increase our chance of success, so we want to take advantage of this instead of giving it away to the trader on the other side of our trade.

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Hi Thomas,

I'm seeing the GBP/USD chart and seems that it's a range chart in there from 1.636 as resistance and 1.603 as support, what do you think about it? I entered a short position in 1.6291 when I thought was clear the range, but it's bouncing back to up,

I'm seeing a double top at the resistance, but I'm not sure anymore.

How can I confirm if it's a true range chart what I'm seeing and what key points should I see to avoid errors?

thx in advance for your help.

I see a similar situation on the GBP/USD as I do on the GBP/JPY in that I think both pairs have found support and are now on the verge of moving back up in the direction of the uptrend. This means that my bias is to look for buys on both pairs. Identifying a range bound market is much easier after the fact. It seems that by the time we are able to confirm the range bound situation, the market is about to break out of that range. To me, that makes them harder to trade. I am sure that there are other traders who think that trends are harder to identify and trade than range bound markets, but we all see things differently. I try to find the most obvious market environments to trade. If there is any doubt, I move onto another pair. What I try not to do is to fit a pair into a situation that I would like; otherwise don't force an uptrend when the market is directionless. Just pick the "easy" ones to trade. The use of trendlines like I have on this chart can be of great help also as they frame the recent activity in a way to get a better feel of the mood of the market. The best advice I can give you is to be picky about how you identify a trend or a range. Your trading results can improve by waiting for the obvious trades to come to you instead of trying to force them.

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I think you nailed to the point, that's what I'm doing... forcing. I will look for other pairs to trade to check for the obvious.

Thanks

You're welcome....good luck with your trading!

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Another pair poised to break out to the upside is the NZD/USD. This pair has bounced off of support and is moving back up to the June highs. Traders should adopt a bullish bias on this pair and only look for buys. Most of the currency pairs seem to be ready to break out of the range that they were in most of June. If we see these pairs break out to new highs or lows, we might see trading more like we saw in May than we did in June. Higher volatility and break outs could be more common in the next month if this continues.

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Let's take a look at one more daily chart for the week. This is a chart of the USD/CAD which shows a good signal that the downtrend has resumed. This means that traders should start looking for selling opportunities on this pair. At this point we want to look at any rallies as selling opportunities. But like any other trading opportunity, identifying and limiting your risk is the key. A solid setup can still result in a loss and the smart trader does not get caught in a losing trade without being prepared. I have shown these daily charts to show that the market does seem poised to resume the trends noted in June. Time will tell for sure and how long this possible trending move will last nobody knows, but right now my bias would be for a weakening USD and JPY. Keep an eye on the US stock market. If the S&P 500 rallies, we should see weakness in the USD and the JPY. If the S&P 500 falls, we might see some strength in the USD and the JPY. Risk tolerance is the reason. When the US stock market rallies, traders feel like taking on more risk which means getting out of their safe currencies which are the USD and the JPY. On the flip side, if the US stock market falls, traders move toward what they see as safer investments. That means that they buy the USD and the JPY.

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Sir

hello Sir

Just want to ask you Something Related to Elliot wave If Can Tell me so that was very Wonderful For me..


Sir I just want to Know Does Any Co- Relation Between Fibonnaci and Elliot wave 12345 abc Count...

Just want to Know How a elliot count I should do..

I Am Reading About Elliot wave. But I can Get it in Real Chart..

pls sir Thank you

In Elliott Wave, the 1,3 and 5 waves are with the trend while waves 2 and 4 are correctives moves against the trend. The corrections are measured by using Fibonacci retracements. Here is more on Elliott Wave:

Elliott Wave: The Best Of The Theory

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