For those of you have read my books, come along to our webinars or taking our Complete Forex Trading Program, you will know the importance we attach to the congestion phases of price action we see on our charts. Indeed it could be argued that markets spend for more time in congestion, consolidation or sideways price action than they do in a trend.
And there are a number of reasons why this happens. For example price action will move sideways ahead of an important news release, such as today's FOMC. Consolidation can happen after an explosive price move - such as we saw last week with the GBP. And of course we have consolidation during distribution and accumulation. In other words at selling and buying climaxes.
For many traders rangebound price action can be problematic because the one quality needed to deal with this type of price action is patience, which is something we all struggle with.
But prices do not remain rangebound forever and eventually there will be a trigger or catalyst, such as today's FOMC.
The example we have been considering today is the one hour chart for the gbp/jpy which has been in heavy consolidation since last Friday with price action building around the volume point of control at 150.69 and oscillating between 151.57 to the upside and 150.12 to the downside. The FOMC has provide the trigger to break to the upside and through the resistance at 151.57 which has been tested on four occasions since Friday. However, the price action also triggered a volatility candle as this event has been used as an opportunity to take out stops. ... See MoreSee Less
Japanese Prime Minister Shinzo Abe is considering calling a snap election for as early as next month to take advantage of his improved approval ratings and disarray in the main opposition party, government and ruling party sources said on Sunday.
Tomorrow marks the 25th anniversary of the day Soros dumped the pound I was reminded again by my good friend Jim Trott, Chief Dealer FX at the BOE on that historic day, with whom I had dinner on Tuesday.
Quantum heatmap giving us fast overview of how our 28 pairs are starting this week. No surprise to see GBP strength against JPY and NZD but it will be interesting to see if we are at the beginning of a correction, but as we always say markets can stay over extended a lot longer than we can stay solvent. For GBP/JPY key to any move higher is break through last Friday's and today's high at 151.53, and be aware we have had volatility candles on both daily and weekly chart for the pair. ... See MoreSee Less
Some background to the German elections where betting firms have Angela Merkel on track for a fourth term. Once she is back in power expect to see pick up in Brexit rhetoric. Why this matters to us is any shock will have dramatic implications for euro. Meantime futures market has seen a small reducation in euro longs, but it is this Friday's numbers which will be more significant. Eurodollar will, of course, be affected particularly with FOMC this week, but other pair to watch is eur/chf - the go to pair when Europeans are nervous and want to buy into a safe haven such as the Swiss Franc.
It is said markets are moved by fear and greed, but I would suggest complacency and euphoria to be a better reflection of trader and investor emotion. VIX is certainly highlighting deep complacency, particularly if it stays in single figures, which it can do for some time.
My post from last week about US equities, and the only spanner in the works is Kimmie whose actions at the weekend also designed to spoil Chinese hosting of the BRICS event. Tomorrow's US opening should be interesting.
A typical forex trading day for David & I. Our Complete Forex Program is now live and within the program you will find a module dedicated to technical analysis and VPA which can be purchased independently (as can all the modules). The module also includes a comprehensive workbook of over 200 worked VPA examples across all markets and time frames.
Recent move higher in oil prices capped at $50.84 per barrel (as per my MT4 daily chart). This is both today's and last Thursday's high for the commodity, but with price support at the 200 ma at $49.81 oil too seems to be waiting on the Wednesday's FOMC and some firm direction for the USD. ... See MoreSee Less
USD weakness not doing gold any favours at present with the metal likely to move back to test the $1300 per ounce region. However, we do have the 200 ma on the 4 hour chart for the metal so we should see some price support. And from a fundamental perspective this week's FOMC meeting is one to watch to see if the current divergence in USD/gold price action comes to an end or not. ... See MoreSee Less
Taders always get very excited a when gold reaches a psychological level & today's move above 1300.00 per ounce is no exception. As we can see from the daily chart taken from the XAU/USD contract on MT4 the precious metal has been in a well defined price channel since March this year, bouncing between the $1200 region (another important price point) and today's price. Today's push is part of the break away from the volume point of control at 1261. But any further moves to the upside will require a degree of effort as the daily chart has a number of congestion zones stretching back to 2013, and of course we do need to watch the USD. Nevertheless a very positive day for gold bugs. ... See MoreSee Less
Heatmap giving us a fast overview of how our 28 pairs rank at the beginning of this important week, with two elections, the FOMC & various central bank meetings as well as speeches from various members. ... See MoreSee Less
Daily gbp/jpy now at VPOC on the daily chart at 141.92 as the new trading month begins. Any price action at the VPOC is signalling a market that is pausing, and in this case waiting not only for traders to return from holiday, but also for a number of geo political events to play out - not least NK. ... See MoreSee Less