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Market Cycles ExampleEarlier this morning I was working with a student covering the 3 main types of market cycles in FOREX and I figured I would share it. Using USD/JPY 4hr as an example, you can see three differently colored zones. Green/Red reference bullish and bearish price action. The blue zones represent consolidation. Price action is defined as, "basic movements of the price, to generate signals of entry and exit in trades and that stands out for its reliability and for not requiring the use of indicators". Price action is simply how prices change - the action of price. It mostly relates to the pure psychological intention of the majority of traders (Bulls vs. Bears). Consolidation zones (blue) occur simply because buyers and sellers within the market are in agreement. You will see much less volatility and liquidity during times of consolidation. We use this to our advantage with the strategy we have developed, by looking for secondary retests at the bottom or top of areas where consolidation has previously occurred to predict price action before it happens. I suggest that you pull up a 4hr chart and begin to back test by drawing the three types of zones to get more aquatinted with being able to spot these out. This will help you always maintain awareness of which current state the pair you are trading or analyzing is in. 03:05:59 (UTC) Sat Jan 4, 2020
by TayFx
15
Example of an Ascending Broadening WedgeThe ascending broadening wedge is considered to be a reversal pattern, and is bearish in nature. Though the pattern is typically a signal of reversal, continuation of the uptrend is still possible. When present as a continuation pattern, the wedge will still slope to the upside, but the up-slope will typically be found as a pullback within a downtrend. When present as a reversal, the pattern will slope to the upside within an uptrend. Regardless of continuation or reversal, ascending broadening wedges are always bearish in nature. All information and material is for educational and entertainment purposes only and is not intended to provide financial advice. 01:22:09 (UTC) Sat Jan 4, 2020
by TayFx
7
Take advantage of institutionalization Commercial & Investment Banks The greatest volume of currency is traded in the interbank market. This is where banks of all sizes trade currency with each other and through electronic networks. Big banks account for a large percentage of total currency volume trades. Banks facilitate forex transactions for clients and conduct speculative trades from their own trading desks. When banks act as dealers for clients, the bid-ask spread represents the bank's profits. Speculative currency trades are executed to profit on currency fluctuations. Currencies can also provide diversification to a portfolio mix. Central Banks Central banks, which represent their nation's government, are extremely important players in the forex market. Open market operations and interest rate policies of central banks influence currency rates to a very large extent. A central bank is responsible for fixing the price of its native currency on forex. This is the exchange rate regime by which its currency will trade in the open market. Exchange rate regimes are divided into floating, fixed and pegged types. Any action taken by a central bank in the forex market is done to stabilize or increase the competitiveness of that nation's economy. Central banks (as well as speculators) may engage in currency interventions to make their currencies appreciate or depreciate. For example, a central bank may weaken its own currency by creating additional supply during periods of long deflationary trends, which is then used to purchase foreign currency. This effectively weakens the domestic currency, making exports more competitive in the global market. Central banks use these strategies to calm inflation. Their doing so also serves as a long-term indicator for forex traders. Investment Managers and Hedge Funds Portfolio managers, pooled funds and hedge funds make up the second-biggest collection of players in the forex market next to banks and central banks. Investment managers trade currencies for large accounts such as pension funds, foundations, and endowments. An investment manager with an international portfolio will have to purchase and sell currencies to trade foreign securities. Investment managers may also make speculative forex trades, while some hedge funds execute speculative currency trades as part of their investment strategies. Multinational Corporations Firms engaged in importing and exporting conduct forex transactions to pay for goods and services. Consider the example of a German solar panel producer that imports American components and sells its finished products in China. After the final sale is made, the Chinese yuan the producer received must be converted back to euros. The German firm must then exchange euros for dollars to purchase more American components. Companies trade forex to hedge the risk associated with foreign currency translations. The same German firm might purchase American dollars in the spot market, or enter into a currency swap agreement to obtain dollars in advance of purchasing components from the American company in order to reduce foreign currency exposure risk. Additionally, hedging against currency risk can add a level of safety to offshore investments. Individual Investors The volume of forex trades made by retail investors is extremely low compared to financial institutions and companies. However, it is growing rapidly in popularity. Retail investors base currency trades on a combination of fundamentals (i.e., interest rate parity, inflation rates, and monetary policy expectations) and technical factors (i.e., support, resistance, technical indicators, price patterns). How Forex Trading Shapes Business The resulting collaboration of the different types of forex traders is a highly liquid, global market that impacts business around the world. Exchange rate movements are a factor in inflation, global corporate earnings and the balance of payments account for each country. For instance, the popular currency carry trade strategy highlights how market participants influence exchange rates that, in turn, have spillover effects on the global economy. The carry trade, executed by banks, hedge funds, investment managers and individual investors, is designed to capture differences in yields across currencies by borrowing low-yielding currencies and selling them to purchase high-yielding currencies. For example, if the Japanese yen has a low yield, market participants would sell it and purchase a higher yield currency. When interest rates in higher yielding countries begin to fall back toward lower yielding countries, the carry trade unwinds and investors sell their higher yielding investments. An unwinding of the yen carry trade may cause large Japanese financial institutions and investors with sizable foreign holdings to move money back into Japan as the spread between foreign yields and domestic yields narrows. This strategy, in turn, may result in a broad decrease in global equity prices. The Bottom Line There is a reason why forex is the largest market in the world: It empowers everyone from central banks to retail investors to potentially see profits from currency fluctuations related to the global economy. There are various strategies that can be used to trade and hedge currencies, such as the carry trade, which highlights how forex players impact the global economy. Segal, Troy. “Forex Folk: Who Trades Currency and Why.” Investopedia, Investopedia, 18 Nov. 2019, www.investopedia.com
by TayFx
2
The Basics of a Candle Stick (for Beginners)Candlesticks represent where price action opens and closes in a given time period.For example, when looking at a 1HR timeframe, each candle will represent 1HR of price action and also show where the opening and closing price of that hour was. Green candles show buy pressure Red candles show sell pressure. The larger the candle, the more variance in price action. Wicks are the thinner lines above and below candles that show where highs and lows of price action has reached during the timeframe of a candle. Wicks on the upside represent the highest price it was traded for during that time. Wicks on the downside represent the lowest price it was traded for during that time. Keep in mind that these wicks can be on both the upside and downside of a candle at the same time. Remember, the top wick is the highest the price was traded at, the bottom wick is the lowest that it was traded at. __________________________________________________________________________________________________________________________________________________________________________________________________________ No part of this book may be reproduced or used in any manner without written permission of the copyright owners except for the use of quotations in a book review. Any opinions, news, research, analysis, prices, trade discussions, or other information contained on this website are educational in nature and merely provided as a presentation of trading strategies. Commentaries made on this website reflect our own opinions and trading techniques and do not constitute investment advice. All information and material is for educational and entertainment purposes only and is not intended to provide financial advice. I'm not a registered investment advisor. 00:58:48 ( UTC ) Thu Jan 2, 2020
OANDA:XAUUSD
by TayFx
2
The Famous Double Bottom (+130 pips)A double bottom is simply the opposite of a double top . This pattern normally occurs during a downtrend and is a signal of a reversal of the downtrend toward an uptrend. It’s easily recognizable by its resemblance to the letter “W”. The initial downward move will find a support at the first bottom and then the price action will rally off the support to a temporary new high (the middle of the “W”). Another selloff will often take place that will reach the same support level of the first bottom, consequently sparking another upward rally. The trend is confirmed when the price breaks through the upper resistance to complete the pattern and reversal as displayed below. These are the most basic pattern structures of double tops and bottoms that you’re likely to come across. ( cont in our course) Any opinions, news, research, analysis, prices, trade discussions, or other information contained on this website are educational in nature and merely provided as a presentation of trading strategies. Commentaries made on this website reflect our own opinions and trading techniques and do not constitute investment advice. All information and material is for educational and entertainment purposes only and is not intended to provide financial advice. I'm not a registered investment advisor.
TVC:DXYLong
by TayFx
3
AUD/NZD starting to move up Price is staying on the range we marked up yesterday, creating some bullish divergence We have to see how the price reacts if gets out of the range and get to touch the 200 Ema If that happens there are two possible scenarios, one where we get to break the 200 Ema and then stop on the 800 Ema And another one is that we cannot break the 200 Ema and come back inside the range we marked up on the chart TDI is getting in position to go long Now set your alarms and wait to see what happens Do not try to predict Trade what you see not what you want to see
by RomanBFX
The Looney Continues to Bargain in FlatThe technical picture on the USD/CAD currency pair is still ambiguous. A temporary low is formed at 1.3115 in USD/CAD and intraday bias is turned neutral first. Further fall is expected as long as 1.3205 holds. A clear break below 1.3115 (38,2% Fibo retracement on the daily chart) will resume the decline from 1.3327 and target 1.3042 key support. Sustainable move there will bring larger bearish implication. On the upside, above 1.3205 (Friday high) minor resistance will turn bias back to the upside for re-test of 1.3327 resistance instead. Our Buy trading is still active. Do you trade that pair and how?
by ForexTrendline
1
Can NZD Keeps its Gains Against USD? The New Zealand Dollar could be weakening on profit-taking and we can see a pullback into a support area at 0.6567, which is 61.8% Fibo retracement on the fall from 0.6790 to 0.6203. But the pullback from 4.5-month high could be temporary, cause on the daily chart we may have a bullish crossover of the 50- and 100-day SMAs. Once its confirmed, this should attracted the buyers. Additionally, NZD/USD printed a daily bullish engulfing candle yesterday, signaling the bullish momentum is not exausted yet. If the buyers pick up, the nearest bullish target is 0.6666 (78,6 Fibo level). In event we have a clear break there, this could extend the upside trend towards July 24 high at 0.6723. And of course don't forget to keep a close eye on fresh developments surrounding the US-China trade talks. In case sides fail to reach a deal and the US ends up hiking tariffs on Chinese imports on Sunday, the trade-sensitive kiwi could start erasing this week's gains. Bellow 61.8% Fibo the next support is around 0.65 - 0.6475.
by ForexTrendline
4
Loonie Still Trading in the RangeThe Canadian dollar has been under pressure after the recent disappointing Canadian jobs report. On the 4-hour chart USD/CAD is staying in a range of 1.3158 - 1.3327, so our intraday bias remains neutral. On the downside, a clear break of 1.3158 will extend the decline from 1.3327 for retesting 1.3042 low. On other side, a sustainable break above 1.3327 should resume the rise form 1.3042 and target 1.3382 (Sept. high) key resistance after that. The currency pair is trading below its H4 100 and 50 SMAs. Stochastic indicator is in oversold area on both H4 and daily charts. We prefer range trading strategy with Buy at the lower boundary of the range and Sell on the upper line with tight SLs.
Long
by ForexTrendline