Trading zone for EURUSD and Dollar Index

EURUSD

EURUSDDaily

The EURUSD rejected the 21sma on the daily chart signalling its intention remain in a downtrend move. However price has to first close below 1.2500 before we can see a lower EURUSD. the grey box is the zone which I suspect the EURUSD will trade within if the EURUSD finds a temporary support at 1.2500.

Dollar Index

#USDXDaily

Like EURUSD, the USDX (Dollar Index) also rejected the 21sma on the daily time frame. The grey box area is an area which I think price will trade for the moment. For the Dollar Index to go higher, price would have to close above 86.75.

Long term view:

I am bearish on the EURUSD and bullish on the Dollar Index. If you are trading against the main trend, it would not be wise to target too big. Draghi rocked the boat which his rate decision, we clearly know that we would not see a EURUSD recovery. Germany is already feared to have entered a recession. In the US, September data were not that encouraging but since then, all the important data has improved as seen in the excellent NFP, best JOLTS since 2001 and jobless claims.

 

 

Majors are slowly retracing

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Most majors are slowly retracing to the 21sma after a prolong trend. Once prices reaches the 21sma, I would start to look for entries again to continue my trend trading which is to buy the US dollar across board. However I would be tracking on which levels the prices are rejecting. I aspect most prices to actually move beyond the 21sma. The higher it goes the better. I will update the levels of rejection once price action trades nearer to those said areas.

Is USDJPY finally ready to retrace

USDJPYDaily

The Dollar Yen upwards momentum has somewhat died down with reference to the recent price action suggest. That being said and if price has found the top, then I would see price retracing to 107.59, 106.30 or 105.42. If price manages 105.42, it would further validate the area as previous resistance become support.

I am still holding a long term view to buy USDJPY and am waiting patiently for the prices to come to my area.

How to work and trade at the same time.

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Most of traders who first started their trading career still have a regular job during the day or run businesses of some form. Let’s face the fact for those who have a regular job, your boss is paying you your monthly salary, so it is only fair that you should give him your undivided attention on your work. As for those who own businesses, your workers need your leadership to steer the ship. So regardless of what job, career or business you might have, it probably consumes most of your available free time each day leaving you a small window to look at the market every day. Furthermore markets do not open during the weekends, so that would not help either.

In this article, I would like to address the issue of working and trading. Like everyone else, I too had manage my time during the early days when I started trading. I also had to take care of my new born daughter to boot. Like everyone else who is new to the trading arena, you probably need to spend more time at first to get use to the trading nuances and chart reading. Eventually it would take 30 minutes to 1 hour of your time a day, MAX!

 

How did I do it

First of all I would recommend you have to change your analysis into daily time frames. Automatically this would reduce your dependence to monitor your trades constantly. I trade mostly the Forex and Commodity market as I come from a place which does not give conducive trading hours for the US equity market. The Forex market opens each day in Asia and Australia and ends the day in New York, at 5pm New York time. There is a saying you probably must have already heard, “the noobs open the market and the experts close the market”. In my trading methodology, the closing price is the most important price on any price bar on any time frame. Why you may ask? This is because the closing price simply tells you who won the price war for the particular period, the bull or the bear.

At the end of the trading day in New York, the closing price would provide us this vital piece of information and we use it to understand price action especially when it reacts to the established support and resistance areas. Once you are used to see the price action, all you have to do is analyze the trading instruments each day after they have closed and make your trading decisions accordingly. Another good point trading the daily time frame is that the support and resistance do not change often compared to the lower time frames. This type of market study does not take up more than 1 hours or even 30 minutes. It’s a matter of just getting used to it.

 

The risk of trading smaller time frames

I usually ask my traders this question when they ask me if they could trade smaller time frames. My answer is YES, however he or she has to think, if one crosses the road once a day versus one who crosses the road a hundred times a day. Which one has a higher percentage of getting knocked down by a car. The trader who crosses a hundred times a day. So if one wants to trade smaller time frames, off course there would be much more trades and off course they will have to deal with more losing trades than the person trading the daily time frame. So are you really missing out on anything important if you ignore trading lower time frames? No, you are not, in fact what you are missing out is stress, over trading and more losing trades. I have no problem to miss it. Most of times, it is the greed and fear and a need to make money all the time that makes us want to trade more.

Just today, I took profit from my AUDUSD long term sell trade. On how I came to my conclusion to short this trade, please click here. This trade netted me a whopping 722 pips. It took me 47 trading days to achieve the 722 pips. That’s an average of 15.4 pips a day. Most intraday trading techniques I know net traders anywhere from 5 – 20 pips per day. To get the 722 pips, the trader has to win 47 times consecutively. Any losses, then the number of trades would have to be increased. SO let’s say, the traders manages to do it. Let us just then compare what I manage to complete during this period. I manage to go work on my charity projects in another country. Have a stress free relaxing period of time. scalping whenever time permits and have time with my family and friends.

So trading the closing prices is a much better way to trade. It almost seems too good to be true but I promise you it’s not , if you learn to properly take advantage of it. For many classes, I proved theoretically that once can make 1000 pips per pair each year and by monitoring 10 pairs a year, we could make 10000 (10 thousand) pips or more each year. Now I am able to show the live account of step by step process how this trade came into fruition. Your day job or business should be viewed as a good thing, not an inconvenience or impediment to your trading activities as many traders falsely believe.

 

Does this mean I should not do intraday trading?

Of course not! You can always do intraday trading. I am just telling the facts that intraday involves more time monitoring prices. Your brain has to be in tip top condition to read the prices. So if you are up to it, by all means, have a go. What I am saying is that you can always have an option to rest from the stress and do only longer term trades.

 

Overtrading

Most traders trade way too much and this is the cause of their accounts imploding. Sometimes, traders go through a losing streak and they develop a frantic and frustrated mindset. This is a vicious, self defeating cycle that becomes worse the more you do it.

 

How to trade around your job

Let’s have a look at the sample trading routine about analyzing market and trading which fits around your current daily schedule:

6:00am – Scan the market in the morning before you leave for work. Don’t do it straight our from bed. Your mind might not have the time to think properly yet. Look especially at trades which you think have setup the night before. Enter your pending trades.

12.00pm – It is your lunch time. See if your trades were executed. Make the changes if necessary.

9.00pm – After you have arrived home from work and had your dinner / gotten comfortable, you can trade the US market opening hours which is usually volatile and good for scalping. Once you are done, scan the market again for the long term trades which might setup the next day or manage your current trades.

This is an example of how a more relaxed trading style. However do remember that this method could be executed once you have a solid understanding on how to trade with price action.

AUDUSD and USDX nearing target profit.

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My AUDUSD trade is nearing my target. Currently I am 624 pips in the money. My target is 710 – 734 pips. From the diagram above, I captured the screen on my trading terminal which shows where my entry is and also my target profit. To understand why I took this short and keep it for so long, please refer to the posting here. This methodology is my favourite methodology as it does not require much monitor. A single trade and we net hundred and hundred of pips. My humble target is about 1500 – 2000 pips per pair and I trade around 10 pairs.

#USDXMonthly

The USDX is also one of my long term trades. On September 11th, I mentioned that the Dollar Index (USDX) might slow down. However there was no indication that price was finally coming down. However I have always maintain a long term buy for USDX and my current targets are 87.41, 89.11, 90.51 and 91.85. You need not exit once price hit the given targets. Only exit when price show bearish patterns like bearish engulfing at those said levels. I have called for a buy since 09.05.2014. You can refer to the mandate here.