Weekly Analysis of Trade Set ups & Ideas EURUSD

EURUSD (19th November to 23rd November)

As we had analyzed the pair last week, we expected a weak euro where we anticipated the pair to break below the neckline of the ‘Head shoulder shoulder pattern’ and a strong dollar but it turned out the downward pressure could not hold. The pair showed a strong rejection of the resistance level, which is turning into a new support level.

The euro retaliated with a strong comeback forming a weekly ‘engulfing candlestick pattern’.

Summary: Our bias for this week and the coming weeks will be to monitor and look for buy price action signals/patterns to go long on this pair, unless price action tells us otherwise.

USDJPY (19th November to 23rd November)

This pair has been very choppy for the last few weeks, but prices are at a major resistance. The US Dollar has been strong overall hence the bullish rally of the yen. The rally came to a halt at the major resistance zone where the currency has had major consolidation. Last week a weekly bearish engulfing candlestick pattern formed, warning us of a potential reversal setup.

Summary: Based on last week’s reversal engulfing candlestick, our bias on this pair remains to go short, however, we will be keen to wait for more confirmation that the trend has actually reversed in order for us to join the downtrend trend.

On our weekly Trade Forex Analysis of Trade set ups and ideas for August 27th to august 31st, here is our analysis:

weekly trade set up & ideas analysis BY FOURTHSTREET CONSULTANTS

Currency pair: EURUSD
Summary: This week’s price surged high after last week’s market reversal as the bulls took over. Currently, we look forward to trade along the upward trend, as we watch the long-term resistance level of 1.1412 turn into a new support line. We therefore watch for  price action signals on any market weakness to rejoin the upward trend.
FourthStreet Consultants Weekly Trade Forex Analysis of Trade set ups and ideas for August 27th to august 31st.

Today’s article, Trading-vs-Hunting is inspired by a book. ‘The One thing’ is one of the greatest books I have read and would strongly advice you get. In his book, Gary Keller undertakes to cover in detail the greatest people and the biggest companies that have achieved enormous success mainly by mastering the one thing/skill they are good at, thereby maximizing on their performance and success.

As traders, we should learn from this book, and use the concept of mastering your strength, and banking more on your area of strength as a trader, whether you are a day trader, a position trader, or a swing trader.

Am sure by now you probably wondering why the topic ‘trading vs. hunting’? There are many similarities between successful/high probability trading and hunting. Let’s use a lion hunting for prey in the jungle. Lion in our case being you, the trader, the jungle being the forex market, and the prey being the trading opportunities that we are always looking to find on the markets.

If you have watched the national geographic, then you’d understand the hunting style of a lion, and other cats in the jungle. No matter how hungry the lion is, there is a formula that he uses to hunt. He doesn’t jump out rightly to chase the prey. First, on spotting the prey, he always takes cover, then watches the prey. At this point, I equate lion watching the prey to a trader studying and analyzing the forex markets/pairs that he/she’s looking to trade. After a careful and a thorough evaluation of the prey, the lion then spots the easiest target to catch, whether it is a weak prey, or one that is at the direction that is easier for him to chase.

This is the highlight of today’s article. So then what lessons do we learn as traders from the hunting style of the king of the jungle? At this point, how does hunting relate to trading? One of the most obvious lessons we learn today is that just like the lion, we as traders must not rush at our ‘prey’, i.e. opening random positions in the market, before taking our time to evaluate our chances of ‘catching the prey’ i.e. analyzing and identifying winning trades in the markets. At any one second on the markets, there’s always price movements and volatility, but it is not all the time that we get to identify high probability trades, which have high chances of making us money.

It is therefore paramount that traders need to analyze the markets using the techniques of price action, trend following, while observing the long-term support and resistance zones, in order to go for an ‘obvious’ trade that offers a good loss to profit ratio of 1:2 and above in order to make consistent money in the market. Mastering such strategies, and attaining the discipline of the patience of the lion requires proper trading education, and new traders to practice trading on the live markets while employing the trading education and strategies acquired from the courses they undertake.

As I conclude, it is paramount to note that the lion might not always catch the prey he chooses to chase, but most of the times he catches he’s prey of choice. This relates to trading in that it goes further to show that as traders, we will experience some losing trades, but as long as we have more winning trades that have high ratios of loss to profit, then and only then can we be guaranteed of successful trading and making money consistently from the markets day after day, month after month, year after year.

 

Joshua Matumo,

Fourthstreet Consultants.

‘When it rains gold, put out the bucket, not the thimble’ is one of the many quotes by Warren Buffet that I love. More Importantly, I have highlighted it at the beginning of this article as it is relevant to our topic. We shall indulge more on what message Mr. Buffet was trying to pass across. That being said, What is high probability trading? What does it entail? What skills or strategies do traders need to employ in the market to be in the smaller margin/percentage of traders that make consistent money in the market?

Anyone can be a trader. As long as you know how to open a couple of positions in the markets, with little knowledge of price action, fundamental analytical skills, and risk management, you qualify to be a trader. However, few people in world are successful professional traders. By successful we imply consistent profitability in the markets year after year. Our sole goal at Fourthstreet Consultants is to create a community of successful high probability traders that can make money consistently in the market, thereby earning a living solely from trading the markets, if they wish to specialize.

High Probability trading can be achieved by having a low risk/high profit ratio. Professional traders’ sole goal in the market is not to open as many positions as their capital allows, but to trade the markets with the odds in their favor. What if I told you today that you only need a couple of trades every month to be profitable consistently in the market? Three or four trades a month are enough to have an edge in the market. This is the highlight of this article. At this point, we revisit Warren Buffet’s quote, ‘when it rains gold, put out the bucket, not the thimble.’ This statement was meant to awaken traders understand that good opportunities to trade in the market come infrequently. There is always few good opportunities to open positions at any one moment in the forex markets. If you are looking for high probability trading opportunities, you got to be patient, not to open trades out of anxiety or boredom, the goal is to do nothing the meantime, preserve your capital, and then go big when the ‘big’ boys are moving the markets. I hope you roger that point!

One of the most rewarding strategy to identify the best trading opportunities is by applying price action strategies. This involves studying chart patterns, trends, channels and related pointers. More often, high probability trading opportunities are found within a trending market. Counter trend dips might earn you a few pips, but you will end up losing the opportunity to catch the big moves when market is correcting to rejoin the long term trend. And this is where money is made. The best part with trading within a trend is that it allows traders to risk less, and earn more, which is the ultimate goal of any trader who is trading forex as a business.

Attaining such skills to identify high probability trading opportunities in the market, and the discipline of patience to preserve your capital long enough to rip from the big market moves, requires one to invest in a comprehensive reputable trading course and mentorship from traders who have a proven track record in the market. Invest in education, earn the experience, and soon you will find yourself on the road to financial independence and a career in trading the financial markets.

 

 

Joshua Matumo,

Fourthstreet Consultants.