GBPJPY

This week’s analysis on the monster is going to be a follow up on a previous analysis. At the time, price had just formed an inside bar. Ours was to wait and see whether price will obey the inside bar and continue in a downtrend. Price action clearly did confirm our analysis, and bears came in heavily.

SUMMARY.

We’ve been in a very strong downtrend denoted by the very few and short retracements. In fact, they all only happened in single candlesticks. Currently price is approaching a major level; we wait for further price action to guide us on our next course of action.

XAUUSD

On gold vs the dollar. It is evident price has been trending up gradually and finally hit a top. Then followed by a downtrend since the years’ beginning in the form of a descending wedge. Eventually after a lengthy period of consolidation within the pattern, we have a breakout.

SUMMARY.

Following the break out, we have a bullish bias which is going of-course to be confirmed by further price action. Affirmation will come by another bullish candle or a successful retest. If the latter passes as true, then the bulls may continue the uptrend which commenced last year.

CADJPY

On this week’s analysis, we’ll be looking at the CADJPY pair on the daily timeframe. The market has been consolidating forming lower highs and resulting into a descending triangle. One may also see it as a double top, with the second top occurring lower than the first one. Price broke out 2 weeks ago and made a pullback, and did the same again last week.

SUMMARY.

Most recently, price broke out of the chart pattern convincingly and was followed by a doji. At this point our bias is bearish, but we will have to wait for further confirmation by price action to see whether bears will maintain lower prices.

NZDCHF

On this pair we will be looking at it on the weekly timeframe. Price has been on a downtrend denoted by the trend line connecting the swing highs. A consolidation ensued in form of a double top that is quite clear. Last week’s candlestick has broken out of the neckline.

SUMMARY.

The breakout that formed gave us an early indication that we could expect price to fall. This being a weekly breakout, you may check on the daily timeframe, if there was a confirmation or a retest. It will give a more refined outlook on whether to anticipate a waterfall of price.

EURAUD

This week we’re going to follow up on a pair which we looked at last week. At the time of the analysis, price had formed the doji with a small real body as shown in the chart. Our course of action was to wait for price action to guide us, since we were at a minor resistance level. A breakout occurred, one that did not have a pullback because they also don’t happen all the time.

SUMMARY.

Bulls are dominant as they’re rallying the price. An inside bar formed signaling a continuation and price did continue bullish. It looks like if they (bulls) maintain the momentum, we might be headed for the major level.

USDCAD

The Dollar vs the Loonie has been on an uptrend since the beginning of the year on the daily timeframe. Currently price is consolidating within an ascending triangle. Where the upper boundary is acting as a resistance zone as shown.

SUMMARY.

At this moment, we are waiting for a break out. Usually an ascending triangle breaks out on the upside, but it is not guaranteed, nothing in the forex market is. Our bias will shift to bullish if there is a break and close above. Otherwise we will monitor the pair and talk bearish if it breaks and closes below the trend line. 

EURAUD

EURAUD will be our choice of weekly analysis this week on the daily timeframe. Price has been slightly choppy with a minor uptrend that just reached our near term resistance level as our latest trend. At the level, the previous candlestick has a long upper shadow which did not close above. As well as the current candle which is a doji with a minute real body.

SUMMARY.

From the recent price behavior, bulls are facing resistance pushing price to higher levels. Indecision is what is depicted. A possibility of a reversal is quite high but we have to wait for confirmation to affirm this speculation.

GBPJPY

We are going to follow up on this pair, from analysis done 3 weeks ago. Price was trading within a descending triangle. At the time of the former analysis, we had reached the lower boundary depicted by the yellow eclipse. A bounce occurred off the support zone and rallied up. Later the upper trend line acted as resistance and the market slid off back to the support zone and broke out.

SUMMARY.

With the occurrence of the break and close below our bias shifts bearish. We had our confirmation candle following the breakout. The most recent candlestick is an inside bar. Monitoring of this pair continues to see whether the bear power will persist.

GBPUSD

This week’s analysis will be a follow up on the pair of the Pound against the Dollar based on the analysis we did on the pair two weeks ago. True to our previous analysis, we have seen a breakout from the descending triangle and prices actually move bearish like we anticipated. The bear move was not very strong as it reversed after about 100 pips. The candlestick formation signaled that the bear power is diminishing, and the bulls have taken control of the pair, and are already pushing the price upwards.

SUMMARY.

Following the bullish pressure witnessed towards close of last week, this week we will be keen to follow if the bulls have enough muscles to continue pushing prices up. The next possible target level is the near-term resistance zone at price 1.33471.

AUDCAD

This week, we are also going to follow up on this pair that we analyzed last week. Our bias was bearish after the breakout and pullback that occurred on the chart. The bears have momentarily pushed the prices down. Currently we see some indecision candles on a minor level.

SUMMARY.

We will be waiting to see whether there will be a possible reversal or if the bears will continue to push the prices further down. We continue to monitor this pair.

GBPJPY

We are going to look at the Pound Yen which is often referred to as the monster. It’s  notorious for causing many traders financial and emotional turmoil .Price has been rallying since December last year. Soon after we went into a consolidation period in the form of a descending triangle. On seeing this as price action traders, we must be rejoicing because a good trend will come out of this. Most traders don’t like it when price ranges. Yet we all know trends follow after ranging periods in the market.

SUMMARY.

A descending triangle breaks out below 7 times out of 10.This does not mean we should automatically sell the market. Patience is needed to join in, whichever side there is a breakout. Price will guide us whether we shall reverse the previous uptrend or continue with the bulls. Therefore we sit on our hands until we get a signal, following a breakout and confirmation.

AUDCAD

In this week’s analysis we are looking at the Australian dollar vs. the Lonnie. It is clear that since November of last year price was in a downtrend. Around February this year we had a rally within an ascending channel. Price usually consolidates in form of chart patterns. Safe to say the downtrend was our main trend and the uptrend(within the channel) is our minor trend .We had a breakout which closed below and a pullback ensued that was successful.

SUMMARY.

Once we broke out of the channel, our bias of any bullish momentum was nullified. There’s a high probability that we will continue with the bearish major trend. We now start looking for opportunities to short the market after a confirmation. Therefore let’s closely look on this pair to see whether we will continue with the falling prices.

GBPUSD

On this week’s analysis, we’ll be looking at the daily chart of pound dollar. Swiftly we can see price has been on an uptrend since December last year. Early this year, price topped twice at the major resistance level. A consolidation followed thereafter in the form of a descending triangle. Within the triangle it is visible that the line of least resistance is downwards. Therefore it is no surprise that price broke out and closed below the triangle. The most recent candle stick has an upper shadow, which is highly likely a pullback on the lower timeframes.

SUMMARY.

Evidence of a close below and a retest shifts our bias on this setup to be quite bearish. We closely monitor the pair to see how much further  the bear momentum will persist.

AUDCHF

We’re going to look at this analysis from the weekly timeframe. Price has been making a series of lower highs for the last 2 years. At the same time we see a series of higher lows from late last year consequently forming a symmetrical triangle. The triangle is still intact with no breakout in sight. However within it, there’s a double bottom that has broken out and closed above the neckline.

SUMMARY.

In order to trade the triangle, our rules suggest we wait for a breakout on either side of the pattern. The double bottom breakout may give us a reason to believe that a bull market is imminent. Nevertheless a breakout above the triangle will confirm this hunch. We may even see a pullback on the double bottom first before any further action. Hence we remain patient but vigilant for clear signals guided by a breakout to open positions.

AUDJPY

We are going to look at a follow up on this pair which we did during 25th-29th March. During the previous analysis, there was a triple top that was supported at the neckline which is labeled as the support level now. Bulls sustained the rally after the bounce off the support up until we got to the resistance zone. The second last candle stick was an inside bar and we can see what ensued after that. Finally we broke out of the consolidation by a huge bullish candle stick.

SUMMARY

Price has been ranging between these two levels, (call it a rectangle if you like) since the beginning of the year. Eventually a breakout has occurred and our bias becomes mainly bullish. We shall therefore be patient to see whether we shall experience a pullback as well or if bull power will sustain pushing price much higher.

XAUEUR

This week we are going to look at gold vs the Euro. Evidence of a trading confluence has been sited which should keep us on high alert as price action traders. Quickly looking to the left, we can see bulls were having a splendid time as they gradually rallied the price. A consolidation later followed in the form of two price patterns as advertised by the charts. Within a symmetrical triangle illustrated by the yellow trend lines, we see an almost picture perfect head and shoulder pattern. Both chart patterns have broken to the downside denoted by a close below the patterns by the breakout candle stick.

SUMMARY.

Bears exhibit an intention of taking price for a waterfall; this is evident by the break and close below the patterns. There might be a pullback towards the neckline/trend line to test the boundaries. If the boundaries hold this will give us an ideal and confirmed entry position after the retest. At this moment we wait for two things, a confirmation of the bear dominance by either another bearish candle or a retest. 

NZDUSD

This week we are going to follow up on the NZDUSD pair, mainly based on the weekly analysis we did back in mid-February.  The NZDUSD pair seems to have taken a ranging motion.  It no longer consolidates to form a symmetrical triangle but has been bouncing between the resistance and support level as captured on the chart.

SUMMARY.

Price is currently sitting at the support level and our take as price action traders is to wait for price to guide us, whether the bulls will have their way and take the pair up or will the support level will finally be broken giving way to further bearish momentum?

XAUUSD

From our previous weekly analysis of the Gold vs USD, price had been on a bullish trend which later was resisted on the formation of a pin bar. The bears further took over the market with a strong bearish candlestick. In the following three weeks as shown from the charts, the bulls resisted the bearish momentum and we see some bullish move. However this did not hold grounds for long as last week the bears regained control of the market as indicated by the strong bearish engulfing candle, which engulfed the last three bullish candles.

SUMMARY.

Should this pair break below the ‘test limit’, we will be looking to go short on the pair, with our targets aimed at the ‘Near-term support level. Until we have this confirmation, we hold to our cards and not do a thing.

WHAT IS FOREX TRADING?

Forex Trading is basically the act of buying and selling currencies. In a typical foreign exchange transaction, an entity purchases one currency by paying with another currency.

Forex trading involves the trading of currencies against one another in pairs. Each currency pair thus constitutes an individual trading product and is traditionally noted – EURUSD or EUR/USD just as an example. The first currency (EUR) is the base currency that is quoted relative to the second currency (USD) which is called the counter currency. For example, the quotation EURUSD (EUR/USD) 1.5656 means that 1 Euro = 1.656 US Dollars.

WHO TRADES ON FOREX?

Before the advent of the internet and advancements in technology, the Forex market was only reserved for big players such as big banks, hedge funds, multinational corporations, governments, and central banks.

Things have changed from that period in time with the aid of technological advancements in the Information Technology sector. Access to the market has now been made easier for individual traders and investors. Forex traders can now trade on the Forex market from anywhere around the world as long as they have a computer and an internet connection.

Forex trading is performed by individual traders, institutional investors, corporations, central banks and banks. The reasons these entities trade in Forex range from balancing the markets, facilitating international trade and tourism and making profits.

THE FOREX MARKET

The Forex market is the largest and most liquid financial market in the world with an average daily turnover of $5.3 trillion. Approximately half of this turnover comes from foreign exchange swaps. The rest include spot transactions, outright forwards, currency swaps, foreign exchange options and other products.

Being such a huge market, this means that no single market participant can significantly influence the currencies’ exchange rates. With this in mind, it is important to note that the Forex market hence provides a fair market pricing to all participants.

The market assists international trade and investments by enabling currency conversion. For example, it allows Kenya to import goods from China and pay in the Chinese Yuan instead of the Kenyan Shilling.  It also supports direct speculation and evaluation relative to the value of currencies and the carry trade speculation, based on the differential interest rate between two currencies.

The Forex Market is also quite unique. This is as a result of the following characteristics:

  • It has a huge trading volume. This also means it has a high level of liquidity, which translates to more opportunities to make money.
  • The concept of leverage while placing investments. It is used to significantly increase returns earned from the investments/trades
  • This market operates 24 hours a day, 5 days a week. This means it operates at all times and on all days except on weekends.

WHAT IS TRADED ON FOREX?

There are eight major currencies in the world: the US dollar (USD), euro (EUR), the British pound (GBP), the Swiss franc (CHF), the Canadian dollar (CAD), the Australian dollar (AUD), the New Zealand dollar (NZD), and the Japanese yen (JPY).

There are also other currencies that are not as heavily traded as the major currencies which are known as exotic currencies. Some examples include: the Turkish Lira, the Swedish Krona, the Norwegian Krone, the Danish Krone, the South African Rand, the Hong Kong Dollar and the Singapore Dollar.  Trading these currencies should be left to the more experienced traders, as they can move a lot in very short periods of time and usually involve higher transaction costs than major currencies.

All currency pairs that involve the US Dollar and any of the other major currencies are called “major pairs”. This remains so even if the US Dollar appears as the base or counter currency. In the case where the pairs do not include the US Dollar, but they include two of the remaining seven major currencies, the pairs are called “cross pairs”.

HOW TRADERS MAKE A PROFIT

Forex traders try to buy a currency cheap and sell it later at a higher price. However, there’s also a way to profit when prices fall through a technique called “short selling”.

For example, if the Euro vs. US Dollar is currently trading at 1.5050 and a trader believes that the exchange rate will rise in the future, they would be compelled to buy the pair at the current rate. If after a few hours or days the exchange rate trades at 1.5150, the trader would have made a profit.

CONCLUSION

If you feel like you need to start trading, or you would like to take your trading to the next level, FourthStreet Consultants offers a comprehensive Online Forex Course which is an all-inclusive program for those committed to becoming successful traders. It provides step-by-step trading basics that will equip you with the knowledge and information you need to understand and trade in the Forex market. The Forex Online Course comes with free one-on-one consultations to the signed students, which is done either at the company offices at Karen, Nairobi, or at the student’s convenience with prior arrangement.