This week’s analysis will consist of a follow up of the previous week’s work. In the past 5 trading days on the pair, price broke and closed below the neckline momentarily. Which was then followed by a rejection of much lower prices and price pushed further up. The recent bullish move is seen to have reached on the level of the left shoulder of the head and shoulder chart pattern.

SUMMARY:

Remember we mentioned previously that in order to trade the head and shoulder pattern we have to be patient for a break and close below then followed by a confirmation. Basically the pattern is only complete if the latter happens. However our pattern was not completed, buyers took over the market and bid for higher prices.It should be clear how waiting for a confirmation prevented one to be faked out by the close below of the neckline. Currently price has formed an inside bar. We’ll again have to wait for a confirmation from price whether price will continue bullish with a close above the mother candle or reverse and close below it.

Analysis

This week we are going to look at the GBPNZD on the daily timeframe. This is one of the most volatile pairs in the forex markets. It is quite clear when we look left, prices have been on a very steep downtrend. We can confirm the steepness from the gradient of the trend. Price later reached a near-term support then rallied up momentarily. Following the rally, there was a consolidation in form of a chart pattern. The pattern is known as a head and shoulder pattern as illustrated on the chart.

Summary:

Consolidation is an indication of indecision between the buyers and sellers. Price was supported twice on the neckline of the pattern but eventually broke and closed a few pips below the neckline. At this point, we will hold on for prices to confirm the breakout from the neckline, as we know it is possible for prices to gain some bullish momentum and rally back up to the level of the left shoulder. Therefore to confirm bear power a pullback/retest is important to verify that the neckline will resist price from rallying back up past the neckline and push downwards.

Today we shall approach the analysis on this pair from the weekly timeframe. We establish that prices on the pair has been ranging for some years since 2014. The market has been on a major consolidation, and currently, price is ranging in the form of an ascending triangle. In addition, the flat side of the ascending triangle, lies on a major level that has acted both as a support and resistance level in the past.

SUMMARY:

In as much as we have an ascending triangle, it is not obvious that we should now open long positions. Instead, to go long we have to wait for a breakout from the triangle and the resistance line, i.e. a retest and a confirmation before open a position. Price could also be resisted at the major support level/the flat side of the triangle and push downwards. Therefore at this point, we should sit on our hands and wait for the market to guide us on the next course of action.

Analysis:

We approach the analysis of this pair based on the weekly timeframe. In this pair we see that price has been trading on an uptrend for two years. On the lower boundary of the channel, prices have formed a bullish engulfing candle. This week’s candle has engulfed the previous three weeks candle, indicating a strong bullish push on the pair in line with the upward price channel.

Summary:

The formation of the bullish engulfing candle shows that there’s a strong bullish momentum after the bearish retracement. This implies rejection of the previous bearish move. We will be analyzing for buy price action signals in the lower time frames of the daily and the 4-hour as long as the bulls can sustain their upward push. Waiting for price confirmation is paramount as they help us not to get faked out.

Analysis:

This currency pair has been caught up in a ranging market. A series of pin bars and dojis mark a lower high and the inside bars illustrate that there are weakness in the buyers.

Summary

Are we headed to the support zone or will the investor sentiment change? This is a perfect illustration of the market speaking to a price action trader. Remember that the price always guide us on where the market is headed.

USDJPY Currency Pair 4th – 8th Feb, 2019: Today we are going to look at the USDJPY pair and we are going to show analysis on a different timeframe, the Monthly. Remember in our price action course we emphasize the TOP DOWN APPROACH when analyzing the market. If we spot candlestick formations in the monthly, this provide a higher probability trade setup than the lower timeframe.

Now we may notice the main trend is up and the currency has been trapped in consolidation in form of a symmetrical triangle.

The pair has recently hit a zone of a support and we a monthly pin bar forming in that zone.

Summary

Will the bullish trend continue? Which direction will the pair break out of the consolidation? We will keep a keen eye on this pair amid confirmation of the direction this pair will head. As always we wait for the price to guide us on the investor sentiment.

Today we are going to look at a recent topic we discussed in our first webinar the power of breakout trading. This pair had nice breakout trades that worked really well.

I want you to note how the market topped in the previous bullish trend. Can you identify the price pattern highlighted in yellow? Do you see the candlestick formation in the right top of the chart pattern? If not, feel free to visit www.fourthstreet.co.ke for more information on our Price Action Trading Course.

As you may observe we see a break of the red trendline in the fall of the GBPUSD and we see close outside the bear trendline. Next we see a peculiar candlestick formation that show indecision. Then a strong decision confirms the investor sentiment. What is the price telling you? What is there to say when the price does the talking?

Summary

Our bias on this pair is to stay alert and we will have a very close to see how the bulls will react as price is at a zone of resistance.

Analysis:

This pair has been on a clear uptrend. This pair has been trapped in broadening tops chart pattern and the price has attempted to break the channel but the bulls could not keep up with the momentum. We see the prices soon closed inside the pattern which shows the importance of waiting for candle to close.

This is a perfect example of how the buyers are trapped in the fake breakout.

The sellers have stepped in they are pushing the prices down the bottom of the channel.

Summary:

Our bias for this pair is bullish although we need to see a clear breakout on the channel to hint us that the investor sentiment has changed. The price will guide us on our position as the prices approach the near term support whether the bullish trend will continue or the seller will prevail.

XAUUSD Currency Pair Analysis 

At the moment gold has rallied until the near term resistance. The pair has not broken the resistance level. At this level, price made indecision candles. Last week we see a pinbar which shows weakness in the uptrend. This week an indecision candle followed showing even further weakness in the uptrend. We wait for further price action to know whether the near term level will be broken and trend upwards and head to the major level, or reverse and we go bearish.  For a bearish move we will need further confirmation and for a bullish move we will need a break of the near term level.

SUMMARY

We will watch this currency pair closely and monitor how it behaves on this resistance zone. As usual the price will be our guide on how this precious commodity behaves at this zone.

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EURCHF Currency Pair Analysis

This pair has been making lower highs and lower lows so we are clearly in a downtrend.  The pair bottomed as it formed a tweezer bottom and here we see the prices momentarily pause and bounce off the support zone.

The pair struggled to get to the support area and then we see a weakness in the downtrend as the pair approaches the support area and we see a doji and a strong bullish day.

The bearish trend has shifted its momentum as the break of the trend line. As you can see the market has broken the near term trend line and the market is retesting the support area. Will the market continue the downtrend or the market will bounce back up?

Summary

The break of the bearish trend line shows that the momentum of the bear has shifted. Formation of the morning star at the support level may hint a change in the investor sentiment. We will watch this pair for further price action and let the price guide us to make further trading decisions.

Want more of such live market analysis every week, kindly ENROLL for our Online Forex Course here https://fourthstreet.co.ke/forex-training/ and learn to trade like a PRO!