Forex Trading

Forex Trading Strategy

2011-04-04T07:07:00.001-07:00

Hello, I understand that I often posted similar topic related with forex trading strategy, because I really enjoy and I try to focus in this topic
Forex Trading Strategy Some of the Best Forex Trading Strategies, Tips & Tricks. Get The Best Forex Trading Strategy and Forex Strategies for FREE !
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ASIA SESSION: Yen Starts the Week on the Defensive...

2011-04-03T23:04:00.001-07:00

Updated Apr 4, 2011 1:40:00 AM

Asia saw a rather peaceful open to the new week, with the yen remaining on the defensive and the Euro pushing to new highs amidst a session of quiet consolidation. The EUR/USD struck fresh five month highs near 1.4267 as it pushed through some resistance at 1.4260 but lacked the follow-through for further advancement. The pair then slid into a consolidating pattern between 1.4220 and 1.4230 for the remainder of the day. Many investors continue to trade their bullish view on the single European currency ahead of this weeks ECB rate decision on Thursday which is expected to produce a 0.25% hike to bring the overnight rate to 1.25%. The main caveat to this view however, is first and foremost that the ECB does not practice what their hawkish [...] Continue Reading ...

Tags: AUD/JPY, AUD/USD, dollar, EUR/JPY, EUR/USD, Fukushima, Japan, Libya, MPC, RBS, Trichet, Yen

FX TECH LAB: Technical Implications for EUR/USD in the week ahead

Updated Apr 1, 2011 5:25:00 PM

The greenback gained some traction midweek as hawkish rhetoric from Fed members Lacker and Kocherlakota led market participants to begin pricing in Fed policy normalization. Broad based USD strength followed suit as the apparent shift in Fed policy direction lifted expectations for tighter relative rate differentials between the U.S. and other economies. The greenback looked set to extend gains into the weekly close as U.S. labor data printed on the positive side - U.S. March NFP rose more than expected (+216k vs. consensus +190k) and the unemployment rate declined to 8.8%. EUR/USD plunged to lows near 1.4060 following the spate of positive U.S. data surprises but USD strength proved unsustainable. EUR/USD completely reversed course to end the week above the 1.4200 figure. The main driver behind the sharp reversal [...] Continue Reading ...

Tags: EUR/USD, FX Tech Lab, Technical Update

Week of April 3, 2011

Updated Apr 1, 2011 4:15:00 PM

Fed hawks squawk, but doves carry the tune A number of Fed speakers offered quite hawkish comments in speeches late in the past week. Minneapolis Fed’s Kocherlakota, Phila.’s Plosser, KC’s Hoenig, Dallas’s Fisher, and Richmond’s Lacker all suggested the economy was strong enough, and inflation threatening enough, that extraordinary accommodation should be removed. Kocherlakota went so far as to suggest rates should be ¾% higher. Importantly, only Kocherlakota and Plosser are 2011 FOMC voting members, and even more importantly, they’re all known hawks, so such comments deserve to be discounted, especially with unemployment still at 8.8% (and U6 underemployment at 15.7%). NY Fed pres. Dudley countered with a distinctly cautious view of the recovery and indicated in no uncertain terms QE would be completed on schedule and that it’s [...] Continue Reading ...

TECHNICAL UPDATE: Update 1 - AUD/JPY - is the carry trade rebuilding momentum?

Updated Apr 1, 2011 2:00:00 PM

In Wednesday’s update, we noted the rising AUD/JPY as it was breaking above the 200-week sma. The pair looks to be comfortably above the 200-week sma which suggests upside potential, however it may face near term resistance at the long-term pivot level of around 87.70. This key pivot level is the 61.8% Fib retracement of the decline from 2007 highs to the 2008 lows – the time of massive unwinding of the carry trade. This horizontal pivot area contained the highs of 2010 and lows of 2007 (see chart below). While the bias remains higher, we would be cautious at current levels as the pair nears significant resistance and would view pullbacks as long opportunities as long as the pair remains above the 200-week sma which is currently around the [...] Continue Reading ...

Tags: AUDJPY, fibonacci, Technical Update

MORNING UPDATE: One to Watch: AUDCHF

Updated Apr 1, 2011 7:30:00 AM

A strong payrolls report today would be negative for safe haven currencies such as the Swiss franc and would pile more downward pressure on the yen. In contrast the winners would most likely be the Aussie and the Cad in our opinion. This made me look at AUDCHF. Essentially the pair has been a massive headache for traders. The risk-on/ risk-off environment that gripped the markets in the past year has made this pair extremely erratic and it has experienced sharp moves on the up and down side. We would recommend this as a short-term trade ONLY. A strong payrolls report should help AUDCHF, which recently passed through the 0.9450 mark – the 200-day moving average. It is currently testing the 100-day moving average at 0.9540 – above here we [...] Continue Reading ...

Tags: AUDCHF, MORNING UPDATE, Non-farm payrolls, One to Watch

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Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.

Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that FOREX.com is not rendering investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. FOREX.com is regulated by the Commodity Futures Trading Commission (CFTC) in the US, by the Financial Services Authority (FSA) in the UK, the Australian Securities and Investment Commission (ASIC) in Australia, and the Financial Services Agency (FSA) in Japan.

FOREX trading strategies

2011-04-03T21:08:00.000-07:00

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Trading Journal 040111

2011-04-01T03:37:00.000-07:00

Hi all, I finally dump my old internet provider and got a new one. Damn they cut the bandwidth without any notice, no wonder it was so horribly slow. Hopefully the new one works well.
Allright, it's April already, time's moving so fast I guess.
Okay, here's my first trade this month:

GBP/USD

Buy GBP/USD @1.60414

Result: closed @1.60660

GBP/USD Analysis 032011

2011-03-20T08:11:00.000-07:00

Good night everyone, great date and weekend I hope :)
Allright, before we start our trading days tomorrow I'll share you my view on GBP/USD. This time I'll go through a more comprehensive, detailed view on each time basis to give you example how to analyze each wave using different approach and tools.
Why trouble ourselves with so many tools? Well, thing is nobody knows where and how far the price might go, so we need as much data as possible to judge the situation and minimize risk. Here's where our chart analysis concept comes into play. Chart analysis itself is all about gathering as much information as possible, using certain concept or approach to get a good view of market condition.
There are basically two important things we want to find out, the tendency of price direction, and the critical levels that the price might go to (I take these levels as "frame" within which the price is moving).
But in the end it's all just prediction and probability, so there's always room for error, therefore risk is always part of the game, that's the reality. Well, if you can't accept it then don't trade forex at all :D

We'll be using some tools, the core tools of KG analysis concept, they are KGB levels (modified fib), Bollinger Bands (BB) SD 1, BS band, LSMA, and range calculator.

Allright here we go, first is monthly

We'll go through wave analysis first, notice the KGB levels (it's the aqua modified fib. The price is still playing above the B (Buyers) level (1.6094), it's indicating that here buyers are still in control of the market.
Notice that price is moving up leaving the B level, so buyers might try to retest the H (high at 1.6343).
Next take a look at the BS band (1.6161), it's dynamic monthly median level. This level is important because that's where the dynamic balance is, a level where buyers and sellers strenght is equal. Now based on this level, price is already above it meaning buyers are having the upper hands.
So far our conclusion is buyers win.
Next is based on bollinger bands (BB). Take a look at the BB shape, notice that the bands are flat, indicating sideways condition. Notice also that price is moving in range within the bands and currently is trying to break SD 1 band. So based on BB price is still in normal or sideways condition, it's a consolidation or staging phase before the next move.
And next is the LSMA. Notice it's previously pointing down and now it starts pointing up, indicating that based on regression the direction tends to be upward.
And last is the range, notice that current month range is 367 pips, about 56% of the average monthly range which is 654 pips. So there's still vast room to move either up or down.
And now our conclusion here, monthly is in sideways or consolidation phase, but overall condition buyers are still in control and there's tendency the price is heading up.
Assuming the price is moving up our first focus should be the SD 1 band, if it's broken then our next focus should be the high (1.6343).
On the other hand if this consolidation continues then our focus should be the middle and the SD -1 bands, also the B level (1.6094). If SD -1 band and B level are broken, then monthly will enter downtrend phase and next target might be the B (Balance) level at 1.5845.

Next is weekly

Wave analysis using the Magenta KGB the current upwave is retrace from the previous downwave. Notice price is trying to break the B level (1.6252). This is a critical level to watch, if it's broken then buyers will have total control and might try to push the price towards the H (1.6344), otherwise price might go down trying to hit the B (1.6161).
Now based on BS band (1.6115), the price is above it indicating buyers are in control.
Next based on BB. Watch the shape, notice that the middle band is pointing up and the bands are expanding, also the price is moving up outside the SD 1 zone, indicating that weekly is in uptrend or abnormal up phase.
Now LSMA is also pointing up, and already crossed both BS band and BB up, it's also indicating uptrend.
And last the range, current weekly range is 278 pips which is 88% of the weekly average. So it might be there's only few space left for the current uptrend.
Okay our conclusion is weekly is clearly in uptrend phase, so our job is watch the B level (1.6252), if it's broken then next destination might be the H (1.6344) otherwise it might go down and try to hit the BS (1.6161), and don't forget based on range there's not much space left so we might see a pause or pullback soon.

And lastly, daily

Based on wave analysis we still have the magenta KGB as our basis and our conclusion is similar to the weekly analysis above, focus is the B level (1.6252).
Based on BS band (1.6157) it's buyers winning.
Next based on BB, daily is in uptrend phase, notice the shape, the angle, and the price position is outside the SD 1 zone, everything is indicating uptrend.
Now based on LSMA, it's uptrend too.
Last is range, notice current range is 194 pips, 147% of the daily average.
Allright, what do we have here? Daily is clearly in uptrend phase, our nearest focus is the B level (1.6252), watch if this level is broken or not. But based on range, it looks like buyers are already overstretched, so here we might expect to see some pullback soon, it might even lead to reversal, who knows.
Thing is if there's really pullback, then our focus should be the SD 1 band and LSMA, if the price manages to play under LSMA within the SD 1 zone, then daily will be in consolidation phase, and if LSMA flattens or turns down, then direction may change.

Allright now we have clear view on monthly, weekly, and daily basis, what's next?
Next is trading plan or strategy, it depends entirely on individual style.
First determine which basis we're focusing on to make our trade, and specify in what condition or criteria we make our trade, and when we cut our losses.
Are you looking for a trend, or reversal, or whatever it is, you should be able to identify the condition, set the criteria you want, set your target and stop loss, and then make the trade.

Allright, that's all for now, hope it helps, it's moto2 race starting by the way, I'm going to watch it :D

Time Based Wave

2011-03-19T04:42:00.000-07:00

In KG analysis concept, one important concept is the KG wave concept. It is said that "smaller waves move in the bigger waves direction and biger waves are formed by smaller waves".
If you wonder what a wave is, it is the price movement itself.
Now I'm not going to write all the theory here because it can be really confusing, even to me :D, if we can't see the application in the market then what's the use?
So I'll just go right away to the chart and let the picture say it all, I find it much easier to understand that way.
And mind you this concept differs greatly from Elliot Wave concept, so for you who are familiar with Elliot Wave (and hold it like a virtue) you might find this very difficult to accept :D

Okay first the wave itself is basically infinite, ranging from the smallest wave to the biggest one, and there is virtually no pattern in the move, it's random.
One thing very sure is it's just moving up and down, and that's the only pattern we have.
So to overcome this randomness another important thing in KG concept is the KG Time concept, in this we divide the waves based on time.
And this time is based on real life business cycle, so in this concept we have daily, weekly, monthly, yearly, etc etc, even the smaller intraday waves such as 8, 4 or even 2 and 1 hourly are used if needed.
Here we'll use LSMA to identify the wave. Why LSMA? Well, you can really use any tool you're familiar with but this LSMA is the standard tool we currently use to read market direction due to its more representative nature. If you don't have the indicator, just ask uncle google :D

Okay in this picture we can see the monthly wave, it's 120 period LSMA if you're on TF H4.

Notice the LSMA represents monthly movement, or wave. We will assume this as the big wave. Upwave is represented by aqua while downwave is represented by red.

And next we can see the daily wave, it's 6 period LSMA.

Notice that within the monthly wave, whether it's up or down there's this smaller wave, the daily moving in up and down rhythm but in general it's moving following the monthly direction.

Now let's take a look at it closer on H1, here the monthly is 480 period LSMA while daily is 24 period LSMA.

The monthly wave is formed by the smaller wave, in this case daily wave, and the daily wave is moving in the monthly wave direction.
Now within this daily wave, there are also smaller waves moving. Here for example we can see 4 hourly wave.
For better view, we'll switch to m15, monthly is 960 period, daily is 96 period and 4 hourly is 16 period.

See it closer, there's even smaller wave still, for example 1 hourly wave. This time we switch to m5, daily is 288 period, 4 hourly is 48 period, 1 hourly is 12 period.

So far I hope you can see what it means by "smaller waves move in the bigger waves direction and biger waves are formed by smaller waves".

Now you might wonder what's the use of this concept.
This concept helps us to read the overall price direction, from the big picture down to the very detail. I already wrote that the trend is something relative, it depends on where we're seeing it from and to, using this concept we can read the trend easily because here we have time as our basis.
One other thing is this concept really offers us wide degree of flexibility in our trades. Depends on our trading style, we can focus to any waves we choose, we might focus on monthly or longer if we trade on longer term, or weekly wave if we trade on midterm basis, daily for intraday, even smaller waves such as 8 or 4 hourly for scalping.

Well, that's all for tonight, I hope you find this useful :)

Trading Journal 031811

2011-03-18T02:23:00.000-07:00

EUR/CHF

Sell EUR/CHF @1.27045

Result: SL hit, closed @1.26956 :D

EUR/USD

Sell EUR/USD @1.40528

Result: Cut loss @1.40912 when everything's indicating uptrend, it was really a good setup, oh well :( :( :(

USD/CAD

Buy USD/CAD @0.98311

Result: SL hit, closed @0.98090
I hate it when my SL got hit while the price is really going my way. I wonder if I set it way too tight, just slightly below the day low.

GBP/USD Analysis 031811

2011-03-17T18:48:00.000-07:00

Morning everyone,
Let's see what happens to GBP/USD this morning, starting with monthly

Following the previous downtrend phase monthly is in normal or sideways phase today. In this kind of situation, the price will move in range within SD 1 zone, as we can see here the price is really moving between the MA and SD -1 band. This phase will end if the price moves outside (either up or down) SD 1 zone.

Now let's see how the weekly is

Weekly is in abnormal up or uptrend phase, following the previous normal phase the price is trying to breakout of SD 1 zone, and MA is slightly pointing up. It's an indication that buyers are trying to take weekly into uptrend phase, we don't know whether or not they will succeed. They still have monthly MA to break before the uptrend can continue.

Now let's see how the daily is

Previously daily was in uptrend phase and now the price is in SD 1 zone, so it's in normal phase. We can say this normal phase is a pause or consolidation, we can see the MA is still pointing up sharply and the price is trying to break SD 1 band.
Notice that the daily MA is already crossed the weekly MA up, indicating there might be longer term reversal, we don't know that yet.
Now our final task is watch the daily phase and the price action.
If daily SD 1 band and monthly MA is broken, then daily and weekly will be in uptrend phase the next target could be monthly SD 1 band. On the other hand if those levels hold, then daily and weekly bands should be our focus since weekly and daily will be in normal phase.

Trading Journal 031711

2011-03-17T06:17:00.000-07:00

AUD/JPY

Buy AUD/JPY @77.181

Result: closed @77.582

NZD/JPY

Buy NZD/JPY @56.816

Result: closed @56.826, SL got hit, but still with profit :D

Buy NZD/JPY again @56.900

Result: closed @57.107

GBP/USD Analysis 031711

2011-03-16T20:25:00.000-07:00

Morning everyone, let's start this day with some chart analysis and coffee :D

I'll start with monthly

Monthly is in abnormal down or downtrend phase, the price is outside SD 1 zone. Notice that the MA is still rather flat, we don't know yet how strong the downtrend is currently, if MA is pointing down later then we can assume the downtrend is strong.

Now we'll see weekly

Weekly is also in downtrend phase, notice that MA is pointing down and price is outside SD 1 zone, not much to say really, simply put, it's down.

And now daily

Daily too is in downtrend phase.
So here in this pair all the three basis clearly indicating down, but notice that there's support around 1.5980. As we can see so far the price is unable to break that support, it might hold or it might not, God only knows :)
So our job is to watch that level, if it's broken then the downtrend might continue, otherwise the price might move into daily/weekly SD 1 zone and daily/weekly might enter normal or sideways phase.

GBP/USD Analysis 031611

2011-03-16T07:18:00.000-07:00

Good night everyone, how's your trade today? Alot of profit I hope :)
It's rather late to post my analysis (I should've done it this morning). But I guess it's better late than never :)
This time I'm still using the basic analysis technique with BBMA (that's Bollinger Bands and Moving Average).

Let's see first how the monthly (480 period) move first

The MA is rather flat but notice that the price is already below the SD -1 band. It's indicating that there's some effort to turn monthly into downtrend phase from previously normal or sideways phase. The price retested the SD -1 band today but unsuccessful, well, it could mean we might see a longterm downtrend in the near future, we don't know yet since we have to watch also the shorter term moves as well.

Now let's see how the weekly (120 period) is

The price is ranging in normal zone between the weekly MA and SD -1 band. One important thing is weekly MA is already below monthly MA, indicating that the shorter term average is now lower than the longer one, and based on KG's concept we know that big waves are formed by the smaller waves.
So it could mean this weekly MA will lead monthly MA into a downtrend, who knows.
But thing is, currently the price is still within weekly normal zone, so our current assumption is price will be still ranging within the weekly bands, unless the price dives and breaks the SD -1 band, in that case downtrend is confirmed.

And now we'll see how the daily (24 period) is

Here daily is also in ranging phase and looks like the price is trying to break daily SD -1 band, indicating that sellers are trying to take control. Notice also the daily MA is below the weekly MA, again indicating that shorter term average is below the longer one, could it lead to a downtrend? Nobody knows :D
So here our conclusion so far is monthly is in (a beginning of) downtrend phase while weekly and daily are still in sideways phase.
Next thing to do is watch the daily and weekly. If the price dives and breaks weekly and daily SD -1 bands, then downtrend is confirmed, but if the price flies then watch the daily MA and SD +1 bands, weekly SD -1 band and monthly SD -1 band. If those levels broken then daily will be in uptrend phase while weekly and monthly will be in normal or sideways phase, and the next points to watch will be weekly SD +1 band and monthly MA.
Now how do we confirm direction? Use any tool or method you're familiar with. I personally use LSMA and Heiken Ashi.
The most important thing is we already have the "frame", the critical levels within which the price will likely to move.

Trading Journal 031611

2011-03-15T23:44:00.000-07:00

Trading multiple accounts can be really confusing, but fun :D
Wish me luck everyone...

EUR/JPY

Buy EUR/JPY @112.975, SL @112.600, TP @113.175

Result: closed @112.985
I really hate it when it keeps slipping while I'm trying to close the position. I tried to close it at about +23 pips but ended up with 1 pip after my SL +1 got hit, damn...

GPB/JPY

Buy GPB/JPY @129.930, SL @129.450. TP @130.400

Result: closed @129.950, SL +2 got hit

AUD/JPY

Buy AUD/JPY @80.180, SL @79.700, TP @80.500

Result: closed @80.401, closed it earlier since I saw it having some trouble with the MA

XAG/USD

My very first time ever trading silver, buy XAG/USD @34.328, SL @33.770. TP @34.700

Result: SL @34.338 hit XDXDXD

XAU/USD

Also my very first time trading gold live, sell XAU/USD @1399.38, SL @1408.71

Result: SL hit @1398.76
Hmmm, I wonder if I locked my profit way too early, I guess I have to really learn the rhytm

AUD/USD

Very tight spot, barely any space at all, sell AUD/USD @0.99145, SL @0.9957

Result: closed @0.98928 :D

GBP/USD Analysis 031411

2011-03-13T20:57:00.000-07:00

Hi all, ready to start the week?
Here's my view on GBP/USD today, again I'll be using only basic analysis concept using Bollinger Bands. It might look complicated but actually no, it's really simple.
It's based on KG's wave and time concept.
Simply put the smaller waves move in the bigger waves direction, and the bigger waves are formed by the smaller waves. And we divide the waves based on time.

Let's start with monthly (480 period)

Notice the middle band (it's SMA by the way)is rather flat, it's indicating that monthly is in sideways phase. But notice also the price is already outside the SD 1 zone, it's below SD -1 band. The price tried to retest the band on Friday but unable to break it.
So here it's already in abnormal condition, an indication that a downtrend might occur. But if the price breaks the SD -1 band then monthly will be in normal or sideways condition and the next target might be the middle band.

Now, let's see the weekly move (120 period)

The price is outside the SD 1 zone, it's below SD -1 band, notice the middle is pointing down, so weekly is in downtrend or abnormal down phase. So here our assumption is down unless the price breaks SD -1 band. If it happens then weekly will be in normal phase and the next target might be the middle band.

Now daily (24 period) move

Daily is really in sideways or normal phase. Notice the middle band is flat, and price currently is right at the middle, this is a gray situation.
The next move will start from here. If price managed to break the daily SD 1 and weekly SD -1 bands, then daily will enter uptrend phase while weekly will enter normal phase. And assuming monthly SD -1 band is also broken the next target might be the weekly middle band.
On the other hand if price moves down then the downtrend at weekly continues and our focus will be the daily SD -1 band, if it's broken then daily will be in downtrend phase following the weekly. It also means that monthly too will be in downtrend phase.

So what do we do next? Now we'll use LSMA to determine direction.

Notice LSMA is pointing up but price is below it, an indication that there's an effort to reverse direction. So what we do here is we'll watch how the price and the LSMA react. Enter only when direction is confirmed and the way is clear.

EUR/USD Analysis 031311

2011-03-13T07:40:00.000-07:00

Good night everyone, I hope you're having a nice weekend.
First my condolence to the people in Japan for the tsunami that hit the country, I wish them the best and hope everything will get better soon, God bless you.
It really reminds me of 2004 tsunami that hit Aceh, a friend of mine lost his relatives and friends there, his father dragged by sea water but managed to survive. It was really nightmare, a horror beyond your imagination.
Okay, back to forex, I really have no idea how the tsunami will impact the market, but I'll share my view anyhow.

This time I'll go through the very basic analysis concept, the very basic that one should learn before moving to a more complex concept. I must warn you though that altough this is a very basic concept but it's a very powerful one, it's more than enough to help you read the move and make constant profit.
This analysis concept is based on average, standard deviation and time concept, using Bollinger Bands (BB) as primary tools.
I don't really use this setup today but this setup works and valid nevertheless.

Allright let's start with EUR/USD, all Bollinger Bands (BB) is set to standard deviation (SD) 1.

First we'll see the bigger picture, the monthly (480 period) move

As we can see price is in the SD 1 zone, so we can say that monthly is in normal phase, in this phase price will move within range between SD 1, middle and SD -1 bands. We can see that price is bounced off the middle and moved up and now it's at SD 1 band.
This is critical level to watch, if this level is broken then monthly will enter uptrend phase otherwise price will be still in normal phase and probably will retest the middle band.

Now we'll see weekly (120 period) move

Here it's also in normal phase, the price is coming from below and hit the middle band. So based on weekly we have this middle band as critical point. If it's broken then the next logical target might be the SD 1 band, otherwise it might retest the SD -1 band.
So far based on the two time basis we have two critical points to watch, the monthly SD 1 band and the weekly middle band, next we'll see how the daily (24 period)is.

Here the price is in abnormal up or uptrend phase, we can see the price is outside SD 1 zone, and middle band (the MA) is pointing up. Now the question is, how far will the price go?
As we already have on monthly and weekly phase, we have the monthly SD 1 and weekly middle band to watch, and beyond those we have weekly SD 1. So if the uptrend continues these points will be our focus. Otherwise we will have two additional points to watch, the daily SD 1 and middle bands.
And how do we know if the price is still moving up or about to reverse? The answer is use something that helps us to identify direction. In this case, I'm using LSMA set to daily (24 period).
Why daily? Actually depends on your focus and style you can use any period you like. I use daily since I'm focusing only on intraday trade. If you trade on longer term you might to focus on weekly or monthly and use 120 or 480 period LSMA for direction, it's your choice. You can even use longer period, like six monthly or yearly for instance for longer term trade.
Here's the picture

As we can see LSMA is pointing up and price is above it, it's an uptrend really.
How do we tell the current uptrend is weakening?
Watch the price action. If price starts to move below the LSMA, it's a sign that the uptrend is weakening. Next we should wait and see if the LSMA is flattening or turning down and price is moving down too, then it's a sign of reversal. How far will it go? Again, watch the bands, see how the price reacts at those bands and how the LSMA is.

A Simple Way To Read A Trend

2011-03-05T02:13:00.000-08:00

The trend is your friend,
Okay, everyone knows that, but ask different people about the trend on the same TF, and guarantee we'll get different answer.
Why? Because the trend is something really relative. It depends on where we're seeing the chart from and to.
For example in this picture:

If we see it from A-B, the trend is up. But if we see it from B-C, then it's down, and if we see it from A-C, then again the trend is up.
So which one is right? All of them is right. Because as I already mentioned, it depends on where we see it from and to.
One major problem in identifying a trend is there's no single, universal or standard way to do it. People have different approach based on their own knowledge and concept, so this "trend" can be quite complicated thing.

In the analysis concept I'm using (it's KG's analysis concept), one important basic concept is the TIME concept. To put it simple, we categorize the price movement based on time, such as daily, weekly, monthly, yearly, 8 hourly, etc etc (please don't confuse it with the chart TF).

The very basic technique to read the move is by using moving average (MA). Any MA will do, but in this case I'll use only SMA.

Take a look at this picture:

In the picture I plot a 24 period SMA (that represents 24 hourly, or daily movement), applied to close. Can you see the pattern there? (If you can't then there's something wrong with your eyes :D)
Okay there's one very important thing to know, the price moves in a cycle. It's trending-sideways cycle. Or in KG's concept it's called normal-abnormal cycle, where normal means the price is close to the average while abnormal means the price is far from the average. So here trending is considered as abnormal phase while sideways is considered as normal phase.
Visually, trending or sideways can be seen easily by the MA angle.
But, what's more important is the price action, how the price reacts to the MA.
Trending is when price is moving away from the MA, retrace is when price is moving towards the MA from previous trend, and sideways is when price is just moving around the MA.

Now how do we tell if the trend is about to begin or about to end. Then we'll use Bollinger Bands (BB)

Here I plot period 24 BB, standard deviation (SD) 1.
Why SD 1? Well, based on statistic concept (correct me if I'm wrong since math is not my background) standard deviation is used to measure how far data is spread from the average. Low SD value indicates that the data is close to the average while high SD value indicates that the data is far from the average.
The majority of the data (or in forex case, the price), approximately 68% is spread within SD 1. And we all aware that something that is close to the average or majority is considered normal.
So we use the SD 1 bands to identify the trending or sideways condition.

Here's how to read it.
If the price is outside SD 1 bands and moving away from the MA, then it's trending. It's confirmed by the MA slope or direction.
If it's trending but price starts to move inside SD 1 bands, then the trend is weakening or about to end.
If the price is moving inside SD 1 and the MA is flat or flattening from previous sharp angle, then it's sideways.
If it's sideways but price starts to move outside SD 1 bands, then a trend is about to begin, it's confirmed by the MA slope.

And the distance between bands also indicates something.
If the bands are expanding then the range is expanding meaning the move is strengthened.
If the bands are contracting then the range is tightening meaning the move is weakening.
If the bands are flat then the range is relatively constant meaning it's sideways.

Allright, that's all for now, hope you find it useful :)

The Four Virtues

2011-03-03T19:12:00.000-08:00

The key to succeed in trading is not the capital, it's not how much money we start with. In fact I've seen some people build their account from scratch and became millionaires, and some people start with big money but end up losing nearly (if not) all their money.
The key to succeed in trading is really within ourselves, it's our mental attitude.
Forex trading is all about internal struggle. Yes, our worst and only enemy is ourselves, not the market. We don't fight the market, we just follow it, the market is like a river that flows.
Then I remember these old games, The Ultima series (I really miss the games by the way), the hero is the avatar, champion of eight virtues. These virtues are the foundation upon which the society is built. Straying from these virtues will lead to disaster.
Well I believe in forex trading, based on my experience, there are also these virtues every trader should uphold.
They are: KNOWLEDGE, DISCIPLINE, PATIENCE, and COURAGE.
Lacking one of those will lead to failure.

A Simple Basket Trading Trick

2011-02-21T20:18:00.000-08:00

Do you focus only on a single pair or do you have several pairs open before you?
I know some people (they're experts by the way) tell us to stick and focus only to a single pair, but check this picture out (and don't bother with my entry there :D):

Can you get the idea?
By watching several pairs we actually have the advantage, we have a more complete view on a certain currency. In the picture, we can see how the USD is.
Sure it doesn't mean that we will recklessly pull the trigger on every pair each time we see a similar condition on all the pairs, but, it will help us a great deal to make a better judgment and decision.
So everytime you're in doubt of a particular pair, check the other pairs (using the same TF and setup as your current pair) to get a better view, good luck :)

Daily Analysis Feb 21, 2011

2011-02-20T18:42:00.000-08:00

Morning everyone :)
Hmmm... good coffee to start my day, hehehe, and an old Guns N' Roses album I just stumbled upon, heh, how much I miss those guys. Sure, they're still touring but with this all new guys, it's just so different.
Well, let's get back to business shall we?

AUD/USD

As we can see price is now at the Buyers level (1.0124). This is a critical point whether or not buyers will continue their hold on the market or will give up their position, we don't know yet.
Now notice the daily is in sideways phase, you can tell from the LSMA slope and candle formation, and price is also between LSMA and BS line. So this is consolidation phase we don't know yet where it will go next.
So our job here is to watch the daily phase and the Buyers level. If daily phase turns into uptrend phase and price is moving up away from the Buyers level, then we can assume buyers have total control of the market and might try to test the High (1.0186).
On the other hand, if daily phase turns into downtrend phase and price is moving down away from the Buyers level, then it means buyers are giving up and the next target might be around the Balance (1.0063).

EUR/JPY

Here buyers tried to break the High (114.01) but failed.
Notice that price is already below the LSMA, meaning the uptrend is weakening altough LSMA slope is still up so there's still possibility of continuation, in fact based on category the daily phase is really in sideways continuation phase.
So here our job is to watch the price action and LSMA. If price continues to move up and break the High, then buyers are really pushing hard and we'll switch our basis to another wave to find the next critical levels that price might go to.
And if price moves down and LSMA turns down, then our next attention will be the Buyers level (113.20).

EUR/USD

Price is already above the Buyers level (1.3665) meaning buyers are now in control and might try to test the High (1.3764).
Daily phase is in sideways continuation phase, it's a pause before deciding where to go next.
So here too our focus will be this daily phase, if the uptrend continue then our next focus will be the High (1.3764), and if buyers decide to give up, then price will pullback to Buyers level (1.3665) and that will be our next focus.

GBP/USD

Here buyers are trying to test the High (1.6279) but notice that price is already below LSMA and its slope is flattening. It's a sign that we might see reversal soon.
So again our focus will be the daily phase, especially the LSMA. If LSMA really turns down then buyers are giving up and price might pull back to Buyers level (1.6200).
And if buyers decide to continue their pressure then our focus will be the High (1.6279).

USD/CHF

Okay here sellers are trying to break the Sellers level (0.9438) to gain total control. So far daily phase is still in downtrend phase although we can see that several last candles formation is rather sideways, so sellers are pausing a little bit.
Here our focus will be the Sellers level, LSMA and price action. If the level is broken, then sellers will have total control and will try to push the price lower and our next attention will be the Low (0.9326).
And if sellers decide to give up, then price will retrace and might go to the Balance (0.9550).

Allright that's all for now, hope it helps, happy trading and have alot of green pips \m/

DISCLAIMER: THIS ANALYSIS MAY CHANGE ANYTIME ACCORDING TO MARKET CONDITION, ALWAYS TRUST YOUR OWN ANALYSIS AND SYSTEM

New Experiment

2011-02-20T09:09:00.000-08:00

This is a crazy idea I just come up with. It's about creating a ridiculously simple, no brainer trading system that everyone, even kids can follow. No complicated analysis or thinking, no complicated lines and fancy indicators involved, just plain simple stuffs.

Here's the setup:
1. H4 chart
2. LSMA period set to 30, applied to close
3. Stochastic set to 30, 1, 1 and set the levels to 25, 50, 75 instead of 20, 50, 80
4. Heiken Ashi (optional)

The rules are simple:
For buy position:
1. If it's trending down, enter when LSMA turns up and the color changes while stochastic coming from the bottom climbing over 25. Exit when stochastic reaches 50 and price unable to continue, or hold if it turns into reversal.
2. If it's trending up, enter when price is pulling back and bounced at the LSMA. Exit when price crosses down LSMA.
3. Always enter as close as possible to LSMA.
4. Cut loss when price plays across LSMA and LSMA turns the other way.
5. Lock at BEP +1 as soon as you have more than 20 pips profit (or better yet, just close the position :D)

For sell position, just do the opposite :)

I'll start testing it on Monday and see how it works within the next few weeks, focusing on GBP/USD and EUR/USD. Let's see how it turns out...

Chart Analysis Diagram

2011-02-19T23:38:00.000-08:00

Daily Analysis Feb 18 2011

2011-02-17T17:32:00.000-08:00

Morning everyone...
As usual, let's start the day with coffee, chart analysis, and rock n' roll, I really wish I could go to Iron Maiden concert by the way \m/ \m/

AUD/USD

Allright, yesterday we had the blue KGB levels (the modified fib) as our basis, and last night the high was clearly broken so these levels now are invalid and we'll switch to the bigger wave (the yellow levels) as our basis.
As we can see, price is trying to reach the Buyers level (1.0133) could even try to break that level later, we don't know.
But for now, notice that price already under the LSMA, this is a sign that buyers are pausing to consolidate for awhile. Watch also the LSMA slope is still up, so there's still big probability that buyers will continue their move.
So here we have our focus on the LSMA and the Buyers level. If price continues to move in the LSMA direction, then watch if it can break the Buyers level. If this happens then there's probability that it will try to move higher and might even retest the High (1.0197).
On the other hand, if LSMA turns down then it means buyers are giving up their position and price might be heading towards the Balance (1.0068)

EUR/JPY

Here we have two waves as our reference. Let's start with the big one (the yellow levels).
Here price is above the Buyers level (113.20), so buyers have more than 75% strength and trying to push the price high and might retest the High (114.01).
However, price is pulling back from 113.67, it could mean that's the furthest buyers can go for this moment. So assuming that's the new high, a lower high by the way, here we draw the second KGB levels (the blue levels) to measure the small wave.
Here too buyers are still in control. So here we have the High (113.67) to watch. If this level is broken, then this blue levels are invalid and we'll shift our attention to the yellow levels.
On the other hand, if price is moving down breaking the buyers level (both 113.28 and 113.20), then buyers are giving up their position and our next focus will be the blue Balance (112.88) and the levels below it.
And last thing, notice that daily phase is in sideways phase. Notice that price is moving around the green BS (113.37). This is consolidation or staging phase.
So keep watching this and those KGB levels to determine where the price is heading next.

EUR/USD

We still have the blue levels as our basis.
Here price is moving up away from the Balance (1.3585), buyers start to gain the upper hand. Notice also that daily phase is in uptrend phase.
So based on these, we can assume that price is currently moving up and might heading to the Buyers level (1.3666).
This assumption will fail if price is heading down and play below the Balance (1.3585). In this case, it's the sellers who are getting the upper hand and might push the price lower toward the sellers level (1.3504).

GBP/USD

Okay, yesterday we have the blue KGB levels. Now the price is right at the High (1.6182) and about to break it.
So here in case that level got broken, we draw the second KGB levels (the yellow ones) as backup. Otherwise we still stick to the blue levels.
Now notice the daily phase, it's still in uptrend phase but price is already below the LSMA. It could be a sign that reversal will occur in near time.
So here our job is keep our eyes open and watch how the price and the LSMA react. If LSMA turns down, then our assumption is price is heading towards the Buyers (1.6132) or the Balance (1.6121). Otherwise if buyers decide to resume their move, then price will try to break the blue High (1.6182) or the yellow Buyers (1.6200).

USD/CHF

Here too our previous blue KGB levels are now invalid since the low is already broken. And now, we'll switch to the bigger wave (the yellow levels) for our basis.
As we can see price is in the midway between the Balance (0.9549) and the Sellers level (0.9438). Here sellers have the upper hand although not yet totally in control.
Now notice the daily phase, it downtrend but price already plays above the LSMA. This is a sign that sellers are currently pausing for awhile and there might be some effort to reverse direction.
Notice also the LSMA slope is still down and sharp, so there's still big probability that price will go down and more effort is needed to reverse direction.
So here we have this LSMA and price action to watch. If LSMA turns up, then sellers are giving way and price might go to the Balance. And if price continues in LSMA direction, then sellers resume their pressure and might retest the Sellers (0.9438).

Allright, that's all for today. Hope it helps, happy trading and have a lot of green pips \m/

DISCALIMER: THIS ANALYSIS MAY CHANGE ANYTIME ACCORDING TO MARKET CONDITION, ALWAYS TRUST YOUR OWN ANALYSIS AND SYSTEM

Daily Analysis Feb 17, 2011

2011-02-16T18:47:00.000-08:00

Hi all, as usual, before we jump into the market let's start the day with caffein (hehehe) and some chart analysis. Today I'll start adding the daily phase analysis, that's the greenish LSMA and BS line (it's 24 hourly buyers/sellers strength balance level), to complement the buyers/sellers strength analysis.

Here we go,

AUD/USD

Okay, based on the 24 hourly phase the pair is in strong uptrend phase.
So in this kind of situation, our assumption is up.
However, based on the wave price is still unable to break the Buyers level (1.0038) so buyers are not in total control of the market yet.
So this is our main focus at the moment, if this level is breached, then our assumption is buyers win and will try to push the price up and retest the high (1.0071).
On the other hand, if the level holds, then price will try to retest the Balance (1.0005).

EUR/JPY

Yesterday we had the blue levels as our basis. And as we can see its high (113.44) already broken (and yes, I had to cut my loss :D), so these levels are now invalid and we'll just ignore them, and then we switch to the bigger wave (the yellow levels) as our basis.
But first based on the 24 hourly (or daily) phase, the price is in strong uptrend phase, so our current assumption is up.
Then based on the yellow levels, we can see that price is above the Buyers level (113.20), so here buyers are winning and trying to push the price high.
So if this uptrend continues our first focus will be the high (114.01), otherwise if buyers decide to give up their position then first focus will be the Buyers level (113.20)

EUR/USD

Daily phase is strong uptrend.
Based on wave, price is still around the balance (1.3585) which is neutral or gray zone, nobody has the upper hands. This is a tricky situation but we can refer to the daily phase to determine the next move.

GBP/USD

Daily is in medium uptrend phase. Here buyers are winning but not too strong yet.
Based on the wave price is in the midway between Balance (1.6083) and Buyers (1.6232). So here buyers are starting to gain the upper hand and trying to push the price away from the Balance. If this continues, then the Buyers level will be our focus, otherwise price will return to retest the Balance.
So here we have these two levels to watch.

USD/CHF

Okay, daily is in strong downtrend phase, it's sellers winning.
Price is already below the Sellers level (0.9597), so based on the wave sellers have total control with more than 75% strength.
Here our first assumption is price will try to retest the low (0.9550). However if sellers decide to give up their position and price move up breaking the Sellers level, then our assumption is price try to find the Balance (0.9644).

Allright people, that's all for now, hope it helps, happy trading and have alot of green pips :D

DISCLAIMER: THIS ANALYSIS MAY CHANGE ANYTIME ACCORDING TO MARKET CONDITION, ALWAYS TRUST YOUR OWN ANALYSIS AND SYSTEM

Daily Analysis Feb 16, 2011

2011-02-15T17:39:00.000-08:00

Hi all, here's my daily analysis (just really simple analyis, newbie style :D) on my favorite 5 pairs, check it out :)
Oh, first I have to say that THIS IS NOT A SIGNAL by any means, all I'm sharing is my view on the market condition, some critical levels to watch and the direction where price might be heading.

AUD/USD

Based on the downwave A-B, price is currently near the level Sellers (0.9972), in fact it looks like it's already breached. It means sellers are losing strength, now they're under 75%. So there's good chance price is heading towards the Balance (1.0005).
Notice that LSMA is still pointing down but flattening and price is already above it. This means there's an effort to reverse direction.
So if price continues to play above the level Sellers and LSMA points up, then direction is confirmed and price (probably) will move towards the Balance.
On the other hand if price plays below the Sellers and LSMA points down, then it's possible that price will retest the low (0.9939).

EUR/JPY

Here buyers are currently dominating the market with more than 75% strength, and we can see price is trying to break and turn the LSMA up. So here we have the High (113.44) to focus on, assuming price is heading up off course. But if this level holds and price goes down, then our next focus will be the level Buyers (113.10).

EUR/USD

Yesterday the price was just playing or pivoting around the level Sellers (1.3504). It could means that sellers haven't decided if they will hold and continue the downmove or close their positions and give way to buyers.
It's kinda tricky situation really, but we can watch the LSMA for direction.
At this moment we can see that LSMA is pointing up and price too is moving up breaching the level Sellers. So, our current assumption is sellers are losing strength and the next destination might be the Balance (1.3585).
But if price moves down and LSMA points down, then we can assume that sellers will continue their hold on the market and our first focus will be the Low (1.3424).

GBP/USD

Here we can see buyers are still in control. The price is trying to break and turn the LSMA up. If they succeed, then the next logical target will be the High (1.6181). But if buyers decide to give up their position, then our first focus will be the level Buyers (1.6126).

USD/CHF

Here we can see that the price is at the Balance (0.9661). This is the level where buyers and sellers strength is equal, and there's 50-50 chance it can go either way.
In this situation we might want to refer to the bigger picture analysis (it's in my previous post on Saturday) and use the LSMA for direction.

Allright, that's all for today.
I hope you find this useful, happy trading and have a lot of green pips \m/\m/

DISCLAIMER: THIS ANALYSIS MAY CHANGE ANYTIME ACCORDING TO MARKET CONDITION, ALWAYS TRUST YOUR OWN ANALYSIS AND SYSTEM

Weekly Analysis Feb 12, 2011

2011-02-12T07:01:00.000-08:00

Hi all, hope you're having a wonderful Saturday night :)

Okay, this time I'll share you my (newbie) weekly analysis for next week, starting on Monday, Feb 14, it's valentine day by the way.
I hope you find it useful, especially to those who trade on weekly basis, even if you don't, you might still find some critical levels to watch this week, and hopefully enough profit to buy your loved ones something (like diamond ring for instance :D).

Let's begin with AUD/USD

Here we have the upwave A-B is the basis for the current downwave.
As we can see price had reached the Balance (0.9998) and currently still playing around that level. This level is very crucial since we can assume it as the zero point, where buyers and sellers strength is equal, and there's 50-50 chance the price will go either way.
If price goes up, then buyers start to gain more strength than sellers and the next target could be around the level Buyers (1.0097).
And if price goes down, then it's the sellers start to gain strength and it might down to the level Sellers (0.9899).
Now notice that the LSMA is still pointing down while price is trying to play above it. It's a sign that selling pressure is loosening although more effort is needed to actually reverse direction. We can say that sellers are pausing for a moment and God only knows where the next move is.
So keep your eyes on the balance and LSMA to see where the price is heading next week.

Next is EUR/JPY

Here the downwave A-B is our basis.
The current upwave has reached the level Buyers (113.21) and it seems unbroken so far. This level is critical since here the percentage of strength is 75%-25% in buyers favor. If it's broken, then buyers will have total control of the market and might push the price higher although we don't know yet if they can break previous high (114.01) to set a new one. Otherwise the price will try to move towards the Balance (117.40).
Notice the LSMA already flattening and price is below it. It's a sign that sellers are trying to reverse direction.

EUR/USD

Based on the upwave A-B, price is already down below the level Buyers (1.3619), meaning buyers are losing strength.
Also notice the LSMA is pointing down, so here there's good chance that price is heading towards the Balance (1.3370). Unless of course if the price moves up above the level Buyers and LSMA points up, then it means buyers regain strength and will push the price up.

GBP/USD

Well, here too buyers are losing strength. Price is below level Buyers (1.6044) and LSMA is pointing down. So the next destination might be around the Balance (1.5810).
Unless of course if price moves up above the level Buyers and LSMA points up, then it means buyers regain their strength and might push the price up.

USD/CHF

Allright, based on the downwave A-B buyers are in total control of the market and it looks like it's about to test the high (0.9786). If this high is broken, then it means the small wave already move according to the bigger wave, in this case we'll switch our preference to a bigger wave, the downwave M1-M2. There we can see there's the level Buyers at 0.9872, and this could be the next target.
But if buyers can't break the high, then there's a chance price will retrace and retest the level Buyers (0.9671) or the bigger wave Balance (0.9682).
Notice the LSMA is still up so at this current moment, our assumption is still up.

Allright, that's all for tonight, hope you find this useful, enjoy your weekend and good luck with your trade next week, see you later \m/\m/

DISCLAIMER: This analysis may change anytime according to market condition without prior notification, and always trust your own analysis and system :D

Daily Analysis 11 Feb 11

2011-02-10T17:22:00.000-08:00

Hi all, today I think I'd better start writing in English, well maybe not everything but some things, just to make it more internationally readable I guess :D

Okay, I'll start with my daily analysis (just a newbie analysis mind you :D) on some pairs I regularly watch everyday (it's low spread wide range pairs :D). My analysis is only on intraday basis since that's how I trade, but this analysis technique can be applied and work well on longer term basis.

I'm starting to use a much more simpler setup than usual because I basically love simple stuffs and hate to complicate things (I would trade naked chart if I could, it's just that, I can't LOL).
My setup consists of range calculator, KG Balance (KGB, that's a modified fibo used to measure buyers/sellers strength) and LSMA (this is to determine the direction), and Heiken Ashi for the trigger.
This setup is based on KG's concept of wave, buyers/sellers strength, and regression.
The basic idea is we want to measure who's in control of the market at the current wave, set some critical levels to watch (some people might call these levels s&r or pivot, whatever, it's just a name) and see the tendency of price direction.
One thing to keep in mind is, in KG analysis concept the very basic tenet in chart analysis is: NOBODY KNOWS WHERE AND HOW FAR THE PRICE MIGHT MOVE

And one more thing, since Tokyo is closed today we might expect low volatility (boring) today until Europe session later today, but this analysis is valid regardless.

Okay, let's start with AUD/USD

The current downwave from point B is the reactional wave of the upwave A-B. So we'll use the upwave A-B as our basic reference.
As we can see the price is already below level BS (1.0032). This level is the balance, where buyers and sellers at about equal strength. So if price is moving down away from this level, we can assume that sellers start to take over.
This is confirmed by the direction and shape of the LSMA. So the next logical level to watch is the level S (or sellers, at 0.9948). This level is where the buyers/sellers strength is at 25%-75% in sellers favor.
If this level is broken, then we can assume that sellers have total control of the market and might push the price lower, altough we don't know yet if they can set a new low lower than previous low.
But if price bounces at this level, then we can assume price is still consolidating and will move in range around the level BS and S.
Watch the LSMA and price action to confirm direction.

Next is EUR/USD

Again, I'll draw KGB level from A-B as our basis.
Here price is coming from above testing the level S (sellers, 1.3567). This is a critical level that determines whether sellers can totally control the price or not.
If this level is broken, then sellers will try to push the price lower and might test the previous low.
Otherwise it will be still in balance area, or consolidation, and price will range around level S and BS.
Again, watch the LSMA and price action for confirmation.

And now GBP/USD

Okay, the KGB A-B is our basis here.
As we can see price is below the level BS (1.6098) and trying to test the level S (1.6054). So again, we have this level as a critical level to watch.
If it's broken, then sellers will have total control of the market, otherwise it will be still ranging around the BS and S.
And again, watch the LSMA and price action for confirmation.

Allright, only these three pairs for today since I really have something to do. Hope I can be back early before Europe session today, wish me luck :D

Hope it helps, happy trading and have alot of green pips \m/\m/

DISCLAIMER: This analysis may change anytime according to market condition without prior notification, and always trust your own analysis and system :D