While the daily chart shows EURUSD firmly in a downtrend, we are after all approaching the resistance and enthusiastic bulls make see a case for an up-move. It is usually common sense not to defy the trend and indeed the reward to risk proposition seems to favour a short.  It is however possible that a reversal might occur if the charts are showing a higher base.

Careful bulls should only enter after retracement following a confirmed move. Bears watch for trigger.

EURUSD higher base in 2 weeks

One of the most commonly used term is Reward to Risk Ratio. The bottom line of such analysis is about having a high probability and profitable trades.

For example, if you want to sell GBPJPY @ 135.00, you might want to consider reward to risk Ratio at 135.00 Price Level.

Risk Management of GBPJPY

As from the chart above, you will see that the reward to risk ratio is 1:2. This will also mean that you have more risk than reward when you want to sell GBPJPY at 135. That is surely unprofitable if you consistently apply the same ratio for your trade.

Therefore, it is highly recommended that you should have at least a reward to risk ratio of 2:1. Which will gives a better chances of winning in the long term.

Lastly, as from the analysis above, to sell GBPJPY @ 135 is unprofitable, so why not consider buying up GBPJPY @ 135? In that case, the Reward to Risk is 2:1!

1. Resistance – .9150
2. Support – .9070

From a risk-reward proposition point of view, it might be worthwhile to fade the downward equidistant channel visible in the daily-chart.

AUDUSD in tightening wedge

AUDUSD equidistant channel in daily chart

If this downtrend continues, it may find an intermediate support zone that is very near to 2009 lows.

Weekly Chart of EURJPY

Looking at near term, on a H4 chart below.

EURJPY H4

There is a high chance that there will be a lot of reaction on the critical support / resistance level as highlighted, which could result in 2 directions.

1. As a Support level for rebound, this will only confirm the market has respected this level again.

2. As a breakdown of Support, resulting in further downtrend movement, seeking for next level of support.

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Based on the proximity of GBPUSD to the support now, it might be bulls’ turn. If so, the next zone to watch is the pullback resistance. If that breaks, this whole episode is a consolidation. If that resistance fails, we got a bearish continuation with head and shoulders.

All this happens only if bulls take over for a while.

GBPUSD bull trap sprung

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• Prize is not exchangeable for cash
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• City Index Asia and TerraSeeds Market Technician reserves reserves the right to publish the results of the promotion with full disclosure of the winner’s details on their website for marketing & advertising purposes.
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Weekly Chart of USDCAD

As from the Weekly Chart above, the Loonie is making its way near to 2009 support and it is also near to multi-week support zone now. Since late Sep 2009 till now, the Loonie has been on a trading range, which could be a consolidation of the downtrend.

How to take this advantage?

4 Hourly Chart of USDCAD

On the 4 hourly chart, it seems that Loonie is forming a pennant-like chart pattern, which could hint a possible trend continuation.

This pattern will be valid as long as the top trendline of the pennant is not violated.

On the other hand, a bullish view on the Loonie could regard the pennant-like pattern to be a symmetrical triangle for a counter-trend move.

Therefore, it will be better to wait for a clear picture for Loonie to unfold before attempt for a trade.