Let’s take a look at a monthly chart below:

As you can see, gold has been in an uptrend since 2002. While this may seem unusual, if you spend some time reading about fiat currencies (paper money), then it’s not so strange because fiat currency is constantly devaluing so gold (which is real and cannot be printed out of thin air) gains. I don’t want to get into economics and theories in this post, but if you want to do some research on your own, read up about fiat currencies.

The monthly candlesticks suggest that we should see another retest of the $1900+ highs before any sort of serious decline can start.

I’d think that gold will see $1900+ within the next 2-3 months.

But to be sure, let’s take a look at a daily chart.

You can see that gold has moved in a wedge pattern for the last 6 months.

At the beginning of 2012 it broke out of that wedge, came back down to test the wedge and continued its ascent.

Currently it’s at a double-top level of 1760 that can prove to be temporary resistance, but even if a pull-back occurs, gold shouldn’t drop below 1700 and should head to its highs of $1900+.

Trading Recommendation

Buying gold at 1750 with a stop below 1700 and targeting 1900 seems like a good risk/reward trade (1:3).

Remember to trade according to your account size. If you want to wait for a better entry point (possibly after a pull-back occurs) then that’s up to you.

Keep your stops in and emotions out.

Gold Analysis 22 Feb 2012 is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

- Read this post about The basic principles of forex trading

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Let’s take a look at possible trades for the week ahead, and we’ll start with the daily chart below:
(Click for a larger view)

• Daily MACD histogram is below the zero line, meaning negative movement is likely.
• Slow stochastics are pointing down although it looks like they could cross up, so that’s an unreliable signal.
• The RSI is just above the 50 line meaning it is still in bullish territory, but barely.
• Friday 17 February ended the daily candle as a swing day and pretty much exactly on the 50 MAE.

Trading Strategy For The Week Ahead

This swing day makes it likely that Monday will be a down day with an initial resistance around 1.3065. I’ll be looking to go short on the open on Sunday (if Eur/Usd doesn’t gap down) around 1.3140 with a stop above 1.3225. This is pretty much a 1:1 risk/reward trade but swing days have a high probability of turning out the way I’m describing so the trade seems like one that should be taken.

Eur Usd Analysis 18 Feb 2012 is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

- Read this post about The basic principles of forex trading

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Currently I feel that Eur/Usd is in a consolidation phase that should result in further upside movement but should it break support to the downside then I will revise my view.

Let’s take a look at a daily and weekly chart below:

As you can see on the daily chart above, Eur/Usd’s rally was halted by the 100 MAE at 1.3320.

The MACD histogram is positive, slow stochastics are positive although in overbought territory and the RSI is in bullish territory.

If you look at the rally in October 2011, the rally that started January 2012 seems to mirror it very closely. This means that we can expect a pullback to the 50 MAE or the 21 MAE around 1.3080. However, on the weekly chart a drop to around 1.3020 is possible but we’ll look at that in a second.

This means that I’ll be looking to go long somewhere between 1.3100 and 1.3020 with a stop below 1.2950 because if the support levels I mentioned above will hold, then I think that Eur/Usd will move towards 1.3500.

On the weekly chart above you can see how the rally was halted by the 21 MAE.

The MACD histogram has just crossed over above the zero line. I drew vertical lines every time this happened over the last few years and this shows how Eur/Usd has rallied higher every time this happens.

However, a drop back to last week’s low is possible, which is around the 1.3020 level.

Trading Recommendation

Go long between 1.3100 and 1.3020 with a stop below 1.2950, targeting 1.3500.

For a more exact entry point, keep your eye on the 4 hourly and the hourly charts to pick a bottom.

Eur Usd Analysis 11 Feb 2012 is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

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It’s consolidated and dropped back to the 21 MAE on the daily chart but not below it.

Let’s take a look at some charts below and then make a new analysis for the week ahead.
(Click on a chart for a larger view)

On the weekly chart above, it seems that there is a long-term uptrend which still has not been broken. However, the Weekly MACD is below the 0 line, the price action is below the moving averages and the moving averages have crossed negatively.

I expect the weekly 21 MAE or even the 50 MAE to be reached which could be as high as 1.3600.

On the daily chart above you can see how the price action has consolidated around the 50 MAE and down to the 21 MAE but not below it. The MACD is still in positive territory.

I expect Eur/Usd to move up to at least the 100 MAE around 1.3300 or higher.

On the 4 hour chart above it is evident that the price action is consolidating in a wedge. I expect a breakout to the upside but in order to take position you have to be patient and wait for a good setup.

This would mean go long near the bottom of the wedge around 1.3090 or wait for a breakout of 1.3220ish to go long.

You could also attempt a short near the top of the wedge around 1.3200. All these trades can have a relatively short stop of 100 pips or less, thus with a high reward, low risk.

Eur Usd Analysis 4 Feb 2012 is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

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Although I entered a long position too early and got stopped at -200 pips, I entered a second long position and profited +320 pips so that leaves me with a positive +120 pips off this call. Not too great to be honest but still here to kick ass for the rest of 2012.

Just going to do a bit of an updated analysis on the Eur/Usd pair so let’s take a look at the daily charts below.

Longer-term, Eur/Usd has fallen back to an ascending trend line and has bounced up from there nicely. It seems in a multi month time-frame that the Eur/Usd pair is stuck in a trading range of between 1.2500 and 1.4300.

However, we’re not here to trade monthly time-frames so let’s take a bit of a zoomed-in look how you can profit from trading Eur/Usd over the coming days and weeks:

I think the medium-term trend has turned bullish on the daily time frame, but since we’ve seen such a violent rally in the last few days, it’s only natural that there will be a bit of a pull-back or a consolidation before that trend can continue.

I would say that a pull-back to the 21 MAE on the daily chart is possible, meaning a pull-back to about 1.30000 or even 1.2950. I would like to enter a long position around the 1.3000 level with a stop of about 100 pips. The profit potential would still be the 1.34000-1.36000 level over the next 4-6 weeks.

However, in case there is a straight upward move without further consolidation, then it is possible to attempt a short position at the 100MAE on the daily chart, with a short stop above it (50 pips or less).

I’m personally counting on a decline to the 21MAE though, and will wait to go long around that level.

Eur Usd Analysis 30 Jan 2012 is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

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Although I got stopped out on my initial trade from 26 Dec 2011 (-200 pips) and almost got stopped out of this last trade, fortunately Eur/Usd bottomed and I’m currently +140 pips on the Long Eur/Usd trade from 1.2790.

I think that Eur/Usd will head towards 1.3400 or higher over the coming 3-4 weeks so I will be holding my Long Eur/Usd position. I will however move the stop to break-even to eliminate any risk from the trade.

Let’s take a look at a daily chart of Eur/Usd and do some analysis:
(click on the chart for a larger view)

• Eur/Usd bottomed at a level of 1.2626 which is also the same level it bottomed at in August 2010.
• The MACD daily histogram has crossed above the 0 line. The last time this happened in October 2011 we saw a rally of 1100 pips.
• The daily RSI is almost above the 50 level, meaning it’s heading towards bullish territory.
• Daily stochastics have crossed upwards and are pointing up, this is bullish.
• The first resistance was the daily 21 MAE at about 1.2890 which has been broken to the upside. It was then tested again but proved to be support. This is very bullish in my opinion.
• The second resistance will be the daily 50MAE which coincides with the level of the last major low in October 2011.
• After this the next resistance will be the daily 100 MAE which is currently around 1.3370, but as you can see on the chart, in October 2011 it shot through that daily 100 MAE with a daily spike. This means that there is good potential for Eur/Usd to head to about 1.3600 over the next weeks.
• I don’t expect Eur/Usd to drop below 1.2850 before it heads to at least 1.3100 first.

Eur Usd Analysis 21 Jan 2012 is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

- Read this post about The basic principles of forex trading

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In my last analysis on 26 Dec of Eur Usd I indicated various reasons why I think this pair is bottoming and ready for a rally of weeks and possibly hundreds of pips.

I entered a long trade at 1.3066 with a stop below 1.2920, but since the holiday markets were rather thin, the powers that be tried to run stops and squeeze out all long positions (in my opinion). Eur/Usd was pushed down all the way to 1.2860-ish and I decided to lower my stop to be able to hold the position.

So far it seems I am right with my decision since Eur Usd is trading at 1.3030 again. Let’s have another look at an updated daily chart (click on it for a larger view):

• The positive RSI divergence is still in place.
• 29 Dec 2011 was a reversal candlestick pattern on the daily chart.
• The MACD histogram has crossed above the 0 line.
• On 10 January 2011 (Vertical line on chart above), Eur Usd started a huge multi month rally.

All in all, I’m still holding the long Eur Usd position from 1.3066 with a stop below 1.2900 and a target of 1.35 or higher.

Eur Usd Analysis 3 Jan 2012 is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

- Read this post about The basic principles of forex trading

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If you do not have excellent trading risk management it’s unlikely that you’re going to make money in the long run as a forex trader.

You see, the main reason why the majority of forex traders blow their accounts is because they simply do not have good trading risk management. No matter how good a trader you are, you will make losing trades. It doesn’t matter if you’ve been trading for 20 years or you have a phd in finance, no single person is able to make correct calls for profitable trades 100% of the time.

Where most traders go wrong is thinking that they don’t need trading risk management. Sometimes consecutive winning trades trick you into thinking that you’re the greatest trader in the world and that you simply can’t make mistakes. But even if you get 9 out of 10 trades correct and make a profit from them, that 1 wrong trade can cause you to lose everything you made in those 9 winning trades and more.

In order to prevent you from losing significant money on a single wrong trade you need to have strict trading risk management.

What Is Trading Risk Management?

Trading risk management is the strategy you follow to manage the downside risk of every trade you make.

The nature of forex trading is that there is always a risk involved. As soon as you enter a trade there is the possibility that the trade will go against you and that you will lose money. Sometimes this drawdown is minimal and will reverse to turn into a profit, but there are also times when the market will keep moving against you so much that it will cause substantial loss if you continue to hold that position.

This is why it’s necessary to have trading risk management so that in the event of the market moving against you, you will only lose an amount that will not cripple your account. This is done through setting a stop loss as soon as you enter a trade that will limit your risk to an amount your account is comfortable with (I recommend risking no more than 5% of your account on a single trade).

My Trading Risk Management Strategy

As I’ve already mentioned, there are two aspects to profitable forex trading. The first is to be able to determine profitable entry points and be right at least 60% of the time with your trades.. The second aspect is good trading risk management to prevent you from losing more than you win in the 40% or less that your trades are losing trades.

You can be the best analyst in the world and come up with 90% winning trades, but without the risk management, those 10% losing trades could ruin you and blow your entire account.

My trading risk management strategy is the following:

1- Risk no more than 5% of your account on a single trade, but preferably keep that risk around the 2% level.

2- Place your stop-loss (according to the above risk level) as soon as you enter a trade to eliminate the possibility of the emotions of fear or greed that could cloud your judgement. Every trade is purely mechanical. It’s either right and you’ll make a profit, or it’s wrong and you’ll lose a per-determined amount that doesn’t pose a severe threat to your account.

3- The third part of my trading risk management strategy is to manage your risk as soon as your trade starts to become profitable. There’s nothing more annoying than when a profitable trade turns into a losing trade. How exactly you do this depends on your trading style and the time-frames on which you trade.

For example, I like to trade on 4 hour and daily time-frames, meaning that my trades have the potential to move hundreds of pips. When my trade becomes profitable, I like to move my stop loss up to 100 or even 50 pips below the current price action, meaning that as soon as my trade gets in a profit of 50 pips, I’ll move my stop up to break-even to eliminate any risk from the trade. In that case, at worst I’ll get stopped out with no loss and at best I keep moving my stop up as the price action rises and make a nice profit.

FILED UNDER: TRADING RISK MANAGEMENT

Trading Risk Management is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

- Read this post about The basic principles of forex trading

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According to my analysis I have reason to believe that Eur/Usd has made a bottom and is ready for a multi day or multi week rally of a few hundred pips.

Let’s take a look at a daily chart to help you understand why I expect the above to occur:

I’m basing my expectation on various indicators and signals. The fact that my analysis is confirmed by multiple indicators makes this a high-probability trade.

1- The positive RSI divergence:
Back in Nov and Dec last year there was a similar positive divergence with price action and the RSI. This resulted in a multi month rally of almost 2000 pips! Currently there seems to be a similar divergence between price action and the RSI.

2-The MACD Histogram:
The daily MACD histogram has just crossed over above the zero line and this often results in at least a few days rally if not more

3- Slow Stochastics:
The slow stochastics indicator has recently dipped below the 20 level and crossed to the upside. This is usually an indication for a rally.

Trade Recommendation

I recommend going long Eur/Usd at market (1.3065) with a stop below 1.2920.

Target 1: 1.3180
Target 2: 1.3390
Target 3: 1.3600

Keep your stops in and your emotions out of this trade as with any trade.

Eur Usd Analysis 26 Dec 2011 is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

- Read this post about The basic principles of forex trading

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The MACD is a very useful indicator to help you to determine whether your entry point is a good one or not. In fact, the MACD is such a good indicator that you can actually use it on it’s own to find profitable trades, on all time frames!

MACD Histogram

The MACD is a computation of the difference between two exponential moving averages (EMAs) of closing prices. This difference is charted over time, alongside a moving average of the difference. The divergence between the two is shown as a histogram or bar graph.

Exponential moving averages highlight recent changes in a stock’s price. By comparing EMAs of different periods, the MACD line illustrates changes in the trend of a stock. Then by comparing that difference to an average, an analyst can chart subtle shifts in the stock’s trend.

Since the MACD is based on moving averages, it is inherently a lagging indicator. A MACD histogram only differs from a MACD by the way in which it is illustrated, i.e. as a bar chart above and below a zero line (histogram) rather than two separate moving averages crossing through each other above and below a zero line.

The reason why I am fond of the MACD histogram is because it is very clear and easy to interpret and base your trades on.

MACD Histogram Strategy

If you want to know how to use the MACD histogram as part of a profitable trading strategy then read on carefully.

This MACD histogram strategy revolves around taking a long position when the MACD histogram crosses over the zero line from the downside and taking a short position when the MACD histogram crosses below the zero line from the upside.

Purely trading on this MACD histogram strategy alone works better on smaller time frames like 15 minute and hourly charts, but it can be a useful helping tool for longer-term trades in combination with other indicators or methods.

Below I’ve got 3 different time frame charts of Eur/Jpy: 4-hourly, daily and 15 minutes. These charts all contain the MACD histogram indicator and I’ve put various vertical red lines on the charts to indicate entry points for this strategy. Click on any of the charts for a larger view.

By looking carefully at the above charts you should be able to notice 2 things:

1- Just as with all indicators or strategies, the MACD histogram strategy does not work 100% of the time. Sometimes there are crosses above and below the zero line that don’t produce the expected upside or downside movement in the price action. This is why you still need to apply your strict money-management rules when trading the MACD histogram strategy. Always use a stop loss and keep your risk level per trade limited.

2- Trading purely on the MACD histogram alone, it tends to give better entry points on shorter-term time frames like 15 minute charts. You can see that it works on longer term charts too (4 hour and daily) but since the MACD is a lagging indicator I find that the MACD histogram works better on longer time frames as a confirmation of your other analysis tools.

I.e. you use other strategies to determine your entry point and you just use the MACD histogram to confirm those entry points. (If you are shorting make sure the MACD histogram is below the zero line and if you are going long make sure the MACD histogram is above the zero line).

FILED UNDER: MACD HISTOGRAM

MACD Histogram Strategy is a post from: Forexhabits.com

*Disclaimer*

- This forex analysis is just my personal opinion and does not guarantee profits or success in any way.

- If you choose to follow analysis from Forexhabits.com you do so entirely at your own risk.

- NEVER follow someone's recommendation without doing your own homework first.

- Online Forex trading is risky and can cause substantial financial loss or gain.

- Read this post about The basic principles of forex trading

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