The “Head Fake”, Shelf Break & Retrace

By Michael Storm aka Robin Hood.

Hi Folks, sorry its been so long since my last article but the trading room has grown and my first responsibility is to those traders that are now a member of our team. We sure do have some boring times. But they are followed by great times to and you have to be waiting for the right setups.  Here is an EXAMPLE of a few very common setups that happen just about every day and on just about any given currency pair.

15 Minute Chart  *Note Click on the Chart to Learn about our Premium Trading Room.

Please note that on the first chart you can clearly see a GAP, begging to be filled on the 15 min chart of the EUR/JPY.  This got extended away from the MA’s and we were watching it to retrace.  Note that it did not technically set up a 15 min sell setup right away. but made a bit of a shelf where the wicks are (this is more evidenced on the 5 min chart to follow)  Then there was a surprise “squeeze” higher that looked like a breakout bar. But it SURE DIDN’T CLOSE THAT WAY!    This is a headfake, or a bulltrap, if you will. It stopped a bunch of shorts out and faked others to get long…. then went SOUTH in a hurry.  

We were waiting for the 124.90 level to break, where we all pounced upon it as a short, setting a stop over the 125.12 area.  It did not take long for this to go down 25 pips in a heartbeat (almost) at which time we closed it out. It did its job, and filled that Gap.  Then you can see it came up to the BOTTOM of that broken shelf and we got short again, same stop.  Yeah, it wiggled and jiggled for a while but once it broke the trendline on the 5 min with the WRB SELL SETUP, it crashed again to a very nice level.  It actually went further than I thought and I did not catch the entire run I only got about 22 pips of this, I think some of the others in the room held out a bit longer.  But wow, what a great trade it was.  Notice that it went right for the 200 period MA on the 5 min chart. Awesome.

Be on the lookout for head fakes aka short squeezes. Be on the lookout for shelf breaks, they are a great trade. And lastly be on the lookout for when things get way to far extended away from the MA’s… there is a powerful tendency to “snap back” over time, right back into them.  But be careful. the first sell setup often fails on a 5 min chart, so either wait for the second or build a position, but always adhere to a decent stop so you don’t get crushed.  This tendency to pull back into the moving averages has a very high probability of success ratio.

Hope this is a help to some… Please be patient and wait for the quality setups to occur.  Till next time, Happy trading !

Eur/Usd: Consolidating or Rebound?

Eur/Usd: Consolidating or Rebound?
Posted by Casey Stubbs on Thursday, February 18, 2010 Under: Trade opportunities

The Euro yesterday gave up all of it’s gains verses the Dollar but stopped short of reaching new lows. The pair stalled out at 1.3540 and the previous lows were around 1.3531. Right now we could be entering a consolidated range trading period where the price will be waiting before making a decision which way that it is likely to go.

The current range is between 1.3531 and 1.3780 watch these levels closely for bounces off of and for possible breaks. The way to trade these is to enter trades if you see a bounce within the current range or make a trade if there is a break out of the range as well.

1 hr chart *Note Click on the Chart to learn about our trading service.

Many times a news analysis and the current fundamental sentiment is what will drive the price out of the current range. For a complete update of all the upcoming news releases visit Forex Crunch. In addition to that you can read additional analysis of the Eur/Usd at The Geek Knows.com

Eur/Usd Weekly Review: Can You Get the Big Score?

The Dollar is on a roll and nothing can stop it! Can you believe that I actually said that this pair may stall a bit or consolidate? I was sure wrong on that one So I give up I am jumping on the Dollar train I am going to short the Dollar and I am going to put all the money I have on it so that I can retire next week.

Ok, wait maybe that is not such a good idea, if I would have done that last week it would have worked. But If I did that I would have to throw out all the principles and disciplines that have made me a profitable trader in the first place. There is the temptation to do so but if I do that one mistake and I could be finished. That is what has put down many traders in the past, they are doing well, they get over condfident and they put in more risk than the plan calls for.

It is at that point that the trend will change and you will get blasted and you end up in a long pile of beaten traders that the market has chewed up and spit out. So don’t be tempted and continue to make sound trading decisions.

We have seen this happen before in the Eur/Usd, remember in December of 2008 the Euro was on a tear and could not be stopped. It kept going and going and that is when I learned this valuable lesson the hard way. Look how wild the trend was and it stopped quick and went right back where it came from.

Daily Chart *Note Click the chart to learn about our premium trading service.

Think about how many traders gave in to temptation and bet the farm at 1.4700? Those traders all lost the farm and are probably living in the streets begging for money. This market is brutal don’t let it defeat you, it is critical that you remain mentally strong to survive.

Have a great weekend every body and plan your next weeks trades well do your research this weekend and read Forex Crunch for the upcoming news. Get another review on the Eur/Usd at TheGeekKnows

Eur/Usd: Desecnding Fast, When Will the Bleeding Stop?

Every day this week the Eur/Usd was hitting new lows and it appears we are in a straight free fall.  To answer the question when will the bleeding stop we have a couple of support areas at the 1.3823 area which was close to the close now. Other areas where we has support where we could see stalling is the 1.3400 1.3500 areas.

I have identified potential support and reverse areas on the daily chart below.

Daily Chart   *Note Click on the chart to learn about our trading system.

One key point for traders to remember is to keep a watch out for the bounce. When you have a free fall like this it can keep going for a long time and it is hard to find buyers. However there will be a point when the trend may stop or at least a strong pull back and it is important that you don’t get smacked when it does.

A key area of resistance when we get a pull back is going to be 1.4000 and 1.4200 areas.

Monthly Trade Update:

That Aud/Usd trade I posted at the beginning of the month turned out positive for those long term traders as the month of January was another down month for the Aud/Usd.

Monthy Aud/Usd Chart

In the month ahead there will be a great deal of forex and economic news that will drive currency prices and it is important to keep track of those news events before they come out. Forex Crunch is a forex blog that talks about each news release before they come out.

If you would like to get another opinion on the Eur/Usd read TheGeekKnows.

As the month of January comes to a close I have taken time to analyze my trading. Depsite spening many hours updating the blog and updating training material for the premium traders. I still continue to trade myself for the income and because it keeps my trading sharp. This month was another profitable month in my own trading and you can verify that for free by following my trades on Currensee.

In : Trade opportunities

Eur/Usd: Consolidating Waiting for a Breakout

The price on the Eur/Usd is in a consolidation pattern waiting for a breakout. The sentiment is that the pair will break the 1.4000 level soon. The pair has been offering some support at the 1.4000 level and has not broken south of that line. However there has not been much strength at all in the pair and the Dollar is strong right now in all verses all the pairs.

Watch the pair break out of the 1.4200 or 1.4000 range for any clear indication about which direction the pair will continue to move from this point forward.

4hr chart  *note click on the chart to learn about our premium trading service.

In other technical news the Eur/Jpy broke a key support level that I spoke about in this post. So that is an indication of more downward moves into the coming weeks.

There is an abundance of news coming out which you will want to read about that on Forex Crunch. In addition to that there is a daily Eur/Usd Report that is done by TheGeekKnows and his information can be useful when trading this pair.

Have good trading and leave your comments I like responding to comments.

Forex Weekly Pre-Trading Video

I am going to do an overview on how I think all of the major pairs that I trade will do for the week. This will give you an idea of how to look for trades this week. It is important to start out with the right mindset and to try to find trades that are in line with the trend.

When starting to trade I am reminding myself this week that I am going to keep my profits and be disciplined. Keep my risk low and make lots of money this week.

Also after watching the video make sure you visit Forex Crunch to find out how the economic news will impact those trends as well.

Eur/Usd: Bottoming at 1.4029

The Euro continues to dive and make new lows this week. The price bottomed out yesterday at 1.4029 and then hanging in a consolidation range until the pair decides to do a critical breakout in either direction.

There are mixed opinions about the future for the Euro/Usd, some experts are saying that the pair will drop going all the way to 1.24 and others are saying that 1.4000 is the bottom of this temporary move. It can be a long and dauntiing task to figure out the fundamentals. What I understand is trending and momentum and right now the Dollar has all the momentum so I will be looking to sell bounces off of key resistance areas. Read the Forex Crunch blog to keep updated on all the news events that impact the market.

The current support levels to watch is 1.4029 and the resistance levels are 1.4181 There is also a shelf of resistance at the 1.4407 level.  The best way to trade is to buy and sell off of the key support and resistance levels.

Look at the 4hr chart below to see the areas the price may stall.

4hr chart  *Note click on the link to learn about our premium trading services.

For more great information on the Eur/Usd make sure your read the daily report from the Geek Knows.

Next I want to include this trade analysis video that I made on the Eur/Jpy. Also for those of you that watch my last video setup on the Eur/Gbp I did well gaining +44 pips on the trade.

Eur/Gbp: Have We Hit a Temporary Bottom?

This post is going to cover the Eur/Usd and the Eur/Gbp on a video that I filmed showing a live trade that I made. The Eur/Usd has broken through support at 1.4200 and looks like it is going to continue to drop. The best way to trade this pair is identify key support and resistance levels and put on buy and sell orders after the price bounces around or breaks through those levesl.

The current support level for the Eur/Usd is 1.4000 we could get some consolidation in this pair before the move continues down especially if we continue to get mixed or poor news from US economic data. Check out the news for today’s trades by visiting Forex Crunch.

The current sentiment for the Euro is poor but we could be getting a slight temporary bottom on the Euro today.

Here is a 4hr chart of the Eur/Usd that shows a 4hr bounce forming right now. Look for a pull back before the pair continues lower.

4Hr Chart   * Click on the Chart to learn about our trading service.

There is consolidation at the bottom of this run and we may get a retracement from here before we go lower.

In addition I filmed a short video detailing a medium term trade that I made on the Eur/GBP because I am attempting to buy a pull back.

Aud/Usd: Learning from my Mistakes

The Australian Dollar is a strong dollar at this time and the economy is doing well compared to the U.S. Dollar.  However there is going to be a temporary pullback in the Aud/Usd because the pair has been so bullish and it is due for a pull back.

Earlier in the month I made a monthly trade call and so far that has been a bad call. You can read the monthly Aud/Usd trade call here. Michael Storm wrote about learning from losses so I am going to follow his advice and evaluate my bad trade.

So the big mistake I made in making that trade was:

• first the monthly bar was red and down, but the daily chart was up
• Next I made a short long term trade and the rollover was against me so capital was taken out of my account everyday.

So I should have waited for an entry signal on the daily chart before going short. I ended up closing that trade for a large loss you can see the result of that here on Currensee by becoming a free member and following my trades.

Now we have a double top on the 4hr chart and an entry sell signal on the daily chart.  So am going to go short again we have a large run up on the daily chart right now and I think despite the good Australian economy we will see a pull back.

4hr Chart * Note click on the chart to learn about our premium trading service.

You can see the bad entry and the new entry I am going to take now on the daily chart below. You can also see how far up we are on the daily chart. This current resistance level of the .9330 area has been tested several times.

Daily Chart

Overall I still think this pair is going to be bullish but I see a short term correction in the future.

Read another Aud/Usd post from my friend Yohay here.

Eur/Usd: Weekly Update

The Eur/Usd is in a consolidation range right now. The pair was thought to possible break to the upside when it broke the 1.4450 price resistance barrier but that was short lived as the Euro is unpopular right now and out of favor. Despite negative US data reports the pair has not lost ground on the Euro.

As of right now the current support level to watch is 1.4200 if the pair breaks below that we could see the pair go to 1.3800. Friday was very bearish for the pair as the Dollar gained all day long. We may continue to see Dollar bullishness until the test of the 1.4200 area again.

If you look at the Daily chart below you can see that the pair has test the 1.4200 area and that is a strong support level.

Daily Chart  *Note Click on the Chart to learn about our premium trading service.

If we zoom in to the 4 hour charts we can see that there is a consolidation period and a trading range happening right now. The last 4 hour candle was green after a series of down candles which indicates that the current down trend may be stall for the time but I would look for a pull back and then another opportunity to enter this pair short.

4hr chart

My live real personal trading record is on Currensee for all traders to see for free. Just follow the link and sign up and you can even follow my trades there as well.

My fellow Eur/Usd blogger wrote another Eur/Usd weekly review and he has thoughts of risk aversion returning. In addition to that it is important that you look at the all the news that will be impacting this currency pair that will be announced next week and the best place to do that is at Forex Crunch.

Good Luck Trading this week.