Latest Forex Commentary

NZDCAD Can’t Hold Weekly Range Breakout – Selling On This Sign Of Weakness

nzdcad weekly range fake out

Got a nice bearish play on the NZDCAD market today – a pair I don’t trade very often, but this swing trade is very hard to refuse.

To build value into this trade idea, I start from the weekly chart to begin my top-down analysis.

I posted my weekly chart above, here I get the scope of the bigger picture, and where the market is likely to move on the medium to longer term.

Keeping things simple, the weekly chart is in a range. Price did manage to break out of the range top, but could not maintain the breakout.

As a result, the market collapsed back below the weekly level very quickly. This failure to break out of the range is a big sign of weakness, and suggests there is no strength left in the market.

As long as price remains on the bottom of the weekly level, I maintain a bearish bias.

Now we drill down to the daily chart to complete the trade idea…

nzdcad daily bearish signal on lower high

With the bearish bias in mind from the weekly chart, I drop down to the daily chart and watch for sell opportunities.

There is a nice bearish rejection candle which we can now build a lot of value into.

We know that the market failed to breakout of the weekly range, we can see the more exaggerated price action from that event on the daily chart. But, the daily chart is giving us even more insight, as we can see lower highs are now being printed – another sign of weakness.

The rejection candle anatomy looks healthy also, the close price is way below the open price – giving it a nice thick bearish body.

To conclude, we have bearish rejection signal coming off lower highs AND a weekly resistance level, following on after the weekly range breakout failure.

Looking to grab a pull-back entry with a limit order. Looking left, it does seem like most trading days do offer corrections up the previous candle’s range.

Best of luck on the charts.

 

Trade Idea Blown Up By NZD Interest Rate Volatility

nzdcad stop out

Unfortunately, this trade was on the wrong side of the NZD interest rate volatility as the RBNZ made a statement.

These are the type of things we can’t control in the market. Technically the setup was good, but these news events can either destroy your trade, or drive it into rapid profits.

My plan was to let the trade do it’s thing, and I already pre-defined my risk in that trade, so I know if I got stopped out, I know how much I lose.

This is why I always use a stop loss, in case of scenarios like this when you get a burst of volatility that is against you.

Nothing more to be said, the trade idea was good, it just didn’t work out – welcome to the fun world of Forex trading.

Now I sit and wait for the next high reward potential setup 🙂

Wow! Huge Gold Bearish Price Action – Lower Prices Expected To Follow

Last US session was a carpet bomb of heated news events coming out of the FED. Interest rake hikes, FOMC statements and a plethora of economic data.

Gold is very sensitive to USD news, as Gold ounces are quoted in USD – well that’s at least how we classically trade it. (GOLD/USD)

I don’t worry about the news, I don’t try to predict numbers or jump on trades in the middle of news volatility – that’s a fools game for a retail trader. I just work with what the price action on the charts communicate to me.

That large string of news really injected a lot of volatility into the Gold, and silver charts – with the final outcome being a very bearish situation.

When you look at the daily chart, the first thing that will slap you in the face is the very large bearish rejection candle standing very authoritatively on the chart. This alone suggests we likely to see lower prices.

The rejection is also coming off lower highs, which is a signature of a weak market.

But I can hear the technical analysts out there screaming “it’s on support!”

Well that support level is on a ‘minor’ level relative to what’s in play here, and has been used as a swing level in the past – it’s not really a major turning point.

The major turning points I have highlighted on the chart – those are the levels you do not want to trade ‘through‘.

What makes this setup more valuable is the situation on the weekly chart.

As I become older and wiser, I turn to the weekly chart more and more to grab a directional bias, whereas many years ago I had tunnel vision on the daily chart.

Doing top down analysis on the weekly chart has saved me from many losing trades, which looked like a great swing trade on the daily chart, but a terrible idea from the weekly perspective.

The gold weekly chart shows a clear bearish rejection of the major resistance level. Weekly levels + weekly price action signals are a force you don’t want to go against.

Trading against the weekly chart in my mind is like looking for coins on the highway.

The bearish rejection on the weekly chart is a very strong indicator that lower prices are to be expected. The bearish rejection candle on the daily chart is demonstrating continuation of that weekly reversion signal

A very powerful combo.

Because the daily candle is so large, a pull-back limit entry may be the best way to get into this trade at a decent price, and to tighten the stop.

Best of luck on the charts.

Gold Breaks Weekly Level With Bearish Outside Candle – Looking for More Bearish Price Action.

gold chart daily analysis

To start off the week, gold is looking like a hot chart to pay attention to.

Already on Monday, gold bears broke the weekly support level – where I was actually waiting for bullish signals!

Monday price action can be deceptive though, so I would take it with a grain of salt – don’t be too quick to jump in here.

So the situation is this; The weekly level failed to hold as support, in doing so has really painted a bearish outlook on this chart. The large bearish Outside Candle suggests lower prices to come.

The last two weekly candles have also closed negatively, giving them bearish bodies and some some bearish momentum here.

I am interested in shorting this – however, I am going to wait until the US session opens. Why? Because that is when ‘gold money’ comes into the market. Breakout moves that occur then, are usually legit.

A break of the bearish outside candle low will be the sell trigger, as the market pushes into lower lows during the US session.

Any breakout attempts before that, I will ignore – especially since this signal was printing on a Monday (which is usually less reliable price action).

So don’t be surprised if this whole downside breakout attempt ‘fakes out’ and we see the bulls charge back in here after the US open. It still is an important level that bulls have a last chance to defend.

That’s why it’s really important to hold your fire until the US session open bell rings, you need to evaluate the situation then.