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Tue, 27th of March, 2007 7:19 am EST
TODAY’S FOCUS: EURUSD & GBPUSD
EUR Bounces Off 1.3240/59 Zone

EURUSD-EUR short to the upside on Monday challenging the 1.3338/42 levels, its Mar 16 & 26’07 highs following a bounce from an intraday low of 1.3253.The pair remains constructive on the upside having formed a bullish engulfing candle pattern at the end of yesterday’s trading session suggesting that a convincing break of 1.3338/42 zone leading to gains towards its Dec 04’06 high at 1.3363 and a likely retest of its recent high at 1.3410 could be shaping up. In such a case, a break and close above there (1.3410) exposes the 1.3483 level, its Mar’05 high ahead of a stronger resistance at 1.3668, its Dec’04 high. In addition, its weekly stochastics remains supportive of this view. The first downside target is seen at its Jan 02’07 high at 1.3296 with a break opening the door for additional losses towards its .618 Ret(1.3071-1.3410 rally)/Dec 20’06/Feb 27’07 highs at 1.3240/59.If this zone gives way, then the next two downside targets lie at 1.3171/89 levels, its .618 Ret (1.2867-1.3363)/Feb 20’07 high and 1.3080/52 zone, representing its Feb 22’07 low/Dec 18’06 highs/range breakout point/Mar 06’07 low. On the whole, having pushed back above 1.3300/38 zone,EUR should now target 1.3363 and 1.3410 resistance zones.

Support Comments

• 1.3296 Jan 02’07 high
• 1.3230/59 Dec 20’06/Feb 27’07
• 1.3220/02 Broken trendline/.618 Ret(1.3071-1.3410)
• 1.3171/89 .618 Ret (1.2867-1.3363)/Feb 20’07 high

Resistance Comments

• 1.3363 Dec’06 high
• 1.3410 2007 high
• 1.3483 Mar’05 high
• 1.3668 Dec’04 high

GBP Pushes Towards 1.9700/26 Levels
GBPUSD-GBP like its EUR counterpart reversed off its intraday low at 1.9571 to close Monday session at 1.9693.It has in early morning trading today pushed lower towards 1.9620 levels signifying that a second failure in a week ahead of 1.9748/78 zone, its Feb 02 & 07’07 highs could be in the offing.GBP requires a decisive clearance of 1.9726,its Mar 22’07 high to establish that correction off its recent high at 1.9726 has ended at 1.9571 low and bring upside gains towards 1.9748/78 zone, its Feb 02 & 07’07 highs where a break must occur in order for the pair to resume its short term uptrend targeting its 2007/14-year highs at 1.9915 followed by its psychological resistance at 2.0000.Its weekly studies remain supportive of this view. On the downside, its initial support comes in at 1.9571/55,its Mar 26’07 low/Dec’04 high. Below here shifts focus to its daily 50 ema/Mar 16’07 high at 1.9507/05 with a violation of there clearing the way for more downside losses towards 1.9460, its Dec 18’06 low and then 1.9401/33 zone, its Feb 13 & 19’07 lows/ Mar 12’07 high ahead of its Mar’05 high at 1.9326.Daily stochstics is in an overbought territory suggesting nearer term upside limitation may be seen. On the whole, maintaining above 1.9552/05 zone calls for further upside pressure towards 1.9748/78 and beyond.

Support Comments

• 1.9571/55 Mar 26’07 low/Dec’04 high
• 1.9524/05 Falling Trendline/ Mar 16’07 high
• 1.9460 Dec 18’06
• 1.9401/33 Feb 13 & 19’07 lows/ Mar 12’07

Resistance Comments

• 1.9673/77 Feb 15 & 27’07 highs
• 1.9748/78 Feb 02 & 07’07 highs
• 1.9915 2007/14-year highs
• 2.0000 Psychological Resistance

Mohammed Isah
Market Analyst
FX Instructor LLC
misah@fxinstructor.com
www.fxinstructor.com

The information has been prepared for information purposes only. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. This information contained herein is derived from sources we believe to be reliable, but of which we have not independently verified. FXInstructor LLC assumes no responsibilities for errors, inaccuracies or omissions in these materials, nor shall it be liable for damages arising out of any person’s reliance upon this information. FXInstructor LLC does not warrant the accuracy or completeness of the information, text, graphics, links or other items contained within these materials. FXInstructor LLC shall not be liable for any indirect, incidental, or consequential damages including without limitation losses, lost revenues or lost profits that may result from these materials. Opinions and estimates constitute our judgment and are subject to change without notice. Past performance is not indicative of future results.

Euro closed the week at the 1.3260 area a strong support level established on February 27th. Considering the downside momentum of the last couple of days we should have to look at the next support levels, the closest support is at 1.3260 which is the high of February, next we have 1.3185 the 50% of the 1.3070/1.3260 range, further south is the 1.3050/70 area which has been tested multiple times starting on December 15th , January 9th, January 23rd, February 2nd, February 22nd and March 5th. Conversely if price holds above 1.3260 we have a resistance level at 1.3300 January 2nd high and higher up we have December 3rd 2006 high of 1.3363 and finally last weeks high at 1.3411.

Resistance levels

• 1.3668 - December 2004 High
• 1.3483 - March 2005 High
• 1.3410 - March 21^st
• 1.3365 – December 3^rd High
• 1.3300 - January 7^th High

Support levels

• 1.3260 - February 27^th High
• 1.3185 - Feb. 20th High; Mar. 7^th High
• 1.3050/70 -Decemeber 18^th Low; Mar. 5^th Low

In this my last installment on Fear I will cover the final action block to success as a Trader. You should remember I said the first block was over-analysis which led to self-doubt which in turn leads onto:

Hesitation at the very moment when you need to pounce!

How many times has this happened to you? How many times have you sat there over-analysing a perfectly good set-up whilst listening to your inner voice creating self-doubt in your mind only for you to hesitate on pulling the trigger at the very crucial moment when all of your energy should be focused on following your plan?

(more…)

Eur-USD thoughts for March 23rd

After Wednesday’s strong move on the Euro we had a down day yesterday March 22^nd which formed an inside bar on the daily charts; not managing to keep above 1.3365 price made a low at 1.3311 very close to the 1.3300 support area established on January 7^th.

Yesterday’s price action brought us very close to where we started the week in the first place; in order for the Euro to continue the uptrend we have to look at how price action develops at 1.3365 December’s 3^rd High and more importantly at 1.3400/1.3410 area, if these two levels are cleared the next resistance consists of March 2005 level at 1.3483 and higher up 1.3668 level made in December 2004. On the flip side if price halts at the current levels (1.3330 as we write this) we should start paying attention to the 1.3311-1.3300 area as a first level of support followed in close by 1.3260 February 27^th high, lower down we have 1.3185 which is February 20^th and March 7^th highs.

Resistance levels

• 1.3668 - December 2004 High
• 1.3483 - March 2005 High
• 1.3410 - March 21^st
• 1.3365 – December 3^rd High

Support levels

• 1.3300 - January 07th High
• 1.3260 - February 27th High
• 1.3185 - Feb. 20th High; Mar. 7 High
• 1.3050/70 -Decemeber 18th Low; Mar. 05 Low

Eur/Usd put in a strong day yesterday the catalyst beeing the US FED statement in the afternoon. Euro broke through the resistance at 1.3365, the December 3^rd 2006 high, and it turned that level into a support level, as this analysis is being done Euro pulled back towards it(1.3365).

If price holds 1.3365 this should set the stage for possible future gains and the next levels to watch out for are: yesterday’s high at 1.3410, higher up we have 1.3483 established in March 2005 and December’s 2004 high at 1.3668. As we can see we don’t have many resistance levels above the current quote as Euro showed strength lately against the greenback.

Conversely if the current level of 1.3365 doesn’t hold and price falls lower we have our first support level at last week’s high of 1.3340, lower down we reenter into a small range between 1.3340/1.3260. Further down we have the 1.3185 area and the stronger 1.3050/1.3080 levels who have been tested on numerous occasions since the beginning of the year.

Resistance levels

• 1.3668 - December 2004 High
• 1.3483 - March 2005 High
• 1.3410 - March 22nd

Support levels

• 1.3300 - January 07th High
• 1.3260 - February 27th High
• 1.3185 - Feb. 20th High; Mar. 7 High
• 1.3050/70 -Decemeber 18th Low; Mar. 05 Low

Did you know that you, as a trader, are your own worst enemy? You might have a perfect setup, a great strategy, and a foolproof trading plan - but if you lack the discipline or patience to see it through, none of it will do you much good. In a less grotesque example, you may simply want to improve your mindset and focus, and get yourself “in the zone” to help improve trading performance - and enjoyment.

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We have seen in our previous posts that there are many dangers awaiting those traders who use high leverage when trading this volatile and unpredictable market.

Let’s now have a look at the other side of the coin…

If leverage is dangerous, then using a very small one - or none - should protect a trader against any danger resulting from trading large positions, right? WRONG!

This confusion is caused by a misunderstanding of the word ‘leverage’, which can have at least two different meanings.

First, leverage has a purely technical meaning and refers to the instrument offered by a broker in order to boost a trader’s power to make profit (or suffer losses). Broker X can offer a 50:1 maximum leverage for trading on its platform, while broker Y may offer a 400:1 maximum leverage.

When we are talking about leverage in its technical aspect, there is nothing wrong with using the highest leverage allowed by the broker. It is not the use of this instrument per se that places us in a risky situation, and in what follows we will explain why. (more…)

If you remember from my last entry I stated that there were 3 blocks to success. The first was Over - Analysis which leads onto the 2nd block:

Self-Doubt which is often experienced as Fear. Having become paralysed by over-analysis you then find yourself doubting your own analysis and your own ability. That internal voice keeps telling you:

• “Your last trade was a loser, so will this one be...”
• “You don’t know what you’re doing do you?”
• “You want to go long but the talking head on Bloomberg is saying traders should be short, surely he knows more than you?”

And a hundred other such self-defeating comments. (more…)

The first aspect of our leverage myth refers to the belief that a high leverage can work in favor of the trader, and even compensate for losses in periods when trading does not give the expected results.

A trader that is aware of what leverage can do for him may tend to increase the size of his trades as losses accumulate, hoping for a recovery in the very last moment. This approach can only work against the trader, and usually leads to margin calls and huge losses in trading accounts.

Whenever a trader tries to apply a casino player mentality to trading (on purpose or not), the probability of his success is in fact much lower than if he were gambling in a casino with a 50%/50% chance. (more…)

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