2009 October

Simultaneous Release at www.thegeekknows.com

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Hi there,

Once in a while, i get questions asking me why was a support respected when it was 1.4718 instead of 1,4719.

I would like to address this common misconception today.

Firstly, what are resistance and support lines?

When viewed on the chart, these are areas whereby the price seems to bounce off.

From a market point of view, these are areas whereby traders feel that enough is enough. ” I will not buy more at this price as it is too costly” ( Resistance Line ) or “I will not sell any further as this is too cheap” ( Support line )

For example, we note a support line at 1.4719.

However, there may be folks who are more stringent and will not sell lower than 1.4725 or perhaps we have folks who are easy going and are willing to sell as low as 1.4715.

This effectively “spreads” out the effect of the line.

This can be one of the reasons why we usually see the price slow down and consolidates when approaching an area of support or resistance as various expectations are being filled.

Another point i would like you to note is that forex being a decentralized market, will usually not have a standard price across all brokers.

If you whip up two charts from different brokers, you will probably see a difference of a few pips.

This contributes to the concepts of resistance and support lines being areas rather than a single line as what may look like 1.4719 to you, maybe 1.4721 to another.

Lets refer to the chart above. It shows the EUR/USD bouncing of a resistance at 1.4951 and later a support at 1.4910.

Notice that the price did push beyond the lines on a few occasions.

Therefore, it may not be feasible if one sets stop loses right on the line as the above example would have triggered your stop loss, just to turn back in your favor moments later.

That’s all for now and i hope i have shed light on how resistance and support lines work.

Trade safe.

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The EURUSD failed to continue it’s bullish momentum  yesterday. Like I said, the pair need a consistent movement above 1.4850 area to confirm the bullish scenario towards 1.5000 area, something that  didn’t happen yesterday. So, what is the plan for the upcoming week?

Just like this week, the trendline support area will be my technical focus next week, as you can see on my daily chart below, after failed to stay consistently above 1.4850 area price is now moving lower re-testing the trendline support once again. 1.5060/80 resistance area (circled) seems to be an important resistance as price keep moving lower after fail to break above that area. A break below the trendline should trigger further bearish scenario towards 1.4450 area.  As long as the trendline support hold, the bullish scenario should remains intact but I  think the bullish exhaustion warning and downside pressure is also still there.

Have a great weekend and see you guys next week

Simultaneous Release at www.thegeekknows.com

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Noticed anything different?
Yes, i have changed the layout of my site based on the feedback i got.
This means that The Koala listens to feedback!
I have also added a nice picture for the title. I really love koalas.

I said yesterday that the price may test the 1.4843 area and it did.
Coming along, 1.4719 was tested too.

The S&P 500 currently heads towards 1040. The market did not take the drop in Personal Spending in the US well. After all like i mentioned, consumer spending is important for a healthy economy.

Oil has dropped to $76+ while Gold suffers at $1039+.

Let us not forget that today is Friday. Profit Taking Day! The big boys really need to cash out for drinks you know ~ Expect bearish pressure from here as well.

***

The market clues that we pay attention to seems to be entering into a consolidation mode.
This is not surprising considering that we had good and bad economic releases throughout the week.

I have noticed that bad news still apparently sparks the US Dollar to strengthen and hence the Risk Aversion theme seems to be still around. This may be the culprit that stopped the EUR/USD from climbing today when German Retail Sales unexpectedly drops.

Do note that once again the lines of 1.4843+ and 1.4719+ plays an important role, often acting as resistance and support.

With the other markets apparently consolidating, EUR/USD may behave in a similar fashion.

If so, we may be capped between 1.4719+ to 1.4843+. Having say so, remember that forex is never about a single pip and hence be prepared for spikes / dips.

One point to note however that we are LOADED with important news next week, including the US Federal Funds Rate, ECB Minimum Bid Rate and * drum rolls ………………….

NON FARM PAYROLL !!!

Free wild roller-coaster ride! Margin calls to be won too !

If any of the market clues makes a move, monitor the currency pair closely too.

***

I feel tired! I won’t be able to climb and hug on to the tree now even if its to save my life!

Have you watched the Japanese movie series Death Note before? Death Note 2 is currently on the TV now and i wonder what will it be like if there is a Pip Note.

Basically you write the person’s name in the book and he gets a margin call! You don’t even have to know the person’s broker!

This will cause a new financial breakdown~!!! Hmmmmmmm

TRADE SAFE !!!

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by Johan Kriek (jkriek@fxinstructor.com)

Key note:

At 10AM GMT we will see Eurozone CPI figures. This could have a “probability changing effect”. Be cautious

Probability Studies:

Direction of  Highest Probability: BULLISH
60 minute trend support: 1.4785
Bearish Probability below: 1.4785
Significant support: 1.4670, 1.4565
Significant resistance:1.5063

Direction of  Highest Probability: BULLISH
60 minute trend support: 1.6495
Bearish Probability below: 1.6495
Significant support: 1.6495, 1.6320
Significant resistance:1.6580, 1.6670

Direction of  Highest Probability: BULLISH
60 minute trend support: 0.9100
Bearish Probability below: 0.9100
Significant support: 0.9100
Significant resistance:0.9160

Direction of  Highest Probability: BEARISH
60 minute trend resistance: 91.30
Bullish Probability above: 91.30
Significant resistance: 91.30
Significant support:90.50

___________________________________
This analysis has been based on the Probability Study Technique which is derived from the Dow Theory

Also note that a “trading condition” does not constitute a trading signal, but rather a context to execute your own trading system within.

For more about the Probability Study Technique, please visit forums.fxinstructor.com or register yourself a seat at
http://www.fxinstructor.com/eng/courses/probability.php to learn this technique or to book a free Level 1 class

Enjoy and good luck!

Johan

The trendline support on daily chart I showed you yesterday proved to be an important support at this phase as bearish pressure failed to push lower and EURUSD started to regain it’s bullish momentum, topped at 1.4858 and closed at 1.4839. This fact should be seen as potential end to the bearish correction and price seems to ready re-testing 1.5000 once again. The bias is bullish in nearest term targeting 1.4950 – 1.5000 area but we need a consistent movement above 1.4850 to confirm the bullish scenario. Immediate support at 1.4760 area. Break below that area should lead us into no trading zone as price might retesting the trendline support one more time. Overall, as long as the pair able to stay above the trendline, I prefer a bullish scenario at this phase.

EURJPY Forecast
The EURJPY failed to continue it’s bearish momentum yesterday, rejected by the trendline support (blue) as you can see on my daily chart below. This fact lead me to no trading zone area but strong rejection to move below trendline support yesterday should open the door for potential further bullish momentum re-testing 138.68 area. Immediate support at 135.25 area. Break below that area scould trigger further bearish pressure.

GBPJPY Forecast
The GBPJPY failed to continue it’s bearish scenario yesterday. As you can see in my h4 chart below the bearish channel has been violated to the upside and price now traded convincingly above 149.40 area indicating bullish view. The bias is bullish in nearest term targeting 153.20 area. Immediate support at 151.00 – 150.70 area. Break below that area should lead us into no trading zone but I prefer a bullish scenario at this phase.

AUDUSD Forecast
The AUDUSD had a significant bullish momentum yesterday, topped at 0.9180 and closed at 0.9155. My technical focus today will be at the trendline resistance (blue) as you can see on my h4 chart below. Break above that trendline should trigger further bullish momentum re-testing 0.9270 area and put the bearish correction to it’s end. Immediate support at 0.9120/00 area. Break below that area should lead us into no trading zone as direction would become unclear for me.

GBPUSD Forecast:
My bearish scenario failed yesterday as GBPUSD had a significant bullish momentum, traded convincingly above the bearish channel, topped at 1.6603 and closed at 1.6560. This fact should trigger further upside momentum at least testing 1.6692 area today. However CCI in overbought area and heading down on h4 chart so watch out for potential downside rebound testing 1.6520 support area. Break below that area should lead us into no trading zone as price might retreat lower towards the upper line of the bearish channel.

USDJPY Forecast:
The USDJPY made a significant bullish momentum yesterday as price made a false breakdown from the bullish channel and now back inside the bullish channel. Usually false breakdown lead to significant bullish momentum with 92.50 area as potential bullish target. The bias is neutral in nearest term but I prefer a bullish scenario at this phase with the lower line of the bullish channel as a potential area to place a long position with tight stop loss below it. Immediate support at 91.20 area. Break below that area should lead us into no trading zone as direction would become unclear for me.

USDCHF Forecast
The 1.0280 area was proved to be a strong resistance area at this phase as price significantly moved lower after failed to break above that area. This fact should be a serious threat to the bullish correction scenario. I will pay attention to the 1.0166 support area as key support level today. Clear break below that area should trigger further bearish pressure retesting 1.0000/40 psychological level.

Simultaneous Release at www.thegeekknows.com

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A wild ride down the river eh?

Before i carry on, i will like to say my favorite phrase!

I LIKE IT WHEN MY PLAN GOES WELL

ok. Good morning all!

Remember i said that 1.4719 is a strong line. To those following me on twitter, i even took the effort to spend a few cents to tweet via mobile to remind.

Bam! Look at the two candles. No photoshop there alright.

Remember i said that S&P 500 should get some support at 1040?

DOUBLE BAM! i like it when my plan goes well! X2

Ok let me calm down. Forgive me. This is healing for me after being sold out by the big boys of the market the other day.

Oil is experiencing a boost, currently at $77+.

Likewise for gold, currently at $1038+.

Alright i guess Goldilocks no longer have her three bears eh?

***

The US Advance GDP came in higher than expected. 3.5%.

The market is taking this very well and chooses to ignore the increased unemployment claims.

Well we all know that economics is all about consumption and trust me, a high unemployment rate is no good for consumption.

This may pose a problem in future when the market faces reality. And should it happen, remember you heard it here first! TheGeekKnows

I have circled the upper line on the EUR/USD chart and it is the major line 1.4800.

Bulls will need to clear this to regain momentum.

Bears will need to maul 1.4719 before any further drops.

Watch the 3 clues for .. uhmm well, clues! If they gain bullish momentum, this may suggest bullish momentum for EUR/USD too. The other direction applies.

***

Those close to me will know that i am very very fond of koalas!

Well i have not seen one or hug one, i simply love them. So much so that i even name my forex system after it. ( Of course i read that in real life, they can be a grumpy lot )

Once in a while i get folks calling me Geek! .. yes i know.. this is TheGeekKnows.. well if my blog was TheKoalaKnows, will you come here? You will probably think that this is a Koala Association.

So the next time you see me, say hi to me.. ” Hi Koala ! ”

If you have been following me for sometime.. you know i am going to say something…

TOMORROW IS FRIDAY!!!! i can finally practice more BattleForge over the weekend.. ( actually i usually end up reading forex articles. no wonder my pvp win rate is like 1 out of 10 )

Trade safe!!!

(p/s as of writing , the currency pair is at 1.4817.. just be careful that it may head back to 1.4800 if not, 1.4843+ may be next )

Read more Forex Articles and Views by The Koala at www.thegeekknows.com

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