AUDUSD
Taking a more quantitative approach to the Aussie today;
After selling off 13 of the last 19 days and shedding 450pips in the process, the Aussie took back almost three days of losses with an impressive bullish engulfing bar. This is the fifth largest bull bar on an open to close basis for the year.
To date, we’ve only had three other bullish engulfing bars opening below the 20ema this year. Out of those three, two of them were followed by bear days. If the history and the numbers have their way, today will be a bear close.
Intraday pullbacks to the 1.0250 former range resistance area could be a solid location for short term bulls to take another jab at the 1.03 highs today. Bears can look to sell around 1.0330 on weakness, which is the daily 20ema and July 5th swing high, but there are price action plays for both sides here.
Chris, I watched your fxstreet.com webinar on trading psychology and I loved it. Thank you so much for that information. Had no other place to say thanks so I did it here.
Thanks for the kind words mate. I appreciate it as I have a lot of pride in my work.
Trading psychology is one of the biggest things a trader can work on, and often their greatest hurdle, so if you can learn to turn this into an edge, you’ll be way ahead of the game and see your trading compass turn north.
Just posting a belated thank you for your response Chris. My excuse…it was my birthday on the 31/8 and my daughter came over to the mainland and put on a surprise party for me and arranged some really fun things to do over the following days (vineyard visits/Jamie Oliver cooking lesson…south Indian Prawn Curry - amazing!)and l’m just getting back to trading after a week or more of wonderful distractions! Gosh we even had a week of glorious sunshine here in the UK after the worst summer weather in over 100 yrs. Ironically, given the terrible weather,its been an amazing summer with, among other things, the Olympics and Paralympics; so much so that the Daily Telegraph, Britain’s most right wing quality broadsheet newspaper had the following front page headline yesterday “The Summer of Love”, with a huge picture of the closing ceremony for the Paralympics. No Jimi Hendrix or John Lennon this time around but heady days indeed and the country has been on a high for some time…wonder what this all means for sterling and the economy!!!
Anyway,back to work, and l appreciate your comments/insights Chris and looking forward to lots more learning as the markets get back to business after their own summer vacation.
Cheers,
Michael.
Using the chart above, you can clearly see an impulsive leg, followed by a corrective leg. This is communicating a likely trend continuation which I explained earlier in this thread here: Impulsive and Corrective Price Action
Anytime I see these types of moves, I look for corrective pullbacks into the 1hr, 4hr or daily 20ema, and then look for a price action trigger off the 20ema which often gives me a with trend setup.
Institutions don’t just buy breaks in trends, they know they pull back and often look to get in on the cheap via a pullback. This often presents itself at the 20ema, so when I see a price action trigger like a good outside bar setup off the 20ema, I’m a buyer off this and will look to get back in a with trend move, ideally making a new swing high.
Now that it has done that, the first candle since then is…corrective. So if I see a similar pattern, I’ll look to do the same again off the 20ema.
Hope this helps give you some ideas of how I trade price action.
I noticed this interesting price action on silver so wanted to do a brief write-up of it which is below:
After two relatively muted days, Silver has sprung to life as the metal formed a large bearish engulfing bar. However, I would look upon it more as a 2-way bar. Normally bearish engulfing bars can be strong reversal signals, but following a small inside bar, and with this one closing right in the middle, its less impressive.
Keep in mind, this made an intraday high above the prior days highs but then ended bearish on the day.
So the initial upside breakout was a fake breakout and sellers took over while current longs dumped positions. Interestingly though, after hitting the intraday low, buyers came back in and bought the metal on the cheap, suggesting they were willing to pick some up at lower prices with it closing close to the open, suggesting strong 2-way price action (hence the name)
Best to look at it as more of a large one day range. This gives us the intraday options of playing fades of both sides prior to the FOMC meeting tomorrow where Ben and his beard speak. Expect quiet before and volatility after.
Anyways, hope you enjoyed the price action commentary.
If you remember back at this price action post I wrote talking about looking for pullbacks to the 20ema in strong trends, and using them as opportunities to join those trends?
Well, just want to show you a few examples of how that worked out to perfection today on a few pairs;
EURUSD
Climbing for both 7 for the last 8 days and 7 of the last 8 weeks, the Euro has looked impressive being given the go-ahead from Bernanke and the German Court. With the trend being so strong, I’m really looking for longs. However, the price action is feeling a bit parabolic and climactic at this point.
Usually climactic price action leads to a consolidation or pullback before the next leg up. Thus, I’ll wait for a pullback before getting long. Levels for getting long are 1.300 and 1.2933 (or a really deep pullback to 1.2820). On the other side, bears can look for possible shorts on weakness heading into the weekly highs at 1.3167.
AUDUSD
Ending last week gaining for of its last 5 days, the Aussie finished a little weak forming a pin bar pattern off the key 1.0600 swing highs. Looking at the nature of this pin bar, I’m suspecting there will still be a 2nd attempt into the daily pin bar highs around 1.0600.
In regards to this level, I’ll look for pullbacks on the 4hr/1hr time frames to take an intraday short off this level. Meanwhile, bulls can look for a pullback towards 1.0533 or 1.0472 to rejoin the uptrend.
No, l was expecting/suspecting a second push up as you mentioned too, so it went without me! As did a great Pbar on GBPJPY last friday…saw them but conservative mm kept me out. Good mm decisions perhaps but not great hindsight decisions!
Plus no USDINX on my humble MT4 platform…not even sure what INX is!
This might offer a really good play on a pullback towards the low. If I see intraday corrective price action and weakness leading into, I’ll consider a long targeting 1.0500 and 1.0600 for a really good R:R play.
AUDJPY also has an interesting Pin off the 20 and rejecting the top of a previous range. Also, BOJ wants a weaker Yen which helps - although there is big BOJ news during tonight’s Asian session.
What do you think Chris?
Thanks,
Michael.
ps Chris is your chart (above) a NY close chart pls?
Update…now seen your post on 2nd Skies site on PA angles and the INX (great!) so pls ignore this!
Haven’t been keeping up recently but now hopefully back on song!
Thanks as always for your insights.
Have been undecided between the NZDUSD and USDCAD…
USDCAD is in a nice non-volatile trend and printing a Pbar which is rejecting the 20ema and the top of the channel. There is news tomorrow but l think l’ll take a half position on a break down which as the Pbar is presently bullish this means it will be showing some bearish momentum.
Yes, this is a non-volatile trend and offered a decent setup - doesn’t seem to have gone anywhere so personally, would not want to hold over the weekend.
I didn’t quite get the pullback on the kiwi that I wanted, but got a long on Aussie yesterday around NY close
BTW - did you see the 3P HLR setup on the Euro before it reversed and took off?
[B]BTW - did you see the 3P HLR setup on the Euro before it reversed and took off?[/B]
To be honest l missed it Chris,but l’m not trading them - l have enough reversal trade tools with the Pbars/6NTs/BR trades at the moment and just sticking to Daily charts. Keeping it as simple and stress free as possible!
EURUSD
After having its first weekly bearish close in six, the Euro ended the week posting an inverted pin bar that is also doubling as an inside bar. It has to be noted a bullish inverted pin bar in a bearish pullback is a failed attempt to rally. However, even though the rally failed, it indicates there is some buying interest off the 1.2920 lows from Thursday.
The wick of the inverted pin bar is near the Thursday highs at 1.3058 so we have an intraday range that needs to be cleared. Intraday players can look for a possible long off the 1.2920 lows while short term bears can short around 1.3058 on weakness. Otherwise, bulls can look for a pullback towards the dynamic support (also Sept. 7th swing highs) at 1.2815 to take a long for a possible resumption of the uptrend.
NZDUSD
After rejecting last week off of .8350 forming a pin bar reversal, the pair has mostly consolidated in a pretty clean range between .8223 (last weeks low) and the .8353 highs so nice plays for both bulls and bears until the range clears. It should be noted the pair formed a dueling swords pattern to end last week so a pullback towards the .8223 lows is likely. If the intraday price action looks corrective, I’ll look for longs off the weekly lows along with shorts towards the weekly highs should the intraday charts confirm.
