As the Greek tragedy continues to drag on, it’s perhaps an apposite time to take a tour round the four major futures of the 6A, the 6B, the 6C and the 6E for the September contract, and for each it is the move in the US dollar which is taking centre stage this morning following the deep hammer candle on the daily chart.
If we start with with Aussie dollar, the pair continue to trade in a narrow range trading between 0.7770 to the upside and 0.7550 to the downside, with the ceiling of resistance well defined with the red dotted line. What is perhaps most revealing here is the lack of volume over the last two days, with the move lower accompanied with volume which is well below average and suggesting a lack of selling pressure at present. The current price action is also reflected on the currency strength indicator alongside, with the Aussie Dollar (the blue line) meandering sideways and confirming the picture on the daily chart.
Moving to the 6B and the GBP/USD, the recent bullish trend for the pair appears to be reaching a pause point following the strong move from 1.5170 to 1.5930 and with nine consecutive up candles, it is no surprise to see the pair reversing off the highs of the last few days. As mentioned earlier, the minor recovery in the US dollar this morning is helping to push the pair lower, and as with the Aussie dollar, the volumes over the last two days have been relatively low suggesting a lack of selling pressure at present.
However, the key issue here is on the currency strength indicator to the left of the chart with the GBP ( the yellow line) now well into the overbought region on the indicator, and suggesting a possible longer term reversal in due course. But, as always we do need to remember currencies and markets can stay overbought and oversold for some time, and all the indicator is signalling is the pound is now at an interesting and potential tipping point.
For the 6C and the CAD/USD, the most significant price action was on Thursday last week with the pair closing as a deep shooting star candle with the high of the session bouncing of the resistance level above in the 0.8235 region, and duly confirmed with a pivot high. Since then the pair has remained weak with a possible move lower to test the strong platform of support now in place in the 0.8050 region. Any move through here will then open the way to a deeper move down to the 0.7940 region in the longer term.
Finally to everyone’s favourite, the 6E, and once again a feature of the price action of the last few days has been the low volume associated with the price action, as many traders and investors are simply waiting and watching for the issues in Greece to be resolved (or not).
This morning’s price action has taken the pair back through the platform of support in the 1.1300 region as uncertainty continues to dominate, and helped lower with a dose of US dollar strength. However, it is interesting to note, as with the GBP, the euro is now increasingly overbought on the currency strength indicator, and should the resistance now building in the 1.1450 area continue to hold, then we could see a longer term reversal from this level in due course.
By Anna Coulling
Charts are from NinjaTrader and the trading indicators from Quantum Trading.
Hello Anna, do you know where I could learn about trading cryptocurrencies. Did you ever try it?
HI James and many thanks – not something I have ever traded myself I’m afraid. I’m always learning and perhaps something I may look at in the future, but at the moment the conventional markets give me more than enough to focus my mind at the moment without worrying about anything new:-)
Also where could I learn more about fundamental analysis and economic side of things? Should I learn economics? I already read your book Three dimesional aproach to forex trading. Thanks
Hi James and many thanks and hope you enjoyed A Three Dimensional Approach to Forex Trading. To be honest I do not believe you need to be an economist to understand the fundamentals, and perhaps more important is trying to understand how they will be interpreted by the central banks and to try to think like they think. In other words,understand their mandate and the context of the data. Its more about understanding the people, their motives and their remit and how this will affect their policy making decisions. And from there how this is likely to affect their currency. Its also important to understand the make up of any central bank – the hawks, the doves, and those who sit on the fence. In addition it also helps to know what school of economics they eschew – ie Keynesian or Austrian etc ( I am more towards the Austrian) If you have a grasp of the data and what it means then that’s fine as a starting point, and then it is putting it into context with the data trend and consequent reaction by the bank. The Misys Institute is a good starting point. Hope this helps and thanks again – Anna
Thanks. One more question, How long would you say it takes to become a consistently profitable trader?
Hi James – many thanks and what I always say in my training rooms, is that if you can be consistently profitable over a period of several months, then you have achieved the first step. Consistency is not about how much money, but the number of points of pips you can make on a regular basis. Once you have achieved this level of consistency then you can gradually start to increase the size of positions, and grow your trading capital accordingly. What consistency proves is that you have developed an approach and methodology which delivers consistent results. And from there, the world is your oyster. So when you start, as I always say – it’s not about the money – it’s about achieving consistency – hope this helps and all best wishes – Anna