Look Out EUR/CHF is about to get busy!

Yes you heard it heard first EUR/CHF is about to get busy!

Gold & S&P 500 exploded for over 1,000 points+ like I predicted. Now EUR/CHF is my next CAMPAIGN, it is set for a monster move as well. After being sleep for over 23 weeks the GIANT has awoken.

Looking at the monthly chart below we can see a huge igniting candle that is the biggest move on the chart this candle shows us that the power has shifted from the bears to the bulls.

 

Now lets look at this weekly chart do you notice the bottoming signs. This pair has been quiet and off of our radar for quite some time. For 23 weeks the bears tried but could not break through the level of support at 1.20000. Then all of a sudden out of no where we get a huge candle from the bulls. I believe the bulls are trying to tell us something traders. As you can see we have an opportunity for an entry at 1.21162 with our stop-loss at 1.20740. A second option for your stop-loss would be to place it below the 1.20000 support level but you must account for your risk to reward if you opt for the second stop-loss option. Are first initial target (TP1) will be at the prior high we will then look to watch price action from there to see how it reacts to the prior high.

 

The Daily chart below has a nice Buy Setup forming now, after price action bounced off of a major level of support. We have an opportunity for an entry at 1.21120 with our stop-loss at 1.20740 and our initial target (TP1) at the prior high.  If you look at the bottom of the chart you will notice the clearing bars that wiped out 23 weeks of consolidation to the left and ignited the larger move. Do you know how BIG it is to wipe out 23 weeks of price action with 2 candles (i.e. 2 weeks of price action) its BIGGER THAN BIG traders it’s colossal.

This pair should give us a nice opportunity to pull in some major pips as it has great upside potential. My only concern is the monthly 20MA, but it is not a big enough concern to shift my bias or deter me from the trade. Stay Tuned!!!

XAU: Respect is Earned

OMG! it looks like gold just does not want to quit. Looking back at one of my previous newsletters we anticipated a pull back on the daily chart to find an opportunity to add to our position. The chart below is a snap shot of price action on August 22nd when we projected the pull back.

Look at that we got our pull back and follow through on our buy setup. Not only did we got follow through traders but we even got a new high. Now that is what I am talking about!!!

You are probably wondering how I was able to project that price would not only pull back but eventually present another buy opportunity. The move we got from the bulls last week took a lot of buying power to establish. Buying power that could only come from big institutions. When you see big candles or moves that clear a lot of price action on the chart they demand your attention and command respect. On the chart below you can see how I have highlighted the powerful moves established by the bulls in side the grey areas and the buy zones that have been established based on these moves by the bulls inside the blue rectangle areas. A Buy Zone is the area from the prior low of a bullish candle or bullish move to the prior high. We typically look for pull backs to the 33% – 61.8% level  inside the Buy Zone. (The same applies in reverse for a sell zone created by a move from the bears.)

Now that we understand how to identify a Buy and Sell zone, your probably asking yourself how to incorporate these zones in your trading. It is easier than you think. First you must make sure that your Buy Zone is inline with your higher time frames. If it is counter to your higher time frames then you want to make sure that there is enough upside potential to your next area of resistance. In other words you want to make sure your risk to reward is on point. Now inside a Buy Zone you will see all kind of attempts from the bears to wipe out what the bulls have established. But it is your job not to be fooled by these moves, instead you want to be patient and wait for a buy opportunity to present itself inside the Buy Zone. This can be applied to any time frame but keep in mind that the higher time frames are always going to carry more weight than the smaller ones. So that means that Buy Zones on the higher time frames are always going to be stronger than zones created on smaller time frames. Now Rule number 2 is a Buy Zone is still valid until it is wiped out from the bears completely. If you follow these few rules and respect these Zones by trading with them your trading profits will soar.

GBP/USD update

You cannot win them all.

It looks like we might get stopped out on our GBP/USD trade. This is what happens when you take a trade that is counter to what the higher time frames are telling you. But it is not over until we are officially stopped out. Unfortunately I was not in front of my computer this morning  to adjust my stop-loss to break even before the aggressive move from the bears took price below our entry.  Now we have no choice but to sit back and see if price comes back into our favor. If not then it is what it is, losing is apart of the game.

GBP/USD Buy Setup

Ok traders we got what we were looking for on GBP/USD. Notice how price action reacted timidly towards the 200 MA and gave us a higher low as it bounced off of the support area at the 200 MA. Then had the strength to close back above the 8 MA OMG!. The buy setup on the daily is starting to show some follow through which is a good sign for our long position.

I have entered the market with my stop in 2 different areas. But if you are just now looking to enter this trade I would place my stop-loss under the previous candle. So our entry point would be at 1.58273, our stop-loss at 1.57415 and our initial target at the prior high on the daily. Stay Tuned!

Bullish XAU: RingGOLD Hmm! I think my mother was on to something!!!

I am big trader of gold and a lot of other commodities mainly because of my political beliefs and knowledge on the banking system and the fiat currency that is used as a medium of exchange around the world. Another obvious reason is that it is apart of my family name. As I stated in previous Newsletters whenever I have an opportunity to go long Gold, Silver or Oil etc.. I hop on the opportunity as I believe long positions are inline with my long-term bias of gold reaching all time highs as it is a necessity in today’s society, and as central banks continue to print more and more money the result is higher gold prices in the long run. With all that being said it is obvious that price has been consolidating in an ascending triangle on our Daily gold chart. The weekly chart is very promising as we have had several bottoming tails that have formed since the beginning of May. Now we are officially above the weekly 20ma and our bias has shifted to the upside on the weekly chart. With the monthly inline with our long bias and coming off of a bottoming tail that bounced off of a rising 20ma last month. OMG look out Gold is set to explode to the upside. You heard it hear and from me and my fellow colleague Jonathan Velez first GOLD IS SET TO EXPLODE so strap on your seat belts and get ready for the ride. Stay Tuned!!!

AUD/USD Trade Update (Up 264 pips)

I can’t forget about my good ole AUD/USD long position. We are up 264 pips at the moment and still got some good size on. Our stop-loss is at break even so we are trading with the houses money at this point. I am expecting a pull back so that I can add to my position. If price action fails to pullback, gives us a shallow retracement and then decides to rally, then be mindful of the resistance at the 1.06321 level stay tuned.

A body in motion tends to stay in motion

Newton’s first law of motion is often stated as, An object at rest stays at rest and an object in motion stays in motion with the same speed and in the same direction unless acted upon by an unbalanced force. 

So in our case it is safe to say that a candle in motion will tend to stay in motion in the same direction, unless compelled to change that state by external forces acted upon it. To explain this matter in further detail. If we have had a bullish month on the monthly chart where the momentum on the previous or current candle is with the bulls then there is a great probability that the next candle on the monthly chart will be a bullish candle. If we have had a bullish week on the weekly chart where the momentum on the previous or current candle is with the bulls then there is a great probability that the next candle on the weekly chart will be a bullish candle. And if we have had a bullish day on the daily chart where the momentum on the previous or current candle is with the bulls then there is a great probability that the next candle on the daily chart will be a bullish candle. I think you get the point.

AUD has been the big boy on the block. It has been very bullish for the last 2 months and has been out preforming the other currency pairs. Looking at the Monthly AUD/USD chart below you can see I have an arrow pointed at last months candle. Notice how last months candle wiped out 80% of  Mays candle. Based on where last months candle closed we can see how the momentum has shifted in the bulls favor. As this months candle comes to a close and sets us up for a potential buy setup  it looks like unless something drastic happens price action will follow through and continue the momentum from last months candle in the direction of our long bias.  Although we have a much higher long term target for this pair, our next target is at the prior high on the monthly. Now there are other aspects to this strategy that must be implemented in order to have success using newtons law in the markets, but when you have mastered this strategy you will find it a lot easier to develop a directional bias and stick to it.

S&P 500 Trade Update

It looks like we are starting to get some follow through on our weekly buy setup on S&P 500. So I have added to my long position at 1369.45. I expect to see price action rally to 1414.00 with little resistance if this weeks candle can maintain itself above the weekly 20MA. The monthly chart is is also looking promising as it is inline with our weekly chart which provides further confirmation that we could get follow through to the prior high. I have my first Take Profit Level at 1413.75, at that point I will then be watching price action to see if it can break through the prior high at the 1414 level. If price fails to break the prior high then I will adjust my exit strategy accordingly. Stay Tuned!!!

You cannot have your cake and eat it too

Happy Birthday to me! Happy Birthday to me! Yesterday was my 28th Birthday. I spent time with friends and family, had a blast and I enjoyed a tasty Birthday cake. I love cake but this cake in particular was one where I couldn’t decide if I wanted to keep the cake and savor it, or just eat it. I was in a dilemma, I wanted to enjoy the cake and eat it but if I ate the cake it would be gone forever. Although it was tough I made the decision to eat the cake so that not only I could enjoy it but my loved ones could enjoy it too. This situation reminds me of the dilemma we face as traders on a day-to-day, often traders want to have their cake and eat it too. We want the luxury of profiting from our trading activities without the potential for loss. unfortunately we cannot have both.

To break things down a little further in trading there is enormous upside potential to make profits, but on the flip side there are the losses. The losses are apart of trading, they come with the territory and are the cost of doing business. To often traders try to avoid losses when they should be trying to keep their losses to a minimum instead of trying to avoid them entirely.

Trading is a numbers game and there is a random distribution between wins and losses. You could have 8 winning trades in a row and then the next 2 could be losers or you could have 4 losing trades in a row and the next 6 could be winners. Anything can happen. But you don’t need to know what is going to happen next in order to make money. The point I am trying to make here is you have to put yourself in the best position to succeed in trading and you do that by following your trading plan and taking every trade that fits within your trading plan. You got to be rigid in your rules and flexible in your expectations. Remember you are not working in your best interest if you are being selective with your trades in an attempt to avoid a loss. If the trade fits within your trading plan then have no fear and no emotion and pull the trigger. Because you never know, the last trade you avoided could have been the trade that made back the profit you just loss on the last 4 trades.

Now on another note I wanted to share with you my trading pick for the week. I really like what I see on S&P:500. S&P is looking very bullish coming off of a very strong month from the bulls closing above the 20 MA on the monthly chart leaving us with a bottoming tail. Now if you look below at the weekly chart you will see that we have gotten 2 Bull 180’s and a Bottoming Tail with price action finally making its way above the 20 MA on the weekly. This presents us with long opportunities above 1369.45 if price action can sustain itself above the weekly 20 MA. Are long-term target for this trade is at 1413.75. If you are trading on smaller time frames which most of you are I suggest that you set your target according to the risk to reward that fits within your trading plan.

Canada O Canada Update 5/31/2012

OMG incredible movement in the markets this week. UCAD has been following through quite nicely. Price action has made a new high and we have officially hit TP1 for 119 pips on our first position and 81 pips on our add.