From Last Friday’s COT Report, the Commercial Net Position has moved down to the level near Jan 2010, a net short level which is unseen for the past 5 years.
In addition, the Total Open Interest remains on a high level. Together, these indicate that the current uptrend for USDX remains strong.
Previously, we talk about how the Tflow system can be used to earn 500 pips in 1 week.
Just yesterday during our Forex live hands on session, we see another powerful move shown by Tflow on GBPJPY, one of the most volatile currencies traded.
Have a look again how we had anticipated a Big Move and our profit target zones before we start our trade.
510 pips for GBPJPY in a day!
It’s all in a day’s “work” for GBPJPY. We targeted about 510 pips near the low before it quickly pullback.
Shouldn’t you be curious how Tflow System can do this? Come and register for our free Tflow Course Preview by click here.
Following up with my previous post on Demystify the Correlation of Currencies.
We mentioned about Positive and Negative Correlation, and now we look into what is correlation coefficient.
Correlation coefficient for Currencies is a number to describe the closeness of the correlation for any two currency pairs. It is usually in the range between +1 and -1, where +1 is to say that A and B are positively correlated and moves in the same magnitude and vice-versa. In general, a good positive correlation pair will have a correlation coefficient of 0.8 to 1 and a negative correlation pair is between -0.8 to -1.
There are 2 websites which has sampling data for most of the major currencies: Mataf.net and OANDA.
We shall have a look at a typical correlation table shown below.
FX Correlation Table
Currency Correlation Table sample, courtesy of OANDA
As observed, the EUR/USD pair has strong negative correlation with USD/CHF and USD/CAD and positive correlation with AUD/USD, GBP/USD, NZD/USD, XAU/USD (Gold) and XAG/USD (Silver).
Attached a chart of EUR/USD with USD/CHF on the same chart.
FX Correlation of EUR/USD and USD/CHF
FX AccuCharts, courtesy from CityIndex Asia
Noticed that when EUR/USD is declining, USD/CHF is climbing. Likewise, a bottoming of EUR/USD coincides with a topping of USD/CHF.
Thus, with a proper analysis of the currencies all at one screen, it can be very profitable trading on multiple currencies that are highly correlated to each other.
Pennant in upward channel
Pattern requires break of short blue trendline to confirm.
This is my contribution to Erwin’s discussion on the AUDUSD in his blog.
What is different in my chart is the introduction of another trendline – one that is steeper.
Trendlines have 2 commonly discussed values:
Another important input that a trader can get from trendlines is the momentum of a trend. The steeper a trendline, the stronger the trend, the more momentum price has, the more it takes for a reversal but also the more likely for a violation/retracement.
The blue line is such a steep line (1.). A trader would who has an existing position would be happy with the speed of movement downwards whereas one looking for a low-risk entry would be wary of a short term violation.
Therefore, the gentler yellow line (2.) is a reasonable place to look for a low-risk short. A goodway is to look for a level with as many confluence.
Lastly, a long-side view should only come in if we see a reversal chart pattern and if the gentle trendline is violated decisively as well.
Moment of Aussie is strong but possible short term violation likely
In Tflow System, we are able to trade with precision and one of the most amazing techniques taught is advanced Fibonacci prediction. This means that even before we enter a trade, we know in advance the actual price of our risk and multiple targets.
This is unlikely a fixed profit target whereby one might be taking 10, 40 or even 80 pips per trade and missed out the possible 100 or even 1000 pips which the trade can give. Remember “cut your losses short, let your profits run“.
The chart below shows you how it can be done.
With advanced Fibonacci prediction by Tflow, we can find an entry shown by the red arrow and projected 5 possible target levels as shown.
So after 8hrs…
Surprised?! The market is so kind that Target 1 and 2 (210 pips and 255 pips) were all hit in 8 hrs, which is 2 bars after the entry, and the profit taking was near to the low of the bar before a pullback. So the prediction turns into reality for the 2 targets.
If suppose you went to sleep and work for the remaining days, without checking back on your trades for the next few days…
320 pips pocketed and near the lows after 16 hours or about 2 full working days. And you don’t have to glue to your screen and constant monitoring of the trade. It is as simple as “Set and Forget” or in auto-flight mode. Isn’t that gives you more time for yourself and perhaps a less stress trading strategy?
So let’s see if the next target is coming.
445 pips in 3 days! Yet, if you noticed, the price is very near target 4 then a pull back before dropping below target 4.
In Tflow system, there is a way to identify the pullback and allow a re-entry to continue shorting GBPJPY.
After 3 days, GBPJPY has moved almost 480 pips, will it reach our projected target of 510 pips?
Whoala! 510 pips in 4 days!
Apart from having a good strategy, patience and discipline are also important for a good trade to last for a long time.
Noticed again how Price had hit on the Target level and made a pullback.
As you had seen, this is a swing trade which one can made within a week and have the peace of mind to let it run for a long time – 4 days!
A 510 pips might mean USD 510 for a mini lot or USD 5100 for a standard lot.
So the risk / reward ratio will be USD 600 / USD 5100, which is 1 to 8.5.
Have you know of such strategy that you can trade with confidence and yet allowing it to run, without affecting your lifestyle?
If you are in search of one, then make time to hear what Terraseeds can offer you! Come for the coming course preview on the Forex Tflow Course.
Gold is currently near the Support Zone and formed a lower high away from the recent high at 1226.
The current support zone near 1070 seems strong as it was formerly a resistance then turn into support.
If the Bulls were to continue their rally, then they will have to breakout of the resistance at the lower high (1160) before overcoming the Yearly Resistance of 1226.
In the same way, if the Bears were to overcome the Bulls, then they will break down every support zone (currently between 1074 and 1025) till both Bulls and Bears meet for a temporary standstill.
The USDJPY is printing a potential wedge on the day chart as well as inverted head and shoulder in the 4-hour. It is critical to confirm with break of neckline or breakout of wedge.
Potential reversal patterns for USDJPY
When entering a trade, one must have a system that can provide him the following things:
a) Is there a signal to enter a trade?
b) What is my risk / reward ratio?
c) Can I make a good prediction for my profit targets?
Since currency trading is a highly leverage transaction, an average trader may not have large risk capital to withstand the volatility of the price movement.
Therefore, is there a tool to help him to manage his trade, and to know in advance when to enter and exit?
Let’s see the chart below.
Know entry and exit level before trading commence
The above shows that there is a possible entry to sell EUR/JPY with multiple profit target level already forecasted.
After 1 day, here is what happened.
First Target within 1 day or 24 hrs
So, the trader would have gotten 270pips after leaving the trade to run for 1 day. It would be translated to about USD 2700 in a day, if he trade on 1 standard lot, or about USD 270 on a mini lot.
What if he continues to hold on his trade?
Second Target within 3 days or 72 hours
It goes to show that the trade was a right one and after 3 days, a profit of 340 pips.
After falling to 340 pips in 3 days, there will be a tendency to say “it getting cheaper to buy it up”; “bargain hunting”;”fair value”. Perhaps even the technical indicators would have signal for a buy, instead of sell.
Will it move to the next target as forecasted initially?
Third Target within 4 days or 96 hours
Imagine having USD 4500 for 4 days of ‘work’, that you need not glue on the screen, seeing an setup and then make a ’set and forget’ trading. Will that earnings give you a better life?
What is this tool that helps to predict the profit targets level with precision? It is called Fibonacci Technique.
Will you want to understand how to use it for your trading?
Come to the coming course preview on the Tflow Forex Trading System to know about it.
Today, we shall excite ourselves by looking at one of the most volatile currency pairs, GBP/JPY, which has a daily average fluctuation of about 300 pips.
In addition, we shall see how 3 chart patterns that is very evident on GBP/JPY for trend reversal and trend continuation – namely, rising wedge pattern, pennant and symmetrical triangle pattern.
GBPJPY Weekly Chart with Chart Patterns
As shown on the chart above, the Bearish Trend Reversal started with the rising wedge formation, which later evolves into the famous Head and Shoulder pattern hinting towards a big bearish reversal move underway.
Afterwhich, every subsequent retracement of the downtrend has either a rising wedge pattern or a bear pennant pattern.
Thus, it goes to show that there is a high reliability of trend continuation when either patterns had formed.
As we observed the recent months, that there is a big rising wedge formation which seems to be forming since 2009, and a symmetrical triangle forming shortly.
As price draws nearer to the apex of the symmetrical triangle, a breakout is inevitable. Yet, will it be a another trend continuation or a bullish reversal?
Should it break out of the pattern to the bullish side, then more bullish sentiment will be added to the equation as many traders will be eyeing for trading the breakout.
Likewise for the breakout to the bearish side, whereby more shorts will be added too.
Whichever the breakout is to be, it will likely to be a big move, so it is worth keeping tabs with this volatile pair in the coming future.
MACD High Probability Trades 
