Monthly Market Updates on Exotic Crosses (July 2012)

“A very conservative position sizing strategy can generate great results. For instance, you could risk ¼% equity per trade and generate something like a 60%return in a year through the effects of consistent results and compounding.” – Ken Long

Last month, prices broke previous highs in an uptrend,whereas falling instruments broke previous lows. This makes it appear that no kind of bias can last forever, and this kind of velocity could be stalled during market equilibrium. Analyzing with indicators apart, trading biases are vividly seen on the charts. This is a good way to recognize trends. When prices trade apart in negatively correlated markets, they emphasize what indicators also signal. Based on the happenings of some chart patterns, an uptrend possibility is made available (for instance, a market plunges while the indicator on the chart points up). These kinds of patterns show that the plunge in the price may be short-lived as this may occur around great demand or supply zones. Besides, some hidden patterns are just what they are – hidden patterns.These are what underline the validity of a trend and proffer a great probability of a good trading signal. It’s known that a form of analysis in which indicators rise portend the bulls’ supremacy and bullish pressure pertaining to the kind of time frame used. When a form of analysis in which indicators plunge on a chart, it portends overall bearish bias in the kind of time frame used.

Below is the summary of some of my trading forecasts this month:

AUDUSD

Primary trend: Bullish

This pair rose by more than 600 pips in the month of June. We are still very much in the bullish bias – though it’s not uncommon for the price to pull back to some support zones, and therefore giving excellent opportunities for buyers to go long. With the ADX 20 and the MACD currently showing a Converging Pattern, this propensity may be grounding to halt since the ADX itself is below the level 30.

 

Forex Market Overview - July 5, 2012
Forex Market Overview - July 5, 2012

AUDJPY

Primary trend: Bullish

This cross rose in the most past of the last month – something that has continued till the time of writing this article. We have a Converging Pattern as well on the Daily chart (The ADX line is below the level 30 as the MACD signal line has crossed its zero line to the upside, staying there). It is likely that this propensity would continue,especially if the Yen shows more weakness.

 

EURNZD

Primary trend: Bearish

Since the beginning of June 2012, this exotic cross has fallen by more than 900 pips;a great bearish trend indeed! No doubt, the EUR still continues to be weakened against the NZD as we have some Confirmation Pattern. The ADX 20 is showing a strong trend and currently above the level 45 (–D1 is below +DI), and the MACD is clearly bearish. I would like to go short at an appropriate price.

EURCAD

Primary trend: Bearish

The price development on this market has not been very much interesting – especially in the recent times. However, the trend last month was bearish (but slightly). From the monthly high of 1.3031 the price reached a low of 1.2742: a mere 280pips (approximately). The price has continued to fall this month as the price is becoming gradually weaker. We have a Divergence Pattern on the chart and this could just be the beginning.

AUDNZD

Primary trend: Bearish

Although the Aussie was generally weakened against the Kiwi last month, the price movement remains sluggish and undecided. Last month, the price reached the level at 1.2661 and has been rising gradually since then; but this could be a trap. The ADX line is below the level 30 (the MACD is still showing some weakness in the markets). Even the ADX +DI and –DI has been undecided, as the price seems to be rallying (albeit weakly). It’s better to stay out of this market now.

GBPCHF

Primary trend: Bullish

This cross has been a kind of difficult to predict in recent times, owing to the manipulation going on the CHF itself. Strictly speaking the last month was bullish; but not that much. The price velocity was below 300 pips last month, and in this month, the price has been indecisive so far. We have a Converging Pattern right now and the price may stubbornly move up a little bit before finding the next turning level.

Conclusion: While we assume our trading stance for this month, we would do well to remember some costs that can be incurred while trading. For instance, accurately calculating price slippage, spreads and other speculation-related expenses may seem to be a challenge for most trader, especially when using some trading software. In most cases, we would be better off if we think of our trades in terms of pips and percentage returns or draw downs – rather than in terms of deposit or base currencies. Nonetheless, in the course of their long-term career, many traders have become aware of this challenge and can tackle it with some touch of professionalism. We would also need to pay attention to the fundamental figures coming out the world over. These figures are only ignored at our own risk.

As it’s my habit, his article is ended by the helpful quotes below:

“The typical novice trader thinks that part of successful trading is actually pulling the trigger as often as possible. They usually believe that the more they trade, the more they make, which in reality couldn’t be farther from the truth.” – Sam Evans

“Keep in mind that events don’t make you afraid. It is the interpretation of those events that makes you afraid. You are scared because you mentally believe that you are about to get hurt, there is no way out, and that there is nothing you can do. If you were to think instead, “I’m not going to get hurt, I have several alternatives I can pursue, and there is a lot I can do to get out of this,” you wouldn’t feel fearful at all.” – Joe Ross

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