We clearly have a top in place on the EUR/USD

Forexmentor.com Forex Trading Price Action

The 4 hour and 15 minute charts told the story for the euro, well before the London open today. The 50x100x200 EMAs were stacked in their proper order for the continuation of a downtrending market. As a matter of fact, an argument could have been made for a downtrend continuation pattern, which in fact, did unfold picture-perfect. That said, positive divergence MACD to price is now in place, which should halt the slide, at least for the time being. We clearly have a top in place if you look closely at the daily and weekly charts – negative divergence times two.

On other fronts, the uptrend on the USD/CAD pair still looks healthy. The Aussie, kiwi and pound have all experienced, or are about to, a downtrend continuation pattern on their respective 15 minute charts. It looks like they have topped out. For more on what to look for, browse through the myriad of ideas, strategies, tips and techniques waiting for you in the members’ area at forexmentor.com.

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Commentary on the pound and other currencies

Forexmentor.com Forex Trading Price Action

Yesterday, we had quite a falling off on the pound, as evidenced by the downtrend continuation pattern. That swoon was corrected by a multi-bottom between yesterday morning and early this am. Further proof came in the form of positive divergence on MACD to price. For the time being, price has stabilized between the central pivot point and M2 on the 15 minute chart. It is too difficult at his point to call any clear direction.

The Canadian dollar is hanging tough in its flight pattern. The Australian dollar is showing clear signs of topping out on the higher level charts, with the possibility of a head and shoulders pattern developing on the daily. We’ll have a closer look at that one tomorrow.

Another one to pay close attention to is the NZD/USD pair, wherein I see the potential for a top forming on the weekly chart. Negative divergence on the MACD histogram has occurred. Stay tuned for more juicy tid-bits folks. And, don’t forget to join the enlightened forex traders in the members area at: www.forexmentor.com

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The current market outlook on the GBP/USD

Forexmentor.com Forex Trading Price Action

Today, we’re going to have a look at the pound. Looking at all of the charts well before today’s session, all indications were that price action was on the rise – with the one possible exception being the 15 minute chart that displayed a price spike yesterday morning. Coincident with that was MACD going overbought.

These are two of the signs you look for when you are evaluating price patterns, and such behavior is usually a precursor to a downtrend continuation pattern unfolding. Sure enough, that’s exactly what we got. After price peaked yesterday, it went sideways in the price equilibrium/consolidation phase, whilst MACD neutralized. Then price collapsed in the form of Leg Two. Further, the 50x100x200 EMAs put in their back-to-back Death Crosses.

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The USD/CAD pair has further upside potential

Forexmentor.com Forex Trading Price Action

Well, well, well … remember last week I talked about 1779 as being a good level to set a buy stop at, just in case Leg Two of the supposed Uptrend Continuation Pattern kicked in? Guess what? Leg Two finally arrived yesterday afternoon in a blaze of glory. Of course, you all had your buy stops in place, right? Right! Way to go people!

Oil prices are still way down, at historically low levels – as is the Canadian dollar. This augers well for further upside potential for the USD/CAD pair – given how the loonie is paired as the second currency of the two currencies. The trend on the weekly chart is clearly up. We must keep a close eye on this as, at some point, the swoon in price will come to an abrupt end. A lower Canadian dollar means that manufacturers are now better able to compete on the world stage. That said, the Canadian economic scene is still fragile. Oil prices could rebound, if weather in the East turns ugly. Canada is a net exporter of oil.

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From The Trading Desk of Seth Gregory

In today’s AM Review I look at a couple of trade setups that we commented on in the PM Preview last week and how they played out. The important part will be when we look at, is how as the sessions progressed the dynamics of what we were looking at changed thus altering the probabilities. It is important to not only accept the probabilities of the market but also know when they change, that is something that largely comes from experience that is gained from trading over time. That experience comes at a price (please see the article below). I think one of the great things about learning to trade the Forex is that for the most part you can gain much of that experience for little to no cost with free demo accounts and free charting packages. The key is to survive long enough to be able to gain that experience. How can you help yourself accomplish that? It would be good to spend some time thinking about that question. All the best to you in the trading sessions ahead.

Drive To Win
Mastering the markets is challenging. Many people try to trade profitably, but few make it. Perhaps the single most significant factor in mastering the markets is the burning desire to win. Winning traders do whatever it takes to win.

Why are people attracted to the markets? Is it the excitement, the money, both? Who doesn't want to win? A mere desire to win is not enough, unfortunately. True mastery requires more than that. A "gung ho" or "can do" attitude is also essential, but it isn't enough either. Traders who master the markets are willing to do anything to win, even if it means putting in all their time, money and effort. First, they are passionate about trading. They like to trade the markets so much that they would gladly spend all their free time looking at the market action and trying to figure out how the markets behave. Master trader Bill Lipschutz observes, "you find people...who spend inordinate amounts of time on the computer doing something because you are fascinated by it" (p. 39; Patel, 1997). Winning traders love studying the markets. In their quest to develop an intuitive feel for the market action, they may not be necessarily looking for the next stock or commodity in which to invest, but they try in earnest to understand the factors that move the markets. Traders who master the markets love what they are doing. In contrast, traders who want the rewards but don't want to put in the work would rather be somewhere else. They view studying the markets as merely a job that needs to get done in order to trade. Close study of market action doesn't excite them.

Second, traders with a passion to win are not afraid to ruthlessly scrutinize themselves. They are so driven to win that they don't mind admitting their mistakes. They aren't afraid to be wrong. They know that they must evaluate their performance in order to improve. They don't avoid negative feedback. To them, no feedback is negative. All feedback is good in that it allows them to gauge where they are and where they need to go next. They are humble, and know that no trader is bigger than the markets. Admitting that you must put your ego aside and go where the markets take you requires courage and strength, but again, winning traders will do anything to win, even admit that their intelligence and personality are not enough to succeed. As Bill Lipschutz notes, "If you meet a trader who is very, very successful and he truly, honestly believes it is because he is smarter and faster and more insightful and more aggressive than all his peers, I don't believe him" (p. 39; Patel, 1997). Intelligence isn'tenough. According to Bill Lipschutz, winning traders are also, "very focused, motivated, and hard working."

It's common to see winning traders become unfazed when they lose money. It's not that they like to lose money, but they enjoy the intellectual challenge of trading so much that they can't wait to perfect a new method. They enjoy the search for new strategies and feel a great sense of accomplishment when they explore new market conditions, and work hard to find the secrets to trading under these new conditions. Traders often face setback after setback. Unless you have a strong desire to win and master the markets, you will feel beaten down after each setback. But if you are willing to do whatever it takes to win, you will not only master the markets, you'll win big. -- Innerworth

Good Hunting,

Seth Gregory
http://www.forexmentor.com/