Commentary on the EUR/USD

Forexmentor.com Forex Trading Price Action

Well, where do you think the euro is going? Speaking strictly from a day trading perspective today, I would say DOWN! My reasoning? Quite simply, all three EMAs (50, 100, 200) have been trending down in their proper order for the downtrend to continue – 50 below the 100, 100 below the 200. Plus which, if you take a look at the weekly chart for this pair, you will notice a spinning top now in place – at the end of the most recent run-up in price. That is bearish.

Also, STO (Stochastics) went overbought a couple days ago on the 4 hour chart, and price has been on the wane ever since. So, getting back to the day at hand (Friday, March 23/07), we have what would appear to be a downtrend continuation pattern in place, with MACD having already neutralized back up to the waterline. Watch out below!

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Commentary on the NZD/USD

Forexmentor.com Forex Trading Price Action

Jim Cowles asked me to talk about the New Zealand Kiwi. The monthly chart is trending up, but the weekly is displaying major resistance at the 3300 level, and MACD is diverging negatively to price action. The 3300 level was strategic September through November of last year. The 200 EMA is trending up on the daily and weekly charts. So, for the time being, this is a watch situation.

Greg Wexell asked me if I was sitting on the sidelines, now that I have liquidated my USD/CAD position, and the answer is yes. I am primarily into position trading these days, and good trades (that is, bankable) don’t come along often. I called the short on the euro last June, and I pushed the USD/CAD pair to the long side last September. Both calls worked out in my favor, and I profited handsomely with the latter pair.

So, to make a fat story thin, you have to be especially patient when it comes to position trading. The same applies to day trading. Patience is definitely a virtue in this business. If you have a need for speed, then play around in your sandbox. Training and education are also important factors. To that end, stay tuned to the latest and greatest at www.forexmentor.com.

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Commentary on the GBP/USD

Forexmentor.com Forex Trading Price Action

If you take a close look at the monthly, weekly, daily and 4 hour charts for the GBP/USD pair, you will notice that the pair is in a distinct downtrend. Add to that the fact that the dumb money is aggressively shorting the pound, and the Big Dogs are net long the US dollar, and you have a recipe for being on the short side of this pair.

Sure, price spiked up today on the lower level charts, but I see that as a counter-trend move, and a great opportunity to pull the trigger on the short side. The 200 EMA on the 4 hour chart has been trending down through this upturn in price – so, the bias DOWN! That’s the advantage of looking at price action top-down.

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