By the year’s end, volatility is certain, and coincidentally, there are usually many trading opportunities across Forex pairs. This year is no exception, and we found 3 trading opportunities among the 4 major pairs, which can possibly be taken by January/2017.
EUR/USD (-4.29% year-to-date)
Euro/Dollar just broke an important support at 1.05, and it’s very close to reaching parity, currently at 1.038. The support was broken following major supply in November, and it kept showing selling volumes on the way down, and during the breakout. After a short-term rally on low volume just before Christmas, it keeps heading lower. Despite the historical lows, solely based on the market’s supply and demand, it’s a good time to short it.
Daily background: Weak
Support Breakout in Euro/USD Daily
GBP/USD (-17.15% year-to-date)
There was a selling climax, just before the October’s rally surged. Most recently, at November and December though, the Sterling/Dollar has been showing supply, and the short-term support 1.21-1.23 won’t probably hold. The ultimate support is 1.20, and if there are no significant changes such as VSA demand signals, aim to short in the breakout.
Daily background: Weak
Near Support GBP/USD Daily
USD/JPY (-2.05% year-to-date)
Following an accumulation consolidation, that lasted for 5 months, USD/JPY started a major uptrend. To trade the daily, there should be a retracement first, to around 114. There are no resistances ahead, and so an uptrend still has much room to go.
Daily background: Strong
Uptrend in USDJPY Daily
USD/CHF (+3.00% year-to-date)
Similarly to the Yen/US Dollar, USD/CHF also went through an accumulation process mostly due to the strength in the US dollar. The rally has been showing good volumes, and as it’s just approaching an important resistance at 1.032, a breakout would be a trigger for a long trade. The next important resistance is at 1.17 which gives enough room for a favorable risk:reward.
Daily background: Strong
Near Resistance USDCHF Daily
If you wish to trade EUR/USD with our indicators for free, you can try it here.
USD/CHF Trade Review
This trade was taken in the 5 minutes timeframe at the today’s London session. There were 2 things going for the trade:
- The background was strong at the time
- There were multiple demand signals nearby (strength)
But sometimes the market only gives 1 shot, and this was one such example – the opportunity was missed when there was a down bar with about average volume. The trade was taken when the rally was already underway, and the volumes were drying up.
Background (15 minutes): Strong
Support: 1.0400
Resistance: 1.0479
Euro/Dollar 15 minutes
Euro/Dollar just broke out from an important accumulation pattern of the last few sessions, that peaked at 1.0418.
- At point 1, we can see that the breakout was on good volume. Together with the buying seen in the pattern’s lows, this shows strength, and we should be looking for a long trade at the moment.
- This was a testing bar, testing for supply at the resistance. If prices keep staying above 1.04182, there is probably not enough supply for a downtrend, and we can expect further rises in prices.
Suggested Strategies
- Look for a low volume down bar, or a demand bar by tomorrow’s London session, for a long position. Make sure to close any trades before 1:30pm GMT, as unemployment claims and the final GDP numbers for US are coming out.
- If prices dip below the critical price 1.0418, re-evaluate depending on what happened during the most recent news.
If you wish to trade EUR/USD with our indicators for free, you can try it here.
Background: Weak
Entry reason (1st trade): Low volume up bar on resistance, with weakness behind
Close reason (1st trade): Demand signal
Entry reason (2nd trade): Low volume up bar and failed test
Euro/Yen Trade
Following up on last week’s post about Euro/Yen, upon reaching the resistance, this pair continued to show supply just above the zone at 123.44, and the background soon turned weak.
- First short trade on the break of a low volume up bar, inside the weak zone. Closed when there was a demand signal, and the traded end up being barely break-even.
- I took another short trade on the break of a low volume up bar. This was also a failed test, which showed further supply. Holding the trade until the support at 120.900, or further strength in the market.
We have just released the video explaining the most recent indicator, Congestions. It’s an indicator that detects certain supply and demand patterns which form buying/selling zones, and serve as supports/resistances.
This is an improvement over standard supports/resistances, that don’t really take real supply/demand into account to draw the resistance areas, which has to be seen by the volumes. This results in more reliable and predictable resistance areas.
You can check the video below:
Hourly Trend: Down
Resistance: 122.800
Support: 122.142
Euro/Yen Hourly
Euro/Yen Hourly – Trend Changing
Euro/Yen’s been trending for the past 2 weeks, but on today’s Tokyo session, the up trendline that was in control, just broke.
Point 1: In this top, there was heavy supply by professional traders pointed out by the VSA indicator [Free Demo], as the market made a top on high volume, and went into a downtrend in even higher volumes. This happened when touching a weak congestion zone (selling zone) above, and all together, it’s a common reversal sign.
Point 2: On the reaction a few days later, the market reached 122.970 on low volume (volumes lower than average). With such selling behind, this is never a good sign, and the market then went on sideways.
Current time: As the ranges have been narrow for the last 2 sessions, this action can be better understood in a lower timeframe, such as 15 minutes.
Euro/Yen 15 Minutes
Trading Range in Euro/Yen 15 minutes
In the 15 minutes, we can see that the market is in a trading range, with a buying zone below, and a selling zone above. The current rally is happening on high volumes, and so it’s likely for the trend to continue until 122.8.
Suggested Strategy
Wait for prices to go to the resistance at 122.8, and look for further supply or low volume up bars in the hourly timeframe.
