📊 EURAUD H4 Analysis
EUR/AUD is on a free fall after finding resistance just below the 1.6600 handle. Where will the bulls step in?
The 1.6300 major psychological handle is a good bet as it lines up with a strong resistance area that the pair recently broke. What’s more, it’s also around a 61.8% Fib retracement while stochastic fell to oversold territory.
A long trade at the earliest signs of a bounce would give you a good reward-to-risk ratio especially if EUR/AUD pops back up to its January highs.
If you think that EUR/AUD will see more selling before popping higher, then you can also watch out for major handles such as 1.6200 and 1.6100 as potential entry levels.
Not sure that EUR/AUD will bounce at all? You can wait until the pair firmly closes below 1.6300 and short the pair until it consolidates around an area of interest.
EUR/AUD is on a free fall after finding resistance just below the 1.6600 handle. Where will the bulls step in?
The 1.6300 major psychological handle is a good bet as it lines up with a strong resistance area that the pair recently broke. What’s more, it’s also around a 61.8% Fib retracement while stochastic fell to oversold territory.
A long trade at the earliest signs of a bounce would give you a good reward-to-risk ratio especially if EUR/AUD pops back up to its January highs.
If you think that EUR/AUD will see more selling before popping higher, then you can also watch out for major handles such as 1.6200 and 1.6100 as potential entry levels.
Not sure that EUR/AUD will bounce at all? You can wait until the pair firmly closes below 1.6300 and short the pair until it consolidates around an area of interest.
📊 NZDUSD D1 Analysis
A couple of days ago we thought that NZD/USD would bounce higher after breaking above a descending trend line on the daily time frame.
Well that was a fail. NZD/USD is now back below the trend line and it looks like it will find support at 0.6450 or 0.6500 instead. As you can see, the area lines up with a 50% Fib retracement and 100 SMA retest on the chart.
Buying at current levels would get you in at a good spot if NZD/USD ends up returning to its December highs.
If you’d rather short the Kiwi against the dollar, however, then you’ll want to wait until it makes new intraweek lows and aim for the .6325 and .6250 previous areas of interest instead.
A couple of days ago we thought that NZD/USD would bounce higher after breaking above a descending trend line on the daily time frame.
Well that was a fail. NZD/USD is now back below the trend line and it looks like it will find support at 0.6450 or 0.6500 instead. As you can see, the area lines up with a 50% Fib retracement and 100 SMA retest on the chart.
Buying at current levels would get you in at a good spot if NZD/USD ends up returning to its December highs.
If you’d rather short the Kiwi against the dollar, however, then you’ll want to wait until it makes new intraweek lows and aim for the .6325 and .6250 previous areas of interest instead.
✅ Trading Psychology ✅
☑️ How to Avoid Risking Too Much
I believe that proper position sizing is THE single most important skill a trader should have. Yup, that’s right – it’s THAT critical!
But before we get down and dirty with the details of lot size or position sizing, let’s define it first.
Simply put, proper position sizing means setting the correct amount of units to buy or sell a currency pair. In other words, it involves finding the lot size that will keep you within your risk comfort level.
Proper position sizing is a key element in risk management. And as I’ve told many times, risk management can determine whether you live to trade another day or not. It can keep you from risking too much on a trade and blowing up your account.
Sure, when you bet big, you can win big. But what happens when you lose? You don’t need to be a brain surgeon to figure that one out – you lose big, too.
Without knowing how to size your positions properly, you may end up taking trades that are far too large for you. In such cases, you become highly vulnerable when the market moves even just a few pips against you. Here are a couple of tips to avoid risking too much:👇
☑️ How to Avoid Risking Too Much
I believe that proper position sizing is THE single most important skill a trader should have. Yup, that’s right – it’s THAT critical!
But before we get down and dirty with the details of lot size or position sizing, let’s define it first.
Simply put, proper position sizing means setting the correct amount of units to buy or sell a currency pair. In other words, it involves finding the lot size that will keep you within your risk comfort level.
Proper position sizing is a key element in risk management. And as I’ve told many times, risk management can determine whether you live to trade another day or not. It can keep you from risking too much on a trade and blowing up your account.
Sure, when you bet big, you can win big. But what happens when you lose? You don’t need to be a brain surgeon to figure that one out – you lose big, too.
Without knowing how to size your positions properly, you may end up taking trades that are far too large for you. In such cases, you become highly vulnerable when the market moves even just a few pips against you. Here are a couple of tips to avoid risking too much:👇
🎯 1. Identify and Acknowledge
Nobody does something just for the heck of it. Binge eaters don’t just overeat just so they could eat a lot. In one way or another, they get something out of it. Some sort of self-fulfillment perhaps.
The same is true for a trader who always finds himself betting too much on his trades even when past experience tells him it’s not a good idea. Why does he keep on doing it?
A little introspection can make one realize that it’s more than just about being greedy. For most traders, they realize that their aggressive behavior is tied to their self-worth. They bet big in hopes that they win big. The prospect of massive gains consequently makes them feel good about themselves.
The problem though is that they don’t fully understand how much they could lose and they find themselves being unable to control their emotions when price goes against their way, even by just a few pips.
In order to address it, one has to acknowledge that there is indeed a problem and that will make a trader realize that this mindset is flawed. With time and conscious effort, he will eventually realize that his trading positions don’t measure his worth as a trader.
Nobody does something just for the heck of it. Binge eaters don’t just overeat just so they could eat a lot. In one way or another, they get something out of it. Some sort of self-fulfillment perhaps.
The same is true for a trader who always finds himself betting too much on his trades even when past experience tells him it’s not a good idea. Why does he keep on doing it?
A little introspection can make one realize that it’s more than just about being greedy. For most traders, they realize that their aggressive behavior is tied to their self-worth. They bet big in hopes that they win big. The prospect of massive gains consequently makes them feel good about themselves.
The problem though is that they don’t fully understand how much they could lose and they find themselves being unable to control their emotions when price goes against their way, even by just a few pips.
In order to address it, one has to acknowledge that there is indeed a problem and that will make a trader realize that this mindset is flawed. With time and conscious effort, he will eventually realize that his trading positions don’t measure his worth as a trader.
🎯 2. Know your limits
You also need to find out your tolerance for risk. There are two opposite sides in the trading spectrum with one extreme being risk-seeking and the other being risk averse. Do you know where you stand?
Although most traders risk a fixed percentage of their account on a trade, there’s no one-size-fits-all method to go about it.
Before you even get to the mathematical aspect of it, you first need to determine your psychological limits for risk. If you’re unsure how to go about it, take it slow. Adjust your position sizes according to the potential losses that you know you can sustain. The basic rule is to keep them small enough so that even when you lose, they don’t evoke any strong emotional response that could derail your trading.
Often times, traders make the mistake of focusing solely on finding the perfect entries and exits. But what really spells the difference between successful and unsuccessful traders is risk management. It’s something that should never be taken it for granted. And the first step towards smart risk management is proper lot/position sizing.
You also need to find out your tolerance for risk. There are two opposite sides in the trading spectrum with one extreme being risk-seeking and the other being risk averse. Do you know where you stand?
Although most traders risk a fixed percentage of their account on a trade, there’s no one-size-fits-all method to go about it.
Before you even get to the mathematical aspect of it, you first need to determine your psychological limits for risk. If you’re unsure how to go about it, take it slow. Adjust your position sizes according to the potential losses that you know you can sustain. The basic rule is to keep them small enough so that even when you lose, they don’t evoke any strong emotional response that could derail your trading.
Often times, traders make the mistake of focusing solely on finding the perfect entries and exits. But what really spells the difference between successful and unsuccessful traders is risk management. It’s something that should never be taken it for granted. And the first step towards smart risk management is proper lot/position sizing.
📊 AUDJPY H4 Analysis
I’m bearish on this pair mainly due to risk-off flows stemming from coronavirus contagion fears, which would likely make a dent on Chinese and global growth. In turn, this could keep traders away from commodities and higher-yielding currencies, favoring the safe-haven ones like the yen instead.
However, the relatively optimistic RBA policy announcement is propping the Aussie higher these days as markets are pricing in lower odds of a rate cut anytime soon. I’ve still got doubts that this sentiment could last, though, given how most authorities are adjusting their outlook on account of the virus.
With that, I’m looking to hop in on a short position if the 50% Fib retracement holds. This lines up with the broken trend line, neckline, and an area of interest.
Given the pair’s average daily volatility, a 100-pip stop should be wide enough to weather the usual price moves. I’ll be aiming for the swing low as my target for roughly a 2:1 return-on-risk.
I’m bearish on this pair mainly due to risk-off flows stemming from coronavirus contagion fears, which would likely make a dent on Chinese and global growth. In turn, this could keep traders away from commodities and higher-yielding currencies, favoring the safe-haven ones like the yen instead.
However, the relatively optimistic RBA policy announcement is propping the Aussie higher these days as markets are pricing in lower odds of a rate cut anytime soon. I’ve still got doubts that this sentiment could last, though, given how most authorities are adjusting their outlook on account of the virus.
With that, I’m looking to hop in on a short position if the 50% Fib retracement holds. This lines up with the broken trend line, neckline, and an area of interest.
Given the pair’s average daily volatility, a 100-pip stop should be wide enough to weather the usual price moves. I’ll be aiming for the swing low as my target for roughly a 2:1 return-on-risk.
📊 EURUSD H4 Analysis
First up is a basic support setup on EUR/USD’s 4-hour chart. See, the pair is chillin’ like a villain at the 1.1000 major psychological handle that’s been limiting the bears’ momentum since early October.
Is EUR/USD in for a bounce? Stochastic certainly suggests so with its oversold signal.
Buying at the first signs of bullish momentum would get you a nice reward-to-risk ratio especially if the euro bounces to previous areas of interest like 1.1100 or 1.1200.
If you’re still firmly on euro bear camp, however, then you might want to wait for a clean break below 1.1000 before you execute them short trades. 1.0950 and 1.0900 are low key support areas to watch if you’re shorting the euro against the dollar.
First up is a basic support setup on EUR/USD’s 4-hour chart. See, the pair is chillin’ like a villain at the 1.1000 major psychological handle that’s been limiting the bears’ momentum since early October.
Is EUR/USD in for a bounce? Stochastic certainly suggests so with its oversold signal.
Buying at the first signs of bullish momentum would get you a nice reward-to-risk ratio especially if the euro bounces to previous areas of interest like 1.1100 or 1.1200.
If you’re still firmly on euro bear camp, however, then you might want to wait for a clean break below 1.1000 before you execute them short trades. 1.0950 and 1.0900 are low key support areas to watch if you’re shorting the euro against the dollar.
📊 AUDJPY D1 Analysis
AUD/JPY broke below the ascending channel that we checked out a coupla days ago! Question is, is the “breakout” legit?
Break and retest traders would want to know that AUD/JPY is currently having trouble trading above 74.00, which is near the broken channel support and a 50% Fib retracement on the daily time frame.
Watch this one closely, yo! If AUD/JPY finds resistance at the level, then we could see the pair drop back down to its previous lows near 72.50. Heck, it might even make new February lows!
If AUD/JPY blasts above the Fib retracement and SMA resistance levels, however, then Aussie bulls could gain enough momentum to retest 75.30 or 76.00 previous resistance levels.
AUD/JPY broke below the ascending channel that we checked out a coupla days ago! Question is, is the “breakout” legit?
Break and retest traders would want to know that AUD/JPY is currently having trouble trading above 74.00, which is near the broken channel support and a 50% Fib retracement on the daily time frame.
Watch this one closely, yo! If AUD/JPY finds resistance at the level, then we could see the pair drop back down to its previous lows near 72.50. Heck, it might even make new February lows!
If AUD/JPY blasts above the Fib retracement and SMA resistance levels, however, then Aussie bulls could gain enough momentum to retest 75.30 or 76.00 previous resistance levels.
✅ INTERMARKET CORRELATION ✅
☑️ Day 2) How Oil Moves with USD/CAD
Let’s talk about the other kind of gold… the black one.
As you may know, crude oil is often referred to as the “black gold”, I call it, “black crack.”
One can live without gold, but if you’re a crack addict, you can’t live without crack.
Oil is the drug that runs through the veins of the global economy as it is a major source of energy.
Canada, one of the top oil producers in the world, exports over 3.5 million barrels of oil and petroleum products per day to the United States.
This makes it the largest supplier of oil to the U.S.!
This means that Canada is United States’ main black crack dealer!
☑️ Day 2) How Oil Moves with USD/CAD
Let’s talk about the other kind of gold… the black one.
As you may know, crude oil is often referred to as the “black gold”, I call it, “black crack.”
One can live without gold, but if you’re a crack addict, you can’t live without crack.
Oil is the drug that runs through the veins of the global economy as it is a major source of energy.
Canada, one of the top oil producers in the world, exports over 3.5 million barrels of oil and petroleum products per day to the United States.
This makes it the largest supplier of oil to the U.S.!
This means that Canada is United States’ main black crack dealer!
Because of the volume involved, it creates a huge amount of demand for Canadian dollars.
Also, take note that Canada’s economy is dependent on exports, with about 85% of its exports going to its big brother down south, the U.S.
Because of this, USD/CAD can be greatly affected by how U.S. consumers react to changes in oil prices.
If U.S. demand rises, manufacturers will need to order more oil to keep up with demand. This can lead to a rise in oil prices, which might lead to a fall in USD/CAD.
If U.S. demand falls, manufacturers may decide to chill out since they don’t need to make more goods. Demand for oil might fall, which could hurt demand for the CAD.
Oil has a negative correlation with USD/CAD of about 93% between 2000 through 2016.
When oil goes up, USD/CAD goes down. When oil goes down, USD/CAD goes up.
And to make the correlation clearer, we can invert USD/CAD to show how both markets move pretty much at the same time (i.e., crude oil will gain value with the Canadian dollar while the U.S. dollar falls…and vice versa. Check it out in the chart below:
Check it out in the chart below:👇
Also, take note that Canada’s economy is dependent on exports, with about 85% of its exports going to its big brother down south, the U.S.
Because of this, USD/CAD can be greatly affected by how U.S. consumers react to changes in oil prices.
If U.S. demand rises, manufacturers will need to order more oil to keep up with demand. This can lead to a rise in oil prices, which might lead to a fall in USD/CAD.
If U.S. demand falls, manufacturers may decide to chill out since they don’t need to make more goods. Demand for oil might fall, which could hurt demand for the CAD.
Oil has a negative correlation with USD/CAD of about 93% between 2000 through 2016.
When oil goes up, USD/CAD goes down. When oil goes down, USD/CAD goes up.
And to make the correlation clearer, we can invert USD/CAD to show how both markets move pretty much at the same time (i.e., crude oil will gain value with the Canadian dollar while the U.S. dollar falls…and vice versa. Check it out in the chart below:
Check it out in the chart below:👇
So, the next time you gas up your car and see that oil prices are rising, you can use this information to your advantage! It may be a clue for you to go short on USD/CAD!
Some forex brokers allow you to trade gold, oil, and other commodities. There, you can readily pull up their charts using their platforms.
You can also monitor the prices of gold on Bloomberg. You can likewise check the prices of oil on Bloomberg as well.
Some forex brokers allow you to trade gold, oil, and other commodities. There, you can readily pull up their charts using their platforms.
You can also monitor the prices of gold on Bloomberg. You can likewise check the prices of oil on Bloomberg as well.
📊 USDCAD H1 Analysis
USD/CAD is trading in what looks like an ascending triangle on the 1-hour time frame. And if that’s not major enough, you should also note that the pair hasn’t traded 100 pips above the 1.3300 major psychological resistance since June 2019.
The short-term consolidation points to a more-volatile-than-usual reaction for the pair when Canada and the U.S. both print their labor market reports later today.
If Uncle Sam’s headline NFP comes in as strongly as what this week’s ADP report suggested, then we could see USD/CAD break above the triangle and maybe make a play for the 1.3380 high seen back in September.
If Canada paints a much healthier job market, or if the dollar sees some profit-taking from its intraweek gains near the end of the week, then USD/CAD could break below the trend line and find support at the 200 SMA or the 1.3200 previous area of interest.
USD/CAD is trading in what looks like an ascending triangle on the 1-hour time frame. And if that’s not major enough, you should also note that the pair hasn’t traded 100 pips above the 1.3300 major psychological resistance since June 2019.
The short-term consolidation points to a more-volatile-than-usual reaction for the pair when Canada and the U.S. both print their labor market reports later today.
If Uncle Sam’s headline NFP comes in as strongly as what this week’s ADP report suggested, then we could see USD/CAD break above the triangle and maybe make a play for the 1.3380 high seen back in September.
If Canada paints a much healthier job market, or if the dollar sees some profit-taking from its intraweek gains near the end of the week, then USD/CAD could break below the trend line and find support at the 200 SMA or the 1.3200 previous area of interest.
📊 GBPAUD H1 Analysis
GBP/AUD is heading fast towards the .9350 area, which is right around a broken trend line, 38.2% Fib, and the 100 SMA that has just crossed below the 200 SMA.
Are we looking at a break-and-retest setup in the making? The pair is still a pip or two (or fifty) away from an actual retest, so you still have time to design a trading plan if you’re planning on trading this setup.
A short trade at the Fib levels would make for a good trade especially if EUR/NZD drops back to its 1.9200 previous lows.
If you’d rather buy the pound against the Aussie, however, then you’ll want to wait until the pair pops above the SMAs and aim for possible retests of the 1.9450 or 1.9700 previous areas of interest.
GBP/AUD is heading fast towards the .9350 area, which is right around a broken trend line, 38.2% Fib, and the 100 SMA that has just crossed below the 200 SMA.
Are we looking at a break-and-retest setup in the making? The pair is still a pip or two (or fifty) away from an actual retest, so you still have time to design a trading plan if you’re planning on trading this setup.
A short trade at the Fib levels would make for a good trade especially if EUR/NZD drops back to its 1.9200 previous lows.
If you’d rather buy the pound against the Aussie, however, then you’ll want to wait until the pair pops above the SMAs and aim for possible retests of the 1.9450 or 1.9700 previous areas of interest.
📊 EURNZD H4 Analysis
EUR/NZD just bounced from the 1.7000 major psychological handle, which isn’t surprising since it lined up with a 38.2% Fib retracement and a previous resistance on the 4-hour time frame.
Buying at current levels would still give you a decent reward-to-risk ratio especially if EUR/NZD ends up rising above its January highs.
Before you place any orders, though, make sure you know exactly where you have to place your profit and stop loss levels, aight?
EUR/NZD just bounced from the 1.7000 major psychological handle, which isn’t surprising since it lined up with a 38.2% Fib retracement and a previous resistance on the 4-hour time frame.
Buying at current levels would still give you a decent reward-to-risk ratio especially if EUR/NZD ends up rising above its January highs.
Before you place any orders, though, make sure you know exactly where you have to place your profit and stop loss levels, aight?
📊 AUDUSD H1 Analysis
The biggest story during the Asian session is the Hubei province reporting 14,840 new confirmed Coronavirus cases after China adopted a new diagnosis classification. For comparison, there were only 1,638 new cases from the area yesterday. Yikes!
Now that most of the major central bankers have shared their two cents, it makes sense for markets to turn their focus back on the disease that’s threatening global growth. Unfortunately, it doesn’t look like we’ll see the end of the theme anytime soon.
This is why AUD/USD’s downtrend is more interesting today.
If you believe that risk-averse theme from today’s Coronavirus headlines is just getting started, then you can jump in on AUD/USD’s downtrend and aim for new February lows. That’s below 0.6670
The biggest story during the Asian session is the Hubei province reporting 14,840 new confirmed Coronavirus cases after China adopted a new diagnosis classification. For comparison, there were only 1,638 new cases from the area yesterday. Yikes!
Now that most of the major central bankers have shared their two cents, it makes sense for markets to turn their focus back on the disease that’s threatening global growth. Unfortunately, it doesn’t look like we’ll see the end of the theme anytime soon.
This is why AUD/USD’s downtrend is more interesting today.
If you believe that risk-averse theme from today’s Coronavirus headlines is just getting started, then you can jump in on AUD/USD’s downtrend and aim for new February lows. That’s below 0.6670
📊 CADJPY H1 Analysis
Risk appetite appears to have improved somewhat during the Asian session, and the Loonie(CAD) has been the strongest among the comdoll bunch.
This is likely because the commodity currency is drawing support from upbeat Canadian data and a pickup in crude oil as well. After all, there are speculations that the OPEC could be mulling an increase in output cuts or at least an extension of their agreement in order to prop prices up.
On the flip side, the safe-haven yen is losing ground to risk-on flows while also facing the possibility of a Q4 GDP contraction.
With that, I’m looking at this inverted head and shoulders breakout on CAD/JPY, especially since the pair appears to be making a retest of the broken neckline.
If you think that this reversal is about to gain traction from here, hopping in at market with a stop that’s enough to weather the pair’s average daily volatility could be a good play.
Risk appetite appears to have improved somewhat during the Asian session, and the Loonie(CAD) has been the strongest among the comdoll bunch.
This is likely because the commodity currency is drawing support from upbeat Canadian data and a pickup in crude oil as well. After all, there are speculations that the OPEC could be mulling an increase in output cuts or at least an extension of their agreement in order to prop prices up.
On the flip side, the safe-haven yen is losing ground to risk-on flows while also facing the possibility of a Q4 GDP contraction.
With that, I’m looking at this inverted head and shoulders breakout on CAD/JPY, especially since the pair appears to be making a retest of the broken neckline.
If you think that this reversal is about to gain traction from here, hopping in at market with a stop that’s enough to weather the pair’s average daily volatility could be a good play.
📊 GBPNZD H1 Analysis
GBP/NZD is dropping from the 2.0260 minor psychological area, which isn’t surprising since the level has been an area of interest for the pair since late January.
What makes the setup tradeable today is that GBP/NZD could gain downside momentum after consolidating at the resistance.
Shorting at current levels would give you prime reward-to-risk ratios especially if you’re eyeing the big 2.0000.
If you think that the pound isn’t done gaining pips on the Kiwi, however, then you’ll definitely want to wait until GBP/NZD makes new February highs AND trades comfortably above the range before you execute them long trades.
GBP/NZD is dropping from the 2.0260 minor psychological area, which isn’t surprising since the level has been an area of interest for the pair since late January.
What makes the setup tradeable today is that GBP/NZD could gain downside momentum after consolidating at the resistance.
Shorting at current levels would give you prime reward-to-risk ratios especially if you’re eyeing the big 2.0000.
If you think that the pound isn’t done gaining pips on the Kiwi, however, then you’ll definitely want to wait until GBP/NZD makes new February highs AND trades comfortably above the range before you execute them long trades.
📊 GBPJPY D1 Analysis
GBP/JPY is testing a descending trend line just above the 143.00 major psychological handle. And, as you can see, the trend line in this case represents the resistance of a potential triangle on the daily time frame.
Will pound traders bow down to the sellers for another day today? Or can the bulls push for an upside breakout this time? Remember that not all descending triangles lead to a downside breakout.
Shorting at the first signs of a successful resistance at the trend line would make for a good trade especially if Guppy drops back down to the 141.150 triangle support.
Meanwhile, a clear break above the triangle could take the pair back to its 147.00 previous highs.
GBP/JPY is testing a descending trend line just above the 143.00 major psychological handle. And, as you can see, the trend line in this case represents the resistance of a potential triangle on the daily time frame.
Will pound traders bow down to the sellers for another day today? Or can the bulls push for an upside breakout this time? Remember that not all descending triangles lead to a downside breakout.
Shorting at the first signs of a successful resistance at the trend line would make for a good trade especially if Guppy drops back down to the 141.150 triangle support.
Meanwhile, a clear break above the triangle could take the pair back to its 147.00 previous highs.