Your Forex Trading Plan during the Holidays and 1st Half of 2015

All eyes are focused on the last FOMC statement of the 2014 trading year which will be released on Wednesday afternoon ET time. Will the statement steer the US Dollar back in its uptrend or has the retracement time finally arrived?

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The statement will probably give Forex traders a sneak preview of the upcoming trading year of 2015 but generally speaking the following developments seem most likely in my forecast for next year:

  1. Typically the market movement slows down during the holiday season and the majority of the trading days will hardly be worth trading. If this is new for you, don’t underestimate the historical seasonal affect of the holidays on the markets and do not beat yourself for focusing on testing or resting;
  2. Typically January has a slow start as well, because a brand new trading year has just started. Although last year’s levels are available, there is a brand new playing field (like new trading day) and the market slowly tests support and resistance.
  3. Bigger long-term (weekly/monthly) trends often start or accelerate in February or March. Grab a weekly or monthly chart and look at each February or March and tell me what you see by writing down a comment down below. I choose the EURUSD as an example and most times work out well with exception of the big 2012 and 2013 consolidation: trends can start if there is no trend present.

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The second half of 2014 has seen the US Dollar in a large uptrend BUT last week’s bullish weekly candles on the EURUSD, GBPUSD, and bearish candle on the USDJPY could hint at a temporary halt of that trend.

The typical slow consolidation during the holiday season fits in well within this picture.  After the USD heads sideways with a tad of a bearish correction for the next 2-3 months, the USD uptrend can make its next march forward in February, March or April.

In the below screenshot you can see what I am thinking about in more detail: notice how price bounces at the monthly support trend line. Price action is indicated by small greenish bars, which represent small bullish candles. They are then followed by bigger and impulsive bearish (red) candles pushing through the monthly support trend line.

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What if the USD uptrend continues quicker and/or the USD uptrend does not receive follow through in March next year?

As always traders should always remain focused on the price action and follow price wherever it wants to go. Be ready to capitalize on opportunities regardless of the direction and your bias. Every Forex trader will have some kind of bias (impossible to remove it entirely), which allows us to stay sharp and improve our forecasts. Just do not rely on it blindly.

Do not forget to add your opinion in this debate by posting a chat below. What is your forecast for the US Dollar? Do you the same as me or something totally different?

Thank you for sharing this post and wish you all Happy Hunting!

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  • Eddy Bennett

    Yes that charts just off the free metatrader5 software so I’m surprised it goes that far back really.

    I’ll definitely check out your weekly waves.

    Thanks again!

  • Chris

    Hi Eddy! Great! Happy to hear that the analysis has helped you. Great looking chart you have there. It’s always interesting to see price action going back that far! I am glad that you are using such good sources, the book is a great guide indeed. I guess the only thing I can recommend is to look at my weekly waves, which you can find at AM as well. Just go to the daily ones and you will find a banner where you can register for the weekly ones. If you cant find it, please drop a note to my email at WET (Chrissvorcik(at) winnersedetrading. com. Thanks for the posts!

  • Eddy Bennett

    Hi Chris,

    Thanks for the detailed response, it’s much appreciated!

    I’ve been keeping an eye on EURUSD and it would appear that you were correct 🙂 I’ve done some basic fibonacci analysis and this further confirms it.

    I also had another look at a chart which goes back as far as 1971 and it’s now clear to me that this triangle is part of a larger corrective pattern (image attached) so had I seen this in the first place I wouldn’t of made the conclusion of the price going to the upside.

    You mentioned on your admiral markets profile that you learnt from the best, would you mind telling me who? I’m currently subscribed to elliot wave international and finding it a really useful resource, I’m also reading the elliot wave principle over and over. Aside from this website which has a great deal of useful information on it, do you have any book / resource recommendations 🙂 ?

    Thanks!
    Eddy

  • Chris

    Hi James, thank you! Appreciated 🙂

  • Chris

    Hi Eddy! Thanks for the comment and your appreciation 🙂 Yes I do use MotiveWave indeed – good eye 🙂 Wave analysis can offer multiple solutions so that is why I myself only use for having a rough idea what could happen next. I dont focus much on the details: some wave analysts love to debate the smallest of waves and I dont think this helps much or is effective. Rather I use it more to have an idea what could be the next momentum and correction.

    When looking at the EURUSD monthly chart, I myself see the wedge as bearish and a break could mean that EU falls to 1.13 or 1.00. In my view: the first fall on the EU from 1.60 top at the beginning of 2008 was the first bearish impulse, followed by a contracting triangle (ABCDE). See screenshot. I know that the triangle can be also seen as bullish but I think that the recent bearish momentum of the last 6 months makes the bullish scenario of a big bounce here unlikely. For that to be a more likely option I would need to see price above 1.30. The bearish scenario is confirmed when price breaks the bottom of the wedge… we will have to see how it reacts at the support. I have a bias that price will go sideways / consolidate and then there will be a bearish break of the wedge but I will wait for price to confirm it.:) Hope this makes sense but let me know if you have questions or comments 🙂

    Thanks for the comment!

  • Thanks for the comment James

  • James

    Very useful information.. Thank you very much Chris. I will look into this and share my analysis in the later future.

  • Eddie thanks for leaving a comment with us. I am sure Chris will respond to your comment here shortly. If you have anything else to share on the site or questions we are more than happy to help you.

  • Eddy Bennett

    Hi Chris, great article 🙂

    I’ll certainly find this useful in my trading.

    I’ve been following your elliot wave analysis with interest. I’ve been learning Elliot wave theory for the past few months and it’s very useful to see it applied on current market situations. Just a guess but do you use the MotiveWave trading platform? Your chart styles look familiar 😉

    Also, re. your long term forecast for EUR/USD, when looking at a 3 month chart, we appear to be at the end of a contracting triangle following an uptrend, I’ve checked this against elliot wave patterns and it suggest that this precedes a large move to the upside, what are your thoughts on this?

    Regards,
    Eddy