The USD Question: a Bear or Not?

Dear Readers,

After a good weekend’s rest I welcome you back to the charts and trading! I hope you had some time for relaxation and also some for learning. I continued, just like last week, with my memory course and read part of a book focused on trading.

Of course I took the opportunity to listen to Nathan’s wonderful daily analysis as well. Nobody should miss out on that! You can read here what others think of the Winners Edge Trading services!

Major USD weakness has hit the charts last week. Especially the Euro showed great strength across the board, but also the AUD, the NZD, and even the GBP are showing signs of bullish impulsiveness towards the USD.

For today’s trading I am looking for continuation of USD weakness. My primary focus at the start of today’s trading day is the AUDUSD and NZDUSD.

14.01.2013 AUDUSD WEEK

I have the following reasons why:

1)      The EURUSD has travelled quite a substantial amount last week and seems relatively (over?)extended. The Euro is in an uptrend so I am looking for buys. No way will I attempt a counter trend sell. But a buy is equally unappealing to me at the moment. Only after a substantial correction will I revisit this currency pair;

2)      The crosses, GBPNZD, GBPAUD, EURAUD and EURNZD are interesting setups as well due to the major reversal signals to the upside. Most of all, I am keen on trading the EURAUD and/or EURNZD north, however, only after a substantial correction takes place. I do not expect that to happen today. I am anticipating a trade on those pairs either on Tuesday or Wednesday but will monitor them regularly;

3)      Of course all Yen pairs are in my scope as well. However also in this case I am looking for a retracement followed by bullish price action signals for an uptrend continuation before touching these currency pairs;

4)      On all time frames both the AUD and NZD are in uptrends versus the USD. They built clear higher highs and higher lows. In the case of the AUDUSD, price has retraced to and bounced off a neat trend line. The bounce showed strength by creating engulfing 4 hour candles to the upside on both pairs;

5)      There are 2 warning signs for the AUDUSD. One is that the top of the week trend line coming from the tops has not been broken by a clear week candle close outside of that area. Also AUDUSD’s current price is close to previous tops. The NZDUSD has broken that week resistance, but is close the previous tops as well.

14.01.2013 NZDUSD 4 HOUR
Now it’s time for the battle plan!

Basically, the AUDUSD and NZDUSD are approaching significant resistance areas. Then again the same currencies are in uptrend as well. What would be the best approach?

Not trading these currencies and waiting for a break and hook back always has its value.

I myself will employ the same tactics as the USDJPY approach. I will buy the currency at the first sign of a bullish impulsive continuation on the 1 hour chart. A break of the correction would be an added benefit in the case of the AUDUSD.

A key advantage of this plan is that I am able to position myself in the trade before the currency actually approaches the top. Using a tight 1 hour stop will give me sufficient reward to risk to take some profit at the top and move the rest of the trade to break even. If the currency does indeed break, that is when I get the extra mileage and R:R.

For those of you how want more information on the Yen, please read this: Yen Weakness in the Forex market ASAP.

What currency pairs are you looking to trade today? Let us know by dropping a comment down below!

As always, Good Trading!

14.01.2013 AUDUSD 4 HOUR

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