DAILY TECHNICAL TRADE ANALYSIS

Here, technical traders will be receiving a daily technical analysis on EUR/USD, GBP/USD, USD/JPY and USD/CHF. This will be revealing the resistance and support levels from daily and weekly charts represented giving traders the trading ideas they can use for the day.
To learn more on how to trade with the support and resistance levels, check here!

SEPTEMBER 28TH. 2009 ANALYSIS

EUR/USD

The Euro versus Dollar pair was able to form a bearish technical pattern, seen in the image above, with a neckline at 1.4615. We expect the pair to decline on the intraday and short term basis, targeting 1.4360 before extending declines towards 1.4275. The stochastic indicator is showing oversold signs, which may result in a slight upside correction to retest the above mentioned neckline before continuing the expected decline, which will remain as far as 1.4765 is intact. Our opinion is selling the pair from 1.4615 to 1.4500 and stop loss above 1.4705 might be appropriate.

USD/JPY

The USD/JPY pair reached the expected downside target to hit the key support for the downside channel at 88.55, seen in the image above, where we expect the pair to incline on the short term basis towards 94.00; supported by positive signs on momentum indicators. The first resistance, which may be an obstacle for the pair is at 90.30, where a breakout of this level will open the way for today's target at 91.60. This incline remains as far as 88.50 is intact. Our opinion is buying the pair with the breach of 90.30 to 91.60 and stop loss below 89.55 might be appropriate.

USD/CHF

The Dollar versus Swissy pair continued to surge to the upside to touch the key resistance of the minor bullish channel that is taking the pair to the upside on the short term. From the image above, we see a minor resistance level is currently the neckline for a possible bullish technical pattern, which may reverse the pair to the downside in correctional movements to reach 1.0300, before rebounding to the upside and completing the pattern by breaching the 1.0365 level and open the way towards 1.0550. This incline is valid as far as 1.0365 is intact on the four hour charts.

Our opinion is buying the pair from 1.0300 to 1.0450 and stop loss below 1.0205 might be appropriate.

GBP/USD

The 23.6% correction limited further inclines for the pair, where it reversed to the downside to near the 38.2% correction for the bullish wave, seen in the image above. The short and medium term declines may face volatility near the current support at 1.5745, as momentum indicators show the possibility for a slight upside correction towards 1.5870 before reversing back to the downside towards 1.5555, as far as 1.6150 remains intact.

Our opinion is selling the pair from 1.5870 to 1.5745 and stop loss above 1.5940 might be appropriate.

DISCLAIMER

These analyses are for information purposes only. They DO NOT post a BUY or SELL recommendation for any of the financial instruments herein analyzed. The information is obtained from a generally accessible data sources. The forecasts made are based on technical analysis. Ensure a good risk management in carrying all your trades.

...To your trading success!

MONEY MANAGEMENT PRINCIPLE

You don't need to ignore this principle if you really want to make good money from the Forex market in the long run. Gamblers don't last long in this market. Professional traders use money management principle by adding a good risk management system to all their trades. This is a way of protecting your capital from bad trades.

The knowledge of how to manage your risk is very important and should not be ignored as this determines your long term success in the market. The concept of loss is inevitable in the Forex market. For you to survive, you need to mange your loss so as not to cut deep into your capital. There is no trading system with 100% accuracy so, losses will always come but your ability to minimize them determines your survival.
With the risk management, you are looking at a long term returns on investment and not a jackpot. Risk management is a system use by investors to control their trading losses. As you are thinking of making profit, also make a provision of how much loss you can afford to bear in case the trade turns against you.

UNDERSTANDING THE USE OF STOP LOSS

This is a tool use to set up when a trader can afford to leave the market with a loss in case if the trade moves against him. It is very important to use this tool effectively because the level of risk a trade carries is determined by the value of the stop loss. This means that a higher stop loss value means a higher risk level while a lower stop loss value means a lower risk level. There are some trading strategies that reqiure the use of fixed exit stop loss and some that require a variable exit stop loss. It is very important for a trader to use stop loss before opening any position because the concept "loss" is inevitable in this market but your ability to manage it properly determines your success.

YOUR RISK LEVEL

You have come to understand that the value of your stop loss determines your risk level. Then, next question is how will you choose your risk level? Different traders have different opinions to the choice of their risk level per trade. From my experience, i think percentage risk level should be drawn from 2% to 3% of your trading capital per trade.

Assuming you are trading with a capital of $2000 and using 3% risk level per trade. With 30 pips stop loss per trade, your risk level will be 3/100 * $2000 = $60.
The amount you gain/loose per pip = $2 ( i.e $60/30 pips)

PROFIT TO LOSS RATIO

This is the ratio of your profit to your loss. Using 3:1 profit to loss ratio means that you are placing your trades only when you have a chance to make three times of what you set to loose. Assuming a stop loss of 20 pips, a trader using 3:1 profit to loss ratio will only place his trade when he sees the chance of making 60 pips profit. This trading rule will increase your chances profitably.

BUYING SUPPORT AND SELLING RESISTANCE

Your success in Forex trading also depends on the trading system you use for your trades. One of the most popular trading system use by investors in technical method of trading is buying support and selling resistance. If you don't know about this important system you have the opportunity to learn it now and add it to your trading tools. Though there are variations to the use of this system and different names given to it. Traders use a mixture of different indicators like stochastic oscillator, relative strength index and so on to identify there support and resistance areas. But the base of the concept is still maintained as buying at the support and selling at the resistance zone.


WHAT IS SUPPORT AND RESISTANCE?

As the chart moves up or down, it attains some level where it becomes tired of moving and tends to change its direction of movement. Watch any chart moving up and you will notice that there are are some areas on the chart where the price stops going further up and you will notice that there are some areas on the chart where the price stops going further up but instead, it changes direction to downward movement. Such area(s) is called resistance area. That is the exchange rate (i.e. price) is resisting from further upward movement.

Also when a chart is going down it reaches a point where it will settle from further movement and change its direction of movement from down to up. This area is called the support or rather the bottom. Trader all over the world watch out for these areas to place their trades so, market most of the time follow this concept. Remember i told you that the secret to pipping the Forex market is the ability to gauge the direction most traders will be placing there trades. If most will be selling then the market will go down and if most traders will be buying. then the market is heading up.











This is a USD/CHF chart. This market is trading in a range looking at the chart you will see the resistance and support area which are indicated by red lines. The support area is marked as 1.1816 while the resistance area is marked as 1.1853. A trader who observes these areas will place his trades accordingly and make a nice profit.
Simply place a buy order at the support area as the market move up and enjoy your pips. To sell, your orders will be placed at the resistance area for a good trade.

WHEN THE RESISTANCE AND THE SUPPORT LINE IS BROKEN

Another way to trade support and resistance is to watch when the support and the resistance area is broken. At times it happens that due to some fundamental factors, the market will experience a heavy buying. In that situation instead of the price to reverse at the support and resistance areas, it ignores them and move further down or up respectively. In a situation like this, a trader seeing that the support area is broken will place a sell order because the market will be going further down.

Get your FREE TRADING SYSTEM. It is simple, powerful and most of all will pip the Forex.