17 DECEMBER 2009 – VERY IMPORTANT TRADING DAY

Today has been (AND IS) a pretty significant day in FX.

Many of the currency pairs that have been on the brink over the last few weeks, causing the choppy markets that we have been experiencing (and the stressful trading for the trend followers) appear to have made a decision today.

If you, like me, are primarily a trend following trader you have been experiencing a very frustrating week, or so, of trading. Nothing in the tool box seemed to work consistently. There have been moments of glory with some beautifully flowing moves, but on the whole signals have been coming, executed and then price just whips around and stops you out. Or worse still when you look at the chart and think to yourself ‘I SEE NOTHING HERE???’

Makes you want to scream and throw your teddies out of the pram, worse still – to doubt your ability as a trader and your confidence in your trading plan.

This frustration maybe at end….Merry Christmas from the markets everyone!

Over the past few months most forex pairs have been comfortably following patterns of behaviours and trends. But since the beginning of December it has been struggle.

There has been a change coming, and like the people that trade it THE MARKET DOESN’T LIKE CHANGE.

And when forces are making it change the market resists for a while. We’ve had to trade the struggle for the last couple of weeks which has not been easy.

The good news is that TODAY WE HAVE A BREAKTHROUGH.
AUDUSD:

Head and shoulders reversal pattern on DAILY Chart confirmed by the MACD confirms at least the pause in the relentless bull run on this pair.

The confirmation of the reversal pattern on this pair has wider implications than just the forex market. Its continued climb has been a sign of the strength in the bull run in the stock markets around the world. Also remember that this is one of the commodity currencies with its value closely correlated to the price of gold.

CABLE

Consolidation of the last 6/7 days has been broken to the downside.

The ADR has been about 170 pips per day on cable recently and within this there have been some decent tradeable moves. Problem is sometimes the majority of the move occurred overnight so if you trade the European session you missed it or were left with the feeling that there wasn’t much left to trade and whats the point? Or you’d take a trade and then get chopped up as it reversed quickly taking parts of your account with it.

EURGBP:

The head and shoulders reversal was finally broken at the end of October, beginning of December we had a test of the neckline, which confirmed to be strong enough to resist price. A few more days of consolidation (otherwise known as trouble and strife for trend traders). Today we saw that support broken to the downside.

Both cable and eurgbp have also broken the support they have been receiving from the 200ema on the daily charts. THIS HAS NOW BEEN BROKEN TO THE DOWNSIDE
EURUSD:

Uptrend broken to downside.

We have been waiting for this since middle October when the MACD was clearly showing divergence as this pair pushed higher. (check out our posts in October and November we were talking about it back then!!!!!)

USDCAD

This pair has experienced major indecision recently.

A total nightmare to plan trades with no clear direction.

The descending triangle forming on daily chart had no confirmation from the MACD for the drop and it has in fact today broken to the upside, which corroborates the aussie’s move to the downside.

So if you have been frustrated by your trading recently, don’t despair. Christmas is here and January is just around the corner and we can go into the new year with some direction.

NO MATTER WHAT TIME FRAME YOU ARE TRADING CHECK YOUR HIGHER TIME FRAME FOR CLARIFICATION