200EMA Nearing On Gold And Silver – FX Commentary November 25th 2015
Anyone that follows the Day Trading Forex Live blog knows that I’m not a fan of indicators. The main reason is most of them were built for the equity market which functions completely different. Even if they were made for the forex market they will still be lagging far behind price and thus of little to no use. The one thing I do find value in is the 200 EMA as it is a leading indicator for directional bias. A clear break, hold, and retest of 200 EMA as support is a very good signal that short term direction has more than likely changed for a couple days at least. Specifically I’m talking about the 1H chart of both Gold and Silver which have slowed in their fall and are now testing the 200 EMA. As I mentioned a few days ago I wouldn’t be surprised if we did see a retracement of some of the last major move down but by no means is the move down to be considered over IMO. When the the price starts breaking above and using the 200 EMA as support on the daily chart, then I will change my tune. This Russian plane getting shot down would have created much more bullish momentum in the gold and silver if there were heavy underlying buying pressure.
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EUR/USD Inverse Trend Channel
For those of you who are members I would highly recommend watching tonight’s daily market preview video. I personally made a stupid mental error in my trading yesterday and it not only cost me a full loss on the EUR/USD, but even worse is that the correct application of the rules resulted in a full take profit. I’m not going to try to explain this via text in detail. The bottom line is that I got complacent and didn’t look at every news event that was capable of spiking the market more than 15 pips. As a result I carried the EUR/USD short into the 10:00 AM news and got stopped out on the run up prior to the news. Based on proper application of the rules we wait for the news to come out and then enter the market as long as the confirmation candle count is still valid. This wasn’t me forgetting about a specific rule, it was a simple matter of me not going through each news item thoroughly enough. I was quite proud to see my email light up like a Christmas tree from all the members telling me I missed the news and I traded it wrong. I was like a proud father haha (although I don’t like children…I did the math and kids have a bad ROI).
At the end of the day there really is no reason for mistakes with the forex bank trading strategy. ITS MECHANICAL and takes the emotion out…that is why I say mistakes like this should never happen. Overall it is a great lesson to stay on your toes because the market will be there to remind you when your not.
For today I will continue to keep the open directional bias on the Euro. Overall we had an extremely tight range as the market goes into holiday mode. We do have some decent manipulation points to work from but at this point we have a long distance to travel before we touch them. The Euro is working on forming a new upper manipulation point as I discussed in tonight’s daily market preview video. Watch the video for exactly what is required but at this point it is getting close to forming a new upper level at the last highs. With that being said it still has a bit further to travel before satisfying the rules we use for selection of a new manipulation point.
GBP/USD Completes Expected Third Push Down
The GBP/USD gave the third and final push to the downside that we were looking for. After we see a short term market trend cycle come to completion we then go back to trading with an open directional bias. Just because a cycle comes to completion doesn’t mean the market could not continue further it just means we don’t only look for that direction as the possibility for trend reversal becomes higher.
Like the Euro, the GBP/USD is working on forming a new upper manipulation point at the Asian highs. Also like the Euro, it has not quite satisfied the rules we use to select a new manipulation point and therefore a large push to the downside is still required as described in tonight’s preview video. We do have some official levels that are quite solid. Our only lower manipulation point is massive level but it is a long ways off. The upper level we have is mediocre but we would have hit the ADR by the time that point on the chart is reached and therefore the possibility for a short term market trend reversal becomes higher. As a result I would be happy to take a day trade short from that level if a valid stop run reversal setup occurs.
Forex News For November 25th 2015
US Core Durable Goods m/m 8:30 AM Eastern: Definitely has the ability to create the 15+ pip spike but also has a strong history of being used to create the trap move. This would be another great indicator to use as an entry on an already valid trade setup similar to what occurred on Monday. This month .4% is the expected number.
US New Home Sales 10:00 AM Eastern: Its been a long time since the home sale indicator came into focus and it looks like over the last 3-4 months they are gaining a little bit of traction. Last month we had a huge miss in New Home Sales to the downside which created a 15 pip spike up. We not only had the spike up, but we then had further continuation past the initial spike. Obviously one big spike is not enough to really make up a pattern but it does give us a starting point. This month 500K is the expected number.
In general it is important to stay on top of news and how it moves the market from month to month. Monday was a good wake up call for me to always be double checking news that you think is incapable of spiking the market as you might be missing something. Additionally, news is always fluid and changing because what is happening in an economy is always changing. As this happens certain news comes into focus and certain news moves out of focus. These cycles tend to be about 1.5 years in length. If you look back at NFP you will notice that about 2+ years ago the EUR/USD and GBP/USD would actually spike AGAINST the direction they should. Instead of positive news spiking them down it would actually spike them to the upside. I’m not going to get into why, but the point is make sure to take the time and look back and historical spikes. It only take 10 minutes per day or less and can save you a significant amount of money.