We are currently experiencing bullish reversals in the markets, brought
about by some fundamental events across the globe. Should this be a surprise to
us? Not at all, especially when we delve deeper into an aspect of the dynamics
of the markets. Market studies have revealed that that the seriousness of
market metamorphosis could be decided by the pressure on the market. During a serious
movement, pressure gains momentum with it. If the transaction pressure is
weighed relative to the market volatility, ‘elusive’ fact concerning the easy
moves of the instrument turns conspicuous. If the transaction pressure is
weighed relative to the market movement, more fact about the easy moves may be
derived. Intensifying moves in an equilibrium territory may portend a probably
exponential rise in price pressure. On the same weight, moves that become less
intensified may portend a counter-trend rise in pressure. It should have been
noted that expanding pressure brings with it a more colossal directional move.
Still, a speculator ought not to deprecate the seemingly refractory nature of
the financial markets. The most crucial issue to comprehend about the market
pressure is that it is not just the pressure itself the concerned analysts are
particular about. With any given market move a significantly erroneous notion
is thinking that there exists a bear for each bull, and therefore the market
pressure is ineffectual. If this were true, the markets would be caught in a
dangerously protracted consolidation. The markets are propelled by the avarice
and fright of the bulls and bears. Thus the transaction pressure and market
movements are factors that make us see the realities of price dynamics.
Consider buying/selling pressure as a lopsided attempt plus the market action
as the aftermath of the attempt. If bears are inclined to smooth their orders
at all cost there might be propensity to do so at the bid rather than sit back
at the offer. In case the purchasing need is scantily situated beneath the
price then the markets would be propelled towards the downside till the bears
get satisfied or not be inclined to go after market moves any further to the
downside. Alternatively, if bulls are inclined to act they may purchase the
offer and not sit on the bid. If bulls are more inclined and there is not much
resistance atop the price, the market may be seen moving up till the bulls are
satisfied or not be inclined to go after the markets to the upside.
Below is the summary of some of my trading forecasts this week.
AUDJPY
Primary Trend: Bullish
This cross, which is in a notable bullish correction, is
currently hesitating before finding the next line of the least resistance. The
SMA 50 is still below the SMA 200, and the price now stays slightly above the
former. Nevertheless, the price is becoming less determinant in its northward
push. If the resistance at 85.00 is broken, the next target would be 85.50. On
the other side, a new bearish bias would resume if the price fails at any of
the levels mentioned.
EURAUD
Primary
trend: Bearish
The
outlook on this pair is closely similar to its EURNZD counterpart. A downmove
was followed by a rally attempt. The price has been edging higher and higher in
a context of a downtrend. In this scenario, I am looking for a pattern that
would trigger a short-sell signal. The pattern is recognized watching a currency move north
until it runs out of energy, stalls out, rolls over and then gravity takes its
toll as it dives for the deck this is when an experienced trader is ready to
pounce and look to short that market.
EURNZD
Primary
trend: Bearish
The EUR is stronger than the NZD at the moment and I’ll
prefer to trade accordingly. The past bearish effort was rejected at the level
1.5800 and the price has been rising since then. The SMA 50 is still below SMA
200, but it may be improbable for this to last very long. However,
the ADX 20 is far below the level 25 – showing another trendless situation. -DI
is precariously situated above +DI. Expect a great move soon, probably to the
downside.
EURCAD
Primary trend: Bearish
The price
going up in a bear market? It appears so. But looking at the daily chart of
this pair, you would see that the upward move is like a trap. The most
important thing right now is to find a way of going short in favor of the major
trend. It could be so nice if one enters as soon as further bullish momentum is
rejected. The bulls’ power is clearly limited.
AUDNZD
Primary trend: Bearish
This slow moving cross, which is in a notable correction, is
currently hesitating before finding the next line of the least resistance. The
SMA 50 is still slightly below the SMA 200, and the price stays bellow the
former. The Stochastic 14,3,5 is heading towards the overbought region, while
the RSI 14 is struggling to go beyond the level 50. The present scenario may be
rendered invalid very soon. I would go short as soon as the Stochastic shows a
sign of reversal in the overbought region. .
GBPCHF
Primary trend: Bullish
The primary trend remains bullish on this
instrument, and the price is attempting to move higher. This is a broad
outlook, as there may be sharp bearish pressures sometimes – only for the price
to pick from those places. This kind of move may be significant before a new
bullish wave arises (something that happens when buyers have gone too far). I
am looking forward to a short-term counter-trend move. I would go short as from
next week..
Conclusion: A trading week invariably proffers certain speculative
signals, but speculators ought to posses valid methods for opening and closing
trades at the expiration of the speculation period whether profitable or
unprofitable. You would do well to elect a technique that fits you the most and
allow intrepidity and be unperturbed enough to stick to your clear-cut rule. In
case a trader still anticipates gains to rain down, the realization of this may
be nearer than imagined. What should you do? Please commit yourself to trading education
and always check Instaforex.com for a wealth of trading information, and be
resolute to leave indelible footprints in the trading world.
This article is ended by the
quotes of the week below:
“Taking
a loss is merely playing for better position. One trades strictly for probable
future results, not for what the market might do… You grow with each decision, yet each decision has a
price. For example, you must discard a choice, and you must commit…
Remember that conditions are never perfect. You must allow yourself to fail.
Allow for human limitations and wrong choices. Reserve compassion for yourself
and your limitations.” - Linda Raschke
“We have to stand
up for our beliefs because it's only by our thoughts that we set ourselves
apart from the masses who are not achieving trading greatness… The time to
learn new instruments is before the one you are trading has stopped
co-operating. Develop your skills before you need to use them. Learning while
calm is very different than learning while feeling forced or desperate. Don't
wait until a crisis in your life to learn how to trade. The time to act is
now.” - Louise Bedford
“Many experienced
traders contend that the most important elements of trading success involve the
psychology or mentality of the trader, which include money management and its
close relationship to discipline and position sizing. Somewhere down the list
is a strategy to enter the trade which is where many beginners focus their
attention.” – Chris Manson
By Azeez Mustapha
Forex Signals Strategist, Funds
Manager &Coach
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