FOREX TRADING

This was basically a week of continuing consolidation, except for the USD/CAD which is looking seriously at the parity scenario. The coming weeks may be crucial as the markets test important powerlines. We have short-term consolidations/corrections in pairs such as EUR/USD, GBP/USD, EUR/GBP, and GBP/JPY. But we are also testing long-intermediate-term consolidation in USD/JPY, EUR/GBP, and AUD/USD as well.

EUR/USD Test of Rounded Bottom

Daily: The EUR/USD pair continues to be supported above the 1.3450 support. This week, the market closed above 1.35 and appears to be creating a rounded bottom.

Today’s rally so far heightens that probability but is still premature to call it a reversal signal. The market needs to break above the declining trendline preferably followed by a pullback. This would confirm a reversal and a target could be the 1.42 area, which is the support from a consolidation zone.

4H: The 4H time-frame shows the market in a current swing breaking out from a triangle pattern. A swing projection is to the 1.3820 area, and the market is nearing.

The completion of the rounded bottom is tested here. If the market can eventually break above 1.3820 during this current bullish cycle, the market may go to 1.42.

However the momentum is overbought so there might be a slightly correction in the near-term. Then if the market breaks above, get ready for a pullback to confirm.

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Easy Fibonacci Trading Guide – 4 Simple Steps to Trading with Fibonacci

If you’re just like anybody else who’s got demanding lifestyle, I am sure you don’t want to spend most of your time sitting and waiting for the market to move for you. Years of experience has taught me some techniques that allowed me to cut my sitting and waiting time to a minimum. I found that I don’t need to watch the markets hour in hour out. Would you like to know these techniques so you can also do your trading in just a short period, leaving you time to do things that the money from trading allow you to do? Then, read on!

1. Keep your trading technique simple and understandable. It’s important for you to decide right away that you’re going to make trading work for you, not you working for the markets.

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News and Events:

The fx markets main focus continues to be the Greek sovereign debt issue and the potential of something concrete materializing from the ECOFIN meeting today. However, we are doubtful we will hear anything new. The Eurozone members are expected to pressure Greece into endorsing further austerity measures and will be given until mid March to prove it will be able to reach its forecasted deficit targets (we are not sure what an extra few weeks will do but…). As of yet, there has been no official bailout plan reported, only a softly worded statement on EU ‘solidarity’ and we don’t think a detail strategy is coming any time soon. So, now FX traders can look forward to 30 days of nervousness and in our mind EUR weakness. Overnight, there has been some harshly worded comments that suggest that members might not be a cohesive as last weeks statement advocated. Finland ‘s Finance Minister stated that EU rules were ‘against a bailout’ and any aid would have to be a bilateral agreement between Greece and members. He also suggested that Finland would not help and ‘Greece must get the money it needs from the market,’ and that Finland has already help enough by supporting Latvia and Iceland . The Austrian Finance Minister said that the fuzzy economic data produced by Greek should not be allowed to undermine the credibility of the EUR. Worryingly, Eurostat, which is already bringing Greece to court for statistical irregularities, today issued a statement that they were unaware that Greece used currency swaps to disguise gaps in there balance sheet. The statistical agency of the European commission has now set an end of February deadline for disclosure on these transactions. Because of the EUs own disclosure and accounting rules, members were not required to report these deals, so markets are completely in the dark to the size and scope of these swaps. And given the familiar names and structures being mentioned, it has eerier similarity to past crisis in the US at the state and country level. Separately, The RBA minutes of Feb 2nd policy meeting provided no real insight into the timing of the next hike.

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By Ahmad A Hassam

Did you find the Holy Grail in trading? If you know when to enter the market and when to exit the market at the right time, you have found the Holy Grail in trading. Fibonacci Retracement and Extensions is the Holy Grail for many traders. They trade by these Fibonacci Levels. Fibonacci sequence is a famous sequence that appears quite frequently in nature. Fibonacci sequence is obtained by adding the last two number to obtain the next number. The first two numbers are 0,1. After that just add the last two numbers to obtain the next number. Fibonacci sequence just develops like 0, 1, 1, 2, 3, 5, 8, 13, 21, 34, 55,89,144,233,377 and so on.

Ratios obtained by dividing a number in the Fibonacci sequence with the number before it and with two numbers before it are always the same. These two numbers 1.27, 0.618 and 0.382 are very important and occur frequently in nature. These three ratios are used to construct Fibonacci Retracements and Extension Levels.

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Fibonacci, Actually named Leonardo of Pisa, was born in Pisa, Italy about 1175 A.D.. Today, he is recognized as the greatest European mathematian of the middle ages. Fibonacci is credited with introducing the Arabic-Hindu numeral system to Europe. He also introduced the decimal system. Both became the basis of mathematics we use today. Enough background for now.

Although Fibonacci covered an entire realm of mathematics, the main numbers used in trading are actually percentages. The percentages are 38.2%, 50%, and 61.8%. These areas are viewed as trend retracement points. The most commonly held theory is that a 38.2% retracement of a trend is a failed reversal and the overall trend should continue. A retracement to the 61.8% mark signals that the retracement is the beginning of a new trend. The 50% level is used for different strategies if confirmed by several other signals

The use of Fibonacci numbers in trading has become increasingly popular in recent years. It does not take long when looking at charts to see several examples of Fibonacci tracements. On numerous occassions I have watched analysts making market predictions on T.V. shows. I will often check the charts about what they discussed. Some of the predictions for new price levels are dead on Fib. retracement numbers.

Fibonacci numbers, as with all technical indicators should not be used by themselves. They should be combined with other indicators to make a complete system to trade with. I do believe that Fibonacci numbers should be a part every traders list of indicators. They do seem to be extremely accurate, This could possibly a self fulfilling prophecy. If enough people believe it, they will cause it to hold true.

In any case, if you do not currently use them, you may want to look into it.

Leonardo Pisano, better known by his nickname Fibonacci, published Liber abaci in 1202 in which he posed the following problem:

A certain man puts a pair of rabbits in a place surrounded on all sides by a wall. How many pairs of rabbits can be produced from that pair in a year if it is supposed that every month each pair begets a new pair, which from the second month on becomes productive?

The resulting sequence is 1, 1, 2, 3, 5, 8, 13, 21, 34, 55,… each number in the series is the sum of the two numbers preceding it. He also discovered that each number in the sequence is 1.618 times the preceding number and.618 of the next number.

Many technicians use the Fibonacci numbers when trying to determine support and resistance, and commonly use.382,.50, and.618 retracements.

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