Wednesday, September 12, 2012

Monthly Market Updates on Exotic Crosses (September 2012)

“As a trader, one of my daily affirmations is: Detach from the outcome of each trade.” – Dr. Janice Dorn

Certain attempts are needed to analyze the markets objectively. One shouldn’t be subjective, except the analytical tools themselves are ineffectual. Everyday speculation isn’t mandatory; and some traders prefer to look at the Big Picture. Certain reversals took place last month - significant reversals, and as such, the month of September would now show whether the counter-trend reversals would be sustained or the overall trends would resume. Risk control on equities should also be borne in mind, for the markets won’t always do want you want them to do (they’ll do only want they want to do), irrespective of your will. Nevertheless, trading is really fascinating. Gone are the days when the financial markets were monopolized by financial trading and other types of institutions. Our appreciation goes to the World Wide Web and cutting edge technological devices. Forex has long been easily traded by retail speculators. Besides, the benefits of this vast market have been appreciated by multitudes. But in the presently turbulent price phases, the effort of many companies to satisfy the want of the speculator is huge.

Below is the summary of some of my trading forecasts this month:

Primary trend: Bearish
This pair was weakened last week and it seems it would continue doing so. We’ve a Divergence Pattern on the chart as the bears still show of their strength. For anyone who’s interested in shorting this pair, it’s still relatively early to do so. The support levels at 1.0300 and 10.200 can be breached this month as the pair weakens further. The logic here remains that, if the USD, which is weaker than some currencies like EUR, USD and CHF, could be stronger than the AUDUSD, then it is logical to short this pair.

Primary trend: Bearish
The outlook on the AUDJPY is similar to that of the AUDUSD - something that further confirms the weakness in the Aussie. Right now we have a Bearish Divergence Pattern on the chart representing this cross. The ADX 14 line just crossed the level 30 upwards, as the MACD histogram just fell below the level 0, while its signal line is heading downwards. The sell signal is still early.

Primary trend: Bullish
This cross is now showing the relative strength as opposed to the EURNZD. We now have a bullish Confirmation Pattern at its early stages as both the signal line and the histogram of the MACD have newly crossed the zero line upwards. The ADX +DI is now above its -DI counterpart. The resistance lines to be broken this month would be those at the levels 1.5700 and 1.5800.

Primary trend: Bullish
What’s happening on this market clearly shows that the EUR is not hopeless at the moment. Further bearish pressure has been rejected after months of downtrend. The price happens to be bottoming out right now, as the indicators on the chart show a Converging Pattern. This makes us concludes that sellers are getting weaker and weaker as the price is poised to go up. There are support levels at 1.2300 and 1.2250.

Primary trend: Bearish
The Aussie is even weaker than its Kiwi counterpart as shown by the price chart representing this cross. This is clearly a weak market, and as weak as it looks, going short on it looks very tricky. The MACD gives a sell signal - as its signal line and histogram have already crossed the zero line to the downside. The -DI of the ADX itself has crossed its +DI counterpart to the upside.

Primary trend: Bearish
The GBPCHF consolidated lower in the month of August 2012. We’ve a clean ‘sell’ signal as the indicators on the chart show a bearish Confirmation Pattern - something that is still early enough to be taken advantage of. The ADX line has crossed the level 30 to the upside as the MACD itself have had both its signal line and the histogram crossed the zero line to the downside. I would short this instrument.  

Conclusion: The end results of our trading activities are gains. The summary of everything is that, we trade for pecuniary gains, just like everybody. Some must lose for others to gain - and vice versa. You’re not to be told before you acknowledge that life itself is a game of chance. But why do some find it difficult to be triumphant in the markets? Why does it seem that many of your orders tend to go negative? It all boils down to some trading biases. Regrettably, most speculators fail to learn form their errors - the errors that bar them from the coveted trading progress. Lessons from others could be better. Speculators come to ruin not as a result of bad brokers, poor market information or malfunctioning platforms, but as a result of their dangerous trading styles.

The article is concluded with the quotes below:

“When I board a plane, I know there are risks, but I don’t let that stop me from flying. Years of Air Force training helped me develop an awareness of flight safety and emergency planning. I know how to put on an oxygen mask, how to open the emergency doors should I need to, and where my seat is in relation to the exit rows. In other words, I accept the risks because they're tolerable, and because I’m prepared for them. Similarly, my training through [a trading institute] has helped me develop an awareness of risk management and the need to plan for worst-case scenarios in the markets.” - R. J. Hixson (square brackets mine)

“Optimism bias refers to people’s tendency to believe that they are better than average, and that misfortunes are more likely to happen to other people rather than themselves. Buyers and sellers in zero-sum markets believe that they have the edge over the other party in the transaction; otherwise the market would not exist.”  - Dr. Woody Johnson

Your questions and opinions are highly welcome.

Thank you.

With best regards,

Azeez Mustapha

Forex Signals Strategist, Funds Manager &Coach

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NB: There is risk of loss in trading, but it is possible to be a successful trader.

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