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Forex Technical Analysis: Trading with Charts and Trends

Forex technical analysis is one of 2 ways to analyze Foreign exchange markets. It works by studying the movement of prices while the other method Fundamental analysis looks at external economic factors such as strength of national economy, political events and so forth. Studying price movement with Forex technical analysis. Studying price movement with Forex technical analysis involves charts. The theory that is that if you look at historical data of how prices have moved in the past you can identify tendencies and trends which will mean how you can predict how the prices will move in the future. As soon as you spot an emerging pattern that fits your system you have a trading opportunity. There are 3 types of Forex charts.
1. Line charts: These charts simply plot each closing price and join them with a line. The rise and fall of the line shows the general movement of currency pair however it does not show movements with in a trading period.
2. Bar charts: A Bar chart will show a series of vertical lines or bars. The top of the line represents the highest price during the timeperiod. The bottom of the line represents the low. A short horizontal bar on the left side indicates the opening price and the one on the right indicates the closing price. Bar charts are also called OHLC charts.
3. Candlestick charts: These charts show all of the same information as a bar chart but presented in a different way which most people find easier to read in a glance. Most people prefer candlestick charts over bar charts because they are easier to interpret. You can easily spot trend reversals. When you can see a trend forming you can make money by trading in the same direction as the emerging trend. Identifying the trend is the most important thing to learn in Forex technical analysis and using candlestick chart is the easiest way to do this.

Inverse Cup and Handle Pattern

The Inverse Cup and Handle is a bearish continuation pattern. It consists of inverse U shape price action as the cup and a small advance at support as handle. In a downtrend the price sets support and price goes in consolidation phase it retraces higher. When the prices fall down to test support set by first low it will rally higher because the people who had sold it at the first low will try to liquidate their positions as close to breakeven point as possible. We enter the market after the price has broken the support and the target is the height of the formation measured down from the breakout point.

AUD/USD — Daily Forecast Technical Analysis — October 30th 2014

In this video the Trader Guy looks at currency pair AUD/USD pair for the October 30th session.
AUD/USD — We had a wild session during the trading on Wednesday. We shot higher and then fell back down. Lot of this would be based upon Federal Reserve releasing more hawkish statement. This is a downtrend and there is no other way to look at it and I am not interested in buying this pair at this point of time. Looking at this daily chart we can make an argument for a little bit of a trend line and if we break below I feel then we go back towards 0.8600 level. That being said the 0.9000 level needs to be broken clearly in order to start buying this pair. Until that happens i really have no interest in doing so. Looking at the weekly chart everytime we rallied we failed. The current area looks supportive but the 0.8000 level looks much more significant in terms of support in longer term perspective. So I do think we will go there given enough time. Keep an eye on Gold though, if Gold drops below 1200 then quit frankly I am not going to wait for anything but to start selling on this pair.

EUR/USD — Daily Forecast Technical Analysis — October 30th 2014

In this video the Trader Guy looks at currency pair EUR/USD pair for the October 30th session.
EUR/USD — We had an interesting session here on Wednesday because the Federal reserve released its Interest rate and more importantly its statement and with that it was seen as a little bit more bullish than the market had expected. It will be interesting to see how we go going forward and certainly it favours US Dollar and certainly I believe that the European Central Bank is going to keep loose Monetary Policy. In the short term I look at 1.26 as the area that we need to deal with. The 1.26 level giving away with this market looking for 1.25 level where I would see more support. There are some things to pay attention to. We have advanced GDP, Unemployment Claims coming out of America. There is Germany Preliminary CPI could move the Euro. But I think its going to be more about the US data at this point. We have a bearish flag and the area between 1.28 to 1.30 level is massively resistance. So I like selling this pair. At this point of time I see this market as binary option almost. If we are below 1.26 level we sell and if we are above it i wait for signs of weakness in short term chart and then we sell it. I am not interested in buying this pair at this point of time.

Forex Trading — Fundamental Indicators

If you want to make money from Foreign exchange trading you will need to give some attention to your currency trading education. So what is is that at the root of all the swings, trends, downturns and upturns that Forex traders make money from. The answer is the Fundamental factors for the global economy such as Gross Domestic Product, Interest rate, Trade deficit. A news release about these factors can cause a sudden swing, a reversal or in some cases a major trend There are two ways that affects traders to use fundamental factors. The first is ofcourse to trade on the information that is given. Most private traders would not try to profit from these announcments but on the contrary would exit any open trades before an announcement was made to. Another way to profit from fundamental factors is to analyze the behaviour of currency prices historically and base a trade around that. Many Forex traders prefer to stay out of the market completely when major announcements and financial reports are made. This is certainly wise for beginners. So depending on your experience and interests, you want to get behind fundamental factors to try to profit from them or be sure to close your trades. The internet is the best medium for finding out about international economic announcements. Many brokers provide this information. It is the important part of your currency trading education.

Cup and Handle Formation Pattern

Cup and Handle formation pattern is a bullish continuation pattern. It has gotten its name after resemblance to a tea cup. It consists of U shape price action as the cup and a sharp decline at resistance as the handle. As you can see in an uptrend prices set a resistance. As the price goes into consolidation phase, price retraces lower. When the price goes up to test the resistance set by previous high we have a sharp decline, because people who bought it at the first peak will try to liquidate their positions as close to the breakeven point as possible as possible. We enter the market after the price has broken the resistance and target is the height of the formation measured up from the breakout point.

USD/JPY — Daily Forecast Technical Analysis — October 29th 2014

In this video the Trader Guy looks at currency pair USD/JPY pair for the October 29th session.
USD/JPY — What is going to be interesting about this particular session is that we have Interest rate decision coming out from Federal Reserve. What we will be paying attention to is the wording of the statement. If it appears under any circumstance whatsoever that the Federal reserve looks like it is going to be hawkish at this point then more than likely we would anticipate that the market should continue to go higher in favour of US Dollar overall. This is the pair that has been rather bullish for the US Dollar for sometime and still we have a target of 110.00. Really short term pullbacks, knee jerk reactions would be great to get because it is only going to represent value in the US Dollar. The Bank of Japan regardless of what the Fed says today, Bank of Japan is much easier with its Monetary Policy and I can pretty much guarantee that. 107.50 will be a bit of springboard as well and 110.00 is the target for now. I still believe that we will reach 115.00 given enough time. We need to break below 105.00 before we can think about selling this pair. I am very bullish of this pair and Japanese Yen continues to get pummeled in my opinion and I am willing to take advantage of any value that shows up.

EUR/USD — Daily Forecast Technical Analysis — October 29th 2014

In this video the Trader Guy looks at currency pair EUR/USD pair for the October 29th session.
EUR/USD — This is going to be one of the most interesting pair of the session as we have the Federal Reserve Interest rate announcement coming out late in the US trading day. I think we probably will have a fairly quiet day up until that point but if you have been watching my videos you know I see the area between 1.28 level and 1.30 level as massively resistance zone. Having said that there is also a possibility that we are forming a bearish flag in the daily chart. Looking at the longer term charts I think we are going to 1.2050 level. So the fact that the statement comes out later today and let us face it the Interest rate decision is going to change anything but the statement made hawkish at all the area above could push the price back down to 1.25 level and eventually will break down. I don’t have any interest in buying this pair until we break above 1.30 level. Looking at the 4 hour and daily chart we have started to drop a little bit ater this rise. I would anticipate a little bit of reaction close to 1.28 level to start selling.

Box Range

A Box range is a neutral chart pattern. It forms after a long period of indecision in the market and defined by strong parallel support and resistance lines. As price bounces through support and resistance lines for several times it is unable to breakout in either direction. There are two ways to trade this. You can actually trade the range. When price is at support you buy with stop below support and target at resistance. When price reaches resistance you sell with stop above and target at support. Second way is to trade the breakout of the range. As this is a neutral pattern breakout can happen on either side. When the price breaks out you enter the market with target as height of the box range measured from the breakout point.

Daily Forex Currency Trading News— 28th October 2014

The Wall Street finished the day almost unchanged with better than expected earnings report combined with Ebola crisis pushing investors out of Financial markets. The S&P 500 fell by 0.15%, NASDAQ gained by 0.05% and Dow added 0.07% from its value. The US Dollar fell against its majors as negative Macroeconomic data increased optimism when early US Rate hike. The Pending Home Sales came out worse than expected at 0.30% vs. 1.10% pushed investors out of the safe haven greenback. Today the Core Durable Goods Orders are expected at 0.50% vs. 0.40% previoiusly and CB Consumer Confidence is expected at 87.4 trillion vs. 86. Gold gained by 0.09% to close at $1,229 an ounce. Crude oil fell by 1.32% to close at $81.01 a barrel.
The Euro gained versus dollar despite worse than expected Macro economic data from Europe. The EUR/USD is expected to start falling towards 1.2678. Breaching the resistnace level of 1.2730 could lead the pair to next resistance of 1.2790.
The Cable rose versus US Dollar after CBI Realized Sales came out better than expected at 31 vs. 29. The Cable is set to remain bullish as long as the pair maintains its support level of 1.6110.
The Japanese Yen finished unchanged versus US Dollar on low volatility during the Monday session. The Retail Sales came out better than expected at 2.30 vs. 0.90%. The USD/JPY has touched the 50% Fib level which signals a return to strong bullish momentum.

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