Let the money talk…don’t front run

Η “Αχίλλειος πτέρνα” του Χ.Α.Α
September 30, 2016
Διαγράμματα και patterns
October 2, 2016

Many forex pairs have been trading in trading ranges for some time now as there is no clear trend in the market. The pairs I will show you in a while have been trading sideways or in triangle formations which can at first be frustrating but if you pause and think clearly, we should be grateful for such price patterns as they will provide a clear signal for the trend that will follow. So traders might of course trade shorter term trends but the big trend that will give a great Risk-reward opportunity will soon come with the break out. So traders need to be patient.

USDCAD

I’ve been following this pair quite closely and was on the bullish camp for a bounce towards 1.33-1.36 to complete the retracement of the decline from 1.47 to 1.2450. Price has been forming a triangle pattern with many opportunities to break above it but with also many fake breakouts. Bearish divergence signals have provided me with sell opportunities and the recent rally in Oil has helped push this pair towards 1.3060 where I closed short positions.

usdcad

Apart from the fake breakouts above 1.3250 one other reason that makes me skeptical on whether we can see a new up trend towards 1.36 is the fact that we are below the weekly Ichimoku cloud. Despite the above bearish sign, traders should continue to be patient for a break out above 1.3280 on a weekly basis to be more confident for a move towards 1.36. Otherwise we should expect a move back towards the lower triangle boundary and why not a break down towards 1.20-1.15 if the lower triangle boundary is broken.

usdcad2

GBPUSD

After the BRexit vote and the sharp decline from 1.50 to 1.28 price has mainly moved sideways.

gbpusd3

We are currently at the lower boundary of the trading range and a break below 1.29 will be a bearish signal. However we should not ignore the bullish potential if we do not eventually break down.

gbpusd1

A break above the short-term trend line resistance and Ichimoku cloud at 1.31 will be a bullish reversal signal that could push the pair back to 1.35. Even 1.40-1.42 could be achieved if we break above 1.35 which is the upper trading range boundary.

gbpusd2

The last pair I’m focusing on is the AUDUSD. In the first short-term chart we see the rejection at the upper triangle boundary and the pull back. In the 2nd chart you can see the bigger picture. Again recognizing risk on different time frames shorter-term traders  can take advantage of the trading range but at the same time they will have to be aware of the potential of a break out.

audusd2
audusd

Although I trade these pairs on a short-term basis my main focus is on their longer-term price patterns as I believe we will see a breakout and a new trend until the end of the year that could run for several months.

Thank you for taking the time to catch up on my thinking.

Alexandros Yfantis
Alexandros Yfantis
Fascinated by financial markets, studied International Securities Investment and Banking in the UK, works as a Portfolio Manager in Greece and runs a technical analysis website. Enjoys travelling and spending time with his family and preparing for the black belt in Korean Karate.