WILL THE CANADIAN DOLLAR  WEAKEN AS WE HEAD TOWARDS 2018? 

More Oil & Gas companies are listed on Toronto Stock Exchange (TSX) and TSX Venture Exchange than any other exchange in the world. Therefore to Track the long-term performance of the Canadian Dollar which is largely driven by Global Energy prices , I closely follow the price Action of these Companies using the S&P Toronto Stock Exchange(TSX) Equal Weight Oil and Gas Index which has an over 95% inverse correlation with the USDCAD . 

As the INDEX  formed a 12wk Head and Shoulder Top, the USDCAD curved out a Bottom Head and Shoulder and successfully broke out of it. Currently the USDCAD has formed a possible continuation Bullish Rectangle Chart pattern and price might continue to Surge if Oil and Gas stocks respect the 3yr primary down-trend by Resolving  the  12wk Head and Shoulder Top.  

EURUSD, DAILY TECHNICAL ANALYSIS

MAJOR DAILY SUPPORT AND RESISTANCE ZONES

The Fiber price has been moving in a bearish channel for the past 2.5 months after hitting a major monthly resistance R around 1.20900. The channel is marked by the red trendlines.

Last week, We had a large bullish break out out of the channel resistance. Large candle breakouts are usually indicate exhaustion  and that's why a retest of the trendline happening now was highly possible before any continuation to the upside. 

Currently, price is back to trendline support zone. Daily candle close below trendline may lead price back into t support zone which also happens to be the 21 Simple Moving Average zone. 

If we get a great price action bullish pattern on the trendline zone , the first immediate resistance will be r before we can any further upside movement.

Daily candle close above r may give price momentum back to the major monthly resistance R. Candle close below t may lead price back into major support zone S. For now, keeping trading on the lower timeframes within r and t zone.

Comments below; What do you think of these zones (r,t,R and S)?

USDJPY-Long term. A multi-year H&S and a Symmetrical Triangle at the Right Shoulder. Keeping an eye on those critical Resistance zones  

SILVER (Ag)

 WEEKLY PRICE ACTION ANALYSIS

In one of previous articles, we discussed why the crypto boom is likely to bring back investors to the centuries safe havens i;e Silver and Gold. We also talked about why silver is likely to be a better investment than Gold. If you missed the article, you can get it here

So now lets look more into the price action on the silver weekly chart.

WEEKLY CHART

Price on the weekly chart is into congestion triangle showed by red trendlines A and B. The large monthly chart is into a large support which explains the large congestions on the weekly chart.

Silver price is coming towards end of triangle without breakout, so may see immediate levels of support X around 15.600 and resistance Y around 19.000 , hold before momentum can build to hit the ultimate levels S and R respectively.

For now keep the trading within the triangle congestion.

Weekly candle close above A may lead price into Immediate resistance Y and depending on the reaction on the Y zone we may see price push to large resistance marked  R around the 20.000 zone.

Weekly candle close below B may lead price into immediate support X and depending on the X zone reaction, price could retest lows at 14.600 zone  marked S

The large monthly chart already shows some bullish bias, so preferably price has to stay above support trendline B to maintain the bullish bias. If the upward bias is maintained and we get prices hitting resistance R, a monthly candle close above the zone R may give a long term monthly swing on the upside.

We still in congestion now, so we will wait for price action on the major marked support and resistance levels.

GOLD, PRICE ACTION ANALYSIS

WEEKLY CHART

The price is back into congestion zone after a false break out at close of weekly candle(blue marking) on 1st Sept. Currently what we see is price into support zone but no major reaction for bounce up. Price is into the 21 Simple moving Average (SMA) zone, great horizontal support around 1266 zone marked with a blue line

The momentum on the downside is still quite strong, so it can make some lower lows aiming for the previous red trendline support marked T

If in short trade, you could take out some of your profits as we wait for reaction in this large support zone (21 SMA, horizontal and trendline support).

SO WHATS NEXT?

Depending on the price reaction on the current support zone, there are two major zones that could determine larger movement up or down. These levels are support trendline T and horizontal resistance zone marked with red line R.

Close below T could lead price to retest previous lows of the congestion around 1212.885 support zone marked S. Preferably if there is a small congestion on the current support zone to give momentum for price to fall through to S. But if current price just falls through beyond T with no pause, it will have a hard time falling into S, we may see immediate support zones in this case hold.

Close above resistance R ,could give  a true breakout that could push prices up. Previous highs would of course be the immediate resistance zone around 1345 marked Z

WHAT NEXT FOR GBPUSD AFTER OUR TARGET

In our previous article, we discussed the sell entries and targets. We have seen a swift follow through as price hit our our ultimate target.  Congratulations to those who followed up the setup.

So now lets discuss the current price action on the daily and 4 hour time frame.

DAILY CHART

Comparing the current swing with previous major average swings on the daily chart above, before price would have a corrective move, the daily major swing is almost completed. 

The downside momentum is still strong so despite the major swing being almost completed, we have no sign of any reversal. If you put a 21 SMA on your weekly chart,  you will notice that  the weekly price is in the SMA zone support which is also likely to halt the price. 

The daily price is sliding along trendline T and also into major support zone but since the momentum on the downside is still quite strong so we may see price go for lower lows. 

1.27610 support zone marked V is likely to be the immediate target if price closes below T. Price may fall to 1.26365 support zone marked Y if the momentum stays as strong before we see a significant correction .

4-HOUR

The 4 hour chart like we discussed in our previous article, we use it for entries.

The price is also sliding along trendline support T as shown in the above chart.  Close below the small H4  Pink trendline support, may run into support zone marked V as we discussed above.

GOLD (XAUUSD) INTRADAY ANALYSIS

4-HOUR TECHNICAL ANALYSIS

Gold has run into a channel as it hits the large daily resistance. The channel can be clearly viewed on the 4-hour chart below.  In our previous analysis, we discussed the V pattern movement on gold. if you didnt follow it up, you can check it here. V patterns are common congestion price movements especially as price lands into major support/resistance zones

Price in the channel is moving in clear V patterns so the most likely neXt move is a more push to the downside to test the lower level channel trendline B. The price on the 4-hour chart is now mid channel being held by the 21 Simple moving Average support.  Candle close below SMA may land into that small blue trendline support marked T. Close below T may give us the ultimate push through to retest B trendline support.

If price breaks the channel on the downside, and we may be just a retest of the lower channel without price beating the the highlighted high, which is mostly likely to be on the daily 21 SMA. aIf that happens, we may have a larger daily correction.

 But for now, lets keep it within the channel as we await the price action

BANKS SHOULD REALLY BE SCARED: ITS ADAPT OR DIE

I tend to think large bodies just like highly learned folks forget the basics. And the basic truth is that the power is with the people. What people have accepted and what works with ease is the deal. 

The future of fiat money has always been at stake but this time the danger is largely pronounced. We have seen technology disrupt many sectors. 

I could ask you a simple question: When did you last write a post letter? or when did you last receive one? I could guess its a long time ago unable to remember. Facebook and whatsapp are just at your fingertips. You no more need to stain your favourite shirt with ink or deal with unbearable post men. 

So.Whether you like it or not, Crypto-technology is here and people are embracing it. And it is the future of money. Alot of hedging has already done in the cryptos. This simply means the traditional banking systems need to be creative and adapt. 

Ofcourse, this also means we will see more cryptocurrencies coming up. Forexample, Recently Dubai was talking about lauching their own cryptocurrency. Bitcoin will have more strong competitors. There may be no coin that may beat the bitcoin price, but we will have coins with stronger intrinsic value. Its quite hard to tell which coin will be strongest in a decade to come. 

But all in all cryptotechnology is the future of the money. 

SO WHAT WILL HAPPEN WHEN WE HAVE A CRYPTO SATURATION 

You could guess that, More Investors will run back to precious metals (gold and Silver) to hedge their money. And this is going to happen sooner. 

Personally i would pick more silver than gold. SIlver is more consumed in industries so chances of reduction in reserves greater than Gold and therefore probability of doubling in value are much higher. 

Let me share the gold silver charts below. Will try to explain in a lay mans language, nothing very technical. 

The arrows on the chart show highest high and the lowest since 2011 and 2015 respectively. Both had all time highs in 2011. Gold's alltime highest is $1920.80 per ounce in Sept 2011 and Silver's highest was $49.81 per ounce in April 2011. As i write this now, Silver is at $16.65 an ounce which is around $545 a kilo and Gold is at $1270.10 an ounce.

When investors get more fearful in the cryptos and in major economies, the precious metals will become a preferance. If both Gold and Silver go back to all time highs, investors in Silver will have made more money than Gold hoarders because the price will have doubled more than thrice ( ie $16.65 to $49.81). A simple reason to pick more silver now. 

In conclusion, as time moves on, cryptocurrencies will be the new money worldwide with gold and silver being the hedge to all risks. 

MARKET PATTERNS TO BE AWARE OF ESPECIALLY WHEN ON THE SIDE OF THE MARKET.

GBPUSD SHORT FOLLOWUP WITH TRAILING STOP AND NEW ENTRIES

Every trader has what they call their 'bread and butter' setups. Setups with the highest probability. I specifically trade the 'shock wave pattern', a pattern i will publish soon to avail it to all aggressive traders interested. But when i find my shock wave pattern within the Wolfe wave, it one of my 'bread and butter setups'. Just like the example i shared on my facebook page last year

AnYway, lets get to the main topic now. A wolfe wave is a strong reversal pattern but it can also be a great continuation pattern if it is formed in the corrective move. It is one of those patterns you have to be careful with when it forms especially when you are on the other side of the market. 

Well, it can also be a pattern that you may add to your trading arsenal.  Just like the shock wave, there is strong mass psychology in the wave that makes it one of my favorites. You clearly see  and feel a shift in the sentiment from buyers to sellers and vice versa.  

For those of you who dont know how a typical Wolfe wave looks like: This is how it looks like 

Below are a few examples of the wolfe wave in the market TODAY. Just like many other patterns, it appears on any financial instruments and any time frame.

 Example 1: EURUSD, 1 minute chart

Example 2: GBPJPY, 15 minute chart


This article was triggered by a lot of bulls who were trapped on the GBPUSD last week. The price had rallied up quite well in the previous days until we saw a wolfe wave being confirmed and triggered heavy selling since last Thursday. Ok, Lets look at that more in detail below:

DAILY CHART

The daily price chart shows a nice wolfe formation . And then a great bearish candle that confirmed the sell entry which was a bright red light to the buyers. We are not yet to the target zone, i do think there is more chance for downside despite Trump's 'fire and fury'. 

There is US Produce Price Index (PPI) news coming up at 12:30 GMT. If turns out higher than expected, we may have a swift flow to the down side. 

New entries and trailing stop on the 4- hour time frame.

4-HOUR CHART

The 4-hour time frame shows a small congestion held by the blue trendline. Close below the trendline will give the next sell. If you are selling short term, the first target can be around 1.29304 marked by the red horizontal line X.  

If the momentum stays strong, then  we can take a deeper level support zone around 1.28237 marked S which is my ultimate target. If it confirms as above Stop loss can be place at 1.30300 marked B. 

If you you were already in the short like me here with 90 pips with Sl trailed to 1.30609, you may further move your stop to 1.30300 too after confirmation.

BUT in case the PPI news are released and they not good for the USD, Keep the SL on 1.30609 (price where my trailing SL is now), until price hits X. This is to protect you from the whipsaws caused by news volatility.

When price hits X, you may safely move your stop to 1.30300

HOW TO SET RULES FOR PROFITABLE FOREX AND STOCK TRADING

I have always said and will say it again; Trading is about following your rules, everything else is amateur behaviour. This is part of what i train in trader enhancement.

Your rules should protect you from chasing the market ie early or late entries, protect you from over trading and over risking and keep you calm. In a nutshell, Only your rules put odds on your side.

Guess what, trading with no rules is like jumping into a river infested with crocodiles unable to swim and hoping and praying you will get out alive. Well, you may once survive miraculously, but soon the crocodiles' prayers will also be answered and they will have a tasty meal.

Our overall main objective is to become better traders every single week and make money monthly. One of the sure gauging ways is in our discipline and patience i.e the ability to follow our trading rules. Only and only then can we get a growing positive equity curve

Your rules should be as simple and precise as possible. No room for second guessing yourself or your system. So, lets use one of my trading systems: Shock wave trading system, as an example to show and explain how a simple rules check list should look like.

Shock wave trading system checklist

This checklist is the summary of the shock wave trading rules. Of course you can grow the table to fit the trades you take in a week.

So here is the thing, Summarise your trading system into a simple checklist just like one above. One that even a 5 year old can just check through.Very short and precise to help check your discipline and keep you on track weekly.

Let us look at a few rules in detail;

Just as i mentioned before, your rules should protect your acc and also be able to grow it consistently. In the shock wave system above, Maximum risk is 2%, assuming above acc is $1000, maximum risk on any trade is $20 and since minimum risk reward is 1:2, then minimum profit of any trade on the above acc would be $40. You can adjust the figures to match your account size.

 123.., represents the trades taken on a particular day, so every trade, check to see if you followed all the rules.

The entry rule is clear and emphasized with the word 'ONLY'. This is to protect you from entering too early or too late. Trade what you see not what you are thinking.

Stop Loss (SL) must be objective and technical. Shock wave is momentum strategy and its SL is on the previous congestion high(short)/low(buy). All am saying, is you must have a level where the market invalidates your trade and close out your position with your specified dollar risk.

Rules are there to enforce positive habits required for peak performance as trader. Forexample, journaling every trade is must rule and should be done immediately. Keeping records is one of least attended to yet one most important habits for profitable trading. Therefore making it a rule with help you grow it as a habit. The successful trader you want to become is engraved in your ability to set and religiously follow trading rules.

Its normal not be able to follow the rules all at once in the start weeks but with conscious deliberate effort, the boxes will all be checked right.

Aha, So what do you do every week?

• ·  Thank yourself first for the rules you have so far managed to follow consistently.
• ·   Check the rules where you are inconsistent.
• ·  Pick a rule among the inconsistent ones that you will must follow deliberately the next week until you have managed to follow all the rules.

It can take about 20 to 90 days of trading to be consistent depending on your level of commitment

The main aim of this trader enhancement series, Is to make our trading rules a part of us, just like driving or cooking.

The competition in the market arena is fierce, your only competitive edge are your rules.

Happy trading!

EURJPY WEEKLY TECHNICAL ANALYSIS

MULTI-TIME FRAME ANALYSIS

From our previous analysis here, we can see price ran up as anticipated. Currently price is into the resistance zone and we can clearly see a shift in momentum on the daily chart as it tries to reach for higher highs. The momentum shift can clearly be seen in the channel on the 4- hour time frame as we will see later.

DAILY

The daily price is in small channel, break and close above the channel is likely to land price into an immediate strong resistance zone around 133.600. Daily candle close below the channel may lead price to retest the recent lows around 128.500. Preferably the candle should close below that 21 Simple Moving Average to confirm the recent lows retest.

4-HOUR

The price is into the channel marked by blue trendlines as shown below.  Wait confirmation of candle close above the mid channel trendline to complete the swing to upper end or else it could fail and fall back and gets you trapped. Keep day trading on the lower time frames WITHIN the channel as we wait for a daily candle confirmation for a swing trade move.

GOLD, WEEKLY 

TECHNICAL ANALYSIS

SUPPORT AND RESISTANCE LEVELS

From our previous daily gold analysis here, the price movement was technically beautiful. Being a 4th touch on the daily trendline in our previous article, the trendline break was likely as it fell into the weekly support channel.

Currently we can see a clear congestion zone on the weekly chart, held by horizontal lines R and S. The momentum in the channel is still strong either way, meaning that keeping the trading within the congestion zone now is most logical. 

Whats within the congestion?

Break of that blue trendline to retest the lower weekly support showed some bearish bias. This bias can only be maintained if the price fails to close above the blue horizontal resistance around 1264.8 and falls back strongly back to S or otherwise we will still see indecision. But the momentum too of the bounce off S for the last 2 weeks doesnt agree so much to above statement, it still shows chances of going higher to retest R getting back to the indecision mode.

After congestion...

Depending on the reaction and momentum in the R and S zones holding the congestion, weekly candle close above R may lead to retest of the larger resistance zone marked R1 around 1375.00 which corresponds to the larger monthly congestion resistance.  

Weekly candle close below S may lead to retest of the previous lows support zone around 1129.00 marked S1

GBPNZD DAILY

SUPPORT AND RESISTANCE

TECHNICAL ANALYSIS

The price is now into a congestion held horizontal support S and red trendline R. 

Close below S may lead to first test of major support trendline T before it can fall  S1 support zone around 1.72571. Close below S1 zone may to retest of previous lows suppot zone marked S2. 

On the other hand, Close above R can lead to test of first major daily resistance around 1.82314 marked R1. Close above R1 zone may lead to retest of the previous high zones around 1.85891 marked R2

NB: On each zone, price has been pausing for a minimum of 5 days before it breaks to new levels. Keep that in mind to avoid false break outs and early/late entries

Is a Robust Position sizing Model achievable and will it prevent us from being stopped out by whipsaws?

For the past few days that I haven't been actively trading or probing charts, my belief about position sizing has been completely shattered. All along, my position sizing model has been based on rigid rules that gave me the illusion of being in control yet I was not. It is quite surprising when all of a sudden you realize that you have unknowingly been deceiving yourself by thinking that you are all about the process of trading and not the money making aspect of it only to find out that some aspects when it comes to not being too concerned about the P&L, have gradually been achieved but not all. my recent discovery has made me introspect further and therefore cast more doubt in my mind. a mind full of thoughts which are merely deceptive illusions and nothing more. What a terrible derangement!

Position sizing to a beginner, (I can't talk about pros since I haven't interrogated them on position sizing ) is all about ensuring that your risk amount is in accordance with the percentage amount of Capital that one wants to allocate to a single trade, whether it's a buy or a sell. No folks, position sizing shouldn't be exclusively about the money. In fact when position sizing I would prefer a model that does not make money the first priority. I shall explain why.

To me a good position sizing model and a possibly robust one for that matter, (it has to be aggressively tested in order to conclusively determine it's robustness. But for now, I would suggest that a system's expectancy is a good indicator of the model's robustness ) should fundamentally assess risk from a psychological point of view. And by psychological I mean market psychology (primarily greed and fear) premised on one's Technical analysis method and market sentiment. in short, one ought to first ask themselves; at what point will the market prove that my hypothesis is wrong? But this is often not the case, we Amatures size our positions from an emotional point of view. we assess risk as a form of pain threshold. 

We ask ourselves how much pain do I have to endure (moneywise) before my stop loss is hit? and further delude ourselves by thinking,"...well, as long as my loss is within my  accepted margin (whether as a percentage or Cash), it's okay" I have news for you: YOU ARE NOT FOCUSSING ON THE TRADING PROCESS  fellow Amateur, so your emotions, and in this instance pain, weakens the percentage of objectivity in your technical analysis method (yes technical analysis is not 100% objective. No form of analysis is thus far). Pain is an emotion. Unknowingly, you have just mixed your trading with an emotion but deceiving your mind that you are in full control of your bottom line! hence setting yourself to fail in the long-run.  I can confidently assume that it is impossible to become a successful trader if one has not managed to control his or her emotions (I can only assume because I don't know every successful trader out there maybe there are some who are uncontrollably emotional in their trading and are successful ).

I am not a risk analyst, neither am I a pro trader but I  find this paragraph in Taleb's book Fooled by Randomness: The Hidden Role of Chance in Life and in the Markets vindicating my opinion on position sizing as a tool for determining risk;

"... it is a fact that that our brain tends to go for superficial clues when it comes to risk and probability, these clues being largely determined by what emotions they elicit or the ease with which they come to mind. In addition to such problems with the perception of risk, it is also a scientific fact, and a shocking one, that both risk detection and risk avoidance are not mediated in the 'thinking part' of the Brain but largely in the emotional one (the 'risk as feelings' theory). The consequences are not trivial: it means that rational thinking has little, very little, to do with risk avoidance. Much of what rational thinking seems to do is to rationalize one's actions by fitting some logic to them..." (The mental delusions we found ourselves in when we justify our positions sizing model that has totally been anchored on emotion).

To me a good position sizing model should be able to combine Probability and Risk. I say probability because the market is inherently uncertain and therefore prone to improbable price movements hence triggering the question; At what point will the market invalidate my analysis? and Risk coz with Risk we can calculate the odds of winning or losing (remember Mark Douglas's self-evident lesson: There is a random distribution between wins and losses, all you have to do is to play the odds in your favor by having an edge? If you have not read Mark Douglas's work and fully grasped concepts therein, stop that nonsense you are participating in called 'learning a strategy or system').

If you actively trade, you have experienced situations in which your perfect 2% rule following stop loss has been hit only for the market to later turn around (and often aggressively) and play out as you had anticipated in your analysis, but by then it is too late and if you are not careful you end up chasing price and getting burned.

Therefore, a  robust position sizing model should dictate where you put stops and the model should be based on analysis that answers the fundamental question; at what point will the market prove my analysis is wrong?. The next challenge is to merge this approach with the concept of risk to reward ratio. Interesting.

How I will Trade this week's volatility. My GOLD, AUD, USD, EUR and GBP intraday plays

Gold began a parabolic decline in October 2016 but bounced back late in the same year leading to a parabolic rally for the Two Quarters of 2017 ending last week. One can safely say that this rally has been a Powerful pullback that blew up major ceilings(38% and 50% Fib levels ) and now Gold is at a critical point. why critical? if you plot the Fibonacci tool  the rally that begun in early 2017, price is now resting at the 38% level. This cluster (of a level  that was  previously a fib support now turned resistance and the 38% support level) forms a very strong floor and to add more concrete to it, currently the 200 day moving average acts as support too. That said, the rally has really propped up the Aussie for the last 2 quarters This Technical uptrend has also been supported by good data coming out of Australia (Latest GDP data -Dec Qtr 2016 to Mar Qtr 2017 up to 0.3% from a previous 0.2%), precipitated a booming mining sector and China. But despite the impeccable performance of the Aussie and the Australian Economy in general  the RBA has seen no need to hike interest Rates since inflation is well within its targeted levels (2.5%-3.5%). The market also does not expect it to do so tomorrow. But we'll find out.

Despite the interest rate hikes by the FED that have tried to at least prop up the US10yr bond yield but not yet trading above the 200day MA, the Dollar has been depreciating. Seems to me that few investors have appetite for the bond yields and preferring to invest in US Equities which have been performing quite well as per the S&P 500. Adding onto this, the recent hawkish comments by key ECB Officials doesn't make things better for the dollar because investors will further be attracted to the high yielding European Bonds.

*Kindly read the rules at the end of this post before proceeding 

GLD- I'll be looking to go long after a confirmed break of resistance at  1260.00 on a 4hr setup , above both the 200MA and 100MA. In my rule book, I look for trends that are above these MA's  on the the long term chart and the Short term Timeframes as a confirmation of the trend and also as a way of finding a reasonable price to place my stop loss. Preferably below one MA or both.

4hrAUDUSD- the parabolic rally seems to be pulling back as we head toward s NY open. I will watching key support levels in anticipation of tomorrow’s economic releases and after the releases in order to find good risk reward levels. watch for breakouts after the releases and the support levels. bad data might further drive the pair down but if support at 0.7602 if broken and the break confirmed my short-term bias will change. 

 

4hr EURUSD the pair is currently pulling back. Also, be on the lookout for those support levels and resistance level breakouts after the barrage of US Data is released. A confirmed breakdown below 1.1200 invalidates my short-term bias.

 4hr USDX(Dollar Index). will upcoming Data give us pullbacks or will they change the short-term trend. I will be keeping an eye on the resistance levels, confirmed Breakouts above the 200ma will invalidate my short-term bias.

4hrGBPUSD the pound is pulling back after the parabolic rallies last week. The BOE governor has a lot of speaking engagements this week. The pair might react because this since traders are anticipating on how hawkish he'll be regarding a rate hike given that UK's inflation data has so far made a case for a hike. Good data from the US might  precipitate nice  pullbacks. For now, looks like the bullish pennant has failed and we might see a further pullback .

 

4hrGBPJPY- expecting a good pull back here for a long setup. breakout below 144.36 will change my bias.

1hrGBPCHF- This pair has a good risk reward setup as I write this. A confirmed break  of 1.2477 should justify a long.

 

 P.s

Kindly take notice of this Blog's Disclaimer.

-Thick horizontal Lines represent weekly Resisitance,Extra thick-Monthly and Thin, the Daily 

- Anticipated Trades are in the direction of the short-term and long-term Trend

- Trades are taken In accordance with the order of the two moving averages.If price falls between the two Moving Averages setups become invalid