AUDUSD, Daily Chart, 28/02/13 : Trade Setup

AUDUSD_DAILY_280213

Pair’s main trend which can clearly be seen on Monthly Chart, is UPWARDS, but on smaller time-frames pair seems to be moving in a Range and actually it does so in a whipsaw manner.  I like to trade on the DAILY Time-Frame because it cuts most of the noise off and gives me a better picture of a trade setup especially when it comes to calculating my Risk/Reward Ratio.  So here I noticed that pair was in a downward Corrective move which has just reversed and what made me believe so is the HAMMER Candlestick -marked in blue- which is validated by the Regular Bullish Divergence between the price action which goes to Lower Low and the Stochastics which go to Higher Low popping up from Oversold Zone (below 20).  My LONG ENTRY Point will either be @1.0245 or @ next candlestick’s open. My Stop-Loss a few pips below HAMMER’s tail @1.0175  and my Take-Profit can be placed at the Conservative point of  1.0598 in case price falls down and continues its Ranging Pattern. Odds are it may go up to  1.0621 or even continue way past that point reaching Fibonacci extension.  But I’d rather secure fewer profits, than lose my shirt 🙂  In this Trade Setup we risk 70pips and go -conservatively- for a profit of  353pips. That means our Risk/Reward Ratio is at 1:4 which is ABSOLUTELY SUPER for me!

USDCAD, Daily Chart, 270213 : Bearish Trade Setup

usdcad_daily_270213

Pair is on a Strong UPTREND on Monthly, Weekly and Daily Charts, but on the Daily Chart we just noticed a big Bearish Correction starting and it looks like it will pull the pair down to parity levels where there is STRONG SUPPORT and Fibonacci 61.8 confluence. We had a valid reversal Candlestick in the shape of Spinning-Top/Cross-Doji yesterday, which signaled a reversal confirmed today by a big Bearish Candlestick. If we are conservative, we’ll wait to enter SHORT at the open of the next candlestick. Otherwise, we can enter @1.0230 placing our STOP-LOSS a few pips above DOJI’s top @1.0307 (risking 77pips).  How big this Correction is going to be before the pair resumes its Bullish Course? Well, Stochastics show that pair is at OVERBOUGHT LEVELS and just formed a REGULAR BEARISH DIVERGENCE with price action because price moved to Higher High while Stochastics moved to Lower High. Therefore the move downwards will be strong enough to at least reach Fib 50.0 but Fib 61.8 looks more possible.  We can therefore place our TAKE-PROFIT/EXIT Point  @1.0003  going for a total profit of  227pips. Since we’re risking 77pips, our Risk/Reward Ratio is 1:3 which is fine.

EURJPY, Daily Chart , 22/02/13 @closing of trading week

eurjpy_daily_signal_220213

EURJPY is on an Uptrend but has just completed a Correctional Move down to the 50.0 Fibonacci Level and now it’s going to resume its Uptrend reaching at least the 127.69 price point where Correction started. So, we’ll place our Take-Profit Target @127.69 and will ENTER LONG @123.25 right at the OPEN of the next candlestick. The previous candlestick is a Spinning Top Bullish Reversal Candlestick when seen after a Downtrend as here.  We place our STOP-LOSS a few pips below Spinning-Top’s tail @122.00 which is a Strong Support Level. We get a Long Entry Confirmation by Stochastics which are at oversold level close to 20 and we also see a DIVERGENCE between price action forming a Lower Low and Stochastics forming a Higher Low. This is REGULAR BULLISH DIVERGENCE and gives a Strong BUY Signal. We’ll be risking 125pips for a profit potential of  444pips.  The Risk/Reward Ratio is  almost 1:4 which is fine.

GBPUSD, Daily Chart, 22/02/13 @ closing of trading week

GBPUSD_Daily_Signal_250213

Pair is on a strong Downtrend and now it’s Correction time 🙂 We just had a very reliable reversal Sign from HAMMER Candlestick formation. Hammer, when appears after a Downtrend, Confirmed with Stochastics or RSI being in Oversold Zone (below or around 20) is absolutely valid. Furthermore, we see here a BULLISH DIVERGENCE between Price (going to LL) and Stochastics (going to HL). So, judging from the Downtrend’s strength, we expect a retracementat at least reaching the 50.0 Fibonacci level. But we see that there is an even stronger Resistance Level just above it. So, that’s where we’ll place our TAKE-PROFIT Target (@1.5828) We enter LONG either at next Candlestick’s OPEN (@1.5247) or higher, depending on our Trading profile (aggressive/conservative), placing our STOP-LOSS a few pips below Hammer Candlestick’s tail which coincides with a very Strong Support for now (@1.5115). We’re risking 132-150 pips for a profit potential of 580pips. That represents a healthy 1:4 Risk/Reward Ratio which is more than fine. What’s even better is, that once we EXIT, we can patiently wait for our conditions to be met, to enter SHORT as the pair will start falling Downwards resuming its Main Trend.

EURUSD, Daily Chart, 22/02/13 closing of trading week : Trade Setup

EURUSD_Daily_Chart_Signal_250213

On the DAILY Chart of EURUSD, we see the conditions for a nice Trade Setup. Pair which is on an uptrend, has made a corrective retracement from 1.3700 level down below Fibonacci 61.8 level, touched 1.3140 and now it’s getting ready to RESUME its uptrend. How do we know? The level at which price has found balance (@1.3185) after making the downward spike, is a Strong Support Level, we see a Spinning-Top Candlestick which is a very strong Bullish Reversal Candlestick Formation when seen after a Downtrend. Our Confirmation comes from the fact that Stochastic Oscillator is at Oversold levels below 20 and in DIVERGENCE with Price Action. While price makes a Lower Low, Stochastic makes a Higher Low and this is called a BULLISH Divergence which gives us a Valid BUY Signal. When to ENTER? An aggressive Trader may enter LONG immediately at the opening of the next Candlestick. A less aggressive trader, will enter long ONLY if the next candlestick opens higher. The conservative trader will enter at the Close of the next Candlestick, if it is Higher. Where to place STOP-LOSS? A few pips BELOW Spinning-Top Candlestick’s tail at 1.3130 would be fine. So we’re risking 55-80 pips depending on our Trading Profile. Price has completed a corrective move and will resume upwards till it reaches 1.3700 again. So that will be our TAKE-PROFIT/Exit Point. With a PROFIT POTENTIAL of 500pips and a risk of 55-85pips, we’re having a RISK/REWARD Ratio of 1:10 which is excellent!