Question by salsa champ: What is happening to all the technical charts of FOREX?
Please give me a rough figure of what is happening to the US$ ? Why are all the technical charts predicting wrong signals?
Alvie both fundamental and technical factors are indicating one thing while the opposite is taking place. Please answer my question more briefly and directly if you may sir.
Just tell me what do you read your indicators as for the US$ coming week?
Best answer:
Answer by Alvie
There is no such thing as ‘wrong signals’ in technical charts. There is only wrong interpretation of technical charts.
Your mistakes in interpreting technical charts usually become obvious with time. Which isn’t of much help, as far as your trading goes.
Give your answer to this question below!
2 Responses
I think because of the delay.
* There are always two trends to consider – a major trend and a minor trend. The minor trend is a reversal of the major trend, which generally lasts for a short period of time.
* Buying above old tops and selling below old bottoms can be excellent entry levels; assuming the move is not overly mature and a nearby reaction unlikely.
* When a strong up move is occurring the market should make both higher tops and higher bottoms. The reverse is true for down moves- lower bottoms and lower tops.
* Reactions (minor reversals) are smaller when a strong move is occurring. As the reactions begin to increase that is a clear warning signal that the move is losing momentum. When the last reaction exceeds the prior reaction you can assume the trend has changed, at least temporarily.
* Higher bottoms always indicate strength, and an up move usually starts from the third or fourth higher bottom. Reverse this rule in a rising market; lower tops…
* You will always make the most money by following the major trend although to say you will never trade against the trend means that you will miss a lot of opportunities to make big profits. The rule is: When you are trading against the trend wait until you have a definite indication of a selling or buying point near the top or bottom, where you can place a close stop loss order (risk small amount of capital). The profit target can be a short-term gain to nearby resistance or more.
* Consider the normal or average daily range, average price change from open to high and average price change from open to low, in determining your intra-day price targets.
* Do not overlook the fact that it requires time for a market to get ready at the bottom before it advances and for selling pressure to work it’s way through at top before a decline. Smaller loses and sideways trading are a sign the trend may be waning in a downtrend. Smaller gains and sideways trading in an up trend.
* Fourth time at bottom or top is crucial; next phase of move will soon become clear… be ready.
* Oftentimes, when an important support or resistance level is broken a quick move occurs followed by a reaction back to or slightly above support or below resistance. This is a great opportunity to play the break on the “rebound”. Your stop can be super tight. For example, EURUSD important resistance 1.0840 is broken and a quick move to 1.0860, followed by a decline to 1.0835. Buy with a 1.0820 stop. The move back down is natural and takes nothing away from the importance of the breakout. However, EURUSD should not decline significantly below the breakout (breakout 1.0840; EURUSD should not go below 1.0825.
* After a prolonged up move when a top has been made there is usually a trading range, followed by a sharp decline. After that, a secondary reaction back near the old highs often occurs. This is because the market gets ahead of itself and a short squeeze occurs. Selling near the old top with a stop above the old top is the safest place to sell.
* The third lower top is also a great place to sell.
* The same is true in reverse for down moves.
* Be careful not to buy near top or sell near bottom within trading ranges. Wait for breakaway (huge profit potential) or play the range.
* Whether the market is very active or in a trading range, all indications are more accurate and trustworthier when the market is actively trading.
Posted on August 9th, 2011 at 6:31 pm
The US Non-Farms Payroll on Friday showed a higher than expected, but less than feared number of newly unemployed Americans. The 663,000 was more than the 650,000 that was expected and less than the 700,000 that was anticipated. For the American economy, this number was significant because it showed that the rate of unemployment was flat, not growing, which led many to believe that a bottom to the downturn is near. Coupled with better than expected data in housing and auto sales earlier in the week, and surprising earnings reports from some major companies, sentiment towards the US economy, and by default the dollar, was up.
At the close on Friday, the dollar closed up .1% to the Japanese Yen to 100.1 after hitting 100.37, a five month high. The dollar fell to the Euro slightly to close at 1.3483, up .21% to the Canadian Dollar to 1.2297 and up .04% to the Australian Dollar to .7151. The dollar also fell .2% to the Swiss Franc to 1.1297 and was unchanged versus the New Zealand Dollar to close at .5857.
Posted on August 9th, 2011 at 6:55 pm
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