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Regular Divergence

November 21st, 2007 @ 1:47 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on November 20, 2007.

Today’s Summary, by Sunil Mangwani:

Its not necessarily every day that we get into a trade, nor do we need to enter a trade every day. We also have our share of losses. But for us, as long as we don’t have any formed confirmations based on technicals, we don’t enter into at trade. We spend the entire day here in the Live Trading Room analyzing the trades and different currencies using different tools to determine which phase of the price movement we are in.

Case in point, EUR/USD – for a couple of days now we have been looking for a Triangle Formation breakout on the H4 charts. We can see that the breakout took place to the upside – but the most important part, more so than the trade itself, is that we – and our members – are prepared. No matter which direction the breakout takes place in, we are ready with fixed targets, based on certain principles of Fibonacci Expansions which we use for targeting our Triangle setups. Read the rest of this entry »

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November 8th, 2007 @ 2:01 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on November 7, 2007.

Today’s Summary, by Sunil Mangwani:

Out of intraday trade setups today, we traded just one. The Yen pairs were going crazy in the Asian session, and have been dropping like a stone. We managed to catch the GBP/JPY – and did not anticipate such a large move.

The Divergence was certainly there – a Bearish Divergence. We entered our Short trade based on our Fibonacci Fan levels, and price went far beyond the expected target levels. We did not ride the price all the way down, however. This trade was a good example in the room of the effectiveness of Fibonacci Fans in general, and how to use them. Read the rest of this entry »

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November 1st, 2007 @ 12:48 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 30, 2007.

Today’s Summary, by Sunil Mangwani:

There were a couple of intraday trades today, which we will go over before following up on the long term trades which we are into up to now.

On the GBP/CHF  we identified a Bearish Divergence, which contributed to a Short trade, as pointed out by one of our members. The price made higher highs, stochastics made lower highs, and the lower high on the stochastic was quite below the overbought level of 80. This means the momentum has been decreasing in this rally of price which gave us the second high. This signifies a change of trend. This was a nice divergence, and we went in according to our divergence trading rules.

We plotted our Fibonacci Fans, and also used other fib projections to get our targets for a technically correct and profitable trade. Read the rest of this entry »

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October 29th, 2007 @ 11:28 pm by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 29, 2007.

Today’s Summary, by Sunil Mangwani:

Mondays usually are slow days and we wait for the technicals to settle down before we think of following up with the last week’s trades or looking at intraday. But on Mondays we do look forward, as we get the technical setups for Gap Trading.

The gaps are not present on forex as much as other markets, as it is a continuous market, but on Mondays the market can open with a gap, and currencies will give you excellent setups. Gap trading techniques are very effective. Lets have a look at one of the currencies which gave us an excellent one today.

The NZD/USD gave us a gap, though not a very large one – usually the larger the gap, the larger the move. We wait for the market to come back down to fill the gap, and went in Short upon a Bearish Divergence, expecting the price to fill the gap, which it did. The gap turns into a kind of channel, and price found support at this level. A nice Short trade on the NZD/USD, without all that much effort, which is the main advantage of gap trading. Read the rest of this entry »

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October 26th, 2007 @ 1:51 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 25, 2007.

Today’s Summary, by Sunil Mangwani:

Lets start with one of the trades we were following since yesterday’s recap – the GBP/CHF on 30 min timeframe. The trigger was a Bearish Divergence. Price made higher highs, while stochastics were giving lower highs. We consider this an aggressive “Class A” divergence. The entry for this trade was determined by certain Fibonacci Retracements, and price did go down beyond our target of 2.3940.

We also use the Andrew’s Pitchfork in different ways to confirm the entry. In this case, the price broke through the midline of the APF, and came back to retest it as a resistance. This is another strong confirmation that a downtrend is in progress. In our room we do like to twist around the technical tools available to give us better results.

Lets go over an intraday trade we ended up taking today. The GBP/JPY, one of the most popular pairs in our room, had a Long trade, though the extent was not too large. As I always say, its the technique and methodology which is always more important than the result. Read the rest of this entry »

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October 25th, 2007 @ 1:32 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 24, 2007.

Today’s Summary, by Sunil Mangwani:

As I always say, its the procedures and technique that are more important than the result of a trade. I know we are all here to trade and win, but ultimately its the procedure that counts more – how you go into the trade, how you analyze it, how you plan your exit. We’ll go over a few setups from today and the techniques which we used to analyze them.

Lets start off with one of the setups we managed to catch in time that is going so far in our favor.
On the GBP/CHF we were looking at a Regular Bearish Divergence, with price making higher highs, and stochastics lower highs. Based on our procedure we calculate our targets using Fibonacci projections on the last move down. So far its on a pause, but expect further moves down. Read the rest of this entry »

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October 21st, 2007 @ 7:15 pm by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 19, 2007.

Today’s Summary, by Sunil Mangwani:

Just one confirmed trade taken today, but a few interesting points for discussion. Fundamentals are beginning to affect the forex market on a longer term basis – yen crosses, carry trades, interest rates, etc. The Dow Jones is having an effect on the yen crosses, the equity markets getting correlated… All these things have to be kept in a deeper perspective.

But we are technical traders – as soon as we find a setup, and it confirms our technical analysis, we go into a trade. More often than not, this works. We look for higher probability trades, with a greater chance of success.

On the GBP/JPY intraday, one of the favorites among the carry trades, we had a technical pattern of a Bullish Divergence, with price making a low and a lower low, Stochastics making initial low below the 20 level. When your second lower low on the price takes place, your stochastics do not have the momentum to carry forward to the oversold zone. This is a very aggressive divergence, signifying that a change of trend is due and a significant reversal could take place. Read the rest of this entry »

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October 18th, 2007 @ 12:39 am by Eugene Teplitsky

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This is a video summary of the Live Forex Trading Room session on October 17, 2007.

Today’s Summary, by Sunil Mangwani:

Good day today, with two nice trades taken in the room, both of which went quite well. More important than the profits is the method of the trade:

  • How you analyzed the trade
  • How you entered
  • Where you exited
  • How you determined your trading plan

All are very important to a trader’s success.
The GBP/JPY, which we call the “Formula-1 Race Car” of the currencies, had a Bullish Divergence spotted on the 30 min timeframe. The price was making a low and a lower low. The stochastics was making a low and a higher low. This is what we call an “aggressive” divergence – Class A. This means the first low was beneath the oversold level on the stochastics, but on the second low, it did not have the momentum to come below this level again. It suggests that the price has come down with a reducing momentum, which signifies a change of trend. Read the rest of this entry »

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