Forex Trading Blog

Alert: BOE holds rates unchanged at .50%! Pound rallies!

By Sean Hyman | July 9, 2009

Alert: BOE holds rates unchanged at .50%! Pound rallies! GBP/USD up about 75 pips within minutes!

Tags: alert, BOE, dollar, fxedu, gbp, Hyman, minutes, mywealth, pip, pips, pound, rate, Sean, Sean Hyman, USD

Topics: What To Look At In The Market | No Comments »

How to Spot a Longer-Term Trend!

By Sean Hyman | June 30, 2009

When I’m teaching my courses each day, I get this question quite often. So I thought I’d share it here with you too! How in the world do you know how to spot the long term trend? Well it’s really simple.

First, you should pull up a daily chart that goes back in time at least a year (even more time is even better). Then place a 200 Simple Moving Average (SMA) on the chart. That’s the line that I’ve got the arrows pointing to on the chart below. The SMA can be found under the “Studies” or Indicators” section of most any charting package.

Let the 200 Day SMA be Your Guide

One of the most widely used indicators in the world is the 200 SMA. I even catch purely fundamental traders putting it on their charts. Why? Because everyone needs to be able to tell which way the long term trend is headed, even pure fundamentalists.

I’ve charted the EUR/USD pair on the daily chart going back several years in time.

The 200 SMA Smoothes out the Trend and Points the Way to Trade

Towards the left of the chart we can see that the “average” price moves upward over time. So while the price may be jagged and spiky at times, they moving average smoothes all of this out so that we can tell if the price is headed up overall or downward overall. To the left of the chart, the price continues to climb higher, so it’s in an uptrend at that point. However, on the latter part of the chart (right side), then trend turns downward and the longer term trend is then downward. You want to define the trend’s direction and trade with it because that’s where the higher probability trades lie. Low probability trades would be shorting an uptrend or buying a pair in a downtrend. You will notice that the price tends to trade at or above the 200 SMA in an uptrend and in a downtrend the price dips below the 200 SMA and holds at or below it.

How to know when a New Longer-Term Trend is likely Beginning!

Therefore, we’re alerted to a “new long term trend” emerging when the price makes this shift. We can see that in August of 2008 when the price fell below the 200 SMA. At that point, the long term uptrend ceased and the “new” downtrend emerged. Then in May of 2009, the uptrend re-emerged for the EUR/USD. As long as the pair can hold above this 200 SMA, then it’s still in its longer term uptrend. Once the pair drops back below the SMA and holds below it, we know that the uptrend has likely ended. So let the 200 Daily SMA on the daily chart be your guide as to whether you should be looking for “long” (buying) entry opportunities or whether you should be looking for “shorting” (selling) opportunities for your entries into a trend. Using this as your guide will enhance your trading performance. No matter how much you get tempted…don’t trade against this trend, but stick with it. Oh sure, you can take profits if you wish, once it trades way away from the 200 SMA…just don’t counter trend trade against it. Be patient and wait for a re-entry back into the trend once the pair retraces back towards its 200 SMA once again!

Click on the chart to enlarge it.

Tags: alert, blog, charts, course, dow, downtrend, EUR, forex, forextrading, fundamental, Hyman, pair, Sean, Sean Hyman, short, simple, spot, teach, time, trade, trader, trades, uptrend, USD

Topics: What To Look At In The Market | No Comments »

Short Term Traders: Get Ready for a Big Breakout Soon!

By Sean Hyman | May 12, 2009

If you look at most daily charts, you will see that we’ve had some narrow trading days the last couple of days. That means that there will be a huge breakout coming soon once again…and it should produce some huge percentage movements on the day when it does. So be on the look out and alert. If you’re there at the right time, you can have a huge gain in a short amount of time. It can be very rewarding if you catch it right. In particular, the “dollar pairs” could be huge movers soon! Get a free practice account here: http://www.fxedu.com/practice-forex-account

Tags: account, alert, breakout, charts, dollar, forex, free, fx, fxedu, movement, pair, practice, practice account, Sean Hyman, time, trading

Topics: What To Look At In The Market | No Comments »

Low Momentum Begets High Momentum!

By Sean Hyman | May 7, 2009

Yesterday was the “ho-hum” day for intra-day traders. However, low volatility begets high volatility. It doesn’t have to occur the very next day…but one thing’s for certain…if there’s low volatility for a period of time, your “radar” should be on alert for the breakout because it will usually be powerful and directional.

Today is that day. The yen is tanking against the commodity currencies the most (NZD/JPY, AUD/JPY) but also is tanking vs. the euro too (EUR/JPY). So all of these pairs have bolted higher to the top of the percentage gainers on the list.

That means that “today”, big traders are “risk seekers” and have their offensive team out on the field. They’re buying commodity currencies predominately.

NZD/JPY is up a whopping 3.29% so far on the day and AUD/JPY is right behind it at 2.39%.

Also, as I’m writing, AUD/USD and NZD/USD are working their way up the lists. So they’re now buying up these currencies vs. the buck too.

So the theme of the day so far is yen and dollar selling (selling defensive currencies) and buying commodity currencies.

Also, I hope you noticed last night that Australia ADDED JOBS rather than lost jobs in their latest employment report. Their unemployment rate DECREASED.

Australia, in my opinion, has the strongest fundamentals of all major currencies out there right now. Therefore, if you agree, you’d want to look to AUD/USD, AUD/JPY, AUD/CHF, etc. for “long” opportunities as they arise and take them over other currency pairs that have buy signals with “lesser fundamentals”. Get started with a demo account today: http://www.fxedu.com/practice-forex-account

Sean Hyman

www.forextradingblog.com

Tags: alert, AUD, blog, breakout, buck, CHF, commodity, currencies, currency, currency pair, currency pairs, dollar, EUR, Euro, forex, forextrading, fundamental, jpy, nzd, rate, Sean Hyman, time, trade, trader, unemployment, USD, Yen

Topics: What To Look At In The Market | No Comments »

Intraday update: AUD/JPY + 4.23% intraday!(280 pips)

By Sean Hyman | March 31, 2009

AUD/JPY c9ntinues to charge higher. This morning when I alerted you to it, it was up 194 pips on the day. Now it’s up about 280 pips on the day! So that’s about another 90 pips per lot traded!

It pays to watch where the intraday momentum is headed and who’s leading the pack, when you are an intraday trader.

The yen continues to weaken across the board. Upon looking to their daily charts, it appears that there could be more room to go in the upcoming days to weeks overall. So the bias should be to the upside and in looking for buy signals rather than shorting opportunities since that’s the way the overall momentum is positioned.

Also, watch USD/JPY to see if it can make it back up above its 200 SMA (simple moving average) on its daily chart. If so, this could be great for the intraday trader and swing trader. Be patient and wait to see. Click on the chart to enlarge it.