"When market conditions change, I change my mind" (J. M. Keynes)  

   Greetings dear traders. Today we are going to make our usual analysis for 5 of the major pairs: Eur/Usd (Fiber), Gbp/Usd (Cable/Pound), Usd/Chf (Swiss Franc), Usd/Jpy (Jap. Yen) and Aud/Usd (Aussie). We will also try to cover some of the commonly market conditions for a trend.

   To better understand a trend we have to start from the definition: The general direction of the market price for a certain trading instrument (currency pair, commodity, bond, stock).

   If we want to identify a trend we have to look at the charts and see if we can find some simple signs:

  • Higher Swing Lows and Higher Swing Highs for an Uptrend,
  • Lower Swing Lows and Lower Swing Highs for a Downtrend.

   Trends Classification:

  1. Major Trends (Primary Trends) - are ascending or descending trends, interrupted by corrections (Sell-offs in Uptrends and Rallies in Downtrends), last from several months to several years. 
  2. Intermediate Trends - can develop in the direction of the Major Trend or in the opposite direction (in this case it is considered a correction), last from several weeks to several months.
  3. Minor Trends (Sell-Off or Rallies) - last from a few days to a few weeks.

   More Minor Trends form an Intermediate Trend: swings of about 7 to 12 days in the direction of the Intermediate Trend with correction of 2 to 4 days. More Intermediate Trends form a Major Trend.

   Trends Participants:

  1. Intraday Traders (Short Term) - interested in Fluctuations of about 100 Pips, follow only the Minor Trends,
  2. Speculators (Medium Term) - follow the Intermediate Trends, and try to enter the market both in the direction of the Major Trend and in the oppoiste direction.
  3. Investors (Long Term) - Accumulate positions in the direction of the Major Trend, maintaining the positions in the Intermediate corrections. They often prottect their positions through hedging.

   Trend Classification and participants are very important when you are following a trend to see if the Market Conditions (accumulation, distribution, supply, demand, volume correlation, different trend participants decisions) will change, if the trend will continue or there are signals for a trend reversal.

   I will try to illustrate some of the Market Conditions and Trend Factors in our Weekly Analysis.

   Our analysis for the 5 major pairs will contain the following instruments:

  • Weekly Pivot Points (Main Pivot Point, S1, S2, S3 and R1, R2, R3),
  • Monthly Pivots (Main, S1, S2, S3 and R1, R2, R3),
  • Simple Moving Averages - SMA - 30, 50, 100 and 200,
  • Fibonacci Retracements,
  • Supports and Resistences / Supply and Demand areas,
  • Trendlines and Channel Trendlines
  • Volume Correlation.

>> 1) Gbp/Usd - 4 hours Chart - (15.05.2012)

    Market Conditions:

  • Sideways Movement from September 2010 (Between 1.525 - 1.675),
  • Intermediate Uptrend from January 2012,
  • Minor Downtrend from 1st of May 2012, 250 Pips Sell-Off
  • Increasing Bearish Volume,

   - Bullish Probability Key Levels:

  • 1.611 - confluence between the Monthly Main Pivot, Weekly Main Pivot, the Minor Trend Trendline, the 61.8% Fibonacci Retracement, (2nd Level Key Level)
  • 1.616 - confluence between the Weekly R1 Pivot and the 100 SMA, also resistence fro 2nd of May (2nd Level Key Level),
  • 1.625 - Weekly R2 Pivot,
  • 1.630 - hystorical level, confluence with the Weekly R3 Pivot Point and resistence from the 30th of April,(2nd Level Key Level),

   - Bearish Probability Key Levels:

  • 1.605 - confluence between the 200 SMA and the Support from the 3rd of April, (1st Level Key Level)
  • 1.600 - confluence between the Weekly S1 Pivot, the 38.2% Fibonacci Retracement and the hystorical level, (2nd Level Key Level),
  • 1.597 - Important confluence between the Weekly S2 Pivot and the support from the 13th of April and 27th of March, (2nd Level Key Level),
  • 1.592 - Monthly S1 Pivot and a support from March,
  • 1.587 - Weekly S3 Pivot.

Probability Charts:

Bullish and Bearish Clear Probabilities:

 

    Mixed Probabilities:

  

 

  >> 2) Usd/Chf - 4 hours Chart - (15.05.2012)

    Market Conditions:

  • Major Uptrend from August 2011,
  • Sideways Movement from December 2011 (between 0.955 - 0.892),
  • Minor Uptrend from 1st of May 2012, 330 Pips Rally,
  • Increasing Bullish Volume,
  • Breakout Continuation Gap - 0.918

    - Bullish Probability Key Levels:

  • 0.936 - Important confluence between the Weekly R1 Pivot and the Monthly R2 Pivot, (1st Level Key Level).
  • 0.940 - Weekly R2 Pivot Point,
  • 0.947 - 0.949 area - confluence between the Monthly R3 Pivot and the Weekly R3 Pivot, (1st Level Key Level)

    - Bearish Probability Key Levels:

  • 0.927 - 0.928 - Resistence from the 6th of May and Weekly Main Pivot Point, (1st Level Key Level),
  • 0.925 - Support from the 15th of April,
  • 0.923 - 0.922 area - confluence between the Monthly R1 Pivot Support and the weekly S1 Pivot, also future confluence with the 100 SMA, (2nd Level Key Level),
  • 0.915 - confluence between the 200 SMA and the Weekly S2 Pivot, (1st Level Key Level)
  • 0.910 - confluence between the Monthly Main Pivot Point and the Weekly S3 Pivot, (1st Level Key Level).

   Probability Charts:

   Bullish and Bearish Clear Probabilities: 

   Mixed Probabilities: 

 

 

>> 3) Usd/Jpy - 4 hours Chart - (15.05.2012)

    Market Conditions:

  • Major Downtrend from 2007,
  • Intermediate Downtrend from 20th of March 2012,
  • Minor Sideways Movement from 1st of May 2012,
  • Increasing Bearish Volume.

    - Bullish Probability Key Levels:

  • 80.30 - 80.40 area - confluence between the Weekly R1 Pivot and the Resistence from the 16th of April, and from the 2nd and 3rd of May, confluence with the 100 SMA (2nd Level Key Level),
  • 80.49 - Weekly R2 Pivot,
  • 80.90 - 81.00 area - Key confluence between the 200 SMA, Weekly R3 Pivot, Monthly Main Pivot Point, 38.2% Fibonacci Retracement from the previous Intermediate Uptrend, (2nd Level Key Level)
  • 81.80 - the Resistence from the 10th and 20th of April.

   - Bearish Probability Key Levels:

  • 79.61 - 79.42 area - Major Demand Area, Weekly S1 Pivot, Supports from the 1st, 6th, 9th and 14th of May, (2nd Level Key Level)
  • 79.19 - 79.15 area - confluence between the Weekly S2 Pivot and the 61.8% Fibonacci Retracement from the previous Intermediate Uptrend, (1st Level Key Level)
  • 78.96 - Weekly S3 Pivot.

    Probability Charts:

    Bullish and Bearish Clear Probabilities: 

   Mixed Probabilities: 

  

 

>> 4) Aud/Usd - 4 hours Chart - (15.05.2012)

    Market Conditions:

  • Major Uptrend from February 2009 - Sideways Movement from May 2011,
  • Intermediate Downtrend from February 2012,
  • Minor Downtrend from 30th of April 2012, 525 Pips Sell-Off
  • Increasing Bearish Volume,

    - Bullish Probability Key Levels:

  • 1.002 - Psychological Level, the resistence from the 9th of May, Monthly S3 Pivot Point resistence, (1st Level Key Level)
  • 1.008 - Weekly Main Pivot Point,
  • 1.013 - 1.016 area - Major Supply Area, Key confluence between the resistences from the 7th and 10th of May, the Monthly S2 Pivot, the Weekly R1 Pivot, and the 61.8% Fibonacci Retracement from the Sell-Off in May, (2nd Level Key Level)
  • 1.020 - Resistence from the 8th of May, confluence with the 100 SMA,
  • 1.027 - 1.029 area - confluence between the 200 SMA, the 38.2% Fibonacci Retracement from the Sell-Off in May, and the Weekly R2 Pivot Point, (2nd Level Key Level)
  • 1.037 - confluence between the Monthly Main Pivot and the Weekly R3 Pivot, (1st Level Key Level)

    - Bearish Probability Key Levels:

  • 0.994 - 0.993 area - confluence between the support from the 9th of August 2011 and the Weekly S1 Pivot,
  • 0.987 - support from the 15th December 2011, and Weekly S2 Pivot.

   Probability Charts:

   Bullish and Bearish Clear Probabilities: 

   Mixed Probabilities:       

>> 5) Eur/Usd - 4 hours Chart - (15.05.2012)

   Market Conditions:

  • Major Downtrend from May 2011,
  • Intermediate Downtrend from March 2012,
  • Minor Downtrend from 1st of May 2012, 470 Pips Sell-Off
  • Increasing Bearish Volume,
  • 2 Breakout Continuation Gaps (1.308, 1.291)

   - Bullish Probability Key Levels:

  • 1.291 - the close from Friday and the continuation Gap from Monday opening,
  • 1.295 - weekly Main Pivot Point and the Resistence from 6th of May, (1st Level Key Level),
  • 1.300 - 1.303 area - confluence between the hystorical level and support from 16th of April and the Monthly S1 Pivot and the Weekly R1 Pivot, (2nd Level Key Level),
  • 1.308 - the close from 4th of May which formed a Breakout Continuation Gap maybe future confluence with the 100 SMA,
  • 1.313 - confluence between the Weekly R2 Pivot Point and the 200 SMA, (1st Level Key Level),
  • 1.318 - 1.320 area - Important confluence between the Monthly Main Pivot, the Weekly R3 1Pivot Point and the Intermediate Downtrend Trendline, (2nd Level Key Level),

   - Bearish Probability Key Levels:

  • 1.285 - 1.282 area - confluence between the Weekly S1 Pivot and the Monthly S2 Pivot. (1st Level Key Level),
  • 1.276 - Weekly S2 Pivot Point,
  • 1.262 - 1.264 area - Important Demand area confluence between the Support from 15th of January, the Monthly S3 Pivot and the Weekly S3 Pivot Point.

   Probability Charts:

   Bullish and Bearish Clear Probabilities:

   Mixed Probabilities: