Whats with the Crosses??

Hi All,
For the past 1-2 weeks, all the crosses seem to have been caught in a range, a big range in fact with no breakout on either side. Thankfully for traders like us, the range is not very small as to make it impossible to trade but the range is big enough to allow us to take trades on either side. But the important point here is that no trend has been established on either side and so big gains cannot be got especially for those who are in for the long term as we are not sure which side the crosses are going to go.

Till about a month back, we were sure that the crosses were moving up and so all that one had to do was take a trade in the long direction and simply wait to rake in the profits. This was possible as the trend was up. But now, there is no clear trend and this makes only range trading possible and not swing trading. This type of trading is useful for day traders but no good for long term trades as they are still not sure which side they need to take the trade.

But why this indecision in the crosses? One of the reasons would be risk aversion, another would be the weak dollar and another could be the stock markets. As can be seen, there is a general aversion towards risk over the past 2 week and the money is now being taken out of the carry trades and moved on to places where there are lesser risks. Second, the dollar is very weak nowadays, so weak that it cant even seem to rise against the yen, which is one of the weakest currencies. This weak UJ pair tends to pull down the other crosses though the currencies like GBP, EUR etc. in themselves might be strong. Next, the global stock markets have all been overheated and they need some cooling down which is what we can see happening over the last few days in some of the stock markets.

I assume that Japan would raise their interest rates In August or atleast in September which would lead to even more correction in the crosses in the short term once the rates are increased. But again, the fundamental difference in the interest rates would continue to persist which should see the crosses rise again. It should be an interesting few months ahead.

Happy Trading!!

Supports and Resistances for August 3, 2007

Hi all,

Another up and down day with the prices for all crosses being caught in a range. The longs seem to be favored now but there needs to be a breakout from the range to confirm any trend, long or short. The crosses have a tendency to respect the fibos a lot and sometimes they respect it too much and stay within the ranges. Yesterday, it was also noticed that not only the crosses, but the major pairs were also within specified ranges and it was only during the end of the day that the GU and the other majors managed to have a small breakout and they carried along the crosses with them. Below are the supports and resistances for the JPY crosses for today:-

USDJPY - Important support at 119.14. If that is broken, next support is at 118.90 which is a very strong support and the final major support is at 118.50. On the topside, the resistance is at 119.32 and then at 119.56.

EURJPY - Important support at 163.28. If that is broken, next support is at 162.63 and the final major support is at 162.00. On the topside, the resistance is at 163.50 and then at 164.06.

GBPJPY - Important support at 242.15. If that is broken, next support is at 240.80 and the final major support is at 240.10. On the topside, the resistance is at 243.05 and then a major resistance at 244.20.

Happy Trading!!!

Supports and Resistances for August 2, 2007

Hi all,
Another confusing day with the crosses going here and there and everywhere and finally ending up where they started from. It is a clear sign that the crosses dont seem to know where to go. They try to break down but are being held up by huge supports which keep pushing them back. The trend has again changed downwards but the huge supports need to be broken for them to make any more headway. The more the supports hold, the more likely they are to bounce back. For now, i can see 2-3 times over the last few days that the supports have held. The dollar is also very weak which is what is trying to drag the crosses down. Lets see how long the crosses hold. Below are the supports and resistances for the JPY crosses for today:-

USDJPY - Important support at 118.75. If that is broken, next support is at 118.45 which is a very strong support and the final major support is at 118.00. On the topside, the resistance is at 119.12 and then at 119.53.

EURJPY - Important support at 161.97. If that is broken, next support is at 161.00 and the final major support is at 160.44. On the topside, the resistance is at 162.50 and then at 163.35.

GBPJPY - Important support at 240.55. If that is broken, next support is at 240.09 and the final major support is at 239.45. On the topside, the resistance is at 241.15 and then a major resistance at 242.20.

Happy Trading!!!

Chat Feature Removed

Hi All,
Sorry guys but i had to remove the chat feature that was available in this blog as it was being misused from both sides both for good and bad reasons. Initially, i had started using the chat feature as i thought it would be a good and easy way to share comments and opinions but as some of you might have seen, over the last few days, it was being used for a slanging match. So i thought that it was entirely inappropriate and useless to have such a feature with no way of controlling it and hence it has been removed. It is a pity that something which was used properly had to be removed cos of few jokers but i guess thats the way it works.

Happy Trading!!

Supports and Resistances for August 1, 2007

Hi all,

Well a confusing day in total with the crosses trying to go up but being repeatedly pulled down by Uj which looks really weak. Finally, towards the end of the day, the bears started to win and now they are on top. This has ensured that the downtrend continues for some more days. Yesterday, there was a brief respite which gave the impression that there might be a change of trend but so far it looks like the up time yesterday was just a retracement and now the shorts are in favor again. Below are the supports and resistances for the JPY crosses for today:-

USDJPY - Important support at 118.35. If that is broken, next support is at 118.00 which is a very strong support and the final major support is at 117.62. On the topside, the resistance is at 118.75 and then at 119.22.

EURJPY - Important support at 161.76. If that is broken, next support is at 161.33 and the final major support is at 160.85. On the topside, the resistance is at 162.50 and then at 163.26.

GBPJPY - Important support at 240.55. If that is broken, next support is at 240.09 and the final major support is at 239.45. On the topside, the resistance is at 241.15 and then a major resistance at 242.20.

Happy Trading!!!

Supports and Resistances for July 31, 2007

Hi all,
So the crosses have made a very strong comeback with the GJ having made up 200 pips in the space of a few hours. With that, i feel that the trend has changed and it should be good for longs in the crosses today. As i had said previously, except for the drop in the stocks and a sudden dip in the risk appetite, there was not much change fundamentally in any of the crosses and i guess it was just a case of good fast correction. This correction was needed and long overdue. This correction showed the importance of identifying trend changes and also the importance of having good stop losses. With this ability, you could make 1000 pips upwards and 1000 pips downwards and could then afford to lose 200 pips when the trend changes. Below are the supports and resistances for the JPY crosses for today:-

USDJPY - Important support at 118.75. If that is broken, next support is at 118.35 which is a very strong support and the final major support is at 118.00. On the topside, the resistance is at 119.22 and then at 119.53.

EURJPY - Important support at 162.45. If that is broken, next support is at 161.38 and the final major support is at 160.85. On the topside, the resistance is at 163.40 and then at 164.05.

GBPJPY - Important support at 241.50. If that is broken, next support is at 240.55 and the final major support is at 239.10. On the topside, the resistance is at 242.20 and then a major resistance at 243.55.

Happy Trading!!!

Supports and Resistances for July 30, 2007

Hi all,

As of this writing, the market is still ranging between the support and resistance with no clear sign of direction yet. I suppose the direction will emerge as the european open nears. There has not been any fundamental change in the markets over the past 2 days and so i expect the downward trend to continue. But keep your stop losses ready as these crosses are beasts and can do anything anytime. Below are the supports and resistances for the JPY crosses for today:-

USDJPY - Important support at 118.34. If that is broken, next support is at 117.90 which is a very strong support and the final major support is at 117.45. On the topside, the resistance is at 118.75 and then at 119.51.

EURJPY - Important support at 161.02. If that is broken, next support is at 160.35 and the final major support is at 159.65. On the topside, the resistance is at 161.68 and then at 162.38.

GBPJPY - Important support at 239.02. If that is broken, next support is at 238.10 and the final major support is at 237.20. On the topside, the resistance is at 239.97 and then a major resistance at 240.63.

Happy Trading!!!

Forthcoming Week!!

Hi All,

So what does the forthcoming week hold for us? As said in this blog at the beginning of last week, the GBPUSD did have a big drop which was long overdue. Lot of people had been predicting this drop for the past 2 months but the market showed only two weeks back that the drop was coming and that was why i had specified in the blog last week that there would be a drop and it did come along.

I feel that the GBPUSD will drop further in the coming 2 weeks as the news coming out of GB would show the bad effects of a weakening dollar on the British economy. As for the crosses, that was something that was not expected as it started only on the second or third day of the week and there was nothing fundamentally changed over those days.

Anyway, for whatever reason it might be, there was indeed a huge drop in all the crosses which made trading very easy last week. That is why it is always good to trade with the trend and have strict stop losses. The trend was down last week and all that a trader had to do was go short and wait for them to go down as that was the trend. If indeed a trader went long to trade the pivots and supports, strict stop losses had to be followed as we are going against the trade. With this knowledge and strategy, there is no way that a trader can lose money under such conditions.

It is good to make 1000 pips in one trend and again 1000 pips in the opposite trend and lose 200 pips during the change of trend rather than lose 1000 pips trying to trade against the trend.

One thing which every trader should learn is not to outguess the market. No one is bigger, better or smarter than the market. So stop outguessing the market and try to react to what the market does and says. The quicker you react, the more money you make. If you try and outguess the market and predict something which you feel might be coming will only leave you with egg on your face.

So just keep watching the market movements and just try to ride the trend and the wave and you should be fine. Dont try to act too smart and think that you can outsmart the market and catch the very top and bottom. Sorry, no one can do that. So just trade the trend and enjoy the pips.

As for what the crosses would do in the forthcoming week, i have not seen anything change fundamentally over the last 2 days and so i think initially atleast the fall will continue. Once again, the market makers have been very smart and have placed the crosses at important supports and it remains to be seen which direction they take the market in.

Happy Trading!!!