Hello folks,

Have a look at the picture below. It’s the GBPJPY weekly chart which, in my opinion, seems to be going through a text-book breakout of a bearish flag formation. Do you guys see the pole and the flag in itself (marked with gray dotted line in the picture)?

As I explain in my Forex Trading Course, my typical stand on this type of breakouts is to wait for the first pullback before going on full “sell” mode, just as I mentioned last week on that EURUSD setup.

Hello folks,

Some few days ago I was mentioning the breakout of the upward range we had seen on EURUSD from the low 1.50′ies to 1.6000. Indeed, EURUSD upon having formed a double top at 1.6000, broke the upward channel bottom to the downside.

At that time I mentioned that those who like to trade within ranges could have a very good short opportunity by selling the EURUSD after the first pullback to retest breakout levels. Also, the logical target would be the range bottom in the low 1.50′ies…

Well, the pullback did happen, it did retest breakout levels (see picture below), and from there it dropped almost 500 pips within the last few days. Very nice high-probability trade setup, isn’t it?

As I always say, price action trading is nothing but buying support and selling resistance, especially if it’s aided by a solid breakout. EURUSD has just proven, once again, that this simple-yet-effective technique is all a trader needs to be successful.

Hello traders!

Few days ago I was wondering whether EUR/USD was ready to take the jump from 1.60 to 1.70, but apparently it’s not ready yet. Throughout the last few days EUR/USD has formed a double top off the 1.60 key level (in fact, it overshot to 1.6040, probably running some stop losses all along) and it’s plummeting from there. Actually, we can clearly see a 1-2-3 reversal formation with a subsequent up-channel breakout to the downside.

What does that mean? it means that range-traders (people who trade within ranges) might get some short opportunities during the following days if we get a little bit of a pullback after that up-channel breakout, perhaps aiming for the low 1.50′ies where the range bottom is to be found.

Hello traders,

It seems to me that USDJPY is facing some sort of dilemma right now on the longer time frames (weekly charts). Let me explain myself:

In one hard, we’ve broken the downtrend that’s been in place ever since summer 2007, so that’s a full year downtrend. Moreover, the trendline breakout is being confirmed as we speak by a text-book breakout-pullback-continuation pattern. All of you who’ve taken my Forex course will know that a B-P-C pattern is nothing but a confirmation of a breakout from a technical analysis point of view. So yeah, that down trendline seems to be broken for good which is a bullish signal.

Now, in the other hand, the key support/resistance level for USDJPY is still holding price below. That level is 108.50 / 109.00, and it’s been tested over and over again throughout the last three years. For the time being that level is holding price below which is a bearish signal.

So what is it then, bullish or bearish? hence the dilemma.

Here’s my take on the issue: if price breaks above 109.00 we go into full bullish mode on the Yen and thus I’ll be looking for long entries. Conversely, if price remains below 109.00, I will probably stay out of the Yen altogether.

Hello folks,

Today I have a little bit of free time so I wanted to share a chart with you.

Have you noticed that EUR/USD has been moving within a recurrent pattern throughout the last two years? It seems like EUR/USD moves in 1000-pip blocks, then consolidates for three or four months and finally it pushes up another 1000-pip run before consolidating again.

Please pull your EUR/USD weekly chart so you can follow along with me: in mid-2006 price flapped sideways for few months in the 1.2xxx whereabouts. Then, in fall 2006, it popped the range and ran up into the 1.3xxx where it ranged sideways once again in mid 2007 for another 3 or 4 months. Fast forward to fall 2007 and… pop-it-goes into the 1.40xx, where once again it ranged sideways for another 3 or 4 months in late 2007/early 2008.

The last run-up took place in spring 2008 when price rocketed from 1.5000 to 1.6000, and ever since we’ve been ranging sideways for… bingo! 3 or 4 months!

What am I getting down to? well, it seems to me that EUR/USD has been following a repetitive “move-congestion-move” pattern throughout the last two years, and as of lately we’ve been toying around the 1.6000 barrier after having bounced around the 1.50′ies for quite a while… I wonder: is EUR/USD ready for another 1000-pip run to 1.7000 soon?

Screenshot attached below: