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EURGBP spike

Hi
The second trade of mine rallied towards my take profit for a while but then a spike went straight down to my SL and the trade resulted in a loss in a jiffy.
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El mercado espera a Yellen - The market expects to Yellen

Saludos!!
Después del mal día que tuvo el USD el pasado viernes, el mercado esta expectante de las palabras que posiblemente pronuncie Janet Yellan el próximo lunes pasado el medio día. El foco esta puesto en la subida de los tipos de interés, algo que el mercado espera con gran expectativa. La FED también espera subir los tipos de interés. Es su meta. Sin embargo los malos datos provenientes de Estados Unidos, han actuado como resistencia para llegar a esa meta, y lo único que han hecho es post…
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USD/JPY to trade lower in January

Monthly chart
The pair broke above a strong cluster of resistance (trendline that contained long-term downtrend in years 1986, 1990, 1998; 23.6% retracement of the 1982 to 2011 decline; 2007 high at 124.14). The pair retested the cycle-high (~125.85) in August before it sold off strongly amid concerns about global growth, China slowdown, oil prices and Fed tightening. It retraced most of the losses but has been unable to get above 124.00.
Weekly chart
In the last week of August the pair broke b…
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UPDATE 5: U.S. labour market report for December came out much stronger than expected as implied by ADP Non-Farm Employment Change which was released on Wednesday. Knee-jerk was to buy the dollar but moves were quick to reverse in lower yielding currencies. A classical risk-off mode that will likely continue well into next week and perhaps beyond it, all things being equal.

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UPDATE 6: There was quite a lot of movement for a Monday right after the open. Moves across major pairs were similar with the dollar gaining against higher yielding currencies and losing against lower yielding ones. The moves were then more or less reversed. USD/JPY lost some 50 pips and traded down to Daily Support 1 (116.70) before turning back up and recouping the losses.

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UPDATE 7: Currencies opened the week with with risk-off gaps: euro, franc and yen gained about 10 pips, pound lost a couple of pips while commodity currencies lost 20-60 pips. All gaps have been already closed as risk sentiment improved. U.S. banks will be closed today in observance of Martin Luther King Day - that means thin liquidity and tight ranges but not without a possibility of an outsized move.

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UPDATE 8: The Yen continues to make lower lows and lower highs. Today, it briefly traded below August 2015 low (~116.20) and pierced 116 level which is an upper extreme of a strong 115.5 - 116 support zone. The support zone is a neckline of a big head and shoulders pattern on the weekly chart. If it gives way, measured move would target 105 - 107 which also includes 38.2% retracement of the 2011 - 2015 uptrend (~106.65), 2013 high (~105.5) and October 2014 low (~105.2).

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UPDATE 9: Major currencies opened with gaps again but this time around with smallish ones in what appears to be the quietest open so far this year. Improvement in risk sentiment seemed to come after China managed to stabilize its currency and stock market. Given the magnitude of the bounce in stocks, oil and risk sensitive currency pairs it seems that an interim bottom may be in place. However, all macroeconomic themes are still ongoing, so it may be too early to speak of a reversal.

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USD/JPY to stay supported

Monthly chart
The pair broke above a strong cluster of resistance (trendline that contained long-term downtrend in years 1986, 1990, 1998; 23.6% retracement of the 1982 to 2011 decline; 2007 high at 124.14). After a weak pullback in June, the pair retested the cycle-high (~125.85) in August before it sold off strongly amid concerns about global growth, China slowdown, oil prices and Fed tightening.
Weekly chart
In the last week of August the pair broke back below the monthly resistance cluster …
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UPDATE 5: Japan will release several lower-tier indicators next week but nothing market moving. U.S. macroeconomic data released in the week ahead includes: ISM Manufacturing PMI, ISM Non-Manufacturing PMI and NFP report, plus a testimony from Fed's Yellen. Unless the data or the ECB or any external shock makes it move, the pair will likely stay in its recent (122 - 124) range until Friday (NFP).

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UPDATE 6: Final revision of Japanese GDP showed that the economy expanded in Q3 rather than contracted. Worries that the country entered a recession were diluted last week after much better than expected capital spending report. This may put some downside pressure on the pair. Technically, the pair has been confined to a 150 pip range (122.25 - 123.75) for nearly a month. 50, 100 and 200 DMA, which are just about to converge, are a part of support band between 121.50 and 122.00. 124.00 - 124.25, which includes a trendline drawn off of June and August highs, may prove to be a decent resistance.

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UPDATE 7: Sentiment in stock markets improved today while ten-year U.S. treasury yield gained 7bp. In addition, there was a broader U.S. dollar buying throughout the second part of the day - a lot if it must have been position adjustment ahead of tomorrow's big event. USD/JPY rallied 120 pips from the lows and gained nearly 70 pips on the day after it bounced from the trendline, drawn off of August and October lows. The pair is currently trading just above the confluence of 50, 100 and 200 DMA (~121-50), which will need to stay above if it wants to improve technical picture.

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UPDATE 8: This week is probably the lightest one for the year with regard to economic data and certainly the most holiday-packed. There's nothing on the calendar from Japan, after Retail Sales and Industrial Production data were released earlier today. U.S. will publish CB Consumer Confidence, Unemployment Claims and Chicago PMI, which may contribute to some volatility in these thin conditions.

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UPDATE 9: Last two weeks of a year are known to be the quietest in most markets. Low participation means low liquidity and usually low volatility. However, it's easier to move markets in such conditions and if someone decides to execute a big order, the move could be big too. That move is more often than not faded or at least retraced to a great extent as liquidity returns.

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USD/JPY may well continue sideways

Monthly chart
The pair broke above a strong cluster of resistance (trendline that contained long-term downtrend in years 1986, 1990, 1998; 23.6% retracement of the 1982 to 2011 decline; 2007 high at 124.14). After weak pullback in June, the pair retested the cycle-high (~125.85) in August before it sold off strongly amid concerns about global growth, China slowdown, oil prices and Fed tightening.
Weekly chart
In the last week of August the pair broke back below the monthly resistance cluster an…
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UPDATE 4: In this mostly sideways week for the pair, yen lost half a cent against the dollar. Weekly range was about a cent and a half wide. The pair gapped down on Monday, but the gap was closed in a matter of hours and the pair rose to 123.25 by the end of that day. Thursday saw a bit of a correction which didn't manage to break below 122.50.

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UPDATE 5: In the week ahead Japan will report inflation data plus few other economic indicators. U.S. will publish several important data points: Prelim GDP, CB Consumer Confidence and (Core Durable) Goods Orders. Both countries will observe Thanksgiving holiday. Technically, the pair still looks bullish but recent failure to continue much past September 9th high warns that a near term correction may be in the making.

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UPDATE 6: The Yen is currently trading in the lower half of one of the smallest weekly ranges of this year. There were some geopolitical tensions yesterday but it wasn't enough to make any significant dent in risk trades, which soon rebounded. 122 is key to hold but below it we have possibly even more important 121.50 level where 50, 100 and 200 DMA may converge in the days ahead. On the upside the first stronger resistance is expected at 123.75 - 124.00 and then around 125.

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UPDATE 7: In another sideways week, the pair has barely managed to produce a 100 pip range. It closed the week essentially unchanged. After a quick surge at the opening, the pair started to fall and touched as low as 122.25 on Wednesday morning. Thursday's range was one of the tightest in months as it measured only 25 pips. A new range appears to be 122 - 124.

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UPDATE 8: Japan will release several lower-tier indicators next week but nothing market moving. U.S. macroeconomic data released in the week ahead includes: ISM Manufacturing PMI, ISM Non-Manufacturing PMI and NFP report, plus a testimony from Fed's Yellen. Unless the data or the ECB or any external shock makes it move, the pair will likely stay in its recent (122 - 124) range until Friday (NFP).

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USD/JPY to remain in balance

Monthly chart:
The pair broke above strong cluster of resistance (trendline that contained long-term downtrend in years 1986, 1990, 1998; 23.6% retracement of the 1982 to 2011 decline; 2007 high at 124.14). After weak pullback in June, the pair retested the cycle-high (~125.85) in August before it sold off strongly with concerns about global growth, China slowdown, oil prices and Fed tightening.
Weekly chart:
In the last week of August the pair broke back below the monthly resistance cluster and…
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UPDATE 6: After it broke the symmetrical triangle pattern, the pair fell towards 118 and nearly touched the big figure. It was essentially a fake break below 118.25 - 118.75 support zone which was followed by a sharp reversal. The pair hit the above-mentioned pattern bottom on Friday, which behaved as expected. Next week will tell whether there's any downside left or the pair will return back to previous range with the mid point near 120.

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UPDATE 7: The bottom of the symmetric triangle pattern, that was broken last week, has been acting as a tough resistance in the last three trading days. The pair is creeping below it but shows no intentions of turning back down. 50 DMA has crossed below 200 DMA on Friday after it has been below 100 DMA for nearly a month. Last week's breakdown roughly coincided with the cross but the pair wasn't able to produce a significant decline.

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UPDATE 8: The symmetric triangle was resolved in the most "market" way. Several fake breakouts to either side were followed by a "real" break to the downside, which proved to be fake. The pair seems to have convincingly broken above 120 level helped by risk-on sentiment spurred by ECB's dovishness and PBOC rate cuts. Stock are rallying and 125 is back in focus. 122.00 - 122.50 is the first strong barrier on the way there.

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UPDATE 9: Yen rose more than two cents last week. It traded up to 121.50 and closed above 200 DMA. However, it has been falling since the beginning of this week, to as low as 120.15 in today's trading, before stalling. The big figure (120), also the mid point of the 118 - 122 range, shall hold if the pair wants to maintain bullish bias. On a break below, retest of the lower extreme of the range will come back into focus.

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Great analysis : )

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EUR/USD Bull Trap (Part 2)

If you have been following my blog yesterday I've made a prediction on EUR/USD saying that we're heading lower and the spike up that happened during the yesterday's London session is just a bull trap, you can check out my blog post here: EUR/USD Bull Traps
Now we can look back and see how price action developed after I've made that prediction. In Figure 1 you can see the chart that I was posting it yesterday. At that point I said the fact that we couldn't close above the resistance level and …
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EUR/AUD - Trading With the Trend

Yesterday I've got in a long EUR/AUD position which I had to mange according to current market conditions. If you have been reading my blog you should know by now the importance of trading in the direction of the trend. I want to emphasize this: that no market is to high to be bought or to low to be sold. When trading with the trend you have the momentum going with you, and even though the market starts moving against you by having the momentum on your side you'll find that more often than not t…
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