Trend trading is perhaps one of the most commonly used strategies in the forex world. In this article we will be sharing tips on how to determine the end of one forex trend and the potential start of a new one. We will share 3 specific clues that you should be looking for when trend trading that will help improve your entries and exits.
One of the first indicators that a forex trend is ending is a trend line break. Taking a look at the chart below, you can see that there are multiple points throughout this bullish trend where price was supported by the bulls. Throughout this trend, the pair continued to form higher highs and higher lows which proves price to be strong. However, at some point this forex market was ready to start heading south. At this point, circled in the image below, buyers were no longer able to buy this market higher. This was the first time throughout this trend we see a pullback which is not supported by the bulls, showing that the market is likely ready to reverse.
After a trend line break, the first sign that a forex trend is ending, we see a bullish push back that fails to meet higher highs. Throughout the bullish trend price continued to reach higher highs. However, after the initial trend line break we see lower highs beginning to form. Thus, indicating that bears are pushing the market back down.
Finally, we see this level of support, which has held for many weeks get violated and broken beneath. Price eventually dropped below a significant level of support showing that sellers have control of this market.
Looking back, we had 3 major clues that this trend may be headed to the downside. these clues are possible things you can look for to potentially find the start of new trends or the end of a trend. We had a bullish structure and when we saw this structure break it gave us a clear indication that sellers may have some room to run. Our second indication was the forming of a lower high. Finally, there was a break of structural support. With this information about trend trading, we could have identified the series of lower highs and potentially taken a short position.
Being in the 5% club means making consistent gains on your forex account. This is done by building an account through small and steady gains and building it at a rate in which you can control it. In this article, we will share a few attributes of profitable forex traders which we believe are critical to their success.
Unfortunately, 90-95% of forex traders fail to ever make it to a point where their winning trades outweigh their losing ones. Often times, the traders who fail to make it to the 5% club are those who expect to quickly make money through trading or attempt to flip accounts in a short period of time. Traders with this mindset will usually lose money quickly and burn out fast.
Plan your trade, trade your plan.
The first step to being successful in trading is creating a profitable strategy. This is achieved by spending significant time backtesting and researching forex trading strategies. The next step, which is often harder for traders, is to actually follow through with that plan. In stressful times traders have a tendency to change their approach to avoid losing a trade. This usually leaves traders in a worse situation than they would be in if they had stuck with their original plan. Make sure you've backtest your strategy and have the confidence to stick with it!
Download our FREE trading plan template here.
Becoming a profitable trader won't happen overnight. Trading successfully requires patience, consistency, and grit. There is no fast pass to success in trading. Trading requires lots of backtesting and strategizing to develop a plan which works for you. Your success in trading is a personal journey that only you can earn. Trading mentors can guide you on the path to success but in the end you are responsible for doing the work.
If your only interest in trading forex is to make money, you probably won't make it too long before you burn out. As we mentioned previously, becoming a successful trader takes grit. You will likely lose many trades before you'll win some. For some traders, it takes years before they're consistently making more than they are losing. To be able to make it through these harder times you have to be motivated by something other than monetary success, because it won't always be there. You have to truly love trading and love the process.
The yen has been the most volatile across the board all day, and there a few reasons why. It seems that investors are more hesitant on the Japanese economy now that stricter monetary policy seems to be more prevalent in other countries more so than in Japan. The economy is expected to continue recovering, but it will do so at a slower pace. Super loose monetary policy for the past decade is likely to continue this year causing the yen will be consistently out of favor. Having said that, here are some yen pairs to watch on this wild trading day.
Bullish potential still seems probable for these three pairs right now although COT is buying up lots of futures contracts on the yen. However, the persistent easing drives investors away from the yen and brings them towards stronger currencies that plan to tighten monetary policy this year.
Dollar yen had a strong day as the pair flew up to the highs of 116.300s before taking a minor retrace on the 4H. Although the previous candle showed rejection from the lows, we still might see a further move downward to support which lies around 115.500s. UJ is now at the levels not seen since January of 2017.
Driven by higher oil prices and bond yields, the loonie gained more demand over the yen in late December. Price crossed above resistance at 91.186, but it hasn't closed above. Also, two trend lines look noticeable on the 1D timeframe, and price has broken above one of them.
Across the pond, pound pairs are in a similar boat as the dollar with the expectation of higher rates going forward. This factor is helping to drive price up closer to highs around 158.239. A trend line formed on the 4H where the pair has respected that level twice. Support lies around 156.000 and 154.746 just below.
To read more about GBP pairs, click here.
Wondering what's in store for GBP (pound) pairs going into 2022? There are some factors that could heavily influence the currencies price action. Here's what we think is the likely outcome for GBP going forward.
Firstly, the UK's recovery has been doing the best recovery-wise as it is projected to be the fastest one to rebound since the COVID pandemic in 2020. More information on G7 can be found here. This is a big thing in the grand scope of things and justifies further bank rate raises.
Above is a YTD chart of the employment rate in the UK. Set to outpace the other six countries including the United States, Germany and Canada, we could find a strong bullish argument for the pound.
Additionally, the Bank of England decided to raise its official bank rate from 0.1% to 0.25% two weeks ago, a 0.15 bp raise. The BOE still has a 2% inflation target goal and will need further hikes to reach that. One hike is already a big step toward the recovery since other currencies like the USD are still tentative. And because the UK is expected to grow at a quicker rate than the rest of G7, we may start to see more hikes in 2022.
Below is the performance of GBP's interest rates in the past 25 years.
I think these two reasons are going to be the main drivers in the pound's recovery as analysts have high expectations for this currency for the next year. Of course, there will always be headwinds such as Brexit and the never-ending issues involved with that.
However, I do think that the UK has a big head start on everyone else which will probably be the best thing for them as they reach a full recovery. Interest rates should keep rising, but not too quickly. Along with that, bulls should hope that the recovery projections come through. If these factors continue to improve, 2022 could be the year of the pound!
To read more of our top picks, click here.
Big changes are expected to happen in the crypto world. Starting with legislation, cryptocurrency will put their foot in the door to try to regulate transactions and trading in the same way they do in the stock market. Read about our other crypto investment ideas here in the A1 Trading analysis tab on our website.
Cryptocurrencies are now expected to see a lot more regulation from lawmakers in the coming year as the crypto market becomes widely recognized. The US government understands the potential growth and immersion into this market, and whether they agree with it or not, it will become more mainstream, and they are trying to decide how to step in and deal with it.
The IRS And New Legislature
According to the IRS website on cryptocurrencies, holding crypto and using it to pay for transactions can now be considered a tax liability. And it is up to the individual to keep track of their investments and report them when they pay taxes.
The current bill, "Build Back Better", states that you will not be able to buy a cryptocurrency after selling it for a loss immediately after you close. And reporting these trades are not limited to just the digital coins but are also for NFTs. Lawmakers haven't decided a set date to start the implementation, but investors may start pricing in what the market may look like with this news that is to take place.
It's hard to say what I think the market will look like in 2022 and the years ahead, especially since we are still not sure if all these new regulations will be passed. But I do know that these kinds of talks will be more prevalent in the New Year. This may lead to volatility as a result should the majority of these laws are implemented. Bitcoin is down today after this news. Whenever there are discussions of regulation, the market doesn't do well. So, I think it's important to watch what could come out of these new bills because we still have no clear path of what tighter policy surrounding this market has in store.
Bitcoin fell 2.55% on the latest 4H candle as it hit support and a rising trend line. A close under this trend line would signify another bearish move, but it could be a decent long setup if price holds above. The 14-Day RSI reads 40 which still is considered undervalued to the average price behavior. Above price are the 200 and 50 SMAs that could serve as resistance.
This is some analysis on the next 4H period. The previous candle closed on the trend line which isn't telling us much as regards to direction or future price action. If you draw a fib level on the current trend from the lows, price could end up touching and bouncing off the 50% level, but it seems that a double bottom found support at the 61.8% level.
Cardano hit its 50 DMA on the 1D chart before turning back to the downside. Support lies below at the bottom of this long term wedge, and the next level of support lies around the $0.98000s range.
Ethereum couldn't hold above the rising trend line on the 1D chart, and price tumbled nearly 6% on the day. It looks like the ETH may not find clean support until the 200 DMA. Unless price action suggests a bullish reversal pattern, the pair may continue to tumble to this support level.
Gold's performance has been mostly red after mixed signals from the Fed and heavy volatility towards the holidays has taken its toll on the precious metal. Discussions and outlook remain uncertain as price action remains unpredictable.
Global market outlook
The market is too mixed right now to really pick a clear direction, at least for the entire year of 2022. Without a clear statement from the Fed, we can only measure the possibilities. It looks like the metal may start off bearish in 2022, after looking at the behavior in the COT reports along with the announcement from Biden to keep the economy open regardless of the new omicron variant.
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And to talk about tight spreads, this broker can give you a 0.0 pip spread on their standard account, but will guarantee a 0 pip spread on their direct account. Blueberry is also platform-friendly as they allow MT4, 5 and Web Trader. With their 24/7 customer support, help is always available should a question or issue show up.
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Winner of the 2018 Most Trusted Broker UK Forex Awards, Axi, or AxiTrader, has proven to be the trader's broker with low trading costs and inactivity fees. Their customer service is also unmatched, with a multilingual customer support of 14 different languages brings traders from around the world to this service. They have won awards in their customer service department that available 24 hours, 5 days out of the week.
What also makes this broker a good pick for those looking for a new broker or are just new to trading, is the ease of setting up an account. With a user-friendly system, opening an account is one of the simplest things to do, and no minimum deposit amount is required along with zero deposit and withdrawal fees. However, the selection of assets to trade are pretty limited as you can only trade forex and CFDs. But what they lack in variety, they make up for in education. And for those new traders looking to learn, Axi is one of the best for that. Their education is top tier when ranking them against the other brokers. With videos, articles and ebooks, the user has lots of tools at their disposal to get themselves ready for trading.
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Whether you live in the US or anywhere in the world, you're in luck. Hugo's Way is a private broker that is available anywhere in the world, however, it is not a regulated broker. If you are an experienced trader, this broker is one of the best choices as it has over 150 tradeable assets to pick from giving you full access to all the markets. However, there is no education section which might make this service not the best for beginners. So, what it lacks in education, it makes up for in tradability. Customer service is 24/7, and as a user of this broker, I can say that they have always had polite and timely support regardless of the time of day. For those US citizens trying to trade the indices, metals, commodities, crypto, stocks, and more, I would say Hugo's Way is the best option for that.
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A major end-of-the-year announcement from the FOMC yesterday waved a big bullish flag for the USD. Several factors were discussed in the conference including interest rates, inflation and tapering. Here is why 2022 could be a fantastic year for the currency:
The Fed decided to double the amount of asset purchases to a rate of $30 billion per month. By the month of January, they will only be buying $60 billion compared to what used to be $120 bn, and by March, the Fed should have reduced their purchases to nothing. This quick reduction of purchases will then be followed by rate hikes.
Fed Calls For 3 Hikes In 2022
After the Fed tapers in the early half of 2022, they will follow it up with three interest rate hikes which will likely equate to 0.75 basis points in total for the year. Although this is bullish news for the USD, it is still not set in stone with the concerns of omicron virus still lingering. Virus fears will likely persist in 2022, so the expectations of three hikes may be quelled if the problems with this strain gets worse. But, at least two seem promising for next year. These raises will help fight the CPI inflation factor that has risen 6.8% in the last month.
The US dollar index came a little off the highs around $96.9, but looks like it wants to come back up to that level once again. Price may have made a wedge formation on the 1D chart as higher lows and lower highs are taking shape. Support lies below at 95.545 and 94.600.
Learn how to trade EURUSD, the largest and most traded currency pair in the entire world. The Euro is so heavily traded due to massive economies in the United States, and European union. The need for high volumes of currency exchange between these two areas makes the EURUSD a very popular currency pair to trade. The high trading volume in this pair makes it an attractive market to trade - for both experienced and new traders. One major advantage of trading the EURUSD is that this high trading volume usually leads to tighter spreads (and hence lower trading costs + easier execution!)
When trading the EURUSD, fundamental analysis plays a large role.
A major component to the Euro rising or falling has to do with the central bank policies of each respective economy. If the dollar for example is hawkish, and has a strong outlook for the US economy, it is possible to see the Euro fall, causing the currency pair to fall.
If the Euro is strong, and/or the dollar is weak, we would expect to see weakening unemployment in the US, and/or strong figures coming from the Euro region in things like inflation (CPI), retail sales, unemployment, etc.
When trading the EURUSD, technical analysis can be a useful tool to help with entries and exits. The EURUSD shifts from being a back and forth, choppy market, to a strongly trending market.
In times of back and forth, lazy price action, the EURUSD can be a great range bound market to trade. Simple Bollinger band, and support and resistance concepts can work great when employed properly during this time.
When the EURUSD is in a trending state, watch for breakouts on the higher timeframes, and pullbacks to key levels of support or resistance.
Our analysts share their analysis and trade ideas on EURUSD. Click the button below to view their analysis now!
Hey everyone! Welcome to this week's forex forecast for the week ending December 17th, 2021. I'm TraderBart with A1 Trading, and this week I'll be looking at AUDUSD, EURUSD, EURAUD & XAUUSD. This will be the final WFF of 2021 as I'm going abroad to spend time with family. Hope everyone has a Merry Christmas and a Happy New Year, and I will be back from mid-January to continue this series of articles.
Price recently broke out of the ascending channel, making a touch of the 0.70 key horizontal level which dates back all the way to September 2018, and is now on its way to potentially making a touch of the ascending channel. Look out for whether we see price re-enter the channel, suggesting further bullish moves towards the channel's top OR if we see price reject the channel's bottom, suggesting further bearish moves towards 0.70 and potentially new recent lows.
Price is forming a triangle pattern following the break of the descending channel. Watch out for a break of this pattern, if we see a break above, look out for the retest and rejection before potentially going long. If we see price break lower, look out for the retest and rejection before going short. A break above 1.14 opens up price to 1.16; a short-term key level.
After breaking out of the ascending triangle pretty early, price has made its full move but is now retesting the pattern's resistance at around 1.57 which is the same as the ascending triangle from May earlier this year. Watch out for a rejection of this level, where following successive price action confirmations would be a potentially good time to go long on this pair.
Gold continues to consolidate for another week, still failing to break below 1765 suggesting its potentially waiting for a major catalyst to create a new trend in the market. Price will likely be slow during the Christmas and New Years period.
For any questions or comments, you can reach me at @TraderBart on Telegram or @TraderBart#2638 through the A1Trading discord.