Huck’s Pre-Week Market Analysis for January 7 to 11, 2012

In terms of trading, 2012 was a rough year for me. The year started out well enough, but I eventually crumbled under pressure and ended the year in the red. After a bit of retrospection, I realized that the reason I didn’t do very well was that I didn’t put enough effort in understanding the market. I just kept on jumping into trades too hastily.

So for 2013, I plan to make a “pre-week market analysis” in hopes of making sounder trading decisions. This pre-week market analysis will involve three steps. First, I will look at the fundamental background. Then I will choose two pairs that I could possibly trade. The third step is to analyze the two pairs technically using the trading framework that I use.

My philosophy for 2013 is to trade with the trend. In order to , I’ll be using two Moving Averages–the 200-SMA (Blue) and the 100-SMA (Maroon)–on the one-hour chart. These two moving averages will tell me where the market is generally headed.

Fundamental Picture

Last week, we saw the dollar rally across due to a combination of “good” news from the U.S. First, the U.S. congress was able to agree on a deal to avert the so-called fiscal cliff.

Second, the minutes from the December FOMC meeting showed that committee members were slightly more hawkish than what the market had initially thought. It was revealed that there were actually some members objected to the length of the Fed’s bond-buying program and they wanted it to end before 2014.

Third was the positive U.S. employment report. The NFP report showed that payrolls rose 155,000 in December, which was slightly above the forecast of 150,000. In addition, November’s NFP was upwardly revised.

These three new developments seem to suggest going long on the U.S. dollar could be the market’s choice this week.

Potential Trades

EUR/USD: Bearish

EUR/USD 60-minute Chart

Technically, we can see that the pair is below both the 100 and 200 SMAs. This, to me, suggests that the trend is down and the bears are in full control. I’m not sure how low price will go, but with the pair very far from the SMAs, I think we may see a pullback soon. I’m going to keep a close eye on this pair for a potential short on a retracement.

USD/JPY: Bullish

USD/JPY  60-Minute Chart

On the other hand, if we look at USD/JPY on the hourly timeframe, we see that the pair is above the SMAs. Using the Fibonacci tool, we see that the pair could soon pullback and test support around the 61.8% Fibonacci retracement level, 100 SMA, and its previous resistance. The setup actually looks pretty similar to the one I spotted last week! I missed the rally on that one, but I’m still not gonna rush and jump in at market.

There ya go folks! What are your thoughts and trade ideas for this week? Share them with me!



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  • SwordOfManagement
    • huck

      I’m trying to understand the picture, but I can’t seem to make sense of it. How come the Fibs don’t line up with swing high/low. Appreciate it if you could explain more! <3

  • semajio

    i don’t follow h1 charts, but have a setup idea for XAU/USD. Friday d1 formed bullish pin bar through support, since then two inside bars (monday, tuesday). a break of the friday pin high (mother bar) 1665, is a long entry with s/l at 50% of friday pin.

    • huck

      I don’t trade gold. I have 0 experience with it. How’s your trade going along?

  • SwordOfManagement

    I marked your fib lvls, in the last pic, with the black rectangle tool. What I wish to show you is how you can use the fibo tool for position sizing. By sizing the fibo to your min. lot size, you can see which charts you can trade, with limit orders, and which charts you might be able to trade if you drop down to a smaller chart and use the fibo lvls as a guide for how many lots you can trade; if price is between two lvls then you can trade the lesser of the two unit sizes. When you think in terms of space then it is just a matter of: 1) position outside of or just inside of a longer term range (7-9+ days) & 2) the number of units that you can afford; the chart just fades into the background as secondary information.

  • SwordOfManagement
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