Cleopiptra

The USD/CAD is a perfect example of why the Directional Bias must be respected. The Directional Bias – if you haven’t already heard or read about it – is the market trend or psychology of the daily chart.

The U.S. Dollar’s bounce from the 77.00 level today as ECB Press Conference drove the EUR/USD sharply lower and the better-than-expected Unemployment Claims number and ISM Non-Manufacturing PMI helped boost the dollar, has been stronger than most expected, especially when considering tomorrow’s Non-Farm Payroll releases.

This move has been one that has been setting up for some time: The U.S. Dollar Index’s slide through 78.00. The break through this psychological level confirmed the negativity of the dollar’s place in the world amidst a surging euro and worldwide equities risk appetite.

Most of today’s forex talk focused around the GBP/USD since that was where the headlines and traders were focused. The cable while weak has set up a swing buy opportunity on the daily and I walk through the set up on today’s show.

This is more of a cautionary set up than one that I would recommend taking. It involves the power of understanding the Directional Bias of the daily and how longer-term time frames (60 and 240-minute) entries should follow the Bias if there is a trend.

Before there was a word for it, I think I was looking at how I could “hack” trading… in other words: How would I get the best (most effective) results in the shortest amount of time?

Today’s episode is about “failure”. What’s that?! Yes, I am taking about the recent succession of trying trades that – despite the fact that I followed my rules – have simply nit worked out.

When the market is volatile and/or the Directional Bias of the daily is sideways (in accumulation or distribution) I will rely on my Between the Greens (BTG) set up that uses Fibonacci-based exponential moving averges to gauge corrections in the (very) short-term trend.

If it all begins with sentiment, then the logical question to ask would be: What effects sentiment? Sentiment in a basic way can be described as bullish or bearish opinion. They are always both present in the market, however, it’s the balance of these two opposing opinions that we are watching.

Today’s ForexAM video is – as far as I’m concerned – the first one of the year since the volume/bank holidays really didn’t make for an interesting or fully participated Monday session. The dollar did break lower and stay below the 34EMA on the daily chart and this has brought about a transition in the daily directional bias to a more neutral or sideways direction.