Thursday, May 21, 2009
21 May Market Probability Studies
by Johan Kriek (jkriek@fxinstructor.com) Please have a look below to view the Direction of Highest Probability for the remainder of the Asian Session and start of the European session today:
No trade zone, but still bullish probability. The GBP smashed through the .382 fib retracement level from the Sep 08 high yesterday and the next significant level would be the 0.500 level at 1.6100. This 1.6100 level also forms a nice confluence with an intermediate bearish primary trend resistance line which comes all the way from the 2.0158 high in July 08. If you have a look at the chart above, the 60minute trend is bullish and therefore the bullish probability. Price is currently consolidating thus I would wait for the 1 hour stochastic to cross bullish before trading long. If we see lower lows and lower highs the stochastic will remain bearish and therefore the no trade zone could prevail. Stand back on this one till you have a trading condition
Same as GBP, no trade zone but bullish probability. We have significant horizontal resistance at 1.3800. Price spiked through this level but could not trend above it and therefore the consolidating market we see now. A break followed by price trending above 1.3800 will cause the 1 hour stochastic to cross North and present me with a suitable bullish trading condition Remember that the direction of probability still remains bullish but if one does not wait for a suitable trading condition to unfold within this bullish probability you increase your risk. Sit back and relax, put your feet on the table and have a sip of your coffee and wait for this one
The JPY is bearish. In fact, we have a nice bearish trading condition due to the fact that the 1 hour stochastic is pointing in the direction of highest probability. Remember that a sudden retrace to the upside will force a bullish cross on the stochastic as it is oversold at this stage Therefore if price continues to trend lower the bearish trading condition will prevail but you will need to stand back if you see price taking out highs on the lower time frames
Wonderful bearish trading condition on the GBPJPY. The previous bullish 60minute trend has been violated to the downside, therefore the bearish probability. I cannot identify the new bearish 60minute trend yet due to the fact that no significant lower peak has formed yet but for as long as the 1 hour stochastic remains bearish you will have a bearish trading condition
EURGBP, no trade zone but still bearish probability. The stochastic has crossed bullish and now price is consolidating thus the no trade zone. I will keep an eye on this one and as soon as a bearish cross on the stochastic is confirmed then we will have a nice bearish trading condition once again Expect resistance at 0.8763 A few notes on the Probability Study technique: - You have to stay extremely disciplined using this approach or you will take unnecessary risk on your trades and possibly lose money - You need to wait for a TRADING CONDITION to unfold within a suitable direction of probability - Trading Conditions only happen when the 1 hour fishing stochastic is pointing in the direction of highest probability. This is when you want to execute your trading entry system Enjoy your trading day. If you have any questions, send me an email or join me in the Live Trading Room here at FXInstructor to have live discussion Labels: Forex Analysis, forex signal, Forex Trend, Market Analysis, Market Trend, money trading |
