Author Bio

Some people learn by reading books, some by doing, and some by watching or listening.  This Thursday, Currensee is presenting another opportunity to learn from a Forex pro by watching and listening to live trading.  We’re thrilled to welcome Willie Guevara of YourTradingRoom and the 4XLosAngeles group on Thursday, May 13 at 8:30am New York time for a session called “Momentum Trading Live with Willie Guevara“  It’s $9.95 but there’s a hefty discount for blog readers on that link, and Currensee members can get in free – the link is posted in the community.

I met Willie not too long ago when I presented Currensee to his 4XLA group, and I can attest the he’s a good guy and a great presenter..  In this webinar he’ll show us his breakout strategy and illuminate ways in which the London session is different from the others.  And as usual, all registrants will get an exclusive special deal on a YourTradingRoom product via the Currensee marketplace.  We hope to see you there!

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results. Investor returns may vary from Trade Leader returns based on slippage, fees, broker spreads, volatility or other market conditions.

Author Bio

My last blog post noted the spurious nature of what set off the downtrend, but since then there has been no denying that it has accelerated. So what next? Often when a trend is swift there is a temptation to close the entire position, when in fact the momentum is so strong, that the reality is that some portion of the position should remain and until that trend changes, day trade opportunities must be used to re-enter on any corrective move. These methods will be covered in future blogs and visual detail provided in a future webinar, but for now, what are the future drivers of the trend?

Firstly, while commonly used indicators such as the RSI and Stochastic are oversold, the inherent flaw in using such indicators means that bottom pickers will be active, and if price breaks down again, will simply add to the wave of selling. So what is flawed? It’s obvious when you think about it, but somehow an established mantra becomes law and few players actually question it. Markets are non-linear and the indicators are linear. In other words, while price can go anywhere on the upside and zero on the downside, the indicators are limited between zero and one hundred. Therefore any strong trend that see simply a one or two day correction can cause theses indicators to move disproportionally and encourage players to trade against the trend. If divergence is evident (as nearly all trends with these indicators show) this will simply encourage them further. Today’s positioning at the close of London in Currensee highlights this fact as it is 77% long.

One of my mantras of trading is this…if a runaway truck is hurtling downhill towards you, don’t stand in its way. Far better to wait for it to prove it has some brakes. At the moment for the Eurodollar, the break of 1.4140 and the close below the standardized limit of range at 1.4170 (a close below my 3rd Range Deviation Pivot from chapter 1 of my book Trading Time), is highly bearish. Greece has been at the forefront of the negativity, but I think the next thing to look out for is the fact that Spain’s credit default swap is also widening sharply. It hit its highest level since July last year today, and with Spain being a far bigger economy than Greece, further widening of the spread will begin to exert huge strains on the Euro’s credibility.

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Be sure to read the full risk disclosure before trading Forex. Please note that Forex trading involves significant risk of loss. It is not suitable for all investors and you should make sure you understand the risks involved before trading. Performance, strategies and charts shown are not necessarily predictive of any particular result. And, as always, past performance is no indication of future results.