November 18, 2015 Daily Analysis

11/18 Analysis: Perfect Divergence, Quick Profits

10 minutes into the London session, we see some real good divergence between the EUR (pink line) which is strong and showing momentum to the upside and the USD (blue line) which is weak and showing momentum to the downside.

It’s these steep lines to the far right moving away from each other that we look for in our break out strategy.


This is a trade I personally took this morning and I’ve marked my entry point. From there, price did go into my favor without any pull back or threat to be stopped out going up almost 30 pips. I hit the 20 pip profit target per the breakout strategy rules.

When you watch the entire video below, I’ll show you what would have happened if you were slow on the trigger and entered later in the move.

[00:00 – 03:38]

[slide]              [1st view indicator: red / blue top but flattish, lilac (white?) / orange lowest]

                        Hello, I’m James Edward from Welcome to another Currency Strength Analysis training video. And, today, we’re looking at an example of a break-out trade at the London Market Open.

So, this is what the indicator looked like at the London Open earlier today and, if you do your initial analysis, you can see there are some weak currencies, but they are not continuing to get weaker. So, right now, they don’t constitute an entry. The same [is] true for the strong currencies up here. You have the strong currencies, but they are not continuing to strengthen. So, we don’t have any initial entries.

What I want you to pay attention to, here, are the (violet-blue) U. S. Dollar (USD) [points] and the (pink-orchid) Euro (EUR). So, these two lines are, at the moment, both strong and both very similar to each other. However, if I fast forward through the indicator by ten minutes,-

[slide]              [2nd view: pink steep climb, violet-blue steep drop]

(continues)… you will see that those two currencies very quickly separated and are now diverging excellently apart from each other. You have the (pink-orchid) Euro (EUR) shooting up to strength and the (violet-blue) U. S. Dollar (USD) moving down to weakness in the opposite direction.

Remember, the most important thing that we look for is not only finding a strong currency to match against a weak currency, but momentum that is going to carry quickly into that 20-pip profit target. That is the strategy that we’re playing at the moment and that is what you’re looking for.

So you absolutely have momentum, you can see momentum on the indicator because of the steepness of the lines. So, this is ten minutes after the Open. And, if I go–

[slide]              [B&W vertical line EURUSD.MS]

(continues) … over to the price bar chart, now, this is the Euro:USD five-minute price charts. This is the Open [points bottom 1st bar of main climb] so you can see, from the Open, the price started coming up and this is the price bar that you would’ve seen the entry signal on in the indicator and got in on. (I actually took this trade, myself, this morning and the price is around about here (where my mouse cursor is. [points 1 bar right] I actually got in at 1.06624 and, from [creates cross bar, diag line to top-most point] my entry, you can see that that price has gone all the way up to the top of that move has gone up over 30 pips. So, you would’ve, very easily, hit your 20-pip profit without any pull backs threatening your stop-loss.

And, if I very quickly go back to the–

[slide]              [previous 2nd view: pink steep climb, violet-blue steep drop]

(continues)… indicator, if you weren’t quick enough to get in and recognize that  move, if–

[slide]              [3rd view: pink steep top, violet-blue deep down]

(continues)… I fast forward it through just a little bit further: this is five minutes after my entry; this is 15 minutes after the Open. You can see that this is much more obvious. You can see the (violet-blue) U. S. Dollar (USD) is the weakest currency and the (pink-orchid) Euro (EUR) is the absolute strongest. And, again, we have momentum. (We’re looking over here on the right-hand side of the indicator to see very steep lines in opposite directions.)

[slide]              [previous B&W vertical line EURUSD.MS]

(continues) … So, going back over to the chart, now, this is the price bar (here). [points 2 right of 1st bar climbing] So, even if you’d entered at that late stage in the move, [creates cross bar, diag to top upper-most bar] the price has still gone up to that point, 23 pips, so, again, you would’ve very easily hit your 20-pip profit target, whether you managed to get–

[slide]              [previous 3rd view: pink steep top, violet-blue deep down]

(continues)… into this trade at this later stage–

[slide]              [previous 2nd view: pink steep climb, violet-blue steep drop]

(continues)… or at this earlier stage, as I did.

This is the key point: you are looking for momentum. You enter when you have momentum on your side, which is the steepening on these lines. Momentum matched with strength versus weakness, you have a high probability trade for that break-out trade, to give you that quick, 20-pip profit target.


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James Edward
James Edward has been a successful Forex hedge fund manager & educator for over a decade. He founded Complete Currency Trader, a London based firm that has consistently trained individuals to become professional and profitable traders long term using the individual currency strength analysis methodology. CCT is an elite Forex educational firm and has a reputation second to none with over 90 positive reviews and an overall 4.538 out of 5 rating on the third party verification site Forex Peace Army. James’s affable personality, expert knowledge, notoriety for getting results, and steadfast dedication to his clients, has secured his position as one of the most trustworthy, liked, and in demand authorities in the industry.