September 18, 2015 Daily Analysis

9/18 Analysis: Patience Equals Profits


Patience Equals Profits

Today, at the London open the market was trading flat. However, if you had some patience, we see this pattern emerge 35 minutes into the session.

The AUD (orange line) is strong with a very steep line to the far right indicating current momentum in the market. The USD (blue line) is weak with a very steep line to the far right indicating current momentum. They are diverging away from each other which is what we want to see.


Even if you would have entered at the top of that price bar (worst case scenario), the pair continued going up by over 30 pips after a slight pullback which would not have stopped you out.

When you watch the entire video analysis below, I’ll show you another profitable trade set up from today’s session:

[00:00 – 05:57]

[slide]              [8 individual currencies on black]

                        Hello, I’m James Edward from Welcome to today’s Currency Strength Analysis training video where I have two examples for you today, both during the London session.

So, this is what the indicator looked like at the London Market Open this morning. So, if you do your initial analysis, remember, you are looking for strong currencies which are continuing [points orange AUD decline] to get stronger and weak currencies which are continuing to get weaker.

Right now, you do not have an entry. So, at the Market Open, you should not be entering straight away, and the reason for that is, although the (orange) Australian Dollar (AUD) is a strong currency, right now, at the [points to decline] Open, it is just starting to turn back down. So that should cause you to pause and wait for a moment. And, for the weak currencies, which are the (red) British Pound (GBP) and the (pink) Euro (EUR), these two are currently going flat and have been for around the last 20 minutes. So, right now, you shouldn’t act, but, you would give it a little bit of time before the Market develops.

And, if I just–

[slide]              [2nd view: further right, same chart, orange AUD weakens, most at center]

(continues) … push the slide forward a little bit from this morning… this is just a quarter of an hour into the session, you can see how the Market did get off to a slow start. So, the particularly strong (orange) Australian Dollar (AUD) that you saw just prior to the Market Open has continued to pull back towards the center line, so gradually getting a little bit weaker. And the (red) British Pound (GBP) and the (pink) Euro (EUR) which were the two weak currencies have, actually, continued to go flat.

There’s no movement at these currencies at all; in fact, the (pink) Euro (EUR) is starting to pull back in a little bit. If you used pending orders, 10 pips away from the Market at the Open, those pending orders would not have been triggered immediately. So, around about now, 15 minutes into the Market, you’d be sacked there, with no trades open.

Because you are trading a break-out strategy, I generally advise you only to take trades early on in the session. So this isn’t a system that you can use two or three hours into the session because, by that time, you’ve lost the momentum that we’re trying to take advantage of when a new financial center opens. So, typically, I would give the system between 20 and 50 minutes, if it was me trading it, to allow the price to cut that momentum and break out of any ranges that it’s in. And, if I haven’t seen anything by then, I walk away and simply [don’t]not trade for the day.

That was pretty much what the New York session was like today. In the London session, however, we–

[slide]              [3rd view currencies, rt on same chart, all but pink EUR / purple USD up]

(continues) … did get a bit of an opportunity at the 35-minute point. And this is what the indicator looked like 35 minutes after the Market had opened. [points far right] And you can see that, now, the (orange) Australian Dollar (AUD) is starting to push back up quite steeply, to strength. So that should catch your eye. (You can see [points orange AUD initial climb] this is where it was strong before the Market had opened.) It did pull back in [follows same orange line] which wouldn’t have triggered any orders, but now it’s started to push [follows orange line up] back out in the direction of that trend and you have that very steep line  (over here) [points orange line far rt] which is what we look for, for the momentum.

And, down to the weak side, it’s actually the (purple) U.S. Dollar (USD) which has taken out and now moving most steeply down to weakness as stands out as the overall weakest currency so far in the session. So, that is a good trade that you can get into with a Market order and, coincidentally, that is the trade that I took (even though I’m a trader of a more advanced system than you and not trading that break-out, I have more information). This is actually the best signal that I’d seen in the session so far, so I took this trade. And you could take this trade, using your break-out strategy 35 minutes after the Market had opened.

So, if I quickly go–

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

(continues) … over to that chart, now, and I’ll show you, this [points] price bar is the price bar that coincides with that move on the indicator. So, you could’ve entered there.

And, let’s go for a worst-case scenario and say that you didn’t get in early. You got in right at the top of that [points same 1] price bar. [creates cross point] Although, initially, it did pull back a little bit, [draws diag line down 4 bars rt] which is normal in the Market, overall, [extends diag line from cross pt up to highest pt, far rt] that trend did carry on and, in total, went up over 30 pips. So, you could’ve easily got[ten] your 20-pip profit from that particular trade.

[slide]              [4th view currencies: yel / blue peak, green / orange climb; pink / purple down]

But, also, just a minute after this move developed on the indicator, I think an even better move developed. And you can see, now, the (purple) U.S. Dollar (USD)–bear in mind that this is one minute after you saw that move with the (orange) Australian Dollar (AUD)–the (purple) U.S. Dollar (USD) is moving even further down to weakness and that momentum is picking up in that currency and the (green) Canadian (CAD) [points to line far rt] is moving strong, very vertically, which is opposite to the (purple) U.S. Dollar (USD), so you have a huge momentum between those two currencies. That should be an indicator for you to get into a trade on that if you hadn’t taken the AUD:USD one minute beforehand.

So, let me go over to that chart, now, so you can–

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

(continues) … see the other option that was available to you this morning. That is this [points 1st longest bar] price bar, here, that is an increase in activity and momentum. [creates cross point]

And, again, we’ll go on a worst-case scenario and say you got in right at the end of that price bar. So, you waited, perhaps longer than you needed to. And, again, it pulled back [diagonal line up three lines] a little bit, but, in total, it [diag line down to lowest pt] has moved down 82 pips. So that was, by far, the best trend of the session and you would’ve, very quickly, got[ten] your 20-pip break-out profit from–

[slide]              [4th view currencies: yel / blue peak, green / orange climb; pink / purple down]

(continues) … that move.

So, what we’ve seen here today is, you’re not always going to be able to enter trade at the Market Open. We can’t dictate what conditions are going to be in the Market and, actually, today was probably the slowest day of the entire week.

So, you just wait patiently and that’s part of being a professional trader. You wait for the Market to “show its hand” and then you respond accordingly. If nothing happens, you walk away and don’t trade. But, if you wait that 30 to 40 minutes and you see something like this develop, this is the kind of pattern that you’re looking for to, again, take advantage of a typical situation we’re looking for, in terms of momentum, and steepness of those lines, which is really the key, fundamental part of trading currency strengths against weaknesses.




You can see that our Currency Strength Indicator is an effective tool for picking out the highest probability, lowest risk trade set ups while avoiding market conditions that aren’t favorable. If you keep using this tool every day along with our daily Forex analysis, you will increase your win rate and be on your way to becoming a profitable trader long term.

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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.