September 25, 2015Daily Analysis

9/25 Analysis: Set & Forget Strategy

Set & Forget Strategy

If you don’t have hours to spend in front of the computer screen, playing a breakout on the strongest VS weakest currencies is the way to go.

Today at the London open, the AUD (orange line) is the strongest currency up top but trading flat at the moment (no momentum). The EUR (pink line) is the weakest with a bit of current momentum to the downside.

You would place a pending order on this pair 10 pips away from the market price.

  • EUR/AUD SELL

In this case, your order would have been triggered at the yellow line we’ve drawn on the charts (10 pips below the open price). From there, the pair moves down 25 pips so you would have nailed your 20 pip profit on this breakout trade.

Watch the entire video analysis below:

[00:00 – 05:02]

[slide]              [8 currencies tight 1st third, then bolt wide open]

                        Hello, I’m James Edward from CompleteCurrencyTrader.com. Welcome to today’s Currency Strength Analysis training video. Now, this week, overall, the Market has been pretty slow and hasn’t been any fantastic trends coming out of either session, the New York or the London session. But, today, is quite a good example to demonstrate just how much you’re playing a high-probability game, simply by taking the most-obvious currencies right as they appear at the Open, even if you haven’t got the momentum behind you.

So, if we look at what the indicator looked like at the London Open today, you can see, very obviously, that the (orange) Australian Dollar (AUD) is, overall, the strongest currency. But, remember what we’re looking for: we’re looking for a strong currency which is continuing to strengthen. And, ideally, we want to see a lot of momentum over here [far rt point] on the right-hand side. Well, right now, we don’t have that. This is a currency that did move up to strength, but for the last 40 minutes has been going completely flat. There is no activity on it; it’s not trending up or down.

And, to the weak side, you have a fairly similar picture with the (pink) Euro (EUR) and, perhaps the (yellow) Japanese Yen (JPY). They did move down to weakness, initially, but for the last 30, 40 minutes, they’ve been going flat and not going anywhere. So, just as the Market was opened, there weren’t any trends taking place, anywhere in the Market. And, what I would always suggest you do in that situation is wait for the Market to develop. Wait for things to get going and, hopefully, you will see a really high-probability trade, where we get very steep lines, where you do get that flurry of more activity and a burst of momentum.

However, as I’ve explained before, if you don’t have much time in the morning–you can’t sit and wait and watch the Market develop over 30 or 40 minutes (which is what I would recommend is your maximum time period for a break-out trade)–what you can do is place a pending order 10 pips away from the Open price.

So, in this case, two obvious currencies are the (orange) Australian Dollar (AUD) for strength and the (pink) Euro (EUR), this pink line down here, for weakness. And, although they are not trending right now, what you can do is place a 10-pip pending order away from that Open price and, if the trend does continue… if these two currencies do continue to diverge, that pending order will be hit. And, if it doesn’t, if the Market reverses, then it won’t be hit. So it kind of takes that decision out of your hand.

Now, if I just move this forward–

 

[slide]              [2nd view: further right, same view but absolute right AUD:JPY tip outward]

(continues) … just a little bit, by a couple of seconds, actually, [no mov’t on screen, appears same slide] you can see that, within seconds of the Market (and this is just 20 seconds into the Market), the (orange) Australian Dollar (AUD) is starting to turn up and the (pink) Euro (EUR) is starting to turn more steeply down. Now, that’s not a high-momentum move, by any means, but that is something that you should’ve been watching and paying to. And, hopefully, you can see that that is the most-obvious move that has taken place on the indicator at the Open. So, within 30 seconds of London opening, you should’ve been able to (immediately) identify that the (orange) Australian Dollar (AUD) was probably the best buy currency and the (pink) Euro (EUR) was probably the best sell currency. And, like I said, you can place your pending order 10 pips away from the Market.

If I go over to that price–

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

(continues) … chart, now, this is the move that was happening [points longest line] before the Market had opened and this price bar, [9 to right] here, is, actually, the Open price bar. So, you can see, in the 30 to 40 minutes leading up to London Open–and this was that sideways range where the Market wasn’t really doing very much. And, then, as London opens, at this point, [creates cross pt] here, if I put my cursor on it [diag line down to 1st lowest pt] down to the lowest point, here, before the Market reversed, it’s gone almost 35, almost 36 pips.

So, if you placed a pending sell order, 10 pips below the Market Open, [creates new cross pt X] and we’ll put that just there, [diag line down to next low] this has, in fact, gone down 25 pips (more or less), which means, even with the spread on this pair you would’ve been able to walk away with a 20-pip take-profit target.

So, it didn’t trend an enormous amount and you can (actually) see, for the rest of the day, the trend went in the opposite direction. But, this is the kind of thing we’re trying to take advantage of in the morning when a new financial center opens.

[slide]              [previous 2nd view: same chart but absolute right AUD:JPY tip outward]

(continues) … Pick the most obvious currencies and, if they’re not moving with momentum immediately at the Open and you don’t have time to wait for things to develop, then you can take that chance of placing a pending order 10 pips below the Market Open price and, if the Market comes to you, then it will be triggered and if it doesn’t, then you’ll have avoided taking that trade.

But, on this occasion, today, without very much analysis needed at all, you just pick the absolute strongest against the absolute weakest, even before they were moving, using that pending order, and, even then, you still have the odds on your side and can walk away with that very quick, easy 10, 20-pip take-profit target.

[end]

 

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.