9/3 Analysis: Profit From Pairs Amateurs Don’t Even Have On Their Radar
Several minutes into the London session, we see this pattern emerge on the indicator.
You can see the NZD (purple line) is strong and turning up steeply which indicates current momentum in the market.
On the downside, the GBP (red line) is weak and turning down steeply so you have divergence between the two currencies.
- GBP/NZD SELL
From the time we noticed the steep lines on our indicator (showing momentum in the market) which was the close of the 3 minute bar after the open, price went 28 pips in our favor straight down (before the pull back).
This is how you profit from an opportunity that most amateur traders don’t even have on their radar.
You can watch the full video analysis here:
[00:00 – 05:16]
[slide] black bkgd w/legend top left, 8 colorful horizontal lines
Hello; I’m James Edward, of CompleteCurrencyTrader.com. Welcome to today’s Currency Strength Analysis training video. And, today, we’re looking at the London Market Open, looking for a break-out trade at the Open of the London Market.
This is what the indicator looked like immediately on the Open and, you’ll see, we do have a couple of currencies that are significantly strong, or they have been strong over the last 60 minutes. And, a couple that are weak.
But, the important thing to notice right now is at the open and just prior to the open all of these currencies are changing direction. The strong currency is starting to turn back into weakness and the weak currencies are starting to turn back up. So, you wouldn’t be trading anything here. [arrow indicates] What you need to do here is exercise a little patience and wait for the market to reveal its hand, and then, you can follow whatever it’s showing you to do.
If I move this forward, [scrolls further right] you’ll see you didn’t have to wait very long. I’ll just fast forward it two minutes. [scrolls right again] This is two minutes after the Open and what you will see here (that is the move I would recommend you’d entered just starting to play out).
This is the New Zealand dollar and that is now turning very rapidly up to strength. I mean, notice that it previously was the same as the Australian dollar. They are both strong. Right at the Open they were both starting to turn a little bit–or, just prior to the Open. The Australian dollar is continuing down, but the New Zealand dollar is now shooting back up to strength in the direction of existing trend.
Down to the weak side, we’re looking at the British pound (here); that is just started to turn down and you have divergence between these two currencies two minutes after the Open. And, if we let it progress just a little bit further, by one minute, this is what the indicators then look like. And you can see, now, that the New Zealand dollar is moving up, almost vertical. That is a huge move in momentum! (On the indicator you can see how steep that is.)
That is precisely what you should be looking for on the highest probability trade. This is a strong trade to get into because the momentum is there, and whenever you see momentum like this on the currency, you are highly probable to see that price continue in that direction.
We don’t know how far it’s going to go, but on the break-out strategy like this, which is very simple, you are just capturing a sure bet, 20 pips. So, you’re not after the big trend, you’re just going after a quick break-out trade, and this is the perfect kind of situation to find.
And, again, the British pound has continued down to weakness today, so those are the two currencies you should match against each other. And you should now be trading the British pound against the N-Zed-D.
So, if I go over to that–
[slide] B&W GBPNZD.MS line graph
[continues] … chart, now, you’ll see it’s the pound / N-Zed-D. This large price bar [arrow indicates] moving down to weakness is the Open price bar. This is 7 AMGMNZ for this price package which is 8 A.M. (London time).
What you can see is there was the trend before London Open, which is why we saw that pattern on the indicator. And, just prior to the Open, these prices had reversed, which is why we saw that initial change in direction and on the indicator. However, over the next two to three minutes, this price bar developed. (You have watched the price move a maximum of 30 pips.)
What I marked on here with this red [horizontal] line is the close of three-minute barb. If we go back over to the indicator [flips to initial black bkgd w widely-spaced lines] you’ll remember, back here, where I showed you where you would’ve first been able to identify the start, and, this is two minutes–or less than two minutes after the market would come up to the two-minute point. And this [pointing] is two-and-a-half minutes after we first saw this really big move and this is when you could’ve entered.
[slide] B&W vertical line graph (GBNZD.MS)
So what I’ve marked here is the worst-case scenario–the latest point. This is the close of three minutes after the Open. So, you can see, had you gone in at that last moment, the price is still moved down, in total, 28 pips. So, you would’ve (very quickly) been able to capture your 20-pip profit. And it did go straight down like this before it pulled back, if you switched down to the one lower price bar on yours when you’re doing your assessment of this.
After watching the video, you’ll be able to see that, from the three-minute point, the price did shoot down almost 30 pips in one direction before it pulled back, so you would’ve been able to walk away with a very quick 20-pip profit in less than five minutes from opening that trade.
That’s a good example, today, of–[flips to initial black bkgd w widely-spaced lines] why we are looking for this kind of momentum, the steepness of the lines (over here on the right-hand side) and why I also hope you can notice is how you are able to identify the absolute best currencies to trade in a market, but at this moment in time wasn’t really doing very much, you can very quickly jump straight in and go, “Well, the two obvious currencies are New Zealand dollar and the British pound. Nothing else is really doing anything; there are no opportunities at this precise moment.” So, you get into the high-probability trade that the vast majority of retail traders are completely and utterly unaware of.
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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