It looks like the market is trying to run away from the teeth of the bear this week:). This week, for the second week in a row, you probably noticed a bullish trend for the S&P index as well as a slight recovery for crude oil.
I anticipate that throughout this week the market will experience a similar bullish trend. Yet, it is time to keep you money close to you and minimize your risk. (As they say, keep your friends close and your money even closer!). In any case, I would stick to trading on short time frames – anywhere from 1 hour to shorter timeframes. You can try using my Bollinger band strategy to improve the likelihood of catching a good setup on short time frames. There are a lot of signals when the market is volatile, and you’ll need to discern which one is right for you.
In the below chart, you can see the S&P index maintained its bullish trend.
Chart: S&P Index Weekly chart
As long as the index keeps moving in this direction, we know the market is still bullish.
Let’s zoom in to a shorter time frame to take a look at the signals the market is sending out. As you can see in the below chart, the index is moving within boundaries. (As I always say, you don’t so many small trades to feel you are a professional trader. All you need is one or two good siganls per day or per assist – currency pairs, indexes, commodities, stocks. Just before you place your option make sure you risk the amount of money you allow yourself to lose based on your aversion to risk and investment goals.)
Chart: S&P Index 1 hour chart
For those traders who follow my posts every week, you probably notices a great signal we got on the USDCAD. On a daily chart it breaks the support line (see below), but instead of a huge move down the trend it stalled. This tells us we should be cautious with the signal. In this as well as similar instances, I would try to find signals for PUT options in short time frames.
Chart: USDCAD daily chart
If you need more convincing, just take a look at crude oil. (As an aside, the Canadian dollar is greatly affected by the price of oil. When the price of oil goes up, CAD gets stronger.) If we look at crude oil, we a similar trend for oil with CAD only it is in the opposite direction.
Chart: Crude Oil
This signal I traded last Friday on AUDUSD is another example of how to become a successful forex trader. You just need to follow the right steps and prepare yourself for when the setup is in your favor. AUDUSD broke out of the support line (see yellow circle on below chart), giving the signal to place PUT options for a quick win with minimal risk due to the high chances for a successful trade stemming for this kind of singal.
Here are the steps for a simple, quick, and winning trade:
- Place the asset on a naked chart
- Recognize and mark the trends (if there are any)
- Prepare yourself for the right timing in a short timeframe
- Hit the option when you get the signal
In this case it’s the breakout on a 30 minutes chart for AUDUSD
Chart: AUDUSD 30 mins
It’s not so easy to beat the market. You need a methodology, a good strategy, and discipline. In order to avoid traps, you also need a bit of experience. Until you have the necessary experience, you should trade and place your options in small amounts in small risk trades.
Gold provided a trap last week when it seemed like it would break out of the resistance line, but in-fact it redefines the resistance line. Until the price trend actually pushes through to the other side, I expect to see a retrieve to a bearish trend.
Chart: Gold Price Trend
The below chart demonstrates how I prepare myself for any upcoming set ups. I mark the 1 hour chart trend with support and resistance boundaries.
Chart: Gold 1 hour
I don’t how to guess in which direction the price trend will move. My gut feeling is telling me to prepare for a short, but it could go either way. My only advise it prepare yourself for any signal the market might send your way.
That’s it for now. As always, I’d be happy to hear about your great trades!