Forex Trade Signals and Setups Jan. 3rd

Markets are back and so are we.  Liquidity and volumes started off a little slow the first London session of the year, but picked up nicely during the US session which is a good sign traders are starting to return, just not in full force.

With that being said, we are going to focus only on those which have made solid moves today and then once the valves open up more, we’ll start digging into the full compliment of pairs, instruments and time frames.

AUDUSD – Building a Bullish Structure

After starting off December in a range that lead to a decent sell-off, the Aussie gained back most of its’ losses to end the year just above parity.  It has started the year off with a bang, especially today gaining from the open and closing near the highs.  This strong price action is suggestive the bulls are still in control and have not engaged in profit taking so we should see continued buying.  Also note how the 20ema held the last pullback which was part of this last move.

Price Action Chris Capre Jan. 3rd

Lastly, the price action structure on the daily chart shows three higher lows, suggesting the bulls are gaining confidence in holding the Aussie for another upside push.  Price is sitting right at a key resistance level at 1.0400 so we have to see how it reacts from here, but if the pullback is sheepish, then we like taking fresh longs at the 20ema for another attack on 1.0400, and an eventual break gunning for the November peaks at 1.0751.  Look for price action clues at the current resistance level at 1.0400 for a possible price action breakout-retest setup.

XAGUSD – Strong Buying off Key Support

After getting brutalized by the CME margin hikes, Silver spent the last two months of the year in a trading range ponging off the $26 level while being held back at the $36 level.  It spent most of the time between $30 and $33 suggesting this was the value level for the precious metal.

Chris Capre Price Action Silver

The prior $26 lows from the massive Sept. sell-off held nicely giving a pinbar signal which we talked about before.  Price Action ended the year touching this level again – only to bounce off of it strongly.  This bounce was confirmed by today’s price action which was bought up from the open and closed near the highs suggesting buyers maintained control into the close.  It also closed just above the 20ema while being just below the 38.2% fib of the $36 – $26 down-move.

With that being said, we like intraday buys off the 20ema, or breaks/closes above the $30 figure for a move to $30.90 and $32 with tight stops below your entries.  Should the price action structure build from here, then it’s possible a good portion of the weak shorts have been filtered out of the market, and the bulls will go on to test $33 and $36.  Perhaps this is the beginning of a big run in silver which we suspect for 2012.

Remember to leave us your comments which are always appreciated, and also to click the ‘Like’ and ‘Tweet’ buttons below to share it.

For those of you looking to trade price action, make sure to visit our Advanced Price Action Course where we teach rule-based systems for trading Price Action.

Make sure to read our latest articles on What Do You Need to Trade Successfully Part 1 and Part 2 by visiting the links.

 

Buddhist, Trader and Philanthropist

Chris Capre, Founder of 2ndSkiesForex, is a professional trader who specializes in trading price action. His blog attracts 150,000+ monthly readers across 110+ countries, including; Australia, USA, Singapore, UK, Canada, & Germany. To discover more about Chris’s Price Action Strategies, visit his Price Action Course page.

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Discussion

3 Comments on the article

  • Dan Schwartz - January 3, 2012 5:19 pm

    Hi Chris,
    Welcome back and happy new year!
    My first question as per aud/usd is about how you determine key resistance being at 1.0400. Are you basing that on the price action back in November (2nd,3rd, 4th, 7th and 8th) where that was ceiling price level? To that end, you mention the 1.0751 as the target. Wouldn’t there first be the target of (resistance at) the November 24th and 25th, which price couldn’t get passed1.0500?

    Also, as per aud/usd if price doesn’t drop back to the 20 ema (and find support-where you suggest getting long) but decides to pause where it is then move past 1.0400, do you get right into the position, or do you always wait for a price-action breakout-retest setup? To that end, where would (to the upside) price go before coming back down the 1.0400 level to get in (if I am interpreting correctly the breakout retest right, that price would go higher then come back down to the 1.0400 level where you might get long). Make sense?

    • Chris Capre - January 5, 2012 2:44 am

      Hello Dan,

      Yes, if you look on the daily chart, you can see the rejections at that level and then how price responded to it so that is why I felt it was a key level.

      In terms of 1.0751, ask yourself why I did not mention 1.0500 and see if you can come up with an answer.

      In the breakout scenario you mentioned – most likely would wait for a breakout-retest setup. In terms of how far it could go before coming back to 1.0400 should it breakout, no idea. Would have to wait and see. But I did a video on that which you can find here at Price Action Trading.

      Hope this helps

      Kind Regards
      Chris

  • Dan Schwartz - January 8, 2012 11:44 pm

    Thanks Chris. I went over your response. In terms of why you didn’t mention 1.0500, I see that there wasn’t a lot of historical resistance around that price (except for the 10/24 & 10/25) so that would be my guess. Also, I re-watched the breakout video. Thanks very much for the insights, Dan

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