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.
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.
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.
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