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Forex Trading Setups and Signals July 13th
EURUSD – Has work to do
As predicted in our webinar yesterday on Price Action Trading, we commented on how we thought the EU would gain short term and likely make its way up to the 20ema on the 4hr chart or 1.4100. This is exactly what happened but how its reacted to 1.4100 is interesting.
The initial bounce off 1.4100 was decent and worthy of notice shedding 60+pips in a matter of a few hours. But since, then the pair is finding its way back up and the rejection to the downside was clearly met with solid buying. With that being said, short term the pair has to clear the 1.4100 barrier and the Kijun to inspire bulls further. This level has further weight since its the double bottom low for the pair in May of this year so the level has some history behind it. Furthermore, the upcoming Kumo suggests it has work to do as its pretty thick and holding the space above it decently. If the pair gets really strong in the near term, then this would be its best chance to make some upside gains but the longer it goes, the more the Kumo will put pressure on the pair. *Note the flat top and 50% fib at 1.4200 could also hold some weight in rejecting the bulls or starting a new move to the upside on a break.
USDJPY – A recent intervention or large buying by a major player?
For the last few months, i’ve had little interest in the UJ because of its constrictive (and likely manipulative) price action has not made things too interesting…until just recently whereby in the last tokyo session the pair was continuing what was massive selling from the prior London and NY sessions shedding 300pips in a matter of a day and half.
But…the pair then had a very strong rejection in one 4hr candle whereby the candle opened 10pips under 79.50, sold all the way off to 78.50 and then immediately was bought back up to close where? 79.30, just 10pips from its open and high. Since then, price action has been muted and rightfully so as traders are wondering if the rejection is serious or a one time thing. If the pair continues to act timidly in its declines, expect the buying behind the rejection to hold and the lows at 78.50 in the short term as it would be a communication the rejection was real and is likely going to be followed up with more. Keep in mind, the pair sold off 14 out of 18 candles with the only buying candles being timid – save for the last one so this is a strong injection of liquidity coming in and could present an opportunity for bulls. Bears should target the lows of that candle and taking profits just before.
Keep in mind there is one alternate scenario to this move…an algo gone wild which we’ve been seeing with increased regularity in the markets so beware for if it is, then the pricing should return back to normal.
GBPCHF – More downside?
As we’ve been writing in our blog about the GBPCHF rejecting off the Kijun, now that the pair has rejected off the Kijun and hit the 350+pip target like we suspected, is there more downside for the pair now that its made an all-time low just yesterday? More than likely, the answer is yes as we feel there is no reason why this pair should not continue its descent.
Right now, the CHF is considered to be the best currency to have in the euro region as its continued to gain strength while its regional neighbors continue to worry about the skeletons in the closet and the likely unfolding Greek Tragedy. Simply put people would rather hold CHF than EUR or GBP and the currency has not disappointed either being at the yearly lows against the G7, or at the all-time lows like in EURCHF and GBPCHF.
The Kumo continues to be daunting and has its minions the Kijun and 20ema working for it to keep the defenses well intact so until these get broken, look for pullbacks to get rejected off here and target further downside. Only a break and close above these two changes our short term view but still keeps the medium term bearish view intact.
XAGUSD – Can it hit $38.50?
As we tweeted less than an hour ago, “Silver breaking $37.00 likely translates into $37.50” pretty much played out to perfection and gunned right for it once it checked out the new air above $37.00. Currently printing at $37.62, the pair has a new target in sights which is the May 25th high at $38.83 and the bulk of price action capping at $38.50. To us, the price action looks like its starting another bull run as the shiny metal has posted daily gains 7 out of the last 8 days and since closing above the 20ema, pulled back to it, tested it, and rejected nicely off it with aggressive buying which to us confirms the buyers are continuing to pick this up on pullbacks as they feel a renewed confidence.
With that being said, we feel the $38.50/.83 target is highly likely by week end and any daily close above $39.02 which is the 38.2% fib of the last major downswing, will likely help propel the metal up to the next fib at $41.10 so watch for strong continuations from here.
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