January 26, 2012 Forex Signals

The Greenback opens weaker against all of it major trading partners this morning after the US Federal Reserve pledged to keep its interest rates at record lows for longer than they had originally forecast. Announcing rates would now remain at current levels through to late 2014 rather than mid 2013 sent ripples through the market, as investors were taken by surprise. The Euro rallied to five-week highs against the US Dollar, hitting levels above 1.3170, and the Japanese Yen pushed to 77.30 as speculation of further quantitative easing followed the announcement. Further quantitative easing would effectively de-base the Greenback by injecting greater amounts of cash into the economy. The Euro has pared most of these gains by this morning’s open as talk with private sector bond holders drag on in Greece and markets become increasingly impatient for a solution. The Dollar Yen pair has since consolidated just below the 77.50 handle.

Now, on to our open positions and new trades. Lets take a look at the specifics:

Open Orders

New Orders

All Pending type orders are only good for the day. Set the pending order to expire within 24 hours.

Use the Lot Size Calculator to determine lot size. In general, never risk more than 2-3% on a single trade, but that also depends on your own personal trading strategy and risk management.

EURUSD:  A good shooting star signal has appeared at the top of the upward run right at a resistance/support level. We are going to jump on this and go short at market. We don’t want to risk more than 1-2% of our account balance should it push back up again.

GBPUSD:  We see indications of a potential reversal. However, until we see confirmation we are holding off for a better opportunity. Currently there is no solid move down potential other than some short term indications.

USDJPY:   Coming off of a huge shooting star pattern, the price has continued down indicating a potential continuation of the downward movement. Unfortunately, there are also short term indications of a move back to the upside. Placing a short trade now would require an extremely large stop loss to account for the huge swing over the past few days. There is also concern there isn’t enough downward move room to risk the large stop loss. We have to pass on this trade tonight.

USDCAD:  Trading yesterday finished the day with the bulls in charge indicating a potential move back to the upside. We are going to wait for confirmation of the bottom before entering a long position here. The overall trend is still downward but it is currently too risky to enter a short position now.

AUDUSD:  The upward channel is still intact. However, as we predicted, it has bounced down off the upper range of the channel. The overall trend is still upward but we have short term indications that it will draw back down a bit toward the bottom of the channel. We are going to hold off and look at catching it as it bounces back up.

USDCHF:  We got a nice bounce at support with the formation of a hammer pattern. This is a potentially strong indication of a move back up. We are entering a long trade here but are keeping our risk to no more than 1-2% of our account balance. We are also using a trailing stop to keep us in the profit zone if it should move up far enough.

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