WARNING: This text is a word-for-word transcription of Mac’s daily forex trading video. That means the writing will reflect the way he speaks, if anything seems out of place, please refer to the forex video on the page.
All right, everyone. We had a very good trading day today. You can see here the British pound was coming into our support area that we were discussing a little bit last week, but also in the weekly wrap. I realize not everyone may have seen the weekly wrap. I got it out a little bit late on Saturday. One of my dear friends and longtime trading partner, he had some family issues come up. Anyway, I talked about it in the weekly wrap.
So here are the lows coming into this session. You can see this is the 8th, about 4:00 AM, so we’re coming out of the Sunday doldrums here. We talked about this trading scenario a little bit last week in the one‑on‑one sessions.
In other words, when you see this kind of volatility early in the session, and then you don’t see any follow through ‑ we have one, two, three hours of sideways action ‑ what all of this is doing is telling us that the sellers are not able to push the market down for the moment.
You’ve got to realize that none of this is a guarantee. There are no guarantees in investing, so we still have to monitor our money management. We still have to make sure that we’re not betting huge amounts of money on any one trade and that we’re lining ourselves up with the likely direction of the market.
So if the market is pushing down early in the morning right out of the open, right out of the gate, and then all of a sudden it stops, our job is then to come up here ‑ this, by the way, is the hourly time frame ‑ our job then is to come up to the daily or even the four‑hour time frame, and see if there are any other support zones, any other logical points, that would lead us to believe that some other trader is willing to come in, and stop price, and push it in the direction that we’re anticipating.
In other words, if we’re expecting the market to come into support, is there another area that would help us to understand that other people had already bought or sold at that same level?
Of course, you could see we’ve got our support area here. This is what I talked about in the weekly wrap. Then we’ve got about six hours, well, let’s call it five hours of sideways action, making a very good support zone. Both of these were reason enough to be looking for a trade coming into the early morning hours here.
So whether you shorted, you sold pounds and bought US dollars, or you bought pounds and sold US dollars, either way there were some good opportunities to trade.
So we’ve got the British pound ‑‑ let me make sure I’ve got my statistics. There we go. I want to make sure I don’t run over here. We’re seeing a good reversal. If you look at the daily bars right here, you can see a candlestick pattern that indicates a possible reversal.
This is an inverted hammer, some people call this a hanging now, whatever name you want to give it. What we have here is a small day‑after momentum, plus we have the market pushing lower. All three of those things put together mean buyers are coming in, and we need to watch for prices to move up.
We don’t really have a pattern coming in and setting up into the Asian session. I’ve got to zoom out quite a ways. We’ve got a big resistance area that starts at 6078, so just above the market here, and runs all the way up here to 6199, call it 6200.
So a big area that could stop the market just overhead. We’re going to have to be careful. I think, though, if we break above 6200, we’ll have a good chance for some higher prices.
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