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. Well, we are back from Orlando, and based on the reviews we have from those who attended, it was our best event ever. I would suggest if you know somebody who did go, to send them an email and find out everything that happened from their perspective.
I can tell you I was really shocked with what eventually wound up happening at the event. We had a bunch of surprises, more content than I ever thought we would give out, was given out. We met some absolutely phenomenal traders. In fact, we’re going to have a follow up webinar in particular from Marcello, to talk about automated trading.
As you know, I am not a fan of all of these robots that are out there, mostly because of the individuals behind them. They really don’t know trading and they don’t know the markets. I can tell you, if I ever believed in kindred spirits, I believe in them now. Marcello is a fantastic guy. He has absolutely phenomenal systems and, if nothing else, I’d like to introduce you to him, because he believes in teaching people about the systems.
In fact, when he produces systems and offers them, if he does offer them for sale, he always includes how the system is actually generating signals. I’ve never seen anyone outside of the few traders that I know, ever do that. So, that’s coming down the road. We’ll have Marcello on when it’s convenient for him. I’ll contact him and make sure to let you know when we’re going to be doing that.
So, let’s talk about the British Pound. We’re going to zoom in here on the daily bars. Really since the market has broke into the bottom end of our trading lane, our sideways action, we had a bottom here and here, but the 6,000 level if you remember, was something that I was interested in. I was interested in the 6,000 level because of the prior bottoms that we had there.
I wanted to give the market a chance to retest this level. You can see here that the pound has done this numerous times over the last two weeks. Here’s the beginning of the pennant. You can see there’s the bottom, there’s the top. At this point, I think on a daily basis, we might wind up with a fairly large push when the Pound does break.
I’ve got my eye on the 5500 level, but then of course, I’ve also got my eye on the 600 level. Those are the last couple of areas where the market had traded, actually to the downside. A better price would be the prior highs here, which are right around 5353 or 5300. Either way you slice it, I think we’ve got to be watching out for a potentially large move in the British pound.
There are all sorts of theories and theories about theories when it comes to the Pound and what’s going on with the Dollar. The rumors are it seems like even more wild now, then they were back in 2008 around this time. Let’s talk about what the charts are showing us. At this point, the charts are showing us that support has been broken and retested.
Right now, the short term trend, meaning the last three months or so, is down. But we do have to remember, if we zoom out here, that we are still also in the middle of this downtrend. This uptrend here could turn out to be just a minor correction in this longer term down move, or this down move could turn out to be a correction in this longer term up move.
So we’ve got to be flexible, number one. But number two, we have to realize that the technicals are merely reflecting the confusion that you are probably hearing in the news. One group is talking about how the market needs to go up, the other group is talking about how the market needs to go down. We don’t know which one of them will eventually be right, but we do know that their activities will show up on the charts.
So, again, long term, we do have this long‑term uptrend that the market is still in. In fact the British pound came to a long‑term double bottom here. If we go back into the early ’90s, there are of course much lower lows that the pound has gone to, even all the way down to, I believe $1.23, but certainly into the $1.30s, much like we had over here. So, again, very mixed when we look at this very long term view, when we look at the multi year view.
As we come into the four hour chart here, I think there are a couple of things to be aware of as we’re in this pennant pattern. Here’s a close‑up of the pennant. There’s the bottom and the top, or I guess the top and the bottom, respectively.
If you look, as this pennant has formed, there are quite a few internal supporting resistance areas we need to be aware of. The one here just above 59000, and a little bit below 5900 as well, which is about where the market is trading now, it’s down around the 5900 level. This is, of course, Tuesday afternoon.
So, we need to watch out as the market is trading up, that we don’t get sucked in, I think, into thinking that the market might make some huge move while it’s inside of here. Remember, with the pennant pattern, you need to see it break out above the top end of the pennant, or the bottom end of the pennant.
The trouble begins when we get impatient. When we want to trade, we want to get in ahead of the game, or as came out a couple of times over this last weekend, we found out you know, we just want some action. In the process of discovering and realizing profits from the market, we also have to take into account the basics of what makes an opportunity.
Let’s talk about this once again here. Remember, in order for us to make money, if we sell… Let’s take the buy first. If we buy, it’s going to break above our upper line here. We need other people to come in and by. And so the reason why we want to be patient and wait for the market to get to this upper band, is because that’s where we know traders have sold.
The reason why we want to wait until traders have sold, is because the only… I was going to say guaranteed, but that will get me in really hot water with my lawyers. The only way that we can understand that there are likely buyers out there, is if we know that there are people who have sold in the past, and then we see that the market has pushed beyond where those individuals have entered the market.
Everybody has an uncle point. Everybody has a point where the need to get out of the market. It’s when they need to get out of the market that we have some opportunity. Every other period, or every other price is simply guesswork. The same goes on the bottom. If we were to sell, the reason why we’re looking to sell is other people have bought.
So, if the market does push past their entry, eventually they’re going to have to get out. That’s what we’re capitalizing on, and we’re looking to do it on a short term basis. So, again, it’s just a short review of some of what we talked about throughout the entire event this weekend. Based on the feedback from the attendees, I wanted to continue with that theme as we go along. It’s something that we need to be reminded of on a constant basis.
So with the hourly, let me zoom back out so it’s a bit more apparent, really the only pattern that we do have is this pennant pattern, which again, I pointed out primarily on the daily bars, but it has been going on long enough that it is now on the hourly bars as well. On the hourly, though, what becomes apparent is just how much of a sideways market we’ve really had.
There’s a resistance line for you there, and a support line for you here, so you can see lots of sideways action with just a couple of spikes on the upside and the downside to form this overall pattern, but not a lot of trade. That’s the main thing we need to watch out for. So, really we need to watch for the market to break over our couple of lines here. I’m going to go ahead and just put this upper line here, and I’ll put in this lower line as well.
That would mean you’re getting in below $58.93 on a sell, and then buying above $60.30 here. Again, you need to watch out for this during the sweet spot times. We might see the market turning sideways for the next few hours, it might even breach these levels.
If it is in the sweet spot time, say in the London open, you’ve seen that the market has broke into the downside already, that’s where we wait for the Little Dipper pattern for the market to push back up. Then we have our entry point utilizing the three‑bar reversal, at the test of the prior resistance area.
If the market is going to maybe go sideways, but then it’s already broken up, again we wait for the market to give us our retest. We then apply our three bar reversal entry down there, and look for the market to continue going to the upside.
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