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, I want to take a look first at the British Pound on a weekly. Really it’s because we’ve got this crazy stuff going on with our data, and our daily charts are just not acting right. But also, I think the weekly is giving us a much better picture. Remember, we’ve been talking about this zone down here. OK, let me draw this across. And I think what is important for us to take away from this is the market has broken out at the bottom and it’s now hooking back up. What this means is we’ve broken through support and we could be looking at a little dipper re‑test on a much higher timeframe.
And so when we’re trying to judge ‑ or, I should say, gauge ‑ our trading strategy, our outlook, I’m going to tell you, when the market breaks out of this big consolidation area, we’re either going to be getting a move quite easily down to 4400 or we’re going to get a breakout with prices moving well above 7600.
And you’ve probably heard some ‑ I was going to say some guys, but that’s not very descriptive. You’ve probably heard traders talking about how you can measure the distance, for example, of a breakout area in order to get where the market may go to. And so that is where I’m getting about the 4400 level. This line here represents, roughly speaking, the distance of this total consolidation area.
And so if we do get a break down, you can see it’s pushing down towards the 4400 level. This is by no means some kind of exact science where we can tell down to the pip where the market is going to go. And you can see up here breaking above 7600. So we need to keep this in perspective as we watch the market trade.
So, let’s take a look at the four‑hour bar. And keeping in mind, going back over here to the weekly, that we’re not going to see very much on the four‑hour bar, because essentially we have this huge vacuum area. Can you see that? Once the market gets into trading below 5600, it really is all the way down to 48 before we have any sort of decent and recent support. So we’ve got to keep that in mind.
All right. So here we go with the four‑hour bar. It’s really hard to see because it’s zoomed so far out. Let me do it this way. The USD, then we’ll go to hour. I’ll just go back a few months. I don’t know why I just didn’t type that in. Right, so there we go. Now, let me make sure we get it all in here.
So we’re looking at the four‑hour and the one‑hour. I’m trying to draw a box around this, so hopefully it will come through on the video. This is the four‑hour, this is the one‑hour. Of course, the one‑hour is giving us much more detail, right? You can see ‑ actually, let me verify that before I go… There we go. Ah, yes. All right. One hour, four hour.
So again, this is the detail. You can see, basically, a trading lane forming like this: boom. That is really what I wanted to talk about. We’ve got ‑ this is the overall flag pattern that ‑ I was going to have this big, dramatic build‑up to it but decided not to. All right, let me zoom back out. Whoops. All right.
So, what are we re‑testing? Well, if you remember, if you were in the crew back here, I was talking about the bottoming process for, I think six months. It might have been a little bit less. And I also made the point that we made such a large move down that the re‑test may take months. And I urge you: go back. I’m not blowing smoke up your skirt: Yes, I’ve been talking about that, have talked about it a long, long time ago.
Anyway, whatever that’s worth. So here is the flag pattern. It is certainly taking quite a while to form up. The reason why I point the pattern out is because if, indeed, we are looking at a compression pattern and a re‑test of this huge support area, then we could very well get a very aggressive move down to 4800 only to see the market just rocket back to the upside because the sellers are finally just washed out of the market. We’ve got to keep that in mind.
However, when I talk about the market moving back down towards 4600 or so, 4700 certainly, that is still sound. We still need to be on the watch for that. I’m saying from a strategy perspective and getting our mind wrapped around what the market may do, it’s important to recognize that we’ve got a good‑looking flag pattern up here on the one‑hour chart when we’re zoomed all the way out.
Now, let’s take a look at what we are going to do right now. This was the consolidation I talked about yesterday. We got the break above the high there. Of course, aggressive traders were rewarded and everybody else just got to watch. There is nothing wrong with that, folks. If you look at this trade, there was an extremely fast move to the upside that had an even faster retracement right here. The market came off of 5744, came back ‑ what is that 40, 60 pips? ‑ in just a couple of hours. So it was very, very quick that the market came down.
We did not get a very decent little dipper at all. And sometimes the market does that. I wish they were all easy. I wish I could tell you exactly what the market was going to do, but frankly nobody can. Right now, though, let’s go back to yesterday’s video. What are we trying to do? We’re trying to confirm either the existence of buyers or not. If the buyers down here are serious and they’re big players, you’re going to see this market turn back around, come to 5640 or so ‑ maybe even a little bit lower ‑ and then push to the upside.
So if you’re not in, so what? The conservative ‑ again, if we focus on ‑ you know, let me not even go there. Let me say something different. Ultimately, you’ve got to make the decision: do you want to action, do you want the thrill of the trade, or do you want to make money? Because oftentimes it’s difficult to do both. Yes, had somebody been in there and been aggressive and just been willing to get in with no confirmation or very little confirmation, the trade would have worked out.
Is it good? Is it bad? It’s just different, folks. I prefer to use a conservative basis. I’ll let somebody else take this trade, because I have seen plenty, and I mean plenty, of trades like this one back here, like this one right here, like this one right here. Let me switch up to the four‑hour bar. Like this one. Like this second peak. Like this second peak. I mean, there are all sorts of trades that it just doesn’t work out on. That’s just how the market works.
All right, now, as far as a short trade, I need to see some kind of flag. I need to see a pennant pattern. I need to see some sort of compression before I’m willing to get in front of this support level and then this momentum. But, if we do get a move down here, about 5567, 5560, yeah. I’d be willing to take a short down there, realizing that I’ve got support very, very close at 5556, and then again down here on the low, about 5540. Right about there.
So again, short position is open. I’d prefer to wait for a compression pattern ‑ flag, pennant, something like that ‑ before I decide to get it.
Comments on this entry are closed.