Chart Analysis for Beginners

[Pip Daddy]

EUR/USD 4-Hour

Look what we here…some bearish divergence. The price has been making higher highs while the oscillator has been lower highs. This move up might be done for now. I’m going to short now at 1.2020. My stop will be placed above the previous high and above the 62% Fib line at 1.2045. My profit target will be 1.1955, at the 100% Fib line where the purple 200 SMA and pink 50 EMA are also chillen’.

 

[Pip Daddy]

EUR/USD 1-Hour

If you took my short trade from this chart yesterday, you also would have been stopped at 1.2035 for a 15 pip loss. I liked this trade because the market would have told me if I was pretty much right or wrong really quickly. That’s why you must always use proper money management. It’s all about probabilities and even though this trade didn’t go my way, I thought it was an extremely “low risk high potential gain” setup.

Bearish divergence still persists on this chart as well. The price has made higher highs while the oscillator has made lower highs or flat highs. I still believe it’s headed down. Off course I could be totally wrong.

 

[walker123]

keep up the good work..

 

[Pip Daddy]

EUR/USD Daily

Here’s another daily chart where I’ve applied the Fibonnaci retracement levels to its most recent swing high and most recent swing low. Notice how the pair found resistance nicely on its 76% Fib line. If this resistance holds, I see the pair falling down and finding support on its 61% Fib line. If the resistance breaks, then it’ll try and break the 1.2300 level.

 

[Pip Daddy]

EUR/USD Daily

Check out the Fibonacci retracement levels on this chart. Notice how the pair got smacked upside its head when it reached its 76% Fib line. That is its immediate resistance. Currently, this pair is testing support at its 62% Fib line. The candle hasn’t closed yet so it hasn’t officially broken support yet. If it does, look for to test its next support at the 50% Fib line and then its purple 200 SMA.

Notice how the three moving averages are moving ever so closely to each other. Watch out. That’s a possible sign of a big move coming.

 

[Pip Daddy]

USD/JPY 4-Hour

The pair has broken back above its 24% Fib line which is now its immediate support. Check out how the 38% Fib line is close to the 117.00 level. Here’s a trade idea. Buy the pair now at 116.50. Place your stop 20 pips below at 116.35 which is below the 24% Fib line. Target 117.00. I will move my stop to breakeven once I'm up 15 pips. This is a very aggressive trade because the current candle hasn't closed yet which would confirm that the 24% Fib line truly is support but I like the reward-to-risk ratio.

 

[Pip Daddy]

USD/JPY Daily

This pair is fighting its pink 50 EMA right now. It wants to go up but the pink 50 EMA and blue 100 SMA won’t let it. Looking at this chart, the pair could head either way. If the 50 EMA and 100 SMA hold as resistance, I look for a fall back to its double beezy (bottom) around the 115.50 area. If the resistance fails, I look for a rise back up to its triple teezy (top) at 119.00.

 

[Pip Daddy]

EUR/USD Daily

Here’s another daily chart using Andrew’s Pitchfork. Look at the area where the falling green trend line has intersected with one of the tines. I’ve marked it with a red circle.

Notice how the pair has found support at that area. Let’s see if that support can hold. If it does hold and can close above the purple 200 SMA, I’m looking for the pair to rise up to its red tine. If support fails, then I look for the pair to fall to the green tine.

 

[Pip Daddy]

USD/JPY 4-Hour

This pair looks to be having a tough time at its 62% Fib line. Will that Fib line act as support or resistance? Only time will tell. The highest this pair reached after the FOMC meeting was 118.05. I’m looking to buy if it can pass that price. I will buy at 118.10. My stop loss will be 117.70 which is right below the lows of the past two candles. My initial profit target will be 118.50. Once it reaches this level, I will remove half my position and move my stop to breakeven. I will then go for 119.00. This is an aggressive trade but I’m willing to throw the dice. It's all about probabilities.

 

[Pip Daddy]

Recap: USD/JPY

This pair pretty much went nowhere today. Resistance is still at 118.00 while support seems to be around the 117.50-70 area. Choppy and directionless is what I’d describe this pair at this moment. I’m usually clueless on the direction on any currency pair, but I’m really clueless for this pair. I’m going to sit on the sidelines for now.

Trade Idea:
I’m going to sell this pair at 117.60. My stop loss will be placed above the 118.00 level at 118.10. My profit target will be 116.50.

Trade Update:
I went long at 118.10. Then there was this gigantic earthquake and this building almost fell on me but I luckily dodged it. Then all of sudden angry green Martians came out of the sky and started attacking me with lasers and I blasted them away with my garden hose since their spaceships were flammable to water. Then this giant groundhog came up from underground and tried to eat me but I punched it in its mouth and knocked it out. And finally I was stopped out at 117.70. What an adventure and it just cost me 40 pips. Priceless.

 

[Priceman]

Oh my God ! I just stumbled on the babypips site and it's fantastic. Just reading your thread and had a quick look. I'm going to read everything on there.

Thanks and keep up the great work.

Maybe this is really simple and I can make some good money after all.

 

[Pip Daddy]

GBP/USD Daily

I currently see this pair as range-bound between 1.7624 and 1.7230. I’ve applied Fibonacci retracement levels on this sideways channel. Notice how the different Fib lines act as effect support and resistance levels. The pair was able to break and close above its 76% Fib line…again. Notice what happened last time. A bunch of spinning tops/doji formed and back down it went. Will this happen again???

 

[Pip Daddy]

EUR/USD Daily

This pair has managed to close below its purple 200 SMA. If it continues to fall, it will face significant support around there area containing the pink 50 EMA, blue 100 SMA, and orange ascending trendline. Keep an eye on this area this week. If the pair is able to break and close below this, I’m betting the farm and shorting.

The oscillators are giving off bearish signals. The MACD shows a bearish crossover. Stochastics also shows a bearish crossover inside the overbought region as well as beginning to fall back below 80.

 

[Pip Daddy]

EUR/USD 1-Hour

Here’s an hourly chart that’s also showing bearish divergence. The price is making higher highs (HH) while both oscillators are making lower highs (LH). Because all three chart timeframes I’ve looked at are making bearish divergences, it looks like this rally is puttering and I’m looking for this pair to drop. Here’s a super aggressive trade. Short now at 1.2380. Place your stop at 1.2405 which is above the most recent high. Target 1.2315 or 1.2300 depending on your greed. Use a 25 pip trailing stop.

 

[Pip Daddy]

RE: EUR/USD 1-Hour

Since I won’t be trading tomorrow because it will be like watching grass grow, let’s review my trade recommendation from yesterday.

Here’s what I wrote:

“Here’s an hourly chart that’s also showing bearish divergence. The price is making higher highs (HH) while both oscillators are making lower highs (LH). Because all three chart timeframes I’ve looked at are making bearish divergences, it looks like this rally is puttering and I’m looking for this pair to drop. Here’s a super aggressive trade. Short now at 1.2380. Place your stop at 1.2405 which is above the most recent high. Target 1.2315 or 1.2300 depending on your greed. Use a 25 pip trailing stop.”

Here’s what happened:

The trade triggered and I was blessed by the forex gods with a cool 80 pips.

 

[Pip Daddy]

EUR/USD 4-Hour

This chart is still showing bearish divergence. I’m looking to sell this pair if it breaks its trendline and its horizontal support from its previous high.

Here’s my trade:

I’m going to short at 1.2390. My stop will be 1.2340 which is right above its most recent high. I have two profit targets. My first target is 1.2340, where I will remove half my position and move my stop to breakeven. My second target will be 1.2300.

 

[Pip Daddy]

EUR/USD 4-Hour

A nice triangle is forming here. As the price gets tighter and tighter, we could see a big break out of the triangle. Just in time for the ECB monetary policy decision tomorrow.

Short 1.2580. Stop 1.2610. Profit 1.2530.
Long 1.2710. Stop 1.2680. Profit 1.2760.

 

[Pip Daddy]

EUR/USD 4-Hour

The 1.2690 level looks to be acting as good support for this pair on this chart. The ascending blue dashed trendline is also providing nice support. If this pair can manage to break through this support, I’m going to sell this pair. Here’s my trade idea:

Sell at 1.2670. Place your stop at 1.2730. Target 1.2610. Exit half of your position. Move your stop to breakeven. Then target 1.2550.

 

[Pip Daddy]

EUR/USD 1-Hour

Bearish divergence seems to be everywhere! Support is its red trendline for now. If the pair can manage to break below support, I see it falling at least to its previous low of 1.2660. If the candle does close below the trendline, I will sell this pair. My stop will be placed above the high of the candle prior to the breakout candle. My profit target will be 1.2660.

 

[Pip Daddy]

USD/JPY 1-Hour

Japan’s Ministry of Finance issue warnings today that they might be “intervene in the yen”. This is Ministry of Finance talk for “buy a gazillion dollars to purposely depreciate their yen”. In the past, the Japanese has started sweating bullets at the 110.00 level, so I’m not surprised intervention comments are coming out. And don’t forget about their nemesis…China.

China has continued to purposely keep their currency weak especially against the dollar. This allows their export to remain cheap which foreign countries and Wal-Mart shoppers alike love. So the yen is appreciating versus the dollar but the Chinese yuan is not? Americans love a bargain. They will stop buying imports from Japan if they can get it cheaper from China. This ain’t going to fly with Japan. That’s why they’re thinking of intervening. They don’t want this to happen. In the news, Japanese corporations are also complaining about the recent rapid appreciation of the yen. So keep an eye out on the 110.00 level. It could be a very tough floor to break.

Which leads me back to technical analysis (that still works?). There is positive or bullish divergence on this chart. Price has made a lower low while the oscillator has made a higher low. This usually signifies that the sellers are exhausted. Maybe 110.00 will hold after all. For now.