Forex Investment and Currency Trading

In recent months there has been a significant degree of IAOL – “its all one trade” – in financial markets, with a high degree of correlation of risk-seeking and risk-aversion trades. In particular, movements in equity prices have provided a significant “guide” to performance in the foreign
exchange markets of growth oriented currencies versus risk-aversion currencies– with the AUD/JPY cross a key G10 example on that relationship.
It is in this context that recent signs of support for equity prices could take on significant importance for currency movements during the weeks ahead. First, the S&P 500 index appears to be testing – [...]

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FX Bottom Line: If the S&P 500 Index manages to form a bottoming pattern against last Thursday’s bullish key reversal low of 818.91, the DXY is likely to undergo a retracement phase that would highlight support levels at 84.45, 83.82 and 82.32. Keep an eye on this relationship this week.
The possibility is raised that the S&P 500 Index is attempting to stabilize against last Thursday’s (bullish key reversal) low of 818.91.
With a potential triple bottom pattern forming near 845.27 for stocks, a close above resistance at 940.73 would produce a bullish trend reversal.
This would then highlight the reaction highs near 1007.46 [...]

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The first step is to commit to making time for market analysis. The more regular your analysis, the greater the feel you’ll develop for where the market has been and where it’s likely to go. Also, the more regularly you update yourself on the market, the less time it’ll take to stay up to speed. It’s a lot easier updating yourself every day than it is trying to catch up on several days’ worth of market news, data, and price developments.
Give some long, hard thought to how much time you can realistically afford to devote to market analysis before committing [...]

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The following candle formations are indications that price trends should continue. Price gaps within the patterns occur in each of these formations:
Upside Tasuki Gap
In a rising market, a white body gaps higher. This is then followed by a black body which pens within the white body, and closes lower, but does not fill in the gap. It is important that any lower shadows also do not fill in the gap. The market should be bought on the close of the black body (as long as the gap was not closed). Normally, the black body would be considered bearish. In this [...]

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Umbrella lines
These candles can be recognized by two features, a real body at the upper end of the entire trading range, with little or no upper shadow and a lower shadow that is at least twice the length of the real body. The color of the real body isn’t important.
Umbrellas can be either bullish or bearish depending on where they appear in a trend. If they occur during a down trend, they are called hammers and are bullish, as in “the market” is ‘hammering out’ a base. If an umbrella appears in an uptrend it’s bearish, and is referred to [...]

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