My assumption is full charts can be viewed. All averages are Simple, not Exponential because I don't use them nor do I like them in my own trading methodology. Not to say they don't work nor serve the trend following purpose. I'm just not nor ever will be a fan. Said with respect to users.
Monthly 253 Day Average-- Important is the EUR/USD bottom that is here. To all the EUR/USD traders and false prognosticators, this is the point of determination. The exact bottom=1.2097. Should prices break on a clean candle close basis, we have a new trend down into uncharted territory in the modern day. Uncharted because price breaks and exchange rates at these levels further insures economic announcements remain disastrous and more trouble ahead for Europe. How do you know? New long term calculations must be factored with a break of this most important of lines. We could see a 0.9700 EUR/USD in years to come. Exchange rate levels are as important as methods of finance as they are as economic documents.That;s what a break of that line says. Its historic as one can tell by viewing past years. Will a break occur?
The central banks are buying every Euro they can so the 1.2097 line will be heavily defended. This says volatility is ahead for the next week. For me, 253 represents US trading days minus weekends and holidays. Its a better indicator because it represents a solid cushion for prices and its used by central banks.
55 and 100 Day Averages. Present averages are turning down but none crossed yet. The present picture says nothing due to the importance of the 253 day line. Only a cross of the 55 then 100 day line below the 253 line has statistical significance and ensures the downtrend continues with clarity. Notice past crosses of the 55 and 100 line above the 253 day line and notice the trends.
Fakeout Candles. I again highlight Fakeout candles on one instance but many exist. Those are no trade zones, caution zones because you can't know where prices will go.
10 Cross 21 in July 2006. 10 cross 21 day line with support of the 55 day line resulted in a beautiful trend. Its a textbook example how normal markets and these various MA's operate.
Volatile times. Since 2010, we've seen uncertain economic times that led to uncertain direction. Just ups and downs without trend or real conviction as evidenced by the ugly lineup of the lines. That's textbook examples of economic uncertainty when moves like that occurs. Proper exchange rate alignments and market movements must be clear as my highlighted trend so Governments, world companies can see a clear path to fund operations now and in the future. While we may love volatility, sporadic moves in the long term are markets out of balance.
10 and 21. Best method to capture those quick and short trend moves but be aware of positional longer term averages as they may act as either support or resistance from above. They say how far will the trade run. Only enter a trade on a full candle close of any cross otherwise its risk of Candle Fakeout.
My continued thank you's to the administrative persons at FX Street. Though I advertise my book Inside the Currency Market here and at btwomey.com, a note of caution and said with all respect. That book is highly sophisticated and not meant for new or beginning traders. Only serious, serious market students must consider that book. Thank you and hope all learn from my posts.
Stay tuned as Brian Twomey again goes Inside the Currency Market