Monthly Market Updates on Exotic Crosses (October 2012)

By Mustapha Azeez
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“If the market conditions are not optimal, you have a choice: Stand aside and wait for conditions to change, or adapt to the reality of the current conditions… Over the years, I found that I can't always trade my favorite markets. I have to trade in markets where I'm able to make money.” - Joe Ross

Irrespective of the timeframe used in your analysis, one thing remains important in trading, that’s the methodology that enables you to follow the trend. It’s now vivid that when Smart Money maintains long positions, pullbacks to support levels would be expected so that new long orders could be opened at those levels.

Below is the summary of some of my trading forecasts this month:


Primary trend: Bullish

The AUDUSD pair experienced mixed results last month. It went up by over 350 pips and later fell by more than 200 pips. On the chart, we have a Convergence Pattern - meaning that the current bearish threat is weakening (indicated by the trendless ADX which has gone far below the level 30) as the MACD gives a new ‘buy’ signal. For this month, a long trade is preferred.


Monthly Market Updates on Exotic Crosses (October 2012)

Monthly Market Updates on Exotic Crosses (October 2012)


Primary trend: Bearish

There were also mixed results on the AUDJPY cross last week: the first half of the month witnessed a rally and the second half of the same month saw a pullback. There is what looks like a potential bearish move on the chart. The MACD is already giving a ‘sell’ signal (as confirmed by the ADX -DI which goes up above its +DI counterpart). This new trend would be confirmed as strong when the ADX line goes above the level at 30.



Primary trend: Bullish

 In the context of the current bullish trend, this cross dropped by over 300 pips in the month September. The primary trend is still northward - giving one possibility of a buying lower in an uptrend. The ADX is trying to cross the level 30 to the upside, and when this is done, the condition on the MACD will showcase the next signal. If the signal line and the histogram are still above the zero line, then it is a ‘buy’ signal. Otherwise, it is a ‘sell’ signal.



Primary trend: Bullish

The EURCAD is still in a valid uptrend - only that the steam in the market is not that strong at the moment. I can say that there is a Convergence Pattern on the chart. The MACD still displays a clear bullish victory, and a new entry level would be confirmed if the ADX (which is presently below the level 30) crosses the level 30 upwards. If not so, the MACD histogram would be going towards zero line as the northward bias is currently violated.



Primary trend: Bearish

The AUD is vividly weaker than the NZD: the AUDNZD crossed plummeted by over 360 pips last month. And it looks like this will continue, The ADX line is above the level 45 as the MACD shows a strong selling pressure in the markets. What we have now is a Divergence Pattern - a bearish confirmation pattern for that matter. Trend followers would do well to call a short trade.



Primary trend: Bearish

The GBPCHF did not experience much activity last month. There was no significant movement on either side (whether bearish or bullish). However, the MACD proves that the underlying trend still looks bearish. Nonetheless, this is not supported by the -DI that is situated below the +DI. The ADX is above the level 30, trying to point upwards. If the ADX continues like this, the market may turn bullish. But it is advisable to remain neutral right now.


Conclusion: When some instruments go up, some instruments fall down. All instruments cannot fall at the same time or go up at the same time. Although, when some instruments nose-dive, they do so continually and thus generate clean returns. Why is this so? Southward moves tend to be more rapid and extended than northward moves.  As certain instruments fall, it portends economic problems in some areas. For instance, inflation - which is a common economic problem, isn’t just a plague of modern-day life. But whatever the economic situation says, you can become financially free as a trader.

The article is ended by the quote below. It is a food for thought by Dr. Janice Dorn:

“The answer is really quite simple, and—just like so many secrets—is hidden in plain view. The type of thinking that made you successful in life outside the markets is the mirror image of that in the markets. In “regular” jobs, in the world of real life—there are rules. These rules are set down by other people. Other people make rules and you follow them. If you do not follow the rules, you risk for losing your job or your license. Think of medicine: a doctor must abide by many rules set forth by state medical boards. If they do not, they are warned, disciplined and may have their licenses revoked. The rules are out there and doctors follow them—or don’t (at their own peril and that of their patients.)… In other words, the same type of thinking that brought you so much success in the world outside the markets will not bring you success in the markets.”

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