Setups I am watching

Hope you all had a nice weekend and recharged your batteries for this week. I hope this week brings us a lot of pips and points :)

News out of China are not conducive to risk at all. Just a quick look at Hang Seng index confirms a downtrend break and it currently is sitting at a support.So better hold at 22440. Accordingly, Ozzie and New Zealand Dollars are also having rough time  

AUDUSD Weekly

 Daily

4 hourly

NZDUSD Daily

USDJPY Daily

 4 hourly

AUDJPY Daily

 4 hourly

 EURJPY 4 hourly

Finally Dax30 - German export powerhouse is showing signs of exhaustion....no wonder given what is happening to Hang Seng. Get the chute ready?

Good luck

Updates

Short Opportunities

Call it a complex H&S with double heads or a double top but WTI Crude Oil finally broke down out of its 2 month long range today to close below 95. If 50SMA holds, then 95/95.50 should be a good opportunity. On sentiment front, hedgies apparently are extremely long positioned which supports our short idea.

Another short candidate is EURUSD which closed below its 50SMA and an uptrendline dating back to November. Admittedly, it is currently sitting at a major support range of 1.3245/85 and still above another uptrendline dating from late July. Should support hold, then we will likely retest broken uptrendline.

P.S. Cable had a range of 260 pips today. I am wondering whether we are in for a pause in selling?

One more chart: AUDJPY Ascending Triangle breaking down instead?

Trading trendlines with RSI

It has been a long time since I last posted on my blog. Mea culpa! It is not a good reason but all I can say is that trading actively keeps me busy and after a day's work all I want is to switch off.

Anyhow, the topic that I wanted to share with you is that of trading trendlines wit RSI. I did a couple of my own studies on this amazing indicator and to my surprise found lots of things that TA books do not even mention. I already started trading using my new found knowledge and to be honest I am excited. I would therefore like to share my findings with you. This post will be the first one in the RSI series articles,

Usually, a trendline that one draws on price and on RSI break down or out more or less at the same time. That would be a good trade since you are getting 2 confirming signals simultaneously. But what is more exciting is when RSI closes below or above the trendline ahead of the price. Check this 4h EURUSD chart:

In all four cases RSI broke its trendlines first, telegraphing us urgently that an uptrend/retrace/consolidation is about to come to an end. More importantly, it told us that those trendlines that we drew on EURUSD are about to get seriously violated. I want to underline that RSI trendline break means very high probability price trendline break.

This is an hourly chart showing in more detail the latest decline. Note how another trendline got broken down first, then EURUSD retested it and rolled over.

A couple of Dos and Don'ts:
 - drawing trendlines on RSI is very subjective. So draw using visible price swing highs and lows
 - do not draw steep trendlines on RSI as they will not work
 - wait for RSI to break and close below/above its trendline before you put your position on
 - stops must be at price swing highs for shorts and swing lows for longs.

In my next post, I will elaborate on RSI swing highs and lows

Good luck