This text is from blog famous currency strategist Joel Kruger .
Overall, a rather quiet five days for EUR/USD, with the market confined to the previous weekly range (inside week) into the final session of trade. Still, upon closer glance, the price action has not been as lackluster as it might appear to have been. Since putting in a bullish outside week off of fresh yearly lows a few weeks back, we have seen a string of consecutive weekly higher lows which reflects a constructive market. Although it got close to breaking the sequence this week, the Euro managed to hold above the previous weekly low (1.2240) and adhere to this newly formed trend. From here, I am looking for a fresh weekly higher low at 1.2255, ahead of the next upside extension back above 1.2445 and towards the current objective which comes in by 1.2600 (38.2% of 2012 high-low/78.6% of June-July high-low).
ANYTHING BUT SUBTLE – Moving on, USD/JPY price action this week has been anything but subtle, with the pair managing to break out of a multi-day range that had previously capped gains ahead of 79.00 on multiple attempts. The break is significant, as it relieves immediate downside pressures, and helps to reinforce my constructive outlook, which has the market in the process of carving a medium/longer-term higher low in the 77.00’s ahead of the next major upside extension through the current yearly highs at 84.20. The next key level of resistance comes in by 79.65, with a break to mark the first time the pair has traded above the daily Ichimoku cloud since April. If breached, psychological figure resistance at 80.00 comes into sights, which guards against the most critical 80.60 level. The 80.60 level represents the key highs from June and the top of the weekly Ichimoku cloud. Once broken, we can expect to see the pair really start to accelerate to the upside.
RULES TO LIVE BY – I will close out the week with a healthy reminder of the key principles which represent the foundation of my approach to trading. 1) Always make sure you LOVE your trades and don’t just LIKE them. Trading the markets is difficult enough as it is, so whenever you decide to put on a trade, make sure that you are absolutely head over heels about it. This will translate into highly effective risk management, as it will ensure that you are not overtrading, while also leaving you in a much better psychological position to be able to deal with a loss should the trade not work out (ie a lot less room for second guessing). 2) Always make sure that you can sleep at night. A few years back I came up with the “Pillow Test” rule. If you find that your positions are keeping you up at night, make sure to reduce your exposure to the point where you can once again put your head down on that pillow and sleep soundly. I believe that if you employ these two simple rules, you will find that your trading will become a lot more rewarding and enjoyable.
Have a great weekend!”