Monday, July 21, 2014

AUDUSD Forecast for 21 July 2014

I'm focusing on my forecasting skills, trying to combine different data to come up with a story. 

I know many people will ask how is it possible to develop an informational edge as a retail trader, considering that we are usually the least-informed traders on the market. The edge is not informational per se. The edge lies in our size. Putting it another way, an informational analysis should show us what the smart money intends to do. Our small size allows us to enter and exit the market quickly. If we know what the smart money is doing, we can anticipate their orders. We're not smarter than the smart money, but we can anticipate their action and "front-run" them while they're trying to get their multi-million dollar orders filled. 

At the end of each day I intend to compare my forecast with the actual outcome, and hopefully hone my forecasting skills. 

COT Sentiment: Bullish. Last week's COT shows speculators adding to longs.

Technical Analysis: Slightly bullish. Price is showing some strength, remaining in upper half of range. The strong rejection off resistance during 2nd July 2014 failed to break the swing low, so the small uptrend within the range is still in effect. I expect price to retest resistance this week. 

Fundamental Analysis: Neutral. Ukraine and Israel / Gaza don't seem to have shaked the AUDUSD much. Any fear-driven movements should've taken place by now. 

Upcoming News Releases: None for today.

Forecast: Being a non-news Monday, I expect volatility to be low. The day's movement will probably be around 67% of ATR(14). Price will be range-friendly with a bullish bias. Friday's high and the 0.94000 level will pose a significant obstacle to upward movement. I expect price to range between 0.93900 and 0.94000, and between 0.94000 and 0.94100 (Friday's high). If 0.94100 breaks, then an upward breakout is likely and I would look to enter on the retracement.

If price falls, I expect strong support to hold at 0.93650. Price should rebound and head upwards.

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