The New Year Eve is usually not so profitable for Forex traders since the market becomes sharper and less predictable. Still, there is some volatility present, which means moneymaking opportunities remain even in such markets.
In this article the trading experts from Masterforex-V Academy will share with us some of their New Year trading tips and tricks.
New Year Eve Trading
Market Leader: If to consider numerous analytic reviews and outlooks, trading during the last days of the year implies little potential in terms of making money. They say the volatility and liquidity of such markets can be insignificant. It is supposed that the market goes flattish and the range movement continues till the first trading day of the new year. However, there are examples indicating the contrary. For instance, in 2010, EURUSD made a 300-pip rally after Christmas (Dec 25th) while the same currency pair dropped 400 pips during the first 3 days of 2011. The similar scenario took place in late 2011-early 2012. So, it seem like we should be careful about trading during the last days of the year. How can you comment all of this?
Masterforex-V Academy Experts:
Analytics reviews and outlooks usually contain some economic stats and describe past moves. Apparently, this info is not enough to make more or less clear conclusions. As for the pass price moves seen in the market of EURUSD during 2010-2012. The information looks interesting but cannot be applied to determine future moves. Meanwhile, traders need clear outlooks to open decent trades. The analyzed factors should be filtered to pick the major tendencies and to gather the puzzle of all those major facts in order to see the overall picture and to turn it into a trading plan. When applying wave-and-volume analysis the trader takes into account both explicit factors (wave count etc) and implicit factors (volume clusters etc). When merging these factors, the trader can eventually make more decent trading decision, thereby getting a certain competitive edge over the crowd. The synthesis makes it possible to reduce the risk while being able to boost the potential yield.
For instance, we analyze the situation in advance of the Fed's interest rate decision:
The upward move started on July 9th (the green arrow) exceeded the high of the year at 1.3710 and hit 1.3832. The further decline of EURUSD was caused by the expectations of interest rate cuts by the ECB (which came true on Nov 7th).
Later on, the price rallied again through a twisted upswing, thereby hitting 1.3810. The volume clusters accumulated inside red-arrow moves are located around 1.3520. This is the major mid-term support. It is interesting to note that the green-arrow move (rally) also accumulated a major volume cluster around this level.
A mid-term reversal will take place if the price consolidates below 1.3520. Further on, if the blue-arrow move started on December 11th continues to break the 1.3710 support, this will give way to a further decline to 1.3620 and 1.3520.
The forthcoming Fed releases and some other news may accelerate the move.
The alternative (bullish) scenario is about elongating the red wave once the price consolidates above 1.3760. If this is the case, the price may further hit 1.3810, 1.3832. Still, the distribution of volume clusters throughout the wave count tells us that the bearish scenario is most likely at this point.
Still, the situation may change during a thin market, some major news or in advance of Christmas and New Year.
The second example, analysing the market after the Fed's release.
The uptrend started on July 9th formed 2 major volume clusters – 1.3250 and 1.3520. The move started on October 25th can be considered the beginning of the bearish reversal. The supposition will be confirmed if the price breaks and consolidates below 1.3520 and further below 1.3296 (the end of the red bearish wave).
The upward move since November 7th (the blue lines) still fits a correction (recovery)against the red-line bearish move.
If the supposition is correct, the move started on December 11th is the 3rd red wave. The expected targets are 1.3090 - 1.2960. The scenario is also confirmed by the decline of EURUSD caused by the Fed's statement made on December 18th. Still, this is a small-scale move at this point.
The scenario implementing further blue waves cannot be completely excluded by now. By the way, the price has already shown a clear reaction to levels 1.3620 and 1.3710. The price consolidation relative to those levels will determine the near-term behavior of EURUSD.
Market Leader: These example do impress. When identifying clear entry and exit points, the trader could earn up to 150 pips from the downswing. Still, there were 2 scenarios. How to choose the right one?
MA Experts: You cannot make 100% certain decisions when trading Forex since there is always a chance that some shady factor (which wasn't taken into account) can change the entire picture. Everyone can make mistakes. Professionals do make mistakes and get losses. However, their winners cover and outpace those loser in the long run. This is what all of us should strive for!
If you want to learn how to anticipate Forex market moves and to make decent trading decisions most of the time, you are welcome to visit Masterforex-V Academy and its free school for traders and investors.
Market Leader and Masterforex-V Academy wish you Merry Christmas and Happy New Year!
