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I hope all our readers have had a Merry Christmas and a Happy New Year and that 2009 will bring you all the happiness and success that you could possibly wish for!
2008 was a turbulent year for investors but proved an extremely profitable year for many traders. The currencies certainly provided numerous opportunities for profits and with the size of the moves that occurred you only needed to “nail” one of them to make 2008 a very successful year.
How well placed are you to take advantage of the opportunities that will come around in 2009? What is your plan for the year?
It’s important to enter each trading year with a solid plan for how much money you intend to make from each of the markets you will be trading. It is also important to have an idea as to how each market may unfold.
This is done by analysing the market action on your daily, weekly and monthly charts, and determining which part of the market cycle we are in.
Let’s take a look at the Euro Futures Contract (EC-Spotv) in ProfitSource, which coincidentally celebrated its 10th Birthday on January 4th.
Some of you may remember an article I wrote in the December 5th, 2008 edition of the Trading Tutors Newsletter titled “Rise of the Euro”. In this article I spoke about 2009 being the year that the Euro would overtake the US Dollar as the preferred currency of the world and that we could expect to see some big up moves once the Euro had consolidated from its November lows.
Chart 1 below shows the market action since that article.
Chart 1
click to enlarge
The market ran up strongly out of those lows, gaining over 2000 points before selling off strongly. Remember, a market will not run from a bottom to a top in one move – WD Gann says to watch for three sections, and possibly a fourth.
If this is the case, then what we are seeing now is a retracement, and there will be more upside to come. Generally speaking, we would watch the 50% retracement level to judge whether the market is weak or strong, though in fast moving markets it pays to also watch the 62.5% level. Often the market will shoot through the 50% level and pull up on the 62.5%.
Chart 2 shows these levels on the Euro.
Chart 2
click to enlarge
As you can see, the Euro has passed through the 50% level and is approaching the 62.5% retracement level.
If the market can hold above this level, then break back through the 50% level, we can look for another bullish section of the market. The 26th January is worth watching as a potential starting date for the next move up.
Patience is the key here. I believe the Euro will have a very strong year, giving several opportunities for traders to get set for a very strong run. There is also a good chance it will break through the current All Time High of 1.5988 and move up further.
However, as David says, “Don’t be anticipatory stupid”. Wait for the right time, wait for the right signal and trade sensibly.
2009 will be a big year for the Euro – make it a big year for you too!
Be Prepared!
Mathew Barnes
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