The Yen has a few levels that I want to keep an eye on.  I also want to let you all know that June is "Back to Basics" month.  I am going "old school" on the charts all through June.  On this first chat you can see that I have outlined the four steps to drawing lines and levels that I also taught in the book 'Forex Trading for Maximum Profit".

The 180 minute USD/JPY shows the second (lower) uptrend line that you can see would have caught you by surprise if you did not draw all your lines and levels.  This is why it is so important o draw all the levels and not just one uptrend line or one downtrend line.

The daily chart of the USD/JPY shows that the "inside the range play" that was discussed last week during the Forex in the Morning chats followed through the downside as 122.00 was resistance yet again.  Scroll down if you want to see more about the rule-bending "inside the range play".  In fact this entire page is full of some excellent posts that you should keep as resources.

The outlook on the Canada is still more of the same:  the Canada gaining strength verses the U.S. Dollar.  the trend on the daily is still firmly down.  However on the short term charts, there is o reason that the occasional move higher couldn't be traded to the upside.  In this case there is a nice three o'clock Wave and a momentum trade that was confirmed by the MACD Histogram.

For those of you who are uncomfortable with taking a short term trade to the long side in the face of such an overwhelming downtrend, you can ofcourse play the momentum set ups as "one sided trades" and take only the short set ups...but this could lead you to missing short term trades like the 30 pip move this morning.

Finally, I want to show you a few looks at the Dollar and the ranges that the Dollar is testing now.  Having taken out the 82.00 level should have us looking to the next support level lower and that is at 81.80.  The yellow area I highlighted the low set in mid-May at 81.66 - 81.67.

Here you can see the support level even clearer and this will be the next support level to watch.

This one is fresh off the top of my head though unlike yesterday's "inside the range" play which is time-tested in the futures and stocks market.  This one is what we will call the "aggro wave" play.  I will be watching this type of aggro Wave entry in the coming weeks and will test it for the next few months.  Do not add this set up to your foundational three set ups.

This 240 minute chart of the 240 minute chart of the USD/CAD was one that a was brought up at a recent "Forex in the Morning" chat.  The question was whether this set up was a Wave short.  All Wave entries are reversal entries and ideally the set up would occur directly after an uptrend or downtrend.  I have a short green line on the chart showing what was the bounce or short rally.  I would not consider this an uptrend - naturally this would mean that the Wave short with CCI confirmation would not be an option.  Add to that, you can see that the trade was not confirmed at the break of the bottom line of the Wave.

Prices did hang around the bottom line of the Wave and this is certainly not the first time that a set up like that has been brought up in the chat.  For that reason I can tell that obviously there is a desire to enter a set up like this.  I also know that the feedback from my first book tells that even now one of the most popular chapter was the Wave/CCI chapter.

So for you "aggro Wave" traders out there:  It this is a trade you want to take, you MUST approach it as an aggro trade.  use the bottom line of the Wave as the entry and use the middle line of the Wave as the stop loss.  This is a more "rolling hills" type Wave, 2 to 4 o'clock but not a true quick transition or short cycle entry -- which is the ideal 2 to 4 o'clock trade.  I hope I have made that much clear. 

Let's also look at this next chart.

The 60 minute chart has the best trigger for the short play that the 240 minute chart also signaled.  the 60 minute chart confirmed as prices traded lower so it was not pre-confirmed but the Wave is a good, three o'clock Wave and the uptrend line is breaking below the "00".  In a good-better-nest triage, the 60 minute chart is a better set up as compared to the 240 minute chart even though the 60 is a one-sided pattern.

One of the most asked questions is "Can I trade inside the support and resistance levels?"

There was a time that I did this often, but only in futures and stocks.  I spent the first three to four years on my trading career working on support and resistance strategies and that was the eventual birth of what you see now in my trading.  One main reason is that I have found the "inside the range" entries to be difficult for new traders as the triggers often have as much to do with feel as they do a single price point.  In you'll notice, my three core strategies all have a concrete point at which the trade triggers - playing the inside of ranges do not always have that concrete trigger... as opposed to playing the breakout of a range (momo) which does.

Let's take a look at the 180 minute chart of the USD/JPY.

This chart shows that the 120.50 levels has been good resistance thus fart through May.  This is also a major psychological number so it's stronger still.  This is a classic "short resistance" set up -- which I do not teach.  It's not that it doesn't work but it does necessitate a great deal of feel.  Why?  Well let's get into the set up.

The USD/JPY has had a difficult time finding buyers at and above the 120.50 key psychological level. The pressure at this price has sent the USD/JPY lower each time it has approached it over the last few sessions.  Ideally the entry short in this scenario would be at or slightly below the 120.50 level. The trick here is that the closer the short can be taken to the "50" pip the less risk in the trade. If the market does find buyers at the "50" then the trade is no longer valid as resistance should be found between 120.50 and 120.55. The other scenario is the the USD/JPY doesn't quite reach the "50" and sells off before hitting this key resistance level. For a more aggressive trader, a short between 120.45 and 120.50 would be warranted but would also add five pips to the risk. Not too terrible.  Lately there is has been very little correlation back to the U.S. Dollar Index so handle the USD/JPY on it's own charting merits. Again remember that the validity for the short is the selling pressure that has repeated kept the USD/JPY from trading higher beyond 120.50 and resistance will be expected between 120.50 and 120.55.

The one thing that makes this set up valid is that the Wave is too angled to be a momo, not steep enough to be a swing.  The 2 to 4 o'clock Wave here is not valid for a Wave entry either because it is not occurring fresh from an uptrend or downtrend.   

During the morning's chat I saw a set up on the 60 in the GBP/USD with a breakdown below "00" resistance and through the support of a rectangle pattern.  All good stuff with the exception of the Wave which was sideways but a little "lumpy bumpy".  So we treat this trade as an "aggro" set up as you can see on the chart.  "Aggro" means a smaller position, tighter stop and vigilant trailing stop.  For me the arithmetic of the trade did not make sense unless I used the "00" as my point of validity which is often a great resistance level to use regardless of the set up.  An alternate sop loss with for those of you with a higher risk tolerance could have been the bottom line of the Wave.  With a 9795 short the 9805 stop loss made sure that unless the bulls took the "00" I'd remain short.  We're there other levels to use?  Sure but with a support at 9780 and 9768, the risk/reward would not make sense and frankly on this Aggro trade, I do not want to see the "00:" as anything but resistance.

It meandered a while, but 9805 was finally taken out as was my stop loss.  Out for a quick 10 pips.  I can live with that.

Another reason this trade looked good even on this doldrums Monday morning is because there were a number of hot zones today in the GBP/USD.

The resistance at 2200 on the Swissy correlated with the support at 3516-3520.  Once the "20" pip was broken in the Euro -- the Swissy ran.

Head's up...this is a large video file and will take a few seconds to preload.  The playback will begin when the preload hits 10%.

Here are a few facts to ponders...

1.  When reports come out, there is already an opinion that has been "discounted" into the market or as it is said "backed into the cake".  This number is the consensus.  Month to month results are not what move the market but rather the difference between the consensus and the actual number.

2.  If the market has risen sharply before the report, the report will have to surprise to the upside for prices to continue higher.  Same goes for a market that had sold off before the report...the number has to be a larger disappointment.  You must consider where prices have already come from as you apply any fundamentals.

3.  Fundamental data is not a level playing field.  Charting/data providers such as eSignal and Metastock pull from dozens if not hundreds of sources so you are seeing the inside bid and offer and last trade reflected on the charts.  However, the individual trader (home-based) rarely is the first to receive the data or whisper number...and even if a home-based trader is plugged into a real time news feed, the type of professional order entry access a trader would need to capitalize on this information is not widely available.

Back to my original statement, you must know when and how potentially volatile a report may be...a visit to forexfactory.com will solve that.  Knowing the actual verses consensus will give you an idea of how and how long the fundamental effect could last.  However this aspect takes some experience - and watching releases is the best way to get that experience.

Second chance entries are all about what you do when you initially miss an confirmed entry.  I'll be using the 60 minute Pound for this during the webinar.  I missed the initial short entry this morning on the Pound and watched the candle bounced against the direction of the trade but so not so much so that it reached the stop loss I was using. Second chance entries are only valid after the confirmed entry as prices enter "no man's land".    If the profit target is reached on the missed entry, the second chance entry is not allowed.  And obviously if the stop loss level is hit, you do not want a second chance entry. 

I call these entries "second chance" for a reason.  It's literally a "second chance" at a missed entry.  Often these entries do allow for price improvement which means that the initial trigger price can be improved upon because prices did trigger the trade but then reversed.  It's during this reverse that price improvement can be had.

The webinar will be uploaded by this weekend but this is just a taste of what's to come and I highly encourage everyone to take notes during this playback.