Just three weeks ago I identified a rather rare H-bottom price pattern on the US Dollar Index (USDI) weekly chart during a period of prolonged stagnation that lasted over 13 weeks.
There were also a couple of bullish key reversals evident too. Both the H-bottom (so called because it looks like a capital H) and key reversals caused me to predict that we were “on the cusp of a sizable rally in the Greenback (USD)”.
I should also point out that USDI has just broken its long-term downtrend line last week and we have a breakout on our hands.
There’s some fundamental action brewing nicely too: due to hawkish rate hike comments from Fed policymakers, there’s growing reason to believe the USD rally against most major currencies will continue… big time!
And of course all this is working out very profitably for us these last couple of weeks.
Since I recommended we buy to capitalize upon the impending dollar rally, the dollar’s completed the largest three-week rise in two years. The USD rally has seen EURUSD plummet from 1.2400 to 1.1900, and GBP has dropped from 1.4200 to 1.3500.
And the trades I recommended delivered gains of 1,230 pips so far:
All this action happened since April 22 as you can see. What’s more, most of these trades remain open for further profits. I expect further gains in most if not all of them, especially NZDUSD.
If you’re new to FX trading, you might be wondering what “pips” are all about and how much money this means.
The value of those 1,230 pips depends on your trading size: if you’re trading one full lot then the $1,000 at risk translates to $12,300. If you want to trade bigger or smaller, then adjust the profits accordingly.
To put this into perspective, we made 9,000 pips last year. And right now we’re doing very well in just the last couple of weeks indeed. This could be a record-breaking year.
But let me remind you of how important it is to be patient for the best moves.
These fertile market periods don’t come along every day. In fact, the ability to identify and capitalize on seismic paradigm shifts in the market is at the core of my trading philosophy and methodology.
This is exactly the kind of highly profitable period I love, and it’s set to continue for awhile yet based purely on the momentum of the U.S. dollar.
Let’s look at the best pairs to keep riding that wave.
My favorites are the Australian dollar against the U.S. dollar (AUDUSD) and the New Zealand dollar against the U.S. dollar too (NZDUSD). As you’ll see in a moment, both pairs feature well formed bearish double-top price patterns on their monthly charts. The presence of these bear price patterns, all but guarantee a large price decline in these pairs over the next several weeks and months.
So let’s take a look at NZDUSD first as I think it’s the best prospect for long term bearish gains.
The first point I want you to note is the Adam and Eve double top. This is called an Adam and Eve top because the Adam top is a single spike while and Eve is more rounded.
NZDUSD broke the neckline for that double top and then retraced. It’s since formed a triple top which is extremely bearish. As you can see, April was a long bearish drop in this pair and I think there’s a lot more to come.
NZDUSD should hit the new triple top neckline and then drop further from there. I expect a substantial decline in NZDUSD in the weeks and months to come. Rallies should be seen as opportunities to short.
The AUDUSD likely has a similar fate lying in wait for it.
As with NZDUSD, this is a monthly chart. There’s a double top here too and the neckline was subsequently broken decisively.
AUDUSD hasn’t rallied much since that huge drop and has formed a new double top since. Currently the price is right at the neckline of that double top and once it’s broken — which could be as early as this month — then much lower prices are on the way.
Before I show you another chart, I should discuss the Japanese yen (JPY) briefly. The yen is currently even stronger than the dollar right now. That means USDJPY is not a good trade at this time. Over the longer term, I’d be inclined to short USDJPY once the dollar’s momentum runs dry … but that time is not now.
So stay away from USDJPY even though all other USD pairs are fair game at the moment (shorting AUDUSD and NZDUSD are the best choices, however).
But there’s another way to take advantage of that JPY strength: short GBPJPY (the British pound against the yen).
That’s because GBP is rather weak at the moment as we see in this weekly chart here:
This pair looks ready for another major bear run soon. The one in 2016 was huge and was potentially a $50,000 move. Right now we’re already up 200 pips in a short position in GBPJPY.
Obviously I’d love to see another 5,000 pip drop this year — GBPJPY definitely has the history for it. For now we’ll just have to hold onto our shorts and wait.
Remember, it’s opportunities like this that pile up the profits over the long run. You pick the best of the patterns when they arrive, pile in … and wait.
This is how we made more than 9,000 pips as Pattern Traders last year, after all.
And how we’ve taken 1,230 pips since April 22.
We patiently waited for — and then caught — the big moves based on patterns we saw in the charts.
To put that into perspective, remember that last year’s 9,000 pips is about $90,000 for every $1,000 at risk when trading one full lot.
And most recently we’ve been looking at $12,300 in the last couple of weeks.
That’s the kind of money that can provide for a very nice lifestyle upgrade if you’re so inclined.
So why not give yourself the best possible chance of grabbing some of those windfalls for yourself?
You can prepare yourself with my LIVE 2-Day Bootcamp where I’ll demonstrate exactly how to make trades just like the ones I’ve outlined here, including my “Lazy Trader’s” 5-step execution plan. That’s the one I’ve used to pull in more than 9,000 pips last year and highlight the potential winners I’m showing you today.