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If you like playing EUR-JPY, then another opportunity to do so is presented before you. This is so, because price action has pulled the pair right where it previously was — the top of the channel.

Now the question is: Will the channeling behavior of the pair continue?

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In this case a simple approach would be to short the top of the channel.

Here are some fundamental analysis factors you must take into consideration: the Japanese core machinery orders, the trade balance as well as the industrial production data of the Eurozone, and of course, the EU decision on interest rates.

One thing though: Will the ECB hold its ground and remain hawkish on inflation, or will they start addressing the issue regarding the economic slowdown?

This looks like the thing to do is short the market with a wide stop in consideration of future data.

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About a couple of weeks or so ago the AUD-USD pair began to form a pattern on the charts that was readily recognized as a rising wedge.

Experienced and veteran traders would agree that a rising wedge pattern, more often than not, tends to indicate bearish tendencies, since in this case sellers would be quite reluctant to let go of their upper range control.

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By the way things are going at the moment, with the AUD-USD pair breaking beneath the lower trendline, buyers are, for the time being, out of the market.

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Just how far will this momentum take the US currency? If, with respect to the US dollar’s current position, and granting that it will remain so for quite a while, then you should take this pattern into consideration, incorporating it into your technical analysis and take a longer term short position.

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The key to making money in trading is having the ability of predicting what the next move is in the market. However, this is easier said than done.

Veteran forex traders have long known that if one were to become a successful trader of currencies, he or she should look beyond the world of forex, because currencies are moved by a lot of factors. These factors include supply and demand, politics, interest rates, economic growth, etc.

Economic growth and exports are both directly related to the domestic industry of any country. Therefore it is but natural for these currencies to be closely correlated with the commodity prices. There are three major currencies that are closely linked with commodities: the Australian dollar (AUD), the Canadian dollar (CAD) and the New Zealand dollar (NZD).

Other currencies, such as the Japanses yen (JPY) and the Swiss franc, are also affected by commodity prices, but overall possess a weaker correlation, are the Swiss franc (CHF) and the Japanese yen (JPY). Knowing which and why a currency is correlated with a particular commodity can help traders understand and predict certain movements in the market.

If you think commodity currencies trading is for you, it is best to always keep an eye on oil and gold market movements while the other eye should be glued on the currency market - look how quickly the market responds.

Because there will always be a slightly delayed impact of these movements on the currency market, this usually offers an opportunity to plan a broader movement in the commodity market as against the currency market. The thing is, as a currency trader, it is a great advantage to be well informed about commodity prices and how they affect the movement of currencies.

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Any commodity trader, especially seasoned ones, may find it worthwhile look at currency trading as an alternative to trading commodities.

Why is this so? In general oil, gold and currency have similar outlooks - a surge in one usually also means a surge in the others. Also, traders may an also earn interest if they happen to be on 2 percent or higher margin.

When you trade currencies, you should take interest rates into consideration. To cite an example, a trader who was long CAD/JPY would be able to make nice gains plus up to 3 percent earnings in interest income. The 3 percent estimate comes from Canada’s central bank rate, which is the amount earned, and deducting the 0% rates paid for shorting the Japanese yen.

These rates are unleveraged, meaning that with 10 times leverage, net of any exchange rate changes, there would be that much higher interest income. Please note that leverage will also render the trade riskier - something you should always remember when trading forex.

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Let’s face it - one of the one of the world’s basic necessities is oil. In developed countries, most, if not all, of the people cannot live without it. The rise in oil prices has brought a big boost to oil producers’ pocketbooks. On the other hand, oil consumers have had to pinch pennies and tighten their belts.

Canada as you know is a net oil exporter, in fact it is the 9th largest crude oil producer in the world, and has benefited the most from the oil rally, while Japan, which is a big time oil importer, suffered the most.

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Canada continues to climb up the oil producers’ list, with the steady increase in oil sands production. Did you know that in 2000 Canada even surpassed Saudi Arabia as the most significant oil supplier to the United States?

What isn’t known to many is that the size of the Canadian oil reserve is second only to Saudi Arabia.

The United States and Canada’s geographical proximity coupled with the growing political tension in the Middle East and South America, renders Canada as among the United State’s important source of oil.

However, Canada’s vast oil resources is getting a lot of attention from China, especially after Canada stumbled upon a new oil stash following a reclassification of its Alberta oil sands to the “economically recoverable” category.

This is the reason why the Canadian dollar has become one of the currencies that will benefit the most from an ongoing oil price surge.

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A lot of times market reaction to news is not entirely logical and swing from one extreme to the other at the blink of an eye. For example, you have observed that the European Central Bank has been trying to keep its interest rates unchanged, whereas the Bank of England has lowered theirs.

Now, higher interest rates usually mean that the value of the currency will surge and the reverse is true if you lower the rates.

So, if you only consider what you read in the news, you will be basing your decisions on the actions or announcements of these central banks. However logical their actions may be, the market’s reaction will most of the time be unpredictable. What you need to ask then is do you know what the market reaction will be to the news? How are traders taking it? What direction will it take next?

You see in trading, market reaction is volatile, it can make or break you. Therefore when you read the news, take into consideration the market reaction, and base your decisions on this and not on the news itself.

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Let us suppose that you were able to purchase the EUR/USD currency pair at 1.4000 and it is trading now in the market at 1.4025. Because of an anticipated economic release which will be due in about 15 minutes, you shift your protective stop to up to the level of 1.4000 to prevent your winning trade from becoming losing trade. When finally the figure is released, you see that the market trades down right through your protective stop and dipped way below it to 1.3975 in just a few seconds. This can leave you frustrated because instead of the forex trade going your direction at 1.4000, you are instead getting 1.3990 and your once winning trade have become a losing trade.

This can happen to anybody if there was no one who would stand at the other side of trade at your price. A trade happens when two people think that the price is right but do not agree regarding the value.

So if it happened that the market took you on your 1.4000 stop level, then your order will then become a market order. When you are not matched up with a buyer, but only purchase below your sell stop price, the process of being filled at that lower level is called slippage and can be found in every market.

As a currency trader, you must always be prepared to deal with slippage, for it is the nature of forex trading.

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A lot of times newbies who were doing fine in a demo account will be surprised when things begin to crumble when they move into live account.

If you have real money on the line as you make your trade, this can spell a lot of difference. This time your emotions will really get the best of you. When a trader loses money in a live account, emotions can go to extremes of joy and frustration.

When emotions come into play, this will usually result to more losses in trades. However, the secret to success is trading live but your decision are made as if no money is at stake. The key to success is having the courage to risk real money.

The technique is to start out slowly as you open that live account. Why not start by trading only one mini lot at a time. That way your risks are at a minimum. You should keep doing this until you feel more confident about your decisions.

Demo trading will not teach you how to do this. No amount of practice can prepare you to deal with real trading. You must use and risk real money if you really want to improve your trading.

This doesn’t mean however that you have to be reckless. Just take it easy at first; keep the risk within your level of comfort. Only then can you move up. Remember, practice makes perfect.

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Can you identify any potential trades that are emerging in the market? When a currency pair that has been in a strong uptrend and gets a good support level as it pulls down, this usually means a good opportunity to buy. However, new traders often delay, wanting to see what will occur next instead of taking advantage of the opportunity. So what happens? That great trading opportunity will just pass them by.

More often than not this hesitation to jump into the trade when the good opportunity presents itself is not about the fear of taking risks, but rather a lack of confidence in their ability to trade as well as judgment. However, to become a successful trader, one must be able to identify good trading opportunities and then pursue that trade aggressively once the setup is complete. Hesitation will get you nowhere.

Remember that when you see a pulling back of the market to a support level, it is a good time to buy. Sure, there is always that risk, but it will be within reasonable levels. As we put our initial protective stop beneath that support level. The nearer you get at buying at this support level, the nearer your stop will be to the price at entry, which boils down to taking fewer risk.

What you should do as a trader is buy just when that level is being tested by the market - do not hesitate to go there. If you delay and the market has rallied off of that support, it most certainly means greater risks for you should you decide to get into the trade at that point. A forex trading demo can also help here.

Therefore learn to identify trading opportunities and just as it sets up do not hesitate to get into that trade. Grab that opportunity while you can.

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More often than not, the main reason new forex traders lose money is that they simply do not have a specific goal. Strange as it may seem, a lot of new traders don’t know what they want to accomplish.

Of course you might say that everyone wants to make big bucks, however, a trader must be realistic as he tries to achieve his goal. Forex trading is just like flipping a coin. If you get paid $1 for each time the coin you flipped landed on tails and you lose $1 if the coin landed on heads, you could spend the rest of the day and break even at every hundred coin flips.

So where does this analogy take you? You should think of forex trading as simply breaking even, but with a slight twist. Instead of winning a dollar or losing a dollar with each flip, think of losing a dollar when you lose and gaining a couple of dollars every time you win.

Remember that in order for this principle to work is if you go with the trend and if the setup you took is solid. This is what is called a 1:2 risk:reward ratio. If for example you risk 50 pips on the trade, you should look for profit that is double that amount, which is of course 100 pips.

Now, following that principle, regardless if you lose a series flips in the end you will still come out the winner at say the hundredth flip. A forex trading demo can also help here.