One of the biggest pitfalls encounted by novice forex traders is arbitrarily trying to pick a top or bottom in a currency pair with no indicator support. The "pure fade trade", on the other hand, is an intraday strategy that uses Bollinger band strategy and RSI to pick a top or bottom based on a clear recovery following an extreme move. The strategy looks for an intraday reversal by using a combination of three sets of Bollinger bands and the RSI on hourly charts.

The trade sets up when the RSI hits either an overbought or oversold level (above 70/under 30). This signals that you should begin to look for a possible reversal. But rather then immediately buying in the top of a trend based solely on RSI, you add in the Bollinger bands to identify a more exact point of exhaustion Threes sets are used because it helps to gauge the extremity of the move and the extent of possible recover.

It is a good idea to hold off on playing ATP Oil & Gas (ATPG) until after the earnings call because there is too much uncertainty ahead of that. Every since the Macondo spill last year, the recovery in this stock has been very consistent on a technical basis, and a Bollinger band strategy can be best used to play it.

The stock shows a pattern of spiking above its top Bollinger band on the six month chart, back fills, gains support, and then repeats the process. Fundamentally, this company is very close to getting their deepwater permits as Noble received the first on Monday, and the pressure has increased to hurry the pace as the price of oil now climbs above $100. If ATP does get that permit there will likely be analyst upgrades and strong short covering that can propel the stock a lot higher going forward.

The New Zealand dollar was down after the country's finance minister suggested that the economy may have fallen back into recession. Finance Minister Bill English said it was possible the economy contracted in the fourth quarter, which would mean a double dip recession for the country.

Near term the kiwi has support at the previous day's low, with resistance first at around the upper Bollinger Band, so traders using a Bollinger bands strategy would want to short here if they believe the currency is headed lower still. The Australian dollar, in contrast, has held up remarkably well in the face of China's latest interest rate hike. The Aussie is among the most sensitive to Chinese interest rate policy as China is Australia's biggest customer for its two top exports of iron ore and coal.