Archives for January 2014

EUR continues to stairstep down.  The chart is self-explanatory.

I’m going to share a few secrets today.  I was taught how to trade by one of the largest traders in the world. He trades in the billions of dollars.  He has over 40 years of trading under his belt.  He has trained some of the largest and most influential market participants.  He uses only one tool on his charts and uses NO other indicators!

He looks at a plain vanilla chart and reads price behaviour.  He applies his one tool, money management, and trades accordingly.  He maintains that “price” is the best indicator.  Learn how to interpret what it is telling you!  Trade the charts that make sense to you and follow your trading rules.

On January 14th, the EUR makes a high of 1.3698 then closes below it.  On January 20th, the EUR puts in a low of 1.3507 and closes above it.  On January 23rd, the EUR closes at 1.3695 – 2 or 3 pips off its high. On January 24th, the EUR attempts to move higher and cannot close above the previous day’s close and leaves a sizable wick above the body.  Price begins to stairstep down each following day.  Sellers are pushing price lower.  Our target is 1.3521.  A huge target is the January 20th low at 1.3507.  There will also be an options level at 1.3500.

If you understand that this is what the largest traders are focused on, you can trade behind them.  If not, you risk being stopped out by them.

Enjoy your weekend!

Back Tuesday following NFP if we find a trade.

EUR sets up… drops and rebounds.

The EUR has not been able to take out and close convincingly above the January 14th interim swing high. Since January 24th it has been moving through its previous day’s low, then rebounding.  Once it pushes through the the previous day’s low, large buying occurs and up it comes.  As intraday traders, we love it. With a very affordable stop loss just above the triple top session highs, we enter with a greater than 4:1 Reward to Risk ratio to our Target 2.

This setup is a favourite… with the UK traders initially pushing price higher – luring in breakout longs.  A pullback followed by a second move higher… forming a lower high with a wicky candle.  Price did not challenge yesterday’s high (Hint) and the session triple top was not tested on the second move up, thereby creating the lower high.  (Second hint)

Price begins to plummet and takes out yesterday’s low before rebounding.

Later today in the Asian session is the New Zealand rate announcement.  Expect volatility and if there is a large move during the Asian session, we will be looking for a reversal setup during the UK session.  Always choose the best setup in the pairs that you are most comfortable trading.

Back tomorrow if can find a trade.

CHF rolls over from its highs as the EUR begins to climb off its lows.  An affordable stop loss of 13 pips for a better than 4:1 Reward to Risk made this trade very attractive.  It started off well but went against us for an hour, before the US traders moved it down well into the Asian range after the US Core Durable Goods Orders number.

We were hoping to see price test at least the Asian session lows, but it didn’t and we are closed following the wicky bottom.

Lots of pending news this week in the majors, so we hope to capture some nice moves.

Good luck with your trading!

Back tomorrow if we find a trade.

A fairly quick CHF long trade set up just as the EUR was setting up for a short.  These 2 pair move inversely and can be used to confirm a setup in the other.

As the CHF bottomed out (for today) we saw buyers come in just above the .8900 figure.  We enter long at .8925 attempting to make it to our Target 2 of .9000.

The move to the downside in this pair is related to the institutional selling based upon the Swiss National Bank proposing to double its capital charge to 2% to cool the housing market, which some suggest may lead to a tightening of the economy.

As price runs into the double barrier of the Asian low and yesterday’s low, we see it cannot close above this confluence.  Protecting our profits, we move the profit stop up another notch – to just under these levels and are closed by the market.

It’s been a good week and we are happy to see that there is life in the currency market once again with some sizable ranges made this week.

Enjoy your weekend!

Back Tuesday if we find a trade.

Another AUD short setup… and in we go.  Australia had a very strong CPI number yesterday surprising many in the market and causing the currency to move up strongly during the Asian session.

My students know that I look to short this pair whenever it rallies.  The major commodity currencies have been getting hammered of late, enabling their respective countries’ exports to be more affordable.

As the US session got underway we had a classic reversal setup.  We enter short with a stop of 12 pips with a greater than 2:1 R/R. to yesterday’s high.   Ideally we want price to drop to the Asian session low, but to get there, it needs to convincingly take out yesterday’s high.  As the UK session wound down, price is unable to close below yesterday’ high and we exit.

There is Big Money active again in the market.  Hopefully we will see some larger ranges in the currency pairs now – as January has been fairly tight most days.

Be aware the market will likely be very sensitive to the US Employment number tomorrow.

Good luck with your trading!

Back  tomorrow if we find a trade.

The JPY set up with classic form 45 mnutes into the US session.  After luring in breakout longs and making 3 lower highs, a very bearish candle sets up the trade.  A short is taken with almost a 3:1 Reward to Risk ratio.  During the US session, we will take a 2:1 R/R because we only have 4 or less hours left in our trading session.

Price moved down nicely and hesitated at our Target 1.  Price dips a little further then moves up where we close the trade to protect profits at our first target.  Price subsequently moves down without us and rests at our Target 2 level area.

The CHF also set up nicely just before the US session and was a more profitable trade.  The JPY setup is so classic in its pattern, that I chose to show it instead.

The Federal Reserve is on track to trim its bond buying program for the second time in six weeks to $65 billion a month from the current $75 billion.  This is expected to be announced at the end of the Jan 28-29 meeting.

Good luck with your trading!

Back tomorrow if find a trade.