Archives for January 2014

Quiet session overall in the majors with less volume today ahead of the weekend.

We were unable to find a short entry into the EUR, but it’s inverse pair – the CHF looked good as a long. Just before the US economic news releases, a wicky candle appears and we tighten our profit stop, because no one likes a losing trade to end their week.  The news reaction volatility takes us out for a modest gain.

As mentioned yesterday, some institutional EUR shorts were happy to enter as price broke through the 1.3560 area. This occurred too late in the session for us to take advantage of and better them than us, holding a position into the weekend.

We will see what next week brings us.

Good luck with your trading and enjoy your weekend!

Back Tuesday if we find a trade.

A nice short setup in the EUR occurred after the rejection of the Oct. 3, 2013 swing high.

With little news during the UK session to move the market, it was sensitive to Thursday’s US Employment and Core CPI numbers.  Vertical moves are not sustainable, so the clear rejection of the October 3rd high meant that there was some large money selling at this level.  Swimming with the current is easier than against it.

Wicky candles tend to precede reversals and the very next candle was bearish enough for me.  Placing a stop above the rejection candle high afforded a better than 4:1 Reward to Risk to our Target 2.  There was pending news with the Philly Fed Manufacturing Index, but with a 16 pip stop loss above structure, the trade was affordable. Interesting to note that even with a positive Philly number, the sellers entered again at exactly the same level – the Oct. 3rd swing high rejection.

This pattern is one of my favourites and it was too good to resist.  The pattern completed in advance of Bernanke’s speech and the trade is closed.

If the USD strength continues, there is institutional money looking to short the EUR below the 1.3560 area. We will wait to see what price does at this level as it will be interesting to observe.  If the level can’t hold there is potential for a large downside move.

The Aussie also presents further opportunities to sell rallies when the setups are there.

Good luck with your trading!

Back tomorrow if can find a trade.

We’re back from holiday. The AUD looked like a nice short but the Reward to Risk was only 2:1 to our Target 2 not 3:1.  If we are going to risk a dollar in a trade, we are seeking a three dollar reward minimum and only after the US session is underway are we willing to take a 2:1 R/R.

It’s great to be enthusiastic about trading, but it is not prudent to be enthusiastic to trade…always be disciplined.

As long as Governor Stevens wants a lower Aussie dollar, we’re happy to find rallies to short.  In this case, everything looked nice with a series of lower highs, a break below the Asian session lows and a double-top just below the Asian low retest.  The deal breaker was that the stop loss would be just above the Asian session low costing us 15 pips and our Target 2 was 30 pips away.  Although professional trading is not gambling, I’m reminded of the old Kenny Rogers song “The Gambler”.  In it he sings…”you got to know when to hold them, know when to fold them, know when to walk away and know when to run…”

We walked away from this otherwise attractive setup.

On the fundamental side, Lockhart’s comments yesterday suggest that he thinks the December NFP was an anomaly.

Good luck with your trading!  Volumes are still down in most majors.

Back tomorrow is we find a trade…