Archives for November 2014

A quick glance at the 15 minute GBP chart shows a series of lower highs as it cascades downward. Looking at the larger intervals that many institutional traders are paying attention to, indicates the same bias or downtrend.

As price tests and fails to close above yesterday’s low as the session gets well underway, we get ready.  Price descends to the Asian session low, retraces to a new lower high and we enter short.  We place a stop loss just above yesterday’s low, giving us a 3:1 Reward for our Risk to our Target 2. Price retests the Asian low and continues down.  We move our profit stop down accordingly -protecting profits just above Target 1 and let Target 2 close the trade.

Statistically price is unlikely to continue much past Target 2 on a given day.  If there is a major news event, it could potentially move twice this range, but it’s improbable most days.  Once you understand how far a pair can move, you can await your setup and determine if the risk merits the potential reward.

Swiss gold referendum this weekend.

Good luck with your trading!  Enjoy your weekend!

Back Tuesday if we find a trade.

As the UK session got underway, a familiar pattern manifested on the AUD.  After the first candle closes,a short is taken with the intention of making it down to the Asian session low…or as close as we can get.

When the AUD has a big move in the Asian session, it is often reversed by the UK traders. This was a beautiful setup and the Reward for the Risk was greater than 4:1.  The 2 concerns were Mario Draghi speaking three and half hours into the session, the other was the first move by the UK traders is often a false move and it’s better to wait.  With no news before Draghi of relevance, and this being an old favourite setup…the short is on.

To mitigate risk, the stop loss is moved to plus one after the second candle of the session closes. With Draghi’s pending speech, the market tends to whipsaw.  As price moved down, we moved our profit stops to lock in gains in case the market quickly reverses.  We are taken out at yesterday’s high just in advance of the ECB’s president’s comments.

Happy Thanksgiving to those in the USA!

Good luck with your trading!

Back tomorrow if we find a trade.

Counter-trend trades have set up this week in advance of the US Thanksgiving holiday.

The UK second estimate GDP number came in on target and buyers entered the cable.  With a stop well below the Asian lows we enter long – meeting our 3:1 R/R ratio minimum. Price tests the Asian high three times before ascending to our Targets 1 and 2 which we always protect with profit stops.

As price retraces this week in advance of the US holiday, we see lots of trades being squared by the institutional traders.  This may allow for some good entries next week back to trend.

Good luck with your trading!

Back tomorrow if we find something we like.  It may be pretty quiet for rest of the week but you never know…

A very interesting week concludes with the Draghi’s dovish comments creating a huge sell off in the EUR. The SNB’s Zurbruegg announcing that they are prepared to buy foreign currency in unlimited quantities because the Franc remains overvalued and the PBOC announce a surprise rate cut.

Having learned many years ago that it is never a good idea to chase a move, nor to stand in the way of an oncoming locomotive… fading a countertrend move once it sets up is an option.

The NZD popped up exceeding its range and then gave three lower highs with wicky candle tops. After the third, a very bearish candle follows as the US traders fade the bullishness.  Ideally, the idea here is a move to the session lows, but a move to the Asian low would be excellent too.  On the way down, we need to close below the Asian high and continue down through yesterday’s high.  Alas, as time ran out for the UK session price bounced off yesterday’s high three times before the close.  This level was particularly sticky because of its significance today to the institutional 60 minute traders.

The trade set up with confluence and we execute according to plan.  The market gives us what it does… and a positive trade is always a good one.

Good luck with your trading!  Enjoy your weekend!

Back Tuesday if we find a trade.

A positive retail sales number helped move the GBP higher in the beginning of the session.  As price topped out just over our Target 1 and began to roll over – closing below yesterday’s high, an entry short set up.

We had little time left in the trading session, price moved down fairly quickly and below the Asian session high where we exited as one pattern completed just in advance of the UK session close.

ECB’s Draghi will be speaking as the UK session gets underway Friday.

Good luck with your trading!

Back tomorrow if we find a trade.

We had some news out of the UK which caused the GBP to rise up near the 1.5700 figure – where it failed to close above. It also appeared heavy after it hit our Target 2.  Knowing statistically that a pair can only rise or fall so much in a given day, before it is highly likely to reverse off its highs or lows gives a trader a powerful edge.

After the second lower high and a close right at our upside Target 2, we enter short with a stop loss above the lower high.  Price penetrates yesterday’s high and retests it before moving further down. As price begins to rise, it creates a double bottom for the session – filling a pattern and we exit.

Thanks to the UK news this pair was active.  The market awaits the risk events of the FOMC meeting minutes today and ECB Draghi’s comments on Friday.

Good luck with your trading!

Find your edge, keep it simple and be consistent!

Back tomorrow if we find a trade.