Archives for April 2015

After the UK session got underway the EUR sold off, but buyers entered beneath the Asian session lows.  After a very bullish candle, we enter long with a 20 pip stop loss for a potential 5:1 R/R.  As price moved up, we moved our profit stop up protecting ourselves and subsequently get taken out before the second wave up…capturing about half the move.

The majors have been moving in unison and showing surprising strength against the USD.  The technicals are currently showing USD weakness… for the time being.  If we get a weaker than expected April payrolls data…under 175K NFP – the USD long squeeze could continue.  If we get a 250K NFP, then the USD longs will be rewarded.  The FOMC statement tomorrow will hopefully shed some light on the recent soft US economic numbers. Typically when the FOMC only releases a statement, as will be the case tomorrow, we don’t have the same level of volatility as usual on a FOMC day.

Good luck with your trading!

Back tomorrow if we find a trade.

 

The AUD has been moving sideways in a trading range since the end of January this year.  Since the March 18th FOMC day – its highs and lows have been more or less contained by the high and low of that day.   In other words, it is sold near the top and bought near the bottom of the range.

Looking at a 4 hour chart, we can see that price could not close below a very important level on Tuesday that many institutional traders would be watching.  On Thursday price moved above an important level for the 1 hour institutional traders.  With price above both levels a counter-trend setup today after a 3 candle reversal  before the opening of the US session.  A stop loss is placed 12 pips below entry for a potential 76 pips of profit to our Target 2.

With the US session underway shortly and economic news pending 30 minutes after the US open… we move our stop loss to plus 3 pips quickly to remove any risk from the trade.  Price continues to move up and we place a profit stop halfway down the large blue candle in advance of the news.  Although the pattern is complete, the news could potentially push the pair another 50 pips in our direction or cause a reversal.  As it turns out, the news volatility takes us out and we give back a few pips.

As price begins to make another move up, we enter long again and keep our stops very tight as the session only has a little more than an hour before the UK Close.  When long upper wicks appear on candles… this is a sign of sellers entering.  This can be considered a red flag – to tighten profit stops and lock in profits.  After 2 long wicky candles, we have tightened our profit stop a bit more and are subsequently taken out by the reversal.

Although we didn’t make it to Target 1…just above T1 marked by the red line is the FOMC high – where sellers have been entering.  As the wicky candles indicated… a reversal was imminent.

When trading a counter-trend trade:

1.  Be very careful!

2.  Ensure that the Reward to Risk makes sense and don’t expect to make as many pips as you would trading  with the trend.

3.  Get as much confluence as you can before you take the trade, so that you are stacking probability on your side.

4.  Keep your stops tight and get the risk out of the trade as quickly as possible… then keep tightening your profit stop.

5.  Be very cognizant of the levels where institutional traders are likely to add to their trending positions.

6.  Read what the candles are telling you as the trade progresses.

7.  Never fight the market or be greedy.

 

Good luck with your trading!  Enjoy your weekend!

Back Tuesday if we find a trade.

USD strength re-emerges  as the EUR was unable to close above 1.0800 and began to move downward.  A short setup is found with a 16 pip stop loss placed above the session highs, for a potential 116 pips to our Target 2.

As price picks up momentum to the downside we can see the long upper wicks on the candles.  As price begins to lose downside momentum, we can see long lower wicks on the candles.  Vertical moves are not sustainable.  When buyers are entering and long lower wicks are appearing on the candles, the idea is to tighten up the profit stop – to lock in as many pips as possible.   Think of the long lower wicks as the brakes being applied to the move.  Price made it to the Asian session lows but could not close beneath it.

We had 3 candles essentially waving red flags at us and the fourth candle (the blue one) takes us out at our tightened profit stop.   Although we did not make it to our Target 1 and 2, we captured a large piece of the daily move.

Tomorrow’s session has some significant economic news releases.

Good luck with your trading!

Back tomorrow if we find a trade.

When the majors are moving in sync, trade in the direction of either USD weakness or strength.  I prefer to trade the pair where I can find the smallest stop loss…all things being equal.  Rarely, however in trading are all things equal.  The GBP could be having a particularly active week and the EUR could be having a more subdued week than usual or the commodity pairs may be very active on a given day.

In today’s session, my first choice would have been the EUR, then the GBP, but the AUD had the least expensive stop loss when placed above structure.

A short is taken at a time of day when we often see large trending session moves.  It was not the case today… as the market went sideways after the entry until the US session news.  A bit of volatility in advance of the U.S. news made it prudent to move the initial stop loss down… as more negative U.S. numbers would completely reverse the market.

The AUD was unable to take out the technically significant daily high from the March 18th FOMC which made the choice to short the AUD more compelling.  When the pair started falling we tightened our take profit to about halfway up any large candles or above structure.  Price moved down but was unable to stay below the Asian lows and we are taken out near the UK close.

Next week is light in the way of U.S. economic news releases.  It will be interesting to see how the market reacts while it awaits further indication as to the US economy’s strength.  In the meantime, we have the Greek situation affecting the EUR and the UK pending elections affecting the GBP.  Oil has strengthened this week and the Canadian economy is looking better than expected.  Australia and New Zealand have also posted good numbers this week.  The JPY is currently comfortable below 121.00.

Enjoy your weekend!

Back Tuesday if we find a trade.

 

 

Since Tuesday’s disappointing retail sales number the USD has been squeezed.  The continuing soft U.S. data as the week progresses is adding to the broad correction.

Beware of technical resistance areas as this counter-trend wave can end abruptly.

After the UK open the EUR pushed down and formed a base before breaking to the upside.  With a 25 pip stop loss, a long trade is taken for a potential 115 pips to our Target 2.  As this is a counter-trend trade, we want to remove the risk from the trade promptly and keep tightening our profit stops until the market takes us out.  Price begins to move vertically up and vertical moves are not sustainable.  We tighten our profit stop to approximately halfway down the preceding large candle.  As it turns out, this was a little too tight and we are taken out well before our Targets 1 & 2.

With any counter-trend trade it is better to be safe than sorry.

The 1.0750 and 1.0800 levels may attract institutional short positions being added as they fade the rallies in the upper portion of the current range.

Good luck with your trading!

Back tomorrow if we find a trade.

 

Nothing really new from the ECB Press Conference today.  The EUR had made a counter-trend move higher yesterday after the weak U.S. data.  Early in the UK session today it sold off and then rose during the conference.

When price could not close above the Asian high, a classic reversal sets up.  A short is taken and we hope to challenge the March 18th low where price had bounced earlier in the session…then on down to our Targets 1 & 2.

As price moves back down, we tighten our profit stop and are taken out with less than an hour left in the session.

The softer USD so far this week does not mean the overall trend has changed.

Good luck with your trading!

There’s lots of news still to come this week.  Back tomorrow if we find a trade.