Archives for January 2016

This is very similar trade to yesterday.  Oil is very important to the markets and the correlation to the USDCAD is extremely high.  The CAD crosses are also yielding to the Canadian dollar as oil climbs and will punish it as oil declines… in this current market.

Remember that vertical moves are not sustainable and if you look for signs of the slow down or reversal, you can be rewarded quickly as these moves tend to reverse and retrace… making a highly reliable pattern formation.

Today as oil increased the USDCAD came down despite the USD being much stronger overall today as the markets reacted to the BOJ surprise.

As the USD began to soften to the CAD, a short is taken with a 27 pip stop loss for a potential 130 pips to our Target 2.  As price approached its Asian low, it started to find buyers and after giving back 10 pips the trade is closed.  This is the opposite of yesterday when price approached the Asian lows and accelerated.

The CAD crosses are also excellent to trade with one eye on oil, but the stop losses were more expensive this session than the USDCAD.

Oil has had a good week and we can make an equally good case for it going higher as we can for it going lower.  This is why we read price!  A close above $34.50 near term will be bullish.  In the meantime, the Canadian dollar strengthens or weakens with the price of oil.

Good luck with your trading!  Enjoy your weekend!

Back next week.

As oil continues to make headlines and remain above the critical $30 level, the CAD continues to strengthen to the USD and its crosses.  Today a short is taken in the USDCAD pair as it fails to close above its Asian high and begins to move lower with oil rising in the session…fueling the descent.  The move became vertical as price took out its Asian lows.  Vertical moves are not sustainable and are susceptible to very abrupt reversals.  As price tagged our Target 1 and bounced, we chose to exit for considerable gains… as a long wick began to form.

It’s better to lock in profits than to give them back by being greedy…especially at critical levels.

The USDJPY was noticeably subdued awaiting the BOJ.

Good luck with your trading!

Back tomorrow if we find a trade.

Sterling made a higher low after BOE Carney’s comments early in the session.  With a nice reversal setup and a 17 pip stop loss for a potential 95 pips to our Target 2…we entered long.  We anticipate price will retest the Asian session lows, but price moves up and takes out yesterday’s low – where we anticipate it to retest.  As price moves higher a long wicky candle appears with sellers entering above the Asian high,  As this is a countertrend trade, and price has run almost straight up, we want to lock in profits just below the Asian high… in the event of a full reversal.  Price pulled back and closed the trade…then spurted higher without us.

Wednesday is FOMC day and we will stay on the sidelines.

Good luck with your trading!

The USDJPY began to move higher in the U.S. session driven by equity markets and overall risk sentiment.  Oil moving up again today helped too as did the Nikkei closing up 5.88%.

An entry long is taken with a 21 pip stop loss for a potential 56 pips to our Target 2.   We allow for a retest of its Asian high level and as price moved upward, we remove the risk from the trade and begin to lock in profits.  As price was unable to close above our Target 1 and the next candle was very wicky and bearish, we tightened our profit stop allowing a little room beneath T1 and the market took us out.

The EURJPY set up for a really low risk short earlier in the session and I missed it.  Congratulations to anyone who caught it… a very nice setup with a 15 pips stop loss.

The markets are getting interesting.   Lots of major news pending next week.

Good luck with your trading and enjoy your weekend!

 

 

The major event risk for the week was the ECB statement today and how the markets would react to Mario Draghi’s comments.

The EUR plummeted and it’s never prudent to chase a trade!  It’s better to let the dust settle, analyze your pairs for confluence and use proper money management including R/R.

When the dust settled today, the US stock markets were moving up as was oil.  This tends to be bullish for the USDJPY  as the JPY is not only a funding currency but also a reserve safe haven currency.

With a greater than 2:1 R/R… which I am comfortable with once the U.S. market is open, a long position is taken following a fourth higher low combined with a reversal setup. Price moved up to test its Asian high, yesterday’s high, Target 1 and tagged Target 2 fairly quickly. We closed at T2.

It’s a  new year but after ECB President Draghi’s comments today my bias remains the same for the EUR.  Will we see par and below this year?

A bounce in oil today but have we seen capitulation…I don’t think so yet… but we will keep an eye on the $30 WTI level.

Know what to look for and trading becomes much easier.  Using oscillators and ambiguous indicators and tools that institutional traders don’t use will result in inconsistent results.

Good luck with your trading!

Back tomorrow if we find a trade.

After making a 3 Drives to a top pattern during the Asian session, the USDJPY initially moved down shortly after the London open before making one last wave to the upside.  A reversal pattern  set up a short with a close below the Asian high requiring a 15 stop loss for a potential 81 pips to our Target 2.

The pair made its way down and the risk was removed from the trade by placing the stop loss at plus 1 pip.  Price moved lower but buyers entered just under the middle of the Asian range – leaving a very wicky bullish candle and the trade was closed for acceptable gains.

In a risk off environment this pair potentially could go a lot lower…

The GBP is getting hammered and even the EURGBP cross is underscoring the sterling’s weakness.

Commodity currencies are very active and the EUR remains in a range.  We will know more on the Euro after Draghi’s comments on Thursday.

Keep the stop losses tight.  Money management as always is paramount to trading success!

Good luck with your trading!

Back tomorrow if we find a trade.