Archives for May 2018

Tumultuous trading week includes Italian government, U.S. imposed tariffs, and “on again” summit with North Korea

by

The markets are gyrating about as uncertainty regarding Italy’s ability to form a euro-friendly government remain in question.  Spain too may have a change of government pending.  Uncertainty will not help the Euro.

The U.S. is imposing tariffs at midnight which will have very far reaching implications and likely retaliatory measures from its trading partners.

The good news is it appears that the summit with President Trump and North Korea’s Kim Jong-un is on again.

Today as oil prices weakened ahead of the crude inventories the USDCAD moved up.  Risking 20 pips for a potential 90 pips to our daily target at 1.2928 we entered long.  Price moved up quickly to our target where our trade was closed…then price continued higher without us.

A second trade shorting the USDJPY set up for us today.  Risking 13 pips for a potential 73 pips to our daily target, we entered short.  The idea was to take advantage of a flight to safety.  After 3 lower highs, we entered and price moved down quickly but the trade closed at our profit stop when it bounced to retest its Asian low.

Be careful tomorrow trading around the Non-Farm Employment release which historically is accompanied by extremely volatility.  This has been less so this year.  There is a lot going on geopolitically… be very careful trading and keep adjusting your profit stops… so as not to give back your profits.

Good luck with your trading!

A nice short on the EURUSD to end the week

by

The EURUSD continues to be a pair that I like to short… as previously mentioned.  It doesn’t set up every day but when it does as it did today, I want to take advantage of it.

Today the USD was strong and after the EUR failed to stay above its Asian high, a short was taken risking 12 pips for a potential 69 pips to our daily target.  This type of risk/return setup on a trending pair is very hard to resist.

Price moved down vertically.  We tightened our profit stop taking the risk out of the trade and then allowing for a retest of its Asian low.  Price continued lower and plunged through yesterday’s low.  After a large candle to the downside which left a moderate lower wick, we tightened our profit stop to lock in 50 pips and our trade was closed.  The pair subsequently moved to our daily target (without us), then began to retrace going into the London close.

With oil moving down the past couple of days, the USDCAD has been very active.  We were unable to secure more than 15 pips yesterday on the pair,  but I have talked with others that did much better and were very successful trading it today.

Enjoy your weekend!

 

Shorting the GBP as Prime Minister May and Bank of England Governor Carney remain on their back foot

by

With Brexit in just over 10 months, internal squabbles continue for P.M. May regarding her plans to remain in the customs union longer if necessary as the question regarding the Irish border remains unresolved.

BOE Governor Carney in his recent statement has left the market thinking that a rate hike in August is below a 50% likelihood.  Carney will be speaking throughout the week which makes the GBPUSD potentially very volatile.  With price still below a critical level, we will continue to look for shorts…and of course listen to what Gov. Carney says.

Today a short was taken early in the U.S. overlap risking 17 pips for a potential 47 to our daily target at 1.3402.  Without a strong USD today, the trade went back and forth before bouncing off its Asian low.  Our profit stop was hit ahead of our daily target for a modest gain.

I will continue to look for high probability short setups on EURUSD and GBPUSD this week.

Good luck with your trading!

 

 

EURUSD trades this week were easy to come by

by

As mentioned a couple of week’s ago, our bias is to trade the EURUSD short… with the trend.  It broke a very important technical level and we will continue to evaluate it daily for entry setups.  On Wednesday after the U.K. open, the pair failed to stay above its Asian session high and an entry short was taken risking 14 pips for a potential 76 pips to our daily target.  Price moved lower and bounced just above our target at 1.1765 leaving a long lower wick.  We tightened our profit stop and price moved higher just before the U.S. open closing our trade.

On Thursday, the EURUSD tested its Asian session low at the U.K. open and moved higher.  After making a third lower high for the day, we found an entry short (with trend) risking 17 pips for a potential 69 pips to our daily target.  Price moved lower then briefly retraced… making a fourth lower high for the day…moved lower again and found buyers just above its Asian session low.  It then pulled back for 2 candles leaving a long upper wick before plunging lower.  We moved our profit stop down to allow for a retest of the Asian session low.  A long lower wick indicated that buyers were entering and we closed our trade on the following candle…giving back more than we wanted to of the move.

On Friday the EURUSD began to move very similarly to Wednesday.  It poked above its Asian session high and moved lower.  When price moved down and closed bearishly near its low, we entered short (with trend) risking 18 pips for a potential 67 pips to our daily target at 1.1738.  Price moved lower, then plunged through its Asian session low testing the previous day’s low.  We moved our profit stop down to allow for a retest of the Asian session low.  From there price went sideways… before finally closing below yesterday’s low.  We moved our profit stop lower to allow for a retest and we were closed the following candle.

This has been a great week to trade.   Looking forward to what next week brings us.

Enjoy your weekend!

Finally a fun day of trading

by

The GBPUSD has been holding on to the technically significant  1.3550 area for over a week.  With a stronger USD today coupled with the US 10 yr yield back above 3%… we saw a uniform move across the majors.

We entered the GBPUSD short risking 15 pips for a potential 84 pips to our daily target.  The headlines about the E.U. stating that “the clock was ticking”… referring to the poor Brexit progress helped the move.

If the USD can remain strong and the US 10 yr yield stays above 3% …I expect the markets to be active as re-balancing takes place.

Good luck with your trading!

The USD is currently on its back foot but this too shall pass

by

Trading has been interesting this week.  With President Trump’s announcement regarding Iran, the USD has temporarily lost its momentum upward and crude oil (WTI) is above $70 for the time being.  Israel is aggressively defending itself against attacks, which creates uncertainty in the Middle East.  This can lead to higher oil prices and a flight to safety.  We haven’t seen this yet in the equity markets, but the US 10 yr yield remains below 3% and gold is catching a bid…at least for now.

On Wednesday the markets reaction to the President’s speech created some countertrend moves in the majors.  We chose the AUDUSD as the stop loss was 12 pips for a potential 56 pips to our daily target at .7478.  As this was a countertrend trade, we moved our stop loss upward quickly to take the risk out of the trade and we exited the trade early in the U.S. session at the first sign of a pullback.

On Thursday, the Bank of England which has been susceptible to credibility issues of late, released its inflation report and monetary policy summary. If you have been watching this pair, it has been sitting near a critical level as the market awaited this news.  Essentially the market wants to hear from the U.K. that there will be a pending interest rate hike soon… and it’s not hearing it.  This caused a sell off reaction, a pullback, followed by continued selling as the critical level gave way with no closes above it.  Despite USD weakness today the GBPUSD fell dramatically.

With both the GBPUSD and the EURUSD, I’m looking for short setups as there is plenty of room for both pairs to fall further.

Keep an eye on geopolitics, USD strength/weakness, along with the overall market tolerance for risk.

Good luck with your trading!