Archives for October 2018

Will the EURUSD take out 1.1300 and move lower?

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I am not a EURUSD bull and find it hard to make a case for not shorting the pair when it sets up.  Some concerns that continue to weigh on the euro include who down the road will replace Angela Merkel in Germany, Brexit outcome, Italian budget, and moderate growth and inflation in the euro zone with the first rate hike not before autumn 2019 at the earliest.

Just before the U.S. session got underway today, the pair made a second lower high for the session and an entry short was taken risking 10 pips for a potential 43 pips to the 1.1300 figure.  This seems to be a level where buyers are entering but I’m not expecting it to hold for long.  The idea today was to enter with a small stop loss and keep it tight as price moved down to test the 1.1300 level and locking in profit along the way.

Tomorrow is a holiday for some European countries so trading will be lighter.

Friday is NFP in the U.S. and I will be taking it off.

Good luck with your trading!

 

The USD strength continued today while the EURUSD and GBPUSD continued to move down

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The USD strength continued today and the EURUSD and the GBPUSD both moved down.  We are a week away from the U.S. midterm elections.

As the GBPUSD began to move down in the U.S. session today, a short was taken risking 17 pips for a potential 46 pips to our daily target at 1.2716.  Price moved down and we lowered our stop to protect ourselves in the event of a sudden move upward.  This pair is very vulnerable to any Brexit headlines, so small and tight stop losses are very important.  Due to scheduling conflicts this week, I will be closing trades at the European close at the latest, as was the case today.

The EURUSD looks like it may test its 1.1300 August low and it will be interesting to see how it reacts at this level.

Good luck with your trading!

 

Moderate USD strength as the week begins

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The EURUSD formed a double top today and dropped back into its Asian range in advance of the U.S. open.  Risking 17 pips for a potential 65 pips to our daily target at 1.1334 we entered short.  As price moved down we moved our stop loss to plus 1 as the U.S. market got underway.  As price moved down and long lower wicks formed, we tightened our profit stop further and the trade was closed well short of our target.

There continues to be an increase in fundamental reasons for shorting the euro, but the USD strength has been moderate at best of late.  It was interesting to see the U.S. equity markets move higher to start the trading week, after last week’s declines.  These are cautious times for trading but entry setups are occurring most days even if the returns are less rewarding than usual.

Note:  I won’t be adjusting my charts or trading times to accommodate the U.K. and European Standard time shift this past weekend.  In North America, Daylight Savings time will end on November 4th.  Next week, everything will be back to normal.  This week only, my charts will show the European open and close as opposed to the U.K. open and close.

Good luck with your trading!

Fear and volatility prevail in the markets

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When the markets are anxious “risk off sentiment” money flows tend to move toward the yen, Swiss franc and gold.  Equity markets can be seen as an indicator of fear and greed.  The U.S. equity markets sold off on Wednesday erasing gains for 2018.  On Thursday the markets rebounded and closing higher and recovering Wednesday’s losses.  On Friday, the equity markets moved down again sharply as the U.S. session got underway.

As price made a lower high early in the U.S. session, a short was taken in the USDJPY risking 13 pips for a potential 32 pips to our daily target at 111.75.   Price moved down to our target and we closed the trade.  Price gained further downside momentum and continued lower without us.  As the U.S. equity markets began to pare some of their losses intraday, the pair reversed higher.  The majors made uniformed moves today and the USD has been weaker once again.

I’m curious as to whether the U.S. equity markets can recover to close positively today to end the week.  If not, next week may start off ugly with negative sentiment and continued selling.

Good luck with your trading and enjoy your weekend!

 

Trading the EURJPY short on Wednesday and the GBPUSD short Thursday

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The USD has been stronger the past two days.  ECB President Mario Draghi gave the market very little new information today and reiterated the obvious Brexit and Italy concerns weighing on the Euro.  Equity markets sold off heavily yesterday and are attempting a recovery today.

As fear entered the markets yesterday we chose to short the EURJPY after an early reversal setup in the U.S. session risking 16 pips for a potential 34 pips to our daily target at 128.05.  Price made its way lower before the London close to our target where we exited the trade.

Today the GBPUSD made a series of lower highs and after making another lower high early in the U.S. session, we went short risking 16 pips for a potential 86 pips to our daily target at 1.2804.  As price moved abruptly down, we locked in profit.  This pair is potentially very volatile due to Brexit headlines, so it’s best to enter with small stop losses and keep locking in profit as the pair moves in your direction.  Price didn’t make it to our daily target but we gave it a couple of extra candles to try, before the market took us out of the trade.

There are so many macro events occurring in the world at the moment, that it is no surprise that trading is more erratic than usual.  It will be interesting to see where the equity markets close the month of October.  They remain a good gauge for risk sentiment at the moment – better than the 10 year yield currently.

Good luck with your trading!

Trading the EURJPY and the USDJPY post FOMC

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The FOMC meeting yesterday confirmed that the U.S. economy continues to be very strong and the concern centers on how many more rate increases will be necessary to strategically slow it down.

Today the EURJPY spent some time stay above its Asian high but ultimately failed and an entry was taken risking 14 pips for a potential 82 pips to our daily target at 128.78.  Price slowly moved down in advance of the U.S. open and we protected ourselves by moving our stop loss to a profit stop.  Price continued down to test yesterday’s low and its Asian session low before bouncing above yesterday’s low where we exited the trade.

Much like yesterday despite a stronger USD versus the majors, it lacked strength versus the JPY.  As the USDJPY made a second lower high for the session, a short was taken risking 8 pips for a potential 46 pips to our daily target at 112.08.  Price moved down tested its Asian session low and briefly bounced making a third lower high for the session before plummeting and reaching our target.

Although talks between Brussels and London are sounding more positive, the GBPUSD has continued lower and a close below 1.3050 is technically bearish.  A close for the EURUSD below 1.1430 would also be technically bearish.  News relating to an amiable and workable Brexit can potentially make both pairs jump considerably, so any short trades would be well advised to have tight stops.

It’s nice to see multiple trade setups again.

Good luck with your trading!