Archives for October 2018

Finally a day when there were multiple setups to choose from ahead of the pending FOMC

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The market has not offered many trade setups that I have wanted to participate in the past couple of weeks.  The ones that have been appealing have produced less than they usually would.

Today the market seemed to align itself once again with some moderate USD strength in the majors with the exception of the USDJPY.

As the the EURUSD weakened and the EURJPY weakened in parallel fashion, my preference was to trade the EURJPY which tends to move further most days.  After going sideways for the first 3 hours of the U.K. session, it moved down making a familiar 3 candle reversal setup.  We entered short risking 19 pips for a potential 52 pips to our daily target at 129.16.  As price moved down, it tested and retested its usual areas, namely its Asian low and yesterday’s low.  As it began to move up from closing below yesterday’s low, we closed the trade and missed the final wave down to our daily target.

Many new traders find it difficult to not trade but it’s important to keep in mind that there are periods when the market is extremely generous and times when it is not.  Neither last for long periods, but successful traders know what makes them comfortable when they see it and what makes them sit back and resist taking less convincing trade setups.  Politically and economically the market has a lot to digest at the moment.  It has been giving numerous conflicting signals fundamentally of late, which is making trading slower than usual and the charts less clear.  Be patient and keep your stop losses tight and don’t be fearful or greedy.

Perhaps the FOMC meeting today will give the USD some added strength.

Good luck with your trading.

 

 

An interesting week but it ends positively

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The markets have become volatile in October once again.  It was a shortened trading week in North America and equity markets were making the headlines as they began to sell off.  As U.S. yields continue to rise, the market participants looking for a safe return tend to prefer bonds over dividends when the returns are comparable.  As borrowing costs increase with rising interest rates, this too affects the equity markets negatively.

If we also consider the U.S. versus China trade tariff impact, E.U. versus Italy debt and spending concerns, amiable or acrimonious Brexit, President Trump criticizing the Federal Reserve for doing its job, pending U.S. mid-term elections, oil surplus or shortage, pending election in Germany etc. one can surmise that the market participants have some issues to consider.  The economic fundamentals remain extremely strong for the U.S. economy,  although the USD had a tough week it ended with some strength today… as did the U.S. equity markets.  Had the downturn continued to the close, next week may have seen a continuation and a downward spiral.  Fortunately, we had a bounce today to end the trading week.

I have been very cautious this week trading only the USDJPY on Thursday and again today, but the returns were very modest.

On Thursday with the USD was very weak and with equity markets selling off, we entered short risking 14 pips for a potential 70 pips to our daily target at 111.70.  Price moved down sharply but bounced upward before making it to session lows and closed the trade.

On Friday, a similar trade risking 11 pips for a potential 57 pips to the same daily target at 111.70.   This trade we managed to ride a little further and exited it at the U.K close.

Next week should be another interesting one.  Keep your stop losses tight and lock in profits.  The potential for volatility remains very high which can be very satisfying if you are on the right side of it.  If you’re not, a strategically placed stop loss is your friend and will protect you from potential catastrophic damage.

Good luck with your trading and enjoy your weekend!

Shorting the AUDUSD well after NFP

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I normally take the first Friday of each month off to avoid the volatile reaction of the market to the Non-Farm Payroll number – now called Non-Farm Employment.  Due to this economic news release potential for extreme volatility, before and at the release, it’s usually a good idea to step aside.  If you really want to find a trade, wait for the market to settle down and catch the real move not the reactionary move…an hour or so afterward.  I was particularly interested in the number today because I thought we were going to get a big surprise to the upside but we didn’t.

Today when the AUDUSD rolled over once again, we were able to risk 8 pips for a potential 50 pips to our daily target at .7029 (Not shown).  Price moved down and we exited the trade at the U.K. close.

Monday is a holiday in North America.

Good luck with your trading and enjoy your weekend!

USD strength continues

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The market is moving the right direction but it was a little difficult for me to find entries today.

After the U.S. session got underway,  the USDJPY setup for a trade risking 8 pips for a potential 18 pips to our daily target at 114.04

The good news is the trade ran past our target and we managed to get an extra couple of pips.  As price was testing the 114.00 figure, we were cautious as this trade appeared to be quite limited.  The bad news is the trade took off after we exited.

Let’s hope tomorrow is more rewarding.

Good luck with your trading!

Shorting the GBP as sentiment remains pessimistic for Brexit going smoothly

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Signs of a smooth Brexit are not visible at the moment.  As mentioned yesterday, my preference it to look for short setups.  This pair is fully capable of moving upward 80 or more pips in a blink – if a headline were to surface giving traders reasons for optimism toward Brexit.  In the meantime, keeping a tight stop loss and locking in profits is my preferred strategy.

Today after the London open we had a quick push downward followed by a pullback and reversal setup.  We entered short risking 14 pips for a  potential 41 pips to our daily target at 1.2953.

The USD continues to show moderate strength today and the EUR, GBP, AUD & NZD look safer to short to my eyes.

Good luck with your trading!

Division within PM May’s Conservative party weighs on the GBP as a Brexit solution continues to be acrimonious

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As Brexit continues to weigh on Sterling, and PM May continues to struggle in finding support, a short setup was found on the GBPUSD.  After lower highs appeared in the U.S. session overlap, a short was taken risking 16 pips for a potential 57 pips to our daily target at 1.3011.  Price moved vertically down pausing and retesting its Asian session high before pushing lower into the U.K. close where we exited the trade.

It may be a difficult few days for the GBP as British politics continue to weigh on the pair.  Ultimately Brexit will get worked out like NAFTA – now known as USMCA.  Sterling will remain potentially volatile in the meantime, but at this juncture, I’m more comfortable finding short setups with tight stop losses.

We have entered the last quarter of 2018 and it will be interesting to see if USD strength will prevail.  Italian politics have the potential to drag the Euro lower.  The Canadian dollar is benefitting today from the new trade agreement and the current high oil prices.  Australia and New Zealand remain vulnerable to China’s slowing economy.  We will soon see what the market thinks.

Good luck with your trading!