Archives for September 2020

After an acrimonious presidential debate the market takeaway may be that the U.S. election outcome on November 3rd may take some additional time in order to declare a victor.

The USD initially moved higher but gave up it gains 2 hours into the U.S. session overlap. As price moved down, a short was taken in the USDJPY risking 9 pips for a potential 31 pips to our daily target at 105.35.

The USD continued to decline as the U.S. equity markets continued to rise. As price approached our daily target it rebounded after going through its Asian low and our trade was closed for modest profit.

Tomorrow begins the last quarter of a tumultuous 2020. Expect volatility as virus rates rise, Brexit talks and details linger further, and the U.S. election day nears.

Good luck with your trading!

For a second day this week, the USD has been bid and moved significantly higher versus the majors. We haven’t moved out of the recent range entirely but a close above 94.00 would be bullish.

It appears traders are becoming concerned about the increasing new virus infections in parts of Europe and Britain. The U.S. economy appears to be strengthening while the virus infection rate is currently in decline.

Today as the dollar strengthened further, a short was taken in the GBPUSD as it began to move lower during the U.S. session overlap – risking 25 pips for a potential 82 pips to our daily target at 1.2710. Price fell through its Asian session low and continued lower before stalling its descent at 2 significant levels from the daily chart just above our daily target.

Tomorrow the Japanese traders will return from holidays and the BoJ Monetary Statement will be released. Fed Chair Powell will be testifying again and will likely reiterate his concerns for the U.S. economy as long as the virus continues to affect it. As the election nears both parties are stepping up the anti-China rhetoric in an attempt to win voter support.

Good luck with your trading!

After a week full of central bank meetings and announcements, the question might be, so what has really changed?

It appears that we will continue to be in a low interest rate environment for the foreseeable future… at least until inflation rises above and stays above 2 percent in the U.S. The coronavirus infection rate is on the rise again in parts of Europe as lockdown measures begin in some countries.

The U.K. government is attempting to re-write its Brexit divorce terms and the E.U. curiously this week is not ruling out an agreement being reached by the end of the month.

A long was taken in the EURGBP today during the early part of the U.S. session overlap, risking 10 pips for a potential 65 pips to our daily target at .9197. Price moved higher but was unable to get above .9159 – an important resistance level on the hourly chart today, in advance of the U.K close.

Equity markets are moving lower today and in the U.S. the S&P 500 is probing its September low, which if closed below will be bearish.

Good luck with your trading, stay healthy and enjoy your weekend!

Trading on Tuesday was rather subdued but with all the Brexit news lately my bias is to look for short GBPUSD setups while this pair is very active.

A short was taken today risking 24 pips for a potential 142 pips to our daily target at 1.2755.

After the U.S. economic news, a short was taken as the pair rejected the 1.2900 figure. As price moved lower, we protected our profit and the trade was eventually closed at 1.2850 as it began to retrace after the European close.

The European close has been very notable this year and it’s not uncommon to see an exaggerated move in the last 15 minutes of the session.

Wednesday the market will be focused on the Federal Reserve and is anticipating a dovish outlook and possible clarity on what “flexible average inflation targeting” means. The Fed is concerned about how to stimulate the economy to reduce unemployment and also to attain inflation in the 2 percent range.

The Fed’s strategy will be revealed and keeping interest rates low for the foreseeable future may serve to support equity performance further. With virus levels on the rise in Europe the USD may get a boost, but we will wait and see how the market reacts to Chair Powell’s latest revelations.

Good luck with your trading!

The major event risk this week was the ECB monetary policy statement and press conference that followed…particularly after their chief economist Lane’s statement last week about the exchange rate.

The acrimonious divorce between the E.U. and Britain has heated up with the U.K. reported to be willing to break international law. This is not good for the Sterling. The E.U. has responded by giving the U.K. until the end of the month to amend the legislation that would violate the Brexit withdrawal agreement. The U.K. reportedly has released a legal opinion that said parliament has the power to pass laws that are in breach of treaty obligations. This is getting getting very interesting! Markets don’t like uncertainty and even Nancy Pelosi is said to be scolding the U.K. on their current stance.

Today a short was taken in the GBPUSD risking 27 pips for a potential 69 pips to our daily target at 1.2888. This pair has been very active lately due to Brexit headlines.

Price moved lower, and we took the risk out of the trade moving our profit stop lower protecting our gains and exited the trade at our target. Price had managed to push through the 1.2900 figure and we continued to lock in profit as buyers could have entered at this level. With yesterday’s low a couple of pips away (potential further support), we were happy to reach our target and exit. Price continued lower but retested our target before dropping further going into the London close.

I’m not concerned about the pips I don’t get in a trade. I concentrate on getting the risk out of a trade, so that the trade’s outcome is positive if the market reverses. Locking in pips as the trade moves toward the target is of paramount importance to me. When the worst case scenario is that your trade is going to have a positive profitable outcome, it’s a lot easier to be objective and read what the market is telling us.

Friday has a fairly light economic news calendar but keep an eye on U.S. Core CPI for market reaction.

Good luck with your trading!