Michael Bridgman

On Friday after an initial selloff to begin the UK session, the EUR found a bottom and began to move up.  The pair has been in more or less a range between 1.0800 and 1.1200 for the past month.  This translates to selling near the highs and closing the positions near the lows for institutional traders.

As it climbed during the UK session it ran into sellers at the previous day’s high creating a double-top.  A very bearish engulfing candle was the reversal sign needed for a short entry.  As we has a vertical move up, we hope as we enter short, that the downside move will be vertical too.  The wild card was the pending U.S. economic news releases.  We move our stop loss to plus one pip just in advance of the news and await the market’s reaction. Price continued lower  and bounced creating a double-bottom for the session – leaving a longish wick where we close noting a familiar pattern completed.

Although our Targets 1 & 2 are significantly lower, we recognize that at this time of day on a Friday, chances of the 1.1100 figure being taken out today is unlikely.

It’s been nice to have the markets focus on the China story this week – something other than Greek solvency issues that have dragged on this summer.

Good luck with your trading.  Enjoy your weekend!

Back next week when we find a trade.

The USDCAD tends to be active during the American session.  After the positive economic releases for the U.S., China devaluing the yuan by 2% and WTI dropping 4%, a trending move higher for the USDCAD set up nicely.

At the this time of day a 2:1 R/R is acceptable.  We risk 18 pips for a potential 51 pips to our Target 2.

We moved our profit stop up after the Asian high gives way and is retested.  We protect Target 1 once realized and Target 2.  As the London session ended we closed the trade.  As a position trade the USDCAD may test 1.35oo in the not too distant future.  The key will be to watch the price of oil and if it rebounds and starts to move up, a tight stop would be prudent.  The China news has brought the commodity currencies into focus.

Good luck with your trading!

Back tomorrow if we find a trade.

 

Although there is lots of upside potential for the USDJPY – the 124.50 – 124.60 level has been a psychological barrier.   This pair lately has been moving predictably between the figures and the 50 pip increment levels.  It finally pushed through yesterday and closed well above its resistance zone, so today we would expect it to retest it.  In trading currencies, once a significant level is broken, a patient trader will see the level retested with approximately 80% certainty.  It is after the retest that we can determine if sentiment has really changed or not.

Today the JPY was unable to gain any momentum above its Asian highs and as price began to roll over in the US session, we go short with a stop loss just above structure and look for the retest of the 124.50-60 area.  As price moves down, we move our profit stop down.  As the UK session ends we exit the trade.

 

Tomorrow is NFP Friday and with lots of CAD news too…the USDCAD will likely be very volatile.  If the employment numbers are very good for the U.S. then we would expect to see the USDJPY move upward to the 125.00 figure and above next week and to test its June highs.

Good luck with your trading!

Back next week.

 

As the GBP rose to test its Asian session high, it ran into sellers and a short entry sets up.  With a 13 pip stop loss and 76 pips to our Target 2, the trade offers a very attractive reward to risk ratio.

Price moves down and long lower wicks begin to appear near the Asian session low.  We tighten our profit stop and note how buyers are entering in the area of yesterday’s low.  We allow for price to retest the Asian low level, but as it climbs above it – our trade is closed at our profit stop.

 

This pair has been ranging recently in advance of its next large move.  We are watching it closely.

Good luck with your trading!

Back tomorrow if we find a trade.

Following the FOMC yesterday, we have USD strength once again.

The setups were present today but the R:R hasn’t made it worthwhile.  The NZD looked great to the downside but not for the limited reward.  The USDCAD however produced a better that 4:1 R:R and that is hard to pass on.

With news releases behind us we see a solid move up to close above the Asian high.  With breakout traders already “washed and rinsed” we take a long position with a modest 10 pip stop loss – allowing for price to retest the Asian high.

Price begins to move up but the long upper wicks don’t make for a comfortable long position.  We at first tighten the stop and move it up to lock in a positive outcome.  As price gets to our Target 1 – a very long upper wick and close just under our T 1 suggests that the move may be ending as sellers are entering.  We protect T 1 and are closed out 2 candles later.

Good luck with your trading.

Back tomorrow if we find a trade.

 

On a day of USD weakness, the JPY failed once again to get above the 1.2450 level.  As is declined and took out the Asian session lows after making 3 lower highs a short it taken.  This countertrend trade against the USD, offered a smaller than usual stop loss and a better than usual R:R.

As price moved down, we tightened our profit stop and closed the trade as it bounces back above Target 2.

This pair is moving in 50 pip increments.  The 1.2350 and 1.2300 levels will be important to the downside as will the 1.2400 and 1.2450 levels to the upside.

Lots of interesting economic news to come this week.  There is no reason to think that the USD won’t continue to strengthen overall as the expected rate hikes continue to be priced into the market and the MPC Official Bank Rate Votes will be of interest tomorrow for the GBP.

Good luck with your trading!

Back tomorrow if we find a trade.