Michael Bridgman

The big question regarding the GBP this week is which party will win the General Election on Thursday?  Current polls are showing it could go either way.

The Euro is moving up despite Greece which one would think would be weighing heavily upon it.  The US is showing a series of softer numbers but the major focus this week will be the NFP number on Friday.  A very strong number would signal the strong USD trend is back on.  A weak number coupled with the current soft economic numbers would signal otherwise.

With the current but highly questionable EUR strength and uncertainty about the UK Election outcome… a EURGBP long is taken with a 13 pip stop loss for a potential 56 pips to our Target 2.  Most of the  pairs are requiring a much larger stop loss than we are comfortable with at the moment – in this period where the majors are moving erratically about.

The EURGBP pair tends to be much less erratic and a slow mover.  After a large bullish engulfing candle a long is taken despite the UK news.  As mentioned above, the election outcome is really the focus this week for the GBP.   Our first objective is to close above the Asian session low and then get above yesterday’s low before moving up to the Asian session high… which is also Target 1.  As price moves up and closes above yesterday’s low, we allow for a few pips of wiggle room to retest it, but we are closed out at our profit stop for a modest gain.

Until we get through Friday, the markets are going to very tricky to trade in terms of conviction.

Back tomorrow if we find a trade.

 

The NZD made a series of lower highs over the past day.  The larger charts showed key levels giving way.  A short is taken after the second lower high of the UK session.  As price drops it begins to range between yesterday’s low and the Asian session low.  In advance of the US news we move our SL to plus 1 pip.  The news results in USD strength continuing for the session.  As price drops through and returns to our Target 2, we close the trade.

 

Good luck with your trading and enjoy your weekend!

Back Tuesday if we find a trade.

I am very adverse to large stop losses for intraday trading.  We typically find setups with stops between 15 to 25 pips for a 3:1 or greater R/R.  I also learned a long time ago not to give back profits to retracements.

The GBP moved up early in the session but with no UK news the move up was short lived.  With the wicky candles indicating that the sellers were entering, a short is taken.  Price made its way down to the mid Asian range and lost momentum.  Having tightened the stop loss to halfway down the large red candle to lock in profits, we ultimately get taken out at our profit stop and miss the following 2 waves to the downside – which completed  a classic “3 Drives to a Bottom”.

There is always another trade and no trader goes broke by taking a profit.

Good luck with your trading!

After the UK session got underway the EUR sold off, but buyers entered beneath the Asian session lows.  After a very bullish candle, we enter long with a 20 pip stop loss for a potential 5:1 R/R.  As price moved up, we moved our profit stop up protecting ourselves and subsequently get taken out before the second wave up…capturing about half the move.

The majors have been moving in unison and showing surprising strength against the USD.  The technicals are currently showing USD weakness… for the time being.  If we get a weaker than expected April payrolls data…under 175K NFP – the USD long squeeze could continue.  If we get a 250K NFP, then the USD longs will be rewarded.  The FOMC statement tomorrow will hopefully shed some light on the recent soft US economic numbers. Typically when the FOMC only releases a statement, as will be the case tomorrow, we don’t have the same level of volatility as usual on a FOMC day.

Good luck with your trading!

Back tomorrow if we find a trade.

 

The AUD has been moving sideways in a trading range since the end of January this year.  Since the March 18th FOMC day – its highs and lows have been more or less contained by the high and low of that day.   In other words, it is sold near the top and bought near the bottom of the range.

Looking at a 4 hour chart, we can see that price could not close below a very important level on Tuesday that many institutional traders would be watching.  On Thursday price moved above an important level for the 1 hour institutional traders.  With price above both levels a counter-trend setup today after a 3 candle reversal  before the opening of the US session.  A stop loss is placed 12 pips below entry for a potential 76 pips of profit to our Target 2.

With the US session underway shortly and economic news pending 30 minutes after the US open… we move our stop loss to plus 3 pips quickly to remove any risk from the trade.  Price continues to move up and we place a profit stop halfway down the large blue candle in advance of the news.  Although the pattern is complete, the news could potentially push the pair another 50 pips in our direction or cause a reversal.  As it turns out, the news volatility takes us out and we give back a few pips.

As price begins to make another move up, we enter long again and keep our stops very tight as the session only has a little more than an hour before the UK Close.  When long upper wicks appear on candles… this is a sign of sellers entering.  This can be considered a red flag – to tighten profit stops and lock in profits.  After 2 long wicky candles, we have tightened our profit stop a bit more and are subsequently taken out by the reversal.

Although we didn’t make it to Target 1…just above T1 marked by the red line is the FOMC high – where sellers have been entering.  As the wicky candles indicated… a reversal was imminent.

When trading a counter-trend trade:

1.  Be very careful!

2.  Ensure that the Reward to Risk makes sense and don’t expect to make as many pips as you would trading  with the trend.

3.  Get as much confluence as you can before you take the trade, so that you are stacking probability on your side.

4.  Keep your stops tight and get the risk out of the trade as quickly as possible… then keep tightening your profit stop.

5.  Be very cognizant of the levels where institutional traders are likely to add to their trending positions.

6.  Read what the candles are telling you as the trade progresses.

7.  Never fight the market or be greedy.

 

Good luck with your trading!  Enjoy your weekend!

Back Tuesday if we find a trade.

USD strength re-emerges  as the EUR was unable to close above 1.0800 and began to move downward.  A short setup is found with a 16 pip stop loss placed above the session highs, for a potential 116 pips to our Target 2.

As price picks up momentum to the downside we can see the long upper wicks on the candles.  As price begins to lose downside momentum, we can see long lower wicks on the candles.  Vertical moves are not sustainable.  When buyers are entering and long lower wicks are appearing on the candles, the idea is to tighten up the profit stop – to lock in as many pips as possible.   Think of the long lower wicks as the brakes being applied to the move.  Price made it to the Asian session lows but could not close beneath it.

We had 3 candles essentially waving red flags at us and the fourth candle (the blue one) takes us out at our tightened profit stop.   Although we did not make it to our Target 1 and 2, we captured a large piece of the daily move.

Tomorrow’s session has some significant economic news releases.

Good luck with your trading!

Back tomorrow if we find a trade.