Michael Bridgman

When the majors are moving in sync, trade in the direction of either USD weakness or strength.  I prefer to trade the pair where I can find the smallest stop loss…all things being equal.  Rarely, however in trading are all things equal.  The GBP could be having a particularly active week and the EUR could be having a more subdued week than usual or the commodity pairs may be very active on a given day.

In today’s session, my first choice would have been the EUR, then the GBP, but the AUD had the least expensive stop loss when placed above structure.

A short is taken at a time of day when we often see large trending session moves.  It was not the case today… as the market went sideways after the entry until the US session news.  A bit of volatility in advance of the U.S. news made it prudent to move the initial stop loss down… as more negative U.S. numbers would completely reverse the market.

The AUD was unable to take out the technically significant daily high from the March 18th FOMC which made the choice to short the AUD more compelling.  When the pair started falling we tightened our take profit to about halfway up any large candles or above structure.  Price moved down but was unable to stay below the Asian lows and we are taken out near the UK close.

Next week is light in the way of U.S. economic news releases.  It will be interesting to see how the market reacts while it awaits further indication as to the US economy’s strength.  In the meantime, we have the Greek situation affecting the EUR and the UK pending elections affecting the GBP.  Oil has strengthened this week and the Canadian economy is looking better than expected.  Australia and New Zealand have also posted good numbers this week.  The JPY is currently comfortable below 121.00.

Enjoy your weekend!

Back Tuesday if we find a trade.

 

 

Since Tuesday’s disappointing retail sales number the USD has been squeezed.  The continuing soft U.S. data as the week progresses is adding to the broad correction.

Beware of technical resistance areas as this counter-trend wave can end abruptly.

After the UK open the EUR pushed down and formed a base before breaking to the upside.  With a 25 pip stop loss, a long trade is taken for a potential 115 pips to our Target 2.  As this is a counter-trend trade, we want to remove the risk from the trade promptly and keep tightening our profit stops until the market takes us out.  Price begins to move vertically up and vertical moves are not sustainable.  We tighten our profit stop to approximately halfway down the preceding large candle.  As it turns out, this was a little too tight and we are taken out well before our Targets 1 & 2.

With any counter-trend trade it is better to be safe than sorry.

The 1.0750 and 1.0800 levels may attract institutional short positions being added as they fade the rallies in the upper portion of the current range.

Good luck with your trading!

Back tomorrow if we find a trade.

 

Nothing really new from the ECB Press Conference today.  The EUR had made a counter-trend move higher yesterday after the weak U.S. data.  Early in the UK session today it sold off and then rose during the conference.

When price could not close above the Asian high, a classic reversal sets up.  A short is taken and we hope to challenge the March 18th low where price had bounced earlier in the session…then on down to our Targets 1 & 2.

As price moves back down, we tighten our profit stop and are taken out with less than an hour left in the session.

The softer USD so far this week does not mean the overall trend has changed.

Good luck with your trading!

There’s lots of news still to come this week.  Back tomorrow if we find a trade.

USD strength was evident across the majors today after the US Unemployment Claims number.  Yesterday’s FOMC statement also added to USD strength.

The EUR broke its 2 hour holding pattern after the Unemployment release and closed bearishly.  An entry short is taken with a 27 pips stop loss for a potential 109 pips to our Target 2.  With the confluence of the larger charts pointing the way and trading with the trend – we enter short with just over 3 hours left in the trading session.  Price moved down retesting the earlier session lows before continuing on toward our targets.

This is a slightly larger stop loss than my usual 15-25 pip ones.  The idea is to remove the risk as soon as is prudent to do so and then to lock in profits as price progresses toward the targets…while understanding the levels where price is likely to slow down and retest as well as being able to interpret what the candles are telling us.

At the UK session close, we exit our trade very close to our Target 1.

Back tomorrow if we find a trade.

Good luck with your trading!

 

The RBA left rates unchanged at 2.25%.  Interestingly with lower commodity prices and softening data from China, some would have thought a rate cut might be announced.  More interestingly was the big move up just before the RBA announcement…who knew?

This used to be one of my favourite setups to trade, but it hasn’t been as productive the past year.  The idea is to watch the AUD jump and do its daily range after a major economic news release during the Asian session  Look for signs of it weakening/reversing… such as the 3 lower highs that we saw today and ride it back down to the Asian low… or as close as it gets to it…but never be greedy.

Today as the long lower wicks form, we see price slow down and the momentum fades as buyers enter.

 

Tomorrow is FOMC day so hang on to your hats.

Good luck with your trading.

Back when we find a trade.

The USDCAD moved downward after the U.S. and Canadian economic news releases today.  With the USD weakening and the Canadian Trade Balance beating expectations, a short is taken with a 15 pip stop loss.  Price moved down and initially bounced at the Asian low before dropping right through it – where it then retested yesterday’s low.

As this is a counter-trend trade within a counter-trend week, we tighten our stop loss to get the risk out of the trade quickly and then tighten our profit stop as price moves in our direction.  The long lower wick (shown on the chart) is a warning that buyers were entering and we tightened our profit stop again… only to be taken out on the subsequent move up.

The always important Non-Farm Employment number will be released tomorrow with many traders away for the holiday weekend.  We will soon know what sort of impact it will have on the markets.

If the CAD continues downward, be cautious around the 1.2450 and 1.2380 levels as buyers are likely to emerge.

Good luck with your trading!  Enjoy the Easter holiday weekend.

Back Tuesday if we find a trade.