Michael Bridgman

The day after Thanksgiving in the U.S. is known as Black Friday and with many traders taking a long weekend, trading volumes are lower. That coupled with negative headlines about the discovery of a new coronavirus variation reported from South Africa’s medical scientists, led to fear and panic in the financial markets around the world… particularly the major equity indices.

Large moves in currency pairs followed. With oil dropping precipitously and fear benefitting the Japanese yen, a CADJPY short was taken risking 20 pips as it started to move lower after the New York session got underway. It didn’t matter which pair you chose today, the gains were likely good if you had your correlations and direction correct.

With the Canadian dollar being weakened by the drop in WTI Oil, and the Japanese yen benefitting from safe haven status, a short was taken risking 20 pips, which was quickly moved to plus one pip once the move began. The pair continued down to the 89.00 figure. We protected that level, as it continued lower to the 88.50 level. As it attempted to move lower still… it ran into an important technical level from the daily chart. We protected the 88.50 level and our profit stop was hit just before the European close.

Enjoy your weekend and good luck with your trading!

Firstly, I haven’t been posting for a month and not because I’ve been away on a holiday. There was a death in my family and recovering from it has been very emotional for me. At times, I wanted the focus and distraction of trading but trading during emotional periods is not advised. I did the occasional trade but my focus was challenged, so I stepped back and spent more time observing the markets.

So what has changed in the past month? We now know that Jerome Powell will continue on for a second term as the Federal Reserve Chairman. Daily currency trading ranges have contracted in the majors, but the USDJPY is showing more life than it had in the summer and early autumn. Oil remains topical and hence the USDCAD remains active, but less so. Unfortunately, the Covid virus is still prevalent and disruptive… and causing chaos in certain areas of the world.

Today, a short was taken in the USDCAD as the pair approached the 1.2750 level and abruptly moved away without actually challenging it. This pair tends to be sensitive to the figure and mid-figure levels and a bearish engulfing candle created our entry setup requiring only an 11 pip stop loss for a potential 64 pips to our daily target at 1.2670. Over the past month, I have found relatively tight risk/reward ratios which have negated a lot of entries. This coupled with smaller moves generally is a good reason to be very selective in your trading.

Today the USDCAD moved lower after entry and our profit stop was moved to plus 1 pip in advance of the U.S. open. After a small pullback, the pair moved lower and was immediately met with buyers at the 1.2700 figure. Not wanting to give back a nice gain, the trade was closed at yesterday’s high.

I have noticed over the past month that locking in at least one pip when a trade moves as expected can save one from the disappointment of having one’s stop loss hit. I let a few trades back up against me despite recognizing that a pair looked like it was reversing and as opposed to closing the trade, I let it hit the stop. reviewing a trade afterward can really help with this. I don’t take any trades that would hurt me if I get stopped out, but locking in profit even if it’s only a pip or two once a pair has moved in your direction prevents a potential loss. It’s a bit of a balancing act but the swings have been less unidirectional than usual and pullbacks along the way are frequent.

Another trick is to take smaller positions, risking less than usual until the market gets active again. If you see a great setup that meets your criteria with the market trending strongly and ranges are less contracted, then consider your usual size of trade.

Good luck with your trading and Happy Thanksgiving holiday to the U.S. traders this week!

Taking advantage of Fed Powell’s remarks, coupled with a tight stop loss, a long was taken in the USDCAD risking 8 pips for a potential 38 pips to our daily target at 1.2390.

Although the market has been anticipating the stimulus taper to begin this year and end mid 2022, any specific timeline for a rate hike next year is still an unknown despite inflation appearing to be more than “transitory”.

The immediate reaction to Chair Powell was a move higher in the USDCAD and the trade was closed at the U.K. close for a quick profit.

Enjoy your weekend and good luck with your trading!

The GBPUSD moved lower in the first half of the U.K. session after Britain’s CPI and PPI economic releases missed expectations. With the USD weaker again today, a long was taken risking 15 pips for a potential 63 pips to our daily target at 1.3830.

I wasn’t comfortable taking a 25 pip stop loss beneath structure today, so if the pair moved against me by 15 pips the trade would have closed. The pair had upside momentum on the 15 minute chart at the time of entry, but it also had some technical resistance levels to get through… which it managed to do as the USD faltered.

We closed the trade at the end of the U.K. session about 10 pips shy of our target.

Thursday will have the EU Leaders Summit and there are some important economic releases early in the the U.S. session to be aware of.

Good luck with your trading!

A bearish session for the USD today and a short was taken in the USDJPY risking 20 pips for a potential 57 pips to our daily target at 113.03.

The USDJPY had been a very quiet pair with a tight daily range all summer. In the third week of September, it began to move higher, with one pullback before pushing higher to the 113.50 level. This has gotten the attention of traders as its daily range has increased considerably since this last move above 110.00.

Today as the U.S. session got underway the USDJPY made a very brief move above its Asian session high then immediately began to move lower. Sellers remained in control until the 113.30 level where buyers entered and we closed the trade at the Asian session low.

On Thursday, U.S. initial jobless claims and PPI numbers will be closely watched.

Good luck with your trading!

The USDCAD continues to be a rewarding pair to trade, along with its crosses and the GBPUSD.

A short was taken today immediately after the Canadian Ivey PMI release risking 18 pips for a potential 75 pips to our daily target at 1.2498 (not shown).

The idea was to take advantage of the “risk on” sentiment and the softer USD today. Similar to what has been mentioned in a previous post, I prefer to short the pair when it sets up and keep an eye on the 1.2550 sticky level. If it attracts more sellers there… I will stay in it and if not I will protect profit.

The pair moved lower and resisted taking out the 1.2550 level at first – which is to be expected. Regardless of your intended target, be aware of the 1.2520 and 1.2500 levels where buyers are likely to appear.

Today when price went through the 1.2550 level, it left a long lower wick. The following candle price attempted to push lower and when it moved up to the low of the previous candle, the trade was closed before it could retest the mid-figure.

The GBPUSD was also a nice trade today.

Tomorrow will be the monthly NFP release and sentiment is widely bullish. If I see an opportunity, I will trade it and if not, I will be back on Tuesday looking for trade setups.

Monday is Thanksgiving Day holiday in Canada and Columbus Day in the U.S.

Good luck with your trading!