Michael Bridgman

We’re back for the New Year

As 2015 trading gets underway, the charts are not nearly as clear as they were at the end of 2014.

The EUR looks weak still, but it needs to close below the  1.1750 area on the daily chart for the next leg downward to have traction.  It tried to take out 1.1750 level this session, but bounced higher making a third higher low – in advance of the US Open and an entry long is taken.  The setup provided a greater than 3:1 R/R with a tight stop just below the third higher low.  The temporary USD weakness was confirmed with the GBP moving in parallel and the CHF moving inversely.

As price moved up, we remove the risk from the trade by placing our stop loss (now a profit stop) higher to lock in a few pips in advance of the US economic news.

Price moves up on the news going through both our Targets 1 & 2.  As price began to fade we closed the trade at Target 2.  Price is not statistically likely to stay above Target 2 and the subsequent wicky candles forecasted the reversal.

Be very careful with counter-trend trading as the volatility in the retracements tends to eat up profits quickly.  It’s much easier and more profitable to trade with the trend.  The charts are currently conflicting which makes finding trades very tricky.

The EUR is likely to get some downward momentum after is closes below 1.1750.  The ECB Press Conference next Thursday has a lot of institutional money on the sidelines.

Good luck with your trading!

Back tomorrow if we see something we like.

Michael

The AUD set up beautifully for a short early in the US part of the session.  After it failed to challenge the Asian high and classically reversed – an entry short is taken.  What makes this trade setup more powerful is what the institutional traders were seeing on their charts.  If you know how the  institutional traders are interpreting their charts, you would enter this trade with a very high degree of confidence!  Their charts are very simple – no oscillators or nonsense indicators below the charts or silly arrows, Bollinger bands etc. on their charts.  All of that junk is strictly a retail myth, very cleverly marketed and a nightmare for anyone trying to clearly interpret where price is going.  This is why retail traders tend to blow up their accounts!

After 3 lower highs (a powerful signal) and with the trending USD strength, a short is entered with a 12 pip stop loss and a potential 75 pips to our Target 2 which coincides with the .8100 figure today.

As price continures down we move our stop loss down locking in profit and taking any stress out of the trade.  As the session ends, we exit and that is it for our year.  For anyone who is active next week and following this pair…be aware of the May 2010 low of approximately .8066 level.

Volumes will be down over the next 2-3 weeks but there is still lots of liquidity.

I hope everyone has a wonderful holiday season!!!  We will be back in early January.

I received an email today from a former student who has worked hard (hint) at becoming a very successful trader.  I have his permission to share this quote.

“I ended the year great in trading and this month was a record for me, no losses!  Man what a feeling that is….”  from Doug W. in Atlanta, Georgia USA

This is why I teach trading.  I wasted years and thousands of dollars learning what doesn’t work in forex trading – buying into retail myths and cleverly marketed courses by guys who have never traded. To hear of the success of one’s students is what every teacher  strives for!!!  Not everyone is cut out to be a trader.  It is not easy and it’s not for everyone!  If you put the work into it and learn what it is that institutional traders pay attention to…you will be much more successful.

All my best for the New Year!

Michael

With the FOMC behind us…the EUR is moving lower toward its Dec. 8th low.

Entering a trade in the middle third of the Asian range is not typically a good idea.  If I have a confluence of reasons, and the stop loss is affordable, then I will make an exception.  After a triple top, we waited one more candle, and the next candle closed below yesterday’s low.  With the selloff after Yellen’s speech and price breaking below once again, this is a good hint as to the direction the market is moving.  We have a triple top, a break below yesterday’s low, the larger charts are bearish, a 4:1 R/R to our Target 2 (not shown I would have to compress the chart too much) and the trend is down!  The Dec. 8th low is going to be a little sticky most likely to get through.

Dec 8th low – 1.2246

Target 1 – 1.2234

Target 2 – 1.2213

As it turns out price stalls at the Asian session lows – goes sideways and we exit there after exercising considerable patience.

Be extremely cautious entering a trade in the middle of a range…it’s known as the “killing zone”.

Back tomorrow to finish the year…if we find a trade.  Otherwise, have a wonderful holiday season and see you in January.

Good luck with your trading!

If you have any questions, send me an email.

 

 

Once the dust settled after the US CPI economic release, the majors set up showing USD strength with the USDJPY taking one extra 15 minute candle to show the same.  The CHF was the mirror image of the EUR and  the GBP, AUD and NZD all showed similar setups.

The EUR is taken short with the 1.2400 figure and  our Target 2 coinciding.  This gave the trade a 2:1 R/R which is acceptable for us, once the US session is underway.  We move our profit stop down protecting ourselves in the event of any whipsaw.  Price moved to the 1.2400 figure before losing downside momentum.

We tighten the profit stop as price is statistically unlikely to run further than our Target 2.  The FOMC is the wildcard today,but we are gone in advance of it.

There will be European and US news tomorrow.  .

Good luck with your trading!

Back tomorrow if we find a trade.

 

The EUR has been trading between 1.2350 and 1.2500 for over a month – with very few days above and a very few days below.  As the UK session got underway price moved up.  Our upside Target was 1.2529 for the day and as price climbed beyond it, we awaited a reversal setup – as our preference is to short this pair.  As the US traders began their day, the pair immediately reversed and an entry is found with the trend – short.

Price continued to move lower and we moved our stop loss down to plus one pip after we see a large bull candle.  The worst case scenario is we are taken out positive one pip and that’s still a winning trade!  Price continued lower before bouncing off yesterday’s high late session and we close at the low of the previous candle to lock in our gain.

The main risk event for the week is the FOMC tomorrow.  Volumes are lighter going into the holiday season which means markets will be susceptible to one-off flow driven moves.

Keep your stops tight.  Over the holidays is a great time to hone your trading skills if you have some free time.

Good luck with your trading!

Back tomorrow if we find a trade.