Michael Bridgman

Fading a rally in a downtrend is an opportunity for institutional traders to add to their core positions. After 3 days of moving counter-trend the EUR was unable to take out the 1.2500 figure.  The UK traders immediately reversed the Asian move higher – as they began their trading day.

After the third lower high for the day (a powerful signal), a short is taken with a stop of 15 pips for a potential 65 pips to our Target 2.

Price dropped to the Asian lows in advance of the pending US news.  We move our stop loss to a profit stop and wait for the market’s reaction to the US figures.  Price drops to our Target 1 where we choose to lock in profits just above… allowing for some wiggle room.  Price takes us out and moves lower without us.

There were a variety of nice trade setups to choose from this session.  The EUR was my favourite as the 1.2500 level was formidable and the 1,2,3 pattern to follow meant the Big Boys and Girls were back in short.  In other words…strong hands taking money from weak hands.

Good luck with your trading!  The year is not over yet.

Be selective, keep your stops tight and don’t be greedy.

Back tomorrow if we find a trade.

The moves overall this week have been counter trend.  Position traders may have given back a lot of profit.  The larger trend remain one of USD strength. The market has become less liquid this week but my bias remains the same.

The AUD moved above its Asian high and came right back down.  My preference is to short it and an entry is found with the US session underway.  As price moved down slowly, we opt to take any risk out of the trade by moving our stop loss to plus one pip.  There is no economic news to create any volatility.  Price meanders lower and we exit at the end of the UK session for a modest gain.

Be very careful with your trade setups and keep your stops tight.

Good luck!

Back tomorrow if we find a trade.

The USD remains strongly bid going into the final month of the year.  Taking tenuous counter-trend trades is not an easy way to make pips.

With a positive UK Services PMI release and price breaking its session highs, a long is taken risking 18 pips for a potential 64 pips to our Target 2.  As the US session gets underway, price moves up and in advance of the US news, we move our stop loss to plus one.  Price initially moves higher on the news and closes bullishly.  We move our profit stop up allowing for some pullback but we get stopped out for a very modest gain.

 
The GBP currently is running into sellers above 1.5785 and finding buyers below 1.5625.  My preference is to short this pair after retracements.  The 1.5600 figure will be fun to watch.

ECB press conference tomorrow and NFP on Friday are the major risk events pending for the week – expect volatility.  Be very selective in choosing your setups.  Lock in profits and keep stops very tight!

Back tomorrow if we find a trade.

The counter-trend move up yesterday did not challenge the high from Nov. 27th.  After the UK Construction PMI disappoints, we wait for the setup.  When price closed below the Asian low, a short is taken with an 18 pips stop loss and a potential reward of 90 pips to our Target 2.

As price drops, we give it room to retest the Asian lows.  Price continues downward and we move our profit stop down accordingly.  As price begins to retrace, we are taken out.

ECB on Thursday and NFP on Friday are the week’s major risk events.

Trending USD strength continues.

Good luck with your trading!

Back tomorrow if we find a trade.

A quick glance at the 15 minute GBP chart shows a series of lower highs as it cascades downward. Looking at the larger intervals that many institutional traders are paying attention to, indicates the same bias or downtrend.

As price tests and fails to close above yesterday’s low as the session gets well underway, we get ready.  Price descends to the Asian session low, retraces to a new lower high and we enter short.  We place a stop loss just above yesterday’s low, giving us a 3:1 Reward for our Risk to our Target 2. Price retests the Asian low and continues down.  We move our profit stop down accordingly -protecting profits just above Target 1 and let Target 2 close the trade.

Statistically price is unlikely to continue much past Target 2 on a given day.  If there is a major news event, it could potentially move twice this range, but it’s improbable most days.  Once you understand how far a pair can move, you can await your setup and determine if the risk merits the potential reward.

Swiss gold referendum this weekend.

Good luck with your trading!  Enjoy your weekend!

Back Tuesday if we find a trade.

As the UK session got underway, a familiar pattern manifested on the AUD.  After the first candle closes,a short is taken with the intention of making it down to the Asian session low…or as close as we can get.

When the AUD has a big move in the Asian session, it is often reversed by the UK traders. This was a beautiful setup and the Reward for the Risk was greater than 4:1.  The 2 concerns were Mario Draghi speaking three and half hours into the session, the other was the first move by the UK traders is often a false move and it’s better to wait.  With no news before Draghi of relevance, and this being an old favourite setup…the short is on.

To mitigate risk, the stop loss is moved to plus one after the second candle of the session closes. With Draghi’s pending speech, the market tends to whipsaw.  As price moved down, we moved our profit stops to lock in gains in case the market quickly reverses.  We are taken out at yesterday’s high just in advance of the ECB’s president’s comments.

Happy Thanksgiving to those in the USA!

Good luck with your trading!

Back tomorrow if we find a trade.