Michael Bridgman

Counter-trend trades have set up this week in advance of the US Thanksgiving holiday.

The UK second estimate GDP number came in on target and buyers entered the cable.  With a stop well below the Asian lows we enter long – meeting our 3:1 R/R ratio minimum. Price tests the Asian high three times before ascending to our Targets 1 and 2 which we always protect with profit stops.

As price retraces this week in advance of the US holiday, we see lots of trades being squared by the institutional traders.  This may allow for some good entries next week back to trend.

Good luck with your trading!

Back tomorrow if we find something we like.  It may be pretty quiet for rest of the week but you never know…

A very interesting week concludes with the Draghi’s dovish comments creating a huge sell off in the EUR. The SNB’s Zurbruegg announcing that they are prepared to buy foreign currency in unlimited quantities because the Franc remains overvalued and the PBOC announce a surprise rate cut.

Having learned many years ago that it is never a good idea to chase a move, nor to stand in the way of an oncoming locomotive… fading a countertrend move once it sets up is an option.

The NZD popped up exceeding its range and then gave three lower highs with wicky candle tops. After the third, a very bearish candle follows as the US traders fade the bullishness.  Ideally, the idea here is a move to the session lows, but a move to the Asian low would be excellent too.  On the way down, we need to close below the Asian high and continue down through yesterday’s high.  Alas, as time ran out for the UK session price bounced off yesterday’s high three times before the close.  This level was particularly sticky because of its significance today to the institutional 60 minute traders.

The trade set up with confluence and we execute according to plan.  The market gives us what it does… and a positive trade is always a good one.

Good luck with your trading!  Enjoy your weekend!

Back Tuesday if we find a trade.

A positive retail sales number helped move the GBP higher in the beginning of the session.  As price topped out just over our Target 1 and began to roll over – closing below yesterday’s high, an entry short set up.

We had little time left in the trading session, price moved down fairly quickly and below the Asian session high where we exited as one pattern completed just in advance of the UK session close.

ECB’s Draghi will be speaking as the UK session gets underway Friday.

Good luck with your trading!

Back tomorrow if we find a trade.

We had some news out of the UK which caused the GBP to rise up near the 1.5700 figure – where it failed to close above. It also appeared heavy after it hit our Target 2.  Knowing statistically that a pair can only rise or fall so much in a given day, before it is highly likely to reverse off its highs or lows gives a trader a powerful edge.

After the second lower high and a close right at our upside Target 2, we enter short with a stop loss above the lower high.  Price penetrates yesterday’s high and retests it before moving further down. As price begins to rise, it creates a double bottom for the session – filling a pattern and we exit.

Thanks to the UK news this pair was active.  The market awaits the risk events of the FOMC meeting minutes today and ECB Draghi’s comments on Friday.

Good luck with your trading!

Find your edge, keep it simple and be consistent!

Back tomorrow if we find a trade.

The AUD set up nicely for a short trade consistent with the trend.

An interesting note here is the Reserve Bank of Australia has not ruled out intervention and has repeated that the AUDUSD  remains above estimate of fundamental value… which sounds to me like they are okay with the AUD getting weaker.

Although it’s been moving up recently, I prefer to find short setups consistent with USD strength.

Unfortunately this nice setup ran out of time for results at the UK close for me.

Good luck with your trading!

Back next week.

The CHF intrigues many traders at the moment.

The Swiss National Bank Governor Jordan stated that they won’t give up the cap for the foreseeable future and that the currency cap is key for preventing deflation.

If the EURCHF (moving currently at a snail’s pace) approaches/penetrates 1.2000 – we anticipate an intervention by the SNB.

Although the USD remains strong, a countertrend setup appeared today which exceeded our Reward for Risk ratio of 3:1.  With a stop loss above structure we attempt to get down to the Asian low and yesterday’s low… then down  to our Targets 1&2.

As this is a countertrend trade, the idea is to be nimble and definitely not greedy.  Always heed what price is telling you.  As price moved down and we get a wicky bottom to our bearish candle, we tighten our profit stop for the minimum we want out of this trade – should it reverse.

Price takes us out and we move on with modest gains. What is most important is that we executed according to our rules and trading plan.

I have found trading to tricky the past couple of weeks.  Be very selective in choosing trades and if trades don’t meet your criteria – come back tomorrow.  The market isn’t going anywhere.

Good luck with your trading!