Michael Bridgman

Two major concerns for the markets have persisted this year… the U.S. – China trade talks and Brexit. As the deadline approaches ever nearer this month for Britain, there remains little progress toward an amicable solution with the E.U. On days of optimism, the GBPUSD rises and on days of pessimism the GBPUSD declines.

Today after the first hour of trading in London, the optimism was not there. A short was taken risking 20 pips for a potential 62 pips to our daily target at 1.2200. Price at first pulled back against us, but then moved lower. In the hour before the U.S. open, the pair found some buyers causing our profit stop to be hit, before price moved down to our daily target.

As the U.S. session got underway, the sentiment of the markets was one of “risk off”. This made the USDJPY look like a nice short opportunity. With further threats coming from the White directed at China, the trade looked like it might be a good one until a headline suggesting that China was sending a large delegation to Washington implied they were not offended and hope resurfaced for favourable trade talks once again, which caused the USDJPY to stop and reverse hitting my 20 pip loss.

This is the currently reality of trading in this market. It’s not the economic news releases which we can trade around that will hurt us – it’s the headlines popping up and uncertainty around the two issues that have weighed on the markets all year. The markets are very volatile and many large asset managers are sitting on the sidelines currently in cash until more is known.

I am being extremely cautious, keeping positions smaller than usual, with reasonably tight stops and locking in profits quickly… before an unforeseen headline can evaporate them.

Good luck with your trading!

The EURCAD has been quite active and with oil higher today early in the U.S. session overlap and the Euro weakening a short was taken risking 11 pips for a potential 106 pips to our daily target at 1.4576.

A glance over that the EURUSD helped confirm the Euro direction was down. As price moved lower, we protected our profit by lowering our stop loss and a retracement just before the U.K. session ended closed our trade.

It will be interesting to learn what the U.K. court decides today regarding the proroguing of parliament by Prime Minister Johnson and how the GBPUSD reacts.

It has been curious seeing a very muted reaction thus far from President Trump regarding the oil attack on Saudi Arabia. Although the president continues with his verbal assault on Fed. Chair Powell… who lowered rates by 25 bp yesterday – as already priced in by the market.

Friday is light on economic news with Germany reporting PPI and Canada reporting core retail sales.

Good luck with your trading!

I can’t remember the last time I took a long on the GBPUSD. Brexit is not behind us, but the charts looked very good today for a move up to the 1.2500 area.

A long was taken early in the U.S. session risking 20 pips for a potential 71 pips to our daily target at 1.2491. The news calendar was light and the pair found more buyers as it climbed to test its Asian session high. This level was tested and retested before price moved quickly up to our daily target where the trade was closed.

A close above 1.2500 today is bullish and the 1.2735 area become a target to test going forward. With negative news regarding Brexit or military intervention against Iran, the pair is likely to move lower…beginning with a test of the 1.2400 figure.

Tomorrow the U.S. is expected to lower interest rates by 25 bp and traders will be listening closely to Fed Chair Powell’s comments regarding any concerns for the U.S. economy that would suggest another 25 bp cut or more by year end.

It will be interesting to see what President Trump decides to do regarding the strike on the Saudi oil facility. Oil is off its highs as the Saudis are expecting to be back up to capacity within a few weeks…if not by month end.

Good luck with your trading!

An attack on Saudi Arabia’s Abqaiq oil processing facility has caused a temporary shut down of 5.7 million barrels a day of oil output. This naturally caused oil to trade significantly higher today.

With oil strengthening significantly, a short was found in the EURCAD risking 19 pips for a potential 85 pips to our daily target at 1.4589.

Price made its way lower throughout the session and the trade was closed at our target.

A number of central banks will be announcing interest rate decisions this week, including an expected cut by Fed Chair Jerome Powell on Wednesday.

It could be a busy week for oil as lost production is restored and price settles lower.

Good luck with your trading!

The USD has been weak since Tuesday’s ISM Manufacturing PMI for August fell to 49.1 – hinting further at a contracting economy. Today the ISM Non Manufacturing PMI came in at 56.4 – above expectation of 54. This helped to reverse the slide in the USD and a short was taken in the EURUSD risking 18 pips for a potential 51 to our downside target at 1.1016.

The EURUSD had already made its upside target but ran into sellers just in advance of the news release. We took advantage of this and hoped for a 100% retracement back down to the low of the day. We protected profits as price moved lower…taking the risk out of the trade. Price was unable to close beneath yesterday’s high and we closed the trade at the London close.

Traders will be watching the NFP number on Friday very closely. A substantially higher number than the expectation of 160K will likely rally the USD further. This release tends to create lots of volatility. Also Fed. Chair Powell will be speaking 30 minutes after the U.K. close.

Good luck with your trading!

The EURUSD moved quickly higher as the U.K session got underway and vertical moves are not sustainable. As the sellers entered above yesterday’s high and price made two red candles, a short was taken risking 12 pips for a potential 33 pips to our daily target at 1.1068.

This is a high probability trade setup and the pattern would be complete if price had just made it back down to its Asian session low. Price tends to retest important levels and after a quick bounce higher, price continued to our daily target and closed the trade.

It’s been a tricky week. Traders have been waiting on Fed Powell’s comments on Friday at Jackson Hole for further clues as to U.S. interest rate cuts and the health of the U.S. economy. The lack of resolution in the U.S. – China trade talks is not helping the U.S. or world economies.

I’m surprised that the 1.1000 level has held up this long for the euro and a bigger surprise is that the 1.2000 level has yet to be breached in the GBPUSD.

I’m still comfortable shorting in to both when the setup presents itself but expect a bounce at these levels in the near term.

Good luck with your trading!