Michael Bridgman

When the markets are anxious “risk off sentiment” money flows tend to move toward the yen, Swiss franc and gold.  Equity markets can be seen as an indicator of fear and greed.  The U.S. equity markets sold off on Wednesday erasing gains for 2018.  On Thursday the markets rebounded and closing higher and recovering Wednesday’s losses.  On Friday, the equity markets moved down again sharply as the U.S. session got underway.

As price made a lower high early in the U.S. session, a short was taken in the USDJPY risking 13 pips for a potential 32 pips to our daily target at 111.75.   Price moved down to our target and we closed the trade.  Price gained further downside momentum and continued lower without us.  As the U.S. equity markets began to pare some of their losses intraday, the pair reversed higher.  The majors made uniformed moves today and the USD has been weaker once again.

I’m curious as to whether the U.S. equity markets can recover to close positively today to end the week.  If not, next week may start off ugly with negative sentiment and continued selling.

Good luck with your trading and enjoy your weekend!

The FOMC meeting yesterday confirmed that the U.S. economy continues to be very strong and the concern centers on how many more rate increases will be necessary to strategically slow it down.

Today the EURJPY spent some time stay above its Asian high but ultimately failed and an entry was taken risking 14 pips for a potential 82 pips to our daily target at 128.78.  Price slowly moved down in advance of the U.S. open and we protected ourselves by moving our stop loss to a profit stop.  Price continued down to test yesterday’s low and its Asian session low before bouncing above yesterday’s low where we exited the trade.

Much like yesterday despite a stronger USD versus the majors, it lacked strength versus the JPY.  As the USDJPY made a second lower high for the session, a short was taken risking 8 pips for a potential 46 pips to our daily target at 112.08.  Price moved down tested its Asian session low and briefly bounced making a third lower high for the session before plummeting and reaching our target.

Although talks between Brussels and London are sounding more positive, the GBPUSD has continued lower and a close below 1.3050 is technically bearish.  A close for the EURUSD below 1.1430 would also be technically bearish.  News relating to an amiable and workable Brexit can potentially make both pairs jump considerably, so any short trades would be well advised to have tight stops.

It’s nice to see multiple trade setups again.

Good luck with your trading!

The markets have become volatile in October once again.  It was a shortened trading week in North America and equity markets were making the headlines as they began to sell off.  As U.S. yields continue to rise, the market participants looking for a safe return tend to prefer bonds over dividends when the returns are comparable.  As borrowing costs increase with rising interest rates, this too affects the equity markets negatively.

If we also consider the U.S. versus China trade tariff impact, E.U. versus Italy debt and spending concerns, amiable or acrimonious Brexit, President Trump criticizing the Federal Reserve for doing its job, pending U.S. mid-term elections, oil surplus or shortage, pending election in Germany etc. one can surmise that the market participants have some issues to consider.  The economic fundamentals remain extremely strong for the U.S. economy,  although the USD had a tough week it ended with some strength today… as did the U.S. equity markets.  Had the downturn continued to the close, next week may have seen a continuation and a downward spiral.  Fortunately, we had a bounce today to end the trading week.

I have been very cautious this week trading only the USDJPY on Thursday and again today, but the returns were very modest.

On Thursday with the USD was very weak and with equity markets selling off, we entered short risking 14 pips for a potential 70 pips to our daily target at 111.70.  Price moved down sharply but bounced upward before making it to session lows and closed the trade.

On Friday, a similar trade risking 11 pips for a potential 57 pips to the same daily target at 111.70.   This trade we managed to ride a little further and exited it at the U.K close.

Next week should be another interesting one.  Keep your stop losses tight and lock in profits.  The potential for volatility remains very high which can be very satisfying if you are on the right side of it.  If you’re not, a strategically placed stop loss is your friend and will protect you from potential catastrophic damage.

Good luck with your trading and enjoy your weekend!

I normally take the first Friday of each month off to avoid the volatile reaction of the market to the Non-Farm Payroll number – now called Non-Farm Employment.  Due to this economic news release potential for extreme volatility, before and at the release, it’s usually a good idea to step aside.  If you really want to find a trade, wait for the market to settle down and catch the real move not the reactionary move…an hour or so afterward.  I was particularly interested in the number today because I thought we were going to get a big surprise to the upside but we didn’t.

Today when the AUDUSD rolled over once again, we were able to risk 8 pips for a potential 50 pips to our daily target at .7029 (Not shown).  Price moved down and we exited the trade at the U.K. close.

Monday is a holiday in North America.

Good luck with your trading and enjoy your weekend!