Michael Bridgman

As the USDJPY reached yesterday’s high early in the U.K. session, it reversed and an entry short was taken.  With the larger charts (Daily and Weekly) unclear, we were prepared to take a trade risking 13 pips for a potential 79 pips to our daily Target.

Price moved down, then went sideways retesting its Asian lows.  We moved the stop loss to plus one pip and price eventually moved a little lower in advance of the U.S. session.  We tightened the stop loss further.  After the second long lower wick and having given up 11 pips to its close, we exited the trade.  Looking at the hourly chart, it was clear the hourly traders were not going to let price close below their important 110.83 level.

Be very careful trading when the charts are not in agreement.  Look for trade setups requiring very small stop losses.  Be patient as the market digests the recent surprises, while we await the confirmation new trends.

Good luck with your trading!

 

The Trump reflation trade has been winding down pushing the USD lower and now it’s approaching some critical technical levels.  Will it bounce upward?  Also, repatriation flows to Japan continue until the end of the month.

Oil moved up a bit today in advance of the weekly crude inventories due out tomorrow.  After the USDCAD made a second lower high for the day, with two very bearish candles, a short is taken with a stop 15 pips above our entry for a possible 54 pips to our Target.

As the U.S. session began, the USDCAD moved down and we immediately moved our stop loss to plus one pip…removing the risk from the trade.  With the pending U.S. and Canadian news today we were expecting the U.S. news to be positive and the Canadian news to be dovish.  After all, the U.S. is raising rates to slow down their growth and everyone else is hovering, watching their own economy and the Trump effect.

Price moved down to its Asian session lows and retested the level before descending further.  As it continued lower, buyers began to enter and we thought it best to get out in advance of the news.

Although the USD continues to get bashed about, it is approaching some critical levels and we will know shortly if it has any strength to take it back up or if most of us have been fooled.

Good luck with your trading!

The markets appear to be concerned about the outcome of the House of Representatives vote tomorrow regarding healthcare reform.  This could be viewed as a test for President Trump’s power and the likelihood of tax reforms this year.  Equity markets and the USD have been selling off in advance of the vote.

A very similar setup occurred in the USDJPY as yesterday and we traded it the same way.   The U.K. traders initially pushed the pair up and it failed to stay above the 111.50 area which supported it yesterday.  As it reversed, an entry short is taken and price moved down to test its Asian session low before moving a little lower.  As it came back up to retest it’s Asian low, our profit stop closed the trade.  Once the U.S. session got underway, just like yesterday, we went short at the first sign of weakness with a 10 pip stop loss above the new session high for a potential 55 pips to our Daily Target. With no U.S. economic releases pending that could possibly derail the trade, we rode it down and closed it as it bounced above our target.

We’ll find out soon if the 110.00 level can hold and stop the decline in the USDJPY.  We will also see if the current Euro strength can take it through 1.1000 but the 1.0885 area is critical in the meantime.

Good luck with your trading!

Optimistic or not about President Trump’s future policies, the USD is weak and being sold off.  In particular, the USDJPY is vulnerable and it set up nicely today.  After testing its Asian high and rolling over, a short is taken with a 15 pip stop loss.  Price moved down then slowed down and took us out of our trade just before the U.S. Open.  It then dropped for the first candle of the U.S. Open before reversing upward.  At the first sign of selling  another entry short was taken with a 13 pip stop loss for a potential 58 pips to our Daily Target.

The second entry worked out better as price moved down to our Target and we exited the trade at 112.00  The next area for price to test will be the 111.50 area where it has stalled before.  If this area gives way, it will be interesting to see if 110.00 gets tested.

The markets are more optimistic about the political outcomes in Europe at the moment than they are about the Trump administration.  I expect that this shall pass, but in the meantime the USD continues to weaken.

Good luck with your trading!

 

This past week was extremely busy for central banks.  The U.S. had their first rate increase since December.   As opposed to seeing USD strength after Janet Yellen tipped the market last Friday that a rate increase was forthcoming (and the usual rhetoric) we saw a sell-off of the USD.  The markets had lots to digest all week as we heard from ECB President Draghi on Monday, Janet Yellen on Wednesday coupled with an interesting election in the Netherlands, followed by the Bank of Japan and disappointing Australian employment numbers Thursday and G20 meetings Friday and Saturday.

While USD bulls remained poised to trade long, the opportunities to do so were few and fleeting.  With WTI remaining below $50 all week a USDCAD long was found today.  After the bullish U of M Consumer Sentiment number and a bullish reversal setup… a long was taken risking 17 pips for a potential 76 pips to our Target.

Price moved higher and just before the UK close, profit taking brought price down closing the trade for a nice ending to the week.  My earlier 2 trades this week were 13 and 10 pips respectively and not eventful in any way.

I continue to be bullish on the USD but the majors are not trending clearly.  Patience and very selective entries on a session by session basis is my preference for now.

Good luck with your trading and enjoy your weekend!

Taking a look at the daily chart of the USDJPY, we can see since Jan. 27th 2017, the pair has not been able to close above the 115.00 area.  With renewed USD strength based upon an anticipated interest rate increase next week, the pair is trying to move higher… and will get there.  Today the market was focused on ECB President Draghi speech and with slight USD weakness, shorting the pair as it failed to break higher, using a small stop loss worked out twice in today’s session.

Although this was a countertrend trade, we used small stop losses and did not expect the trade to move far to the downside.  As usual we read how price reacted at yesterday’s high and the Asian session high.

Tomorrow will be the NFP release which traders will watch very closely in case there is a substantial miss.  If the number is slightly lower, meets or exceeds expectations, then the market believes the rate hike on March 15th is assured.  As recently as yesterday, the consensus was indicating a 94 percent probability for a rate increase next week.

**** In North America the clocks go ahead one hour this weekend – which changes the U.S. overlap period with the European and U.K. traders.

Enjoy your weekend!

Back next week.