Michael Bridgman

The week had been slow as traders awaited the outcome of the F.O.M.C. statement as to whether March looked like a good time to raise interest rates or maybe…not.  Here we go again… month by month assessing whether the economic data is strong enough for the Fed to raise rates at their next meeting or not.

The outcome yesterday was a weaker USD as it doesn’t appear like the March meeting will bring about an interest rate hike.  U.S. equity markets are up 15% since the election…inspired by tax reform, infrastructure spending and banking deregulation  prospects.

A number of trades set up today requiring very little risk to trade against the USD.

As the ranges have been somewhat subdued this week as traders awaited the outcome of the Fed, it wasn’t surprising to see the market get active with the news behind us.  I like the resilience of both the AUD and NZD (commodity currencies) and found a an entry long into the Kiwi with a 6 pip stop loss for a potential 18 pips to our Target.  The setup was a classic “W” pattern and fortunately the pair moved straight up…keeping us in the trade until the pullback.

The second trade was the GBP which has been beaten down due to Brexit concerns.  It’s important to note that the U.K. economy is doing quite well and the market will be focusing on political risk in Europe with the pending elections.  This to me suggests shorting the EURGBP when the charts look enticing.  Today we had that opportunity, but I chose a GBP long  (my preferred direction at the moment) and as it turns out got out too early.  The reward to risk ratio was a couple of pips under a 3:1 and as price got within  a tick of the Target, we closed the trade… being very cautious.  Oh well…it then moved substantially higher.

I am beginning to wonder if the triggering of Article 50 next month will turn into a non-event for the market.  The European elections outcome implications may be much more concerning to the market over the next few months.  If the EURGBP continues downward and takes out its December 2016 low and continues lower, the .8000 level becomes a probable target.

The USD although on its back foot at the moment will likely strengthen as the market gets a better understanding of President Trump’s fiscal policies.

Good luck with your trading!

 

 

It’s always interesting when we see a big move before a major economic news release, as we saw today with the GBPUSD and EURGBP.   Who knew?

I’m including the GBPUSD and the EURGBP for comparison.  The GBPUSD began to sell off sharply 45 minutes into the UK session.  The EURGBP moved down for 30 minutes luring in breakout traders then reversed and moved strongly upward in advance of the UK Retail Sales release.

The safer way to trade this today was to wait for the U.S. session.  Price had come off its high in the EURGBP…risen as the U.S. session got underway before making a lower high and a 3 candle reversal.  A short was taken with a stop loss above the U.S. session high.  Price moved down to test the familiar levels of yesterday’s high and the Asian session high.  As price bounced upward after testing its Asian high our profit stop is hit and we were finished for the week.

Monday is a holiday in the U.S. and overall it’s a fairly light week for U.S. economic news releases.  The USD was a little stronger on Friday but it may be a slow grind higher with turbulence going forward until we have a better idea as to the new fiscal policies of President Trump.  The market may move its attention more toward Europe next week but we will have to wait and see.

Good luck with your trading and enjoy your weekend!

Despite a continuation of strong economic numbers reflecting the strength of the U.S. economy, the USD continues to slip and the USD index moved down to 100.50 area today.

The first candle of the U.K. session saw the USDJPY drop 27 pips but it went sideways for the most of the session drifting a bit lower before the U.S. Open.  It moved up at the opening and continued until 30 minutes after the economic releases…then began to move down.  We went short after price failed to close above yesterday’s low…witha 23 pips stop loss for a potential 51 pips to our Target.  Price moved down to our Target without our profit target getting executed due to the spread.  As price came back we manually exited as European trader finished for the day.

With the media focusing on President Trump’s administration issues as opposed to optimism about his pending fiscal policies, and the hawkish sounding Fed, traders seem to be quick to sell the USD.

Tomorrow we have retail sales m/m for the U.K. but no U.S. economic releases.

Good luck with your trading!

 

 

 

It’s been an interesting year so far.  Despite the U.S. election outcome well behind us, a stronger U.S. economy, a hawkish Fed, the USD is softer this week so far.  The US Dollar index remains above 101.00.  Commodity prices overall are strong (not including oil) and China’s economy is continuing to improve beating CPI year over year expectations.

Although there was a broad based USD selling today, I avoided a EUR long and instead chose the AUDUSD after a nice reversal setup.  The AUD has been very resilient of late, but sellers tend to emerge near the .7700 barrier.  With that in mind, with a Target today of .7698 an entry long was taken and the stop loss was moved up to eliminate any risk in advance of Fed Yellen’s testimony today.  Although her testimony was not expected to be different from yesterday, whenever she speaks, the market listens, and the potential for volatility is extremely high.

As price reached our Target we exited, as it was an area where yesterday’s high, our daily target and the .7700 barrier all grouped closely together. Could the AUD continue to climb with USD weakness to the .7800 figure?  Yes it could and my sense is that the rate hike perception is leaning more toward June than March.  It’s also interesting to see that gold is staying comfortably above $1200.  This suggests to me that the market is nervous about Europe’s political future.

When it becomes clearer what President Trump’s fiscal policies will be and when the next rate hike is likely to be announced, then the USD will strengthen and it will be onward and upward.  In the meantime, watch the charts and my preference remains to look for EUR short setups.

Keep your stops tight and continue to trade what you see not what others think.

Good luck with your trading!

 

Got a little bit behind yesterday as I ran into some tech issues.  I will start with today’s trade in the NZDUSD.

The NZDUSD has actually been a beautifully upward trending pair.  Gov. Wheeler speech has thrown some cold water on it – as there may not be an interest rate increase until 2019.  Many have commented on the NZD as being overvalued for some time, but we all know that doesn’t mean it can’t go higher.  After Gov. Wheeler’s comments the pair came down and as it topped out early in the U.S. session, a short was taken requiring a very small stop loss.  The pair dropped immediately and closed below its Asian low and the next candle went through our Target at .7182 where we exited as it came back up.  Overall a very quick and simple trade thanks to a sudden uniform move of USD strength.

On Wednesday, despite the Nikkei having a good day, a “risk off” sentiment trickled through European, U.K. and U.S. equity markets.  As the JPY formed a third lower high for the day…a near triple-top is formed and an entry short is taken.  Price moved down, closed and retested its Asian low before taking us out at our profit stop.

There is growing political uncertainty (risk) as previously mentioned in Europe.  Adding to the issues is Greece (again).  Coupled with elections in Greece which could complicate provisions for further financial support, is also a large EUR 10.5 billion payment due this summer.  If you remember when this happened a couple of years ago, it wasn’t difficult to find EUR short setups.

The GBP keeps selling off but this too shall pass.  If anything, this year I’m searching for long entries in the GBP once it starts to reverse.  Another pair to consider is shorting the EURGBP when this starts to happen.

In the meantime, let’s hope it becomes clearer what President Trump’s fiscal policies are so we can look for trends to develop again.

Good luck with your trading!

I don’t usually look for trades on Mondays, but due to it being a shortened week as I avoid NFP Fridays, I was happy to catch a nice setup on the USDJPY.  The USDX started the week in a very volatile manner and with a very light economic news day the market was more reactionary to political rhetoric than usual.   I suspect a number of analysts were contemplating how protectionist policy and imposing higher tariffs on imported goods to the U.S. would weaken the USD.  That caught some attention!

The USD fell shortly after the London open, then made a small up-wave before rolling over in advance of the U.S. open.  With a stop loss placed 18 pips above our entry for a potential 108 pips to our Target, we went short at the U.S. open.  The U.S. traders pushed the pair lower and we protected our profit as price descended allowing for some room for testing and retesting at the Asian low and previous day’s low. When we saw a long lower wick appear, we tightened our profit stop and the next candle closed our trade for a very nice outcome.

On Wednesday, a nice trade setup occurred in the EURUSD.  Price had been unable to close above its Asian session high.  Thirty minutes before the U.S. open, price once again tried to move higher and sellers pushed it back down to close near its low.  Knowing that there were large sellers lurking at the 1.0800 area – a short was taken risking 12 pips for a potential 85 pips to our Target.  We moved the stop loss to plus 1 in advance of the ADP Non Farm Employment release and continued tightening our profit stop in advance of the ISM Manufacturing PMI release.  A brief move up in price took us out before the PMI release.

January was a very bullish month for the EUR… which was intriguing for me.  There are pending elections in the Netherlands, France, Germany and Italy this year.  The markets are more focused on the new U.S. Administration at the moment than on political uncertainty in Europe.  Price has been rejected at the 1.0800 area and tomorrow will be interesting as the market reacts to the NFP number.

Strong language from President Trump regarding currency manipulation directed at Germany, Japan and China is making things very interesting.  It will also be interesting to see if the USD will have another continued move lower in February.

Read the current trends and pay attention to the critical areas where trends can end,. Trading with the trend is a lot easier to make money.  Critical areas tend to be tested and retested.  Price rarely moves through them without a retest, so lock in profits as the market moves in your favour.  Trade the pairs that are easier to interpret.  If the EUR and GBP are moving opposite directions, look for a setup in the EURGBP.  Trade what you see not what you think may make fundamental sense.  The USD direction remains as clear as mud at the moment with a somewhat hawkish Fed and a president wanting a lower dollar.

Keeping a close eye on USDX, the U.S. 10 year yield and global equity markets will help validate your trading decision.

Good luck with your trading!

Back next week.