Michael Bridgman

Trading up until Thursday was fairly quiet but in advance of the ECB conference on Thursday, a GBP trade set up as price began to roll over.  Risking 24 pips for a potential 104 to our Target, we went short.  Less concerned about the pending U.S. Unemployment Claims and more concerned about the markets reaction to Mario Draghi’s speech, we felt a little insulated by trading the GBP and not the Euro.  As the U.S. session approached, we moved our stop loss to plus one, in case the market’s volatility moved the pair against us.

Price dropped and our pattern completed.  With price bouncing higher after the initial plunge lower, our profit stop was hit.

On Friday, we were comfortable going back to shorting the EUR as it continues to trend lower.  With the exaggerated move on Thursday, we weren’t expecting to get too much of a move Friday before the weekend.  When price could not go above its Asian high, we waited for a candles to move lower and went short.  As price dropped, we remained cognizant of yesterday’s low and Friday’s Asian low.  Protecting profit as it dropped, we comfortably rode it lower and as the U.S. session got underway we were taken out for a nice gain.

Next week the FOMC is expected to increase the interest rate for a 2016 “one and done” which as of Friday was 100% priced into the market.  If the hike doesn’t occur – we will have an interesting reaction as traders will have been caught offside.  The USD closed the week strong.

Good luck with your trading and enjoy your weekend!

 

 

 

Larger than expected  production cuts by OPEC have caused oil prices to rise and the Canadian dollar is benefitting.  The USD was little weaker today compared to yesterday.  A short in the USDCAD is taken after the third lower high in the session with a stop 18 pip stop loss for a potential 72 pips to our Target.  Price moved almost straight down and we moved our stop loss to plus one because there were 2 economic news releases pending that could have reversed the move.

When price left a long lower wick, we chose to close the trade.

 

With a very strong USD yesterday, we chose to short the AUDUSD.  With a 15 pip stop loss for a potential 49 pips to our Target, the setup looked compelling.  Price moved down to its Asian low and retested the level before moving lower in advance of the U.S. session.  As price moved to our Target, we closed the trade.  The AUDUSD moved down much further without us, but we are always happy to realize our Target price while trading true to our trading plan.

Tomorrow will be Non Farm Payroll and we will take the session off and be back next week.

Good luck with your trading!

When a pair is making higher lows like the USDJPY did today, the idea is to find a pullback and when a candle reversal pattern occurs, to go long with a stop loss below the pullback low –  providing the reward to risk ratio makes sense.

As the London session got underway, price made a higher low, then moved above its Asian high.  I avoid breakout trades and always wait for a pullback.  The pullback followed and we saw a second higher low for the session.  An entry long is taken risking 16 pips for a potential 47 pips to our Target.  This was a nice trade because it ran quickly up to the Target where we exited as price came back off the high of the candle.

Curiously, the USD was weaker after a very strong Preliminary GDP q/q print today.  I know one institutional trader who went long the EUR when he saw the market’s reaction – but he’s not planning on staying in the trade long.  He is just taking advantage of the countertrend  move.  This is the natural flow of a market…there are always those who are willing to sell and others willing to buy.

Music to my ears today when one of my students sent me his trade and he had done better than me while trading the USDJPY today.

Good luck with your trading!

 

As the new week began the EURUSD moved up early in the Asian session before going sideways into the UK Open.  A brief move up was followed by a strong bearish reversal in the first hour of London trading.  A short is taken with a 16 pips stop loss for a potential 61 pips to our Target.  This a familiar pattern and with the Asian low coupled with our Target price, we exited once price touched it.

Political event risk overhangs Europe this coming weekend with Italy and Austria.  Italian 10 year bond spreads over German 10 year bunds will likely widen throughout the week.  The market will be focused on the potential for Italian bank failures.

NFP awaits us on Friday in the U.S., so it will be shortened trading week for me.

Trading Tip:  Many traders think of themselves as risk takers and what they really want is a guaranteed outcome.  This doesn’t happen in trading. There are no guaranteed outcomes when you trade.  As a result, many traders hesitate to put on a trade, even when it  meets their trading plan criteria. Every trade will have risk associated with it!  To be a successful trader requires that you learn to get comfortable with taking risks and take responsibility for your trades.  Follow your trading rules consistently (if they work) and practice, practice, practice.  When a trade doesn’t work out, see if can determine why it didn’t…learn from it, and move on the next trade.

Good luck with your trading!

My bias currently is to short the EUR.  On Tuesday what appeared to be really nice setup early in the UK part of the session quickly fizzled out. After hitting my stop the pair ran down to test the Asian low without me.  After a retracement to start the U.S. session, a second short entry is found and price moved down further for modest gains before our profit stop was hit.

Wednesday the EUR set up nicely again for a short.  A stop loss of 16 pips for a potential 73 pips to our Target was an attractive R/R ratio.  Price made a lower high and began to move down (with trend) as the U.S. session overlap got closer.  It continued to sell off in advance of the economic news releases.  We tightened the profit stop in advance of the news to lock in some profit if the pairs gets volatile or the USD comes under pressure.  The news was USD positive and with traders having priced in a December rate hike, price continued lower.  We locked in our Target price and the market took us out.

Thursday is U.S. Thanksgiving holiday so many traders will be off until next week.

Good luck with your trading!

 

Trading has been good this week with setups on multiple pairs.

There wasn’t much economic news today of significance after ECB’s Draghi spoke.   Aside from Canada’s core CPI and numerous FED speakers talking the session was light on news.

The EUR and AUD continue to move down and the USDJPY continues to move up.

The GBP caught my eye today with the old familiar “M pattern”.  The GBP currently is trading in a range between 1.2550 and 1.2150  The “M pattern” is an old favourite, but it hasn’t been as common this past year.  It essentially is a move higher above the Asian high – which lures in breakout traders followed by a pullback to stop them out, followed by another false move higher and pullback.  An entry short was taken after the second pullback with a stop above the session high requiring a 25 pip stop loss for a potential 97 pips to our Target*.

It didn’t take long for price to move with the trend downward.  As it did, we needed to take out yesterday’s low, the Asian low and hope that the momentum would be strong enough to hit our Target.  Once price moves in our direction, we eliminate the risk by moving our stop loss to a profit stop and keep adjusting it as price moves lower.  Vertical moves are not sustainable, so it’s prudent to keep moving the profit stop to lock in more profit as price continues.  When price hit our Target, we lock it that level, and allow price to take us out when it retraces.  If price continues lower without a retracement, then we keep locking in more profit until the market takes us out.

*The Target we use is a statistical value calculated daily and it works extremely well.  I used to show a Target 1 and a Target 2, but my indicator which draws it, is not working reliably after some recent MT4 updates.  As a result, we are using the original indicator which I have used for years.  The Target 1 is now calculated manually at 15% less than Target 2.  For example if Target  2 is based on a 100 pip move today then Target 1 would be 85 pips.  This calculation lets us determine our Risk/Reward Ratio.

The USD remains strong and trading accordingly in trending pairs is working very well.

Good luck with your trading and enjoy your weekend!