Michael Bridgman

Our critical levels mentioned last week held up nicely, so it was back to shorting the EUR today.  With the market consensus anticipating that the Fed will announce rate hike lift-off tomorrow…the USD was strong across the board.

We waited for the German ZEW release, then found a nice short setup in the EUR requiring a stop loss of 18 pips for a potential 75 pips to our Target 2.  The only negative to the setup was that it was in the middle of the Asian range.  As price immediately moved down, we took the risk out of the trade by moving our stop loss to plus 1 pip.  Price moved down to its Asian lows then descended to our targets after the U.S. CPI releases.

Will she or won’t she?  Tomorrow we will finally have the interest rate question answered.

Good luck with your trading!

The EUR made a “3 drives to a top” pattern yesterday during the UK/US session.  It however did not close above 1.1030 let alone move to test 1.1060. Weakness followed throughout the Asian session today.   Following a bearish engulfing candle early in the UK session, a short is taken with a 16 pip stop loss for a potential 89 pips to our Target 2.

My preference is still to short this pair, and avoid it for the time being when it climbs higher.  If it can close above the 1.1060 area and follow through to the upside, then I will change my opinion.  Until then, it’s a matter of finding short setups with tight stops and exercising sound money management.  I was hoping for a big move to the downside today but it didn’t happen.

The Euro continues to be a funding currency for buying U.S. bonds.  So…would you rather own U.S. dollars or Euros going forward?  Would you rather own German 10 year or U.S. 10 year bonds?

Good luck with your trading!

Back tomorrow if we find a trade.

 

 

 

A very similar trade to yesterday with the key being that the trade required a very small stop loss of 9 pips for a 3:1 R/R.  After a series of lower highs the JPY set up with a 3 candle reversal pattern.  Price behaved similarly to yesterday in that it was one directional to our targets.  As it continued lower through our Target 2, we locked in (bonus) profits and heeded the wicky candles forming near the 122.00 figure and exited.

In the current market it’s best to keep stop losses very tight and not to be greedy. With year end approaching and Janet Yellen’s yet to be announced interest rate hike looming in trader’s minds, the market is very jittery.  Those without tight stops are likely to experience pain as we saw last Thursday with a greater than 450 pip reversal in the EUR near the 1.0500 figure when Mario Draghi spoke.

If the JPY can close below 121.50 today, it will be very bearish.   This pair tends to be very technical in its movements.

As a USD bull, I would prefer to trade it upward, but that is not what the technicals are suggesting so far this week.

Good luck with your trading!  Keep your stops tight and exercise sound money management!

Back tomorrow if we find a trade.

With the Nikkei down yesterday and the JPY unable to get traction above yesterday’s low – a short entry is taken.

The JPY setup required a 10 pip stop loss at entry for a potential 31 pips to our Target 2 and it moved nicely to our target before rebounding.

Although the GBP looked good too, I didn’t like the reward for the risk.  The CAD is weakening substantially as WTI moves down taking out 6 year lows, but I have not been comfortable with the large stop losses required.

Good luck with your trading!

Back tomorrow if we find a trade.

I’m including two days of trades today due to a tech glitch yesterday that prevented me from getting Wednesday’s trade posted.

Let’s start with today.  What a week and we still have the NFP number to be revealed tomorrow.  ECB President Mario Draghi had everyone’s attention today when he made his speech.  The EUR after nearly touching 1.05 earlier in the session, jumped well above 1.09.  This will take out a lot of stops, but the trend remains down…so let the buyer beware.  Janet Yellen has been hawkish and continues to reiterate her case for seeing interest rate liftoff being imminent.

Remaining on the sidelines until after Mario Draghi’s comments and not chasing anything led me to the AUD which I prefer to short currently.  Although the AUD has been strong this past month, I will be more convinced if it can close above .7380 and then take out  .7460 near-term.  In the meantime, when the setup presents itself with the appropriate reward to risk, I prefer to short its rallies.

Yesterday was a different story.  It’s highly unusual to see a really large move without news and before Janet Yellen spoke, the GBP hit our targets and then took off as “real money” accounts pushed it lower still.  We left a 100 pips on the table by protecting our Target 2…oh well.

After a second lower high for the session an entry short is taken with trend.   As price moved lower and dipped below our Target 2, we protected our profits by locking them in at T2 and we were closed near the important 1.5000 big figure.  Who knew?  Price retested the level and dropped another 100 pips… all before Janet Yellen’s speech…very unusual.

For me, the trend has not changed and will reasserts itself in the near term.  I remain USD bullish for now and look for setups to trade accordingly.

Stepping aside as usual on NFP Fridays and will be back Tuesday if we find a trade.