Michael Bridgman

BOE Inflation Report Hearings on Tuesday lead to further selling of the Sterling.  We like this trade and  faded the rally earlier again today. I have combined two separate days of trading in this post.  On Tuesday the break of of the previous day’s low gave way to our Target 2.

Today’s trade wasn’t as nice, but fading the rally at the reversal worked.  Price could not sustain above its Asian high and moved down.  A reversal following a very bearish candle beneath the Asian low was not what we expected.  Getting through the 1.5000 big figure going forward won’t be easy especially with a U.S, holiday on Thursday, but a poor Second Estimate GDP on Friday could be the catalyst.

Good luck with your trading!

An upgrade to Windows 10 yesterday after the UK close put my schedule off…these things always take longer that you think, so I’ve posted the 2 days of GBP trading today.

Back tomorrow if we find a trade.

Call it a mid week reversal or just a countertrend day, but the USD came under selling pressure yesterday and both the EUR and GBP moved higher in a “3 drives pattern”.

Today it was back to trend with USD strength and a nice short setup on the GBP in the sweet spot of the session.  With a 19 pip stop loss above structure for a potential 76 pips to our Target 2, we go short and price moved quickly down.  When price moves quickly and vertically, it is prudent to lock in profits along the way – by moving the profit stop after large candles, price targets… like pattern closures, previous session highs/lows, yesterday’s highs/lows and figure numbers.

In today’s example, just before the U.S. open, we are taken out on a small retracement. Vertical moves are not sustainable and it’s better to lock in your profits than to give them back.  On a Friday the reversals can be quick as traders exit positions taking profits – not wanting to hold over the weekend.

Good luck with your trading!

Back Tuesday if we find a trade.

 

Two hours into the U.K. session the NZD drops after not challenging the Asian highs.  Recent soft Global Dairy Trade numbers and persistent low commodity prices have helped devalue this pair.

With a stop loss of 11 pips for a potential 54 pips to our Target 2, a short trade is taken with  trend.  Looking at a 4 hour chart, we can see that price has been stairstepping downward in this pair.

Price chops sideways until the U.S. session opens, then drops testing the Asian lows… before moving to yesterday’s low and descending to our Target 1.  As price lacks any follow through after reaching our first target, we close the trade on the next candle.

Both the EUR and AUD offered nice trade setups with the trend in the U.S. part of the session.

Good luck with your trading!

Back tomorrow if we find a trade.

Overall there was not a lot to choose from in the UK session.  As the EURUSD moved down with the GBPUSD moving up, we looked for a short trade setup in the EURGBP.  We also sidestep (more or less) U.S. news volatility by not being in a USD cross.

As the pair made a third lower high and failed to stay above yesterday’s high, we went short.  Price moved against us at first, but did not threaten our 14 pip stop loss.  Price subsequently began to move back down but fell short of our targets as the UK session came to an end.

The market continues to anticipate further ECB easing – given the weak outlook for inflation there.  The bond market continues to signal the likelihood of a Fed hike in December.

I continue to look for the EURUSD to reach 1.0500 before testing its yearly low – both of which may still happen this year.

Good luck with your trading!

Back tomorrow if we find a trade.

 

With the EUR showing weakness throughout the crosses simultaneously and with trend, a short is taken in the EURGBP.  This tends to be the least volatile of the EUR pairs and less likely to be affected by U.S. economic releases.

Although I prefer not to take an entry most days when price is in the middle of its Asian range, I will if I have enough confluence to make a strong case.  Price had reversed without testing the Asian highs, was clearly moving back to trend, a nice 3 candle reversal setup, and the other EUR crosses were setting up simultaneously.  As price moved down, we removed the risk from the trade and continue to lock in profit.  Price moved down to our Target 1 and was unable to close below it.  We exited on the bounce above.

Good luck with your trading!

Our thoughts and prayers for the people of France.

Back Tuesday if we find a trade.

The commodity currencies have been suffering as reflected in the Bloomberg Commodity Index showing commodities at 16 year lows.

Australia had a reprieve today as positive jobs data helped strengthen the Aussie dollar.  Canada and New Zealand didn’t fare as well.

An entry short is taken on the NZD as it made a new lower high in the session.  With a stop loss of 8 pips for a potential 47 pips to our Target 2, this is a hard trade to pass on.  Price moved down to the Asian session lows and retested this level before descending to the .6500 figure.  This is a very solid area of support for the moment, with a number of touches since mid July.  When .6500 gives way, the pair has room to test the .6250 level – from its September low.

Lots of Fed speak today…will is sound like a further endorsement of a December rate hike?

Good luck with your trading!

Back tomorrow if we find a trade.