Forex Tips

NZD short with trend

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The market this week is focused on the ECB Press Conference on Thursday and NFP on Friday. Trade cautiously as it could get very volatile.  We have begun the final quarter for 2014 and clear trends are evident.  It is always safer to trade with the trend than against it.

The NZD has been trading sideways this week, but its trend is down and every pallid rally creates an opportunity to go short.  The USD continues to strengthen – so it’s better to trade accordingly.

The NZD strengthened in the first part of the session, but as it hit our upside Targets 1&2 … sellers entered as we would expect.  After the second wicky candle, we enter short with a stop loss just above Target 1 anticipating a move to the Asian low.  Price drops vertically and we move our profit stop down approximately half way.  Price moves up a bit then creates a higher low with a bullish wicky candle.  The following candle is very bullish and as price closes on its high – we exit near the session end.

If Draghi’s comments tomorrow are interpreted as dovish, watch the EUR’s reaction.  On Friday, the market is expecting stronger employment numbers in the US and if they disappoint – things will get interesting… but we will remain on the sidelines as is our habit on Non-Farm Employment days.

Be very careful trading this week.

Back tomorrow if we find a trade.

EUR short to end a great week.

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The USD strength theme continues as the week comes to a close.

A series of lower highs in the EUR and a 4:1 Reward to Risk ratio helped create a compelling entry just below the 1.2750 options level.  There were clearly no buyers near the Asian highs and after a second lower high we enter short with a stop loss just above the session high.  I don’t like entering trades in the middle of the Asian range, but we had cleared 1.2750 level and the stop loss was inexpensive.

Price moved down to test and retest the Asian low.  In advance of the US Final GDP number, we move our stop loss down to plus one pip – also known as the “stress free area”.  Price continues to move down and retest the Asian lows once again and we allow a few pips of wiggle room at this level.  Price descends to our Target 1 and closes below it.  We exit a little early on the next candle as price bounces up over Target 1.  Price in fact was coming up to retest yesterday’s low, but we exited not wanting to give back any more pips.

Trading for the month of September has been excellent.  There have been multiple pairs to trade in the majors and overall the trading has been straightforward.  When you are looking for a trade – look for a nice trending pair and fine tune your entry.  If there are 2 pairs that are trending nicely, have lots of institutional interest, choose the pair that allows you the smaller stop loss and better Reward to Risk ratio.  If you like trading the EUR and miss an entry, look for an entry on the CHF as it moves inversely to the EUR.  If you miss an entry on the AUD, you may find one in the same direction on the NZD as these pairs tend to move together.

Trading is about probabilities.  Find your edge, manage risk, be consistent and KEEP IT SIMPLE.

Good luck with your trading!  Enjoy your weekend.

Back on Tuesday if we find a trade.

Questions – please email Michael@privateforexcoaching.com

EUR trend remains down

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There were nice setups in both the EUR and GBP during the UK session.  I will show the EUR trade which was very straightforward and required a much smaller stop loss.  The GBP is moving considerably more than the EUR at the moment, so a larger stop loss with the right setup is fine.

A question you need to always ask yourself before taking any trade is:  what is the reward potential for the amount of risk that I’m willing to take in this trade?

I like a 3:1 RR ratio early in the session and 2:1 RR is fine once the US traders are active.

Another question to ask:  is the pair trending nicely or is it difficult to determine its current direction?

The GBP trend is less clear this week than last, and the EUR is very clearly trending down.

We see the EUR ran into sellers above the Asian session highs and began to move down.  The German Ifo Business Climate number missed expectations and as we moved into the “sweet spot” of the session, a new lower high forms and gives us an entry short with a 8:1 RR ratio.

To recap, we have a trending pair, a nice setup, negative German economic news, a cheap stop loss, lower highs and a high potential for reward at a time in the session when intraday trending moves frequently occur.  The daily candle’s close was extremely bearish.

Once Target 2 is hit, I am only willing to give back a few pips most days before closing a trade…so on the bounce above – we exit and move on.  Once price makes it to Target 2 – which is statistically significant, it is more likely to bounce, as it has made it range for the day.

The idea is to look for a reversal at this level…enter and place a stop loss below T2.  This is an advanced technique but it works nicely going into the UK Close.

Be mindful of price action at the 1.2750 level.  Anticipate more institutions adding to their short positions on bounces approaching the 1.2900 figure.

Good luck with your trading!

If you want to learn more about institutional trading techniques and how to spot setups that occur most days, enquire about my course – but it’s not cheap.  If you are struggling to be successful trading, please don’t use real money!

Back tomorrow if we find a trade.

GBP remains active

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The GBP trend is less clear this week and the referendum outcome is behind us.

With little economic news of significance for the UK, we see a reversal pattern set up long with a stop below the preceding candle – allowing a near 5:1 Reward to Risk ratio.

Price moves up to retest the Asian session low and begins to move higher.  We move our stop loss, now take profit up and no longer have any risk in the trade.  As price continues up, past yesterday’s high, we keep locking in profit.  Price moves through the Asian high but gets pushed down at our Target 1 – leaving a wicky candle.  We allow for a retest of the Asian high…moving our take profit just below this level and price comes back at us closing the trade for a very nice start to our trading week.

There are some very nice setups occurring – be selective and don’t over-trade.  Thethe currency markets are very active this month and we anticipate some very nice trending moves into year end.

Hope some of you caught the NZD.

Good luck with your trading!

Back tomorrow if we find a trade.

Beautiful up and down pattern on the AUD and quick GBP short

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If you can recognize reversal patterns setting up on a 15 minute chart, you actually have an edge over the 60 minute, 240 minute and Daily traders.  

As the UK session got underway the AUD moved down and lured in the breakout shorts.  Price reversed and closed strongly within the Asian range – well off the lows.  An entry long is taken with a stop loss below the session low.  Price makes a familiar 3 Drives pattern higher but sellers emerge just below yesterday’s high.  With the bearish wicky candle closing, we exit the trade.  As the sellers are entering and we know near the .9000 figure will find more short position traders, we await for the setup.  Two candles later we clearly have a 3 candle reversal and a short is taken with a stop loss above the session high. 
Price drops and our first goal is to complete one of our favourite patterns which involves taking out the Asian low.  If price can do this without much of a retest of the level, we may see our Targets 1 and 2 hit.  As the session winds down, we only make it to the Asian low before the retest above closes our position.
There was a very nice and quick trade early in the session with the GBP.   Initially the GBP rose in the Asian session and then began to fade.  If you look at the 240 minute chart and you know what the institutional traders are looking at – you will see that price stopped to the upside at a significant level. By the time the UK session started, price was in the middle of the Asian range – not an ideal place to take a trade… 9 times out of 10.  
However having seen where price had stopped to the upside and was now making waves to the downside with lower highs, an entry short is taken with a stop loss above the session high.  Price does not disappoint and moves quickly down to our Target 1 level…retests it and plummets through our Target 2.  We exit as price begins to bounce back as the bounce is exactly where the institutional 60 minute traders will become active… and did.
This has been an excellent week of trading.
Although the GBP has been very active and lots of fun to short of late, now that the result of the referendum is behind us, we are less inclined to think that it will go much lower from here near term. Watch the USD strength and consider the EURGBP as an alternative trade if the GBPUSD chart is looking unclear.
Please don’t waste your time using oscillators as I did in my early years of trading.  Learn instead what the BIG MONEY – the instiutional traders use and trade the same direction…with them. 
September has shown the currency markets are very active and trends going into year end appear to be setting up.  This may be a very profitable few months of trading for those that know how to trade, what to look for, how to read price, how to manage risk and how to put on appropriate position size trades.  If you are a swing trader or intraday trader and you want to learn how to capture large pieces of the moves and which pairs you should be considering trading – contact me about my course.  If you are prepared to put in the hours, you stand a good chance of being successful.  Trading is very difficult and requires hours and hours of practice.  If anyone tells you it’s easy – hold on to your wallet and run!
Enjoy your weekend!
Back Tuesday if we find a trade.
Michael  
Questions – email me at Michael@privateforexcoaching.com

GBP active before the vote

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Thursday has lots of news pending and the Scottish Independence vote will be very important to the GBP.

Today a countertrend long set up after the breakout longs were washed and rinsed.  Price makes a series of higher lows and closes above the Asian session high.  This is a countertrend trade so it’s better to take a smaller position – more like a half size position and keep the stop a little tighter than usual. In this case, a stop is placed below the most recent higher low and allowing for some wiggle room at the Asian highs.  Price likes to retest levels!

Price subsequently rises and retests yesterday’s high before moving through our Target 1.  This is countertrend trade so our confidence level is lower than if the trade is with the trend.  As price fades a few pips and comes back toward our Target 1, we exit the trade.  We are also aware that above our Target 2 is a dynamic level where institutional shorts may add to their position short trades.  We are happy to be in and out…well in advance of the referendum result, FOMC and all the other news pending tomorrow.

Higher lows and lower highs are very useful for traders to read market direction.  There is a trick to reading whether they are indicating acceleration or deceleration.  If you learn this technique it makes entries and exits easier to see in advance.

Good luck with your trading!

Back tomorrow if we find a trade.