Forex Tips

The EUR is giving mixed signals at the moment.   A very powerful trading pattern emerged during the “sweet spot” of the UK session.  After the breakout traders went short, we await a couple of pullbacks.  After the second one, we enter short allowing for an 8 pip stop loss.  The lower highs are very easy to spot and the reversal allows us a 3:1 Reward to Risk to our Target 2.

Trading is demanding of patience and it was not until after the US news that the pair began to plummet.  As price drops and closes below our Target 2, we find it begin to bounce on the next candle and we allow a bit of wiggle room – then close the trade to protect our profit.

The market is much more likely to reverse near our Target 2 level than it is to continue in the same direction. The targets not only enable us to determine our R:R ratio, but also help us protect and lock in profits – as we know statistically that the day’s range has been met and only in very rare instances is price likely to continue much further.

Good luck with your trading!

We will be back tomorrow if we find a trade and if not it will be next Wednesday… as we be enjoying a long weekend.  Trading will have less volume next week during the US session as Canada has a national holiday on Tuesday with many taking Monday off too.  The US has a national holiday on Friday and many will want to add additional time due to it being summer.

The GBP has given up 1.70 today after Governor Carney’s comments.

After an initial surge downward and sizeable retracement, an entry short is taken with a stop loss above the double top – meeting our 3:1 Reward to Risk ratio to our Target 2.  Although price remained below yesterday’s low, it’s not until after the US news that we finally get a move to our Target 2.  As the candle closes leaving a long lower wick, we exit the trade.

More GBP news tomorrow as the market appears to be long at the moment.  We’re not position traders so we are happy to trade either direction with the session trend.

Good luck with your trading!

Back tomorrow if we find a trade.

The CHF pair moved up during the UK session to our Target 2 but its overall direction remains unclear as the week closes.

This setup required approximately an 8 pip stop loss for a potential 27 pips to our Target 2.  A classic wash & rinse setup – meeting our 3:1 Reward to Risk ratio.

Three other considerations are: 1. The EUR is moving down and our CHF is moving up.  2. The time of day is a very familiar one for trending moves to begin.  3. There are no significant economic news releases pending.

As price moves up we remove the risk from the trade by moving our stop loss to a profit stop.  We see price slow down at our Target 1, which is very close to yesterday’s high.  One last push higher through Target 2 and a dip below closes the trade and concludes the week.

Janet Yellen’s speech on Wednesday was bullish for the US economy and the stock markets continue higher.

Good luck with your trading and enjoy your weekend!

Back Tuesday if we find a trade.

As we await the FOMC outcome, both the CHF and EUR set up nicely for modest pips.  I preferred the CHF setup despite its tighter recent range.  Knowing that the market it focused on the FOMC outcome today, it is unlikely that large moves would take place in advance.

The CHF has been moving sideways recently and this is evidenced on the Daily chart.  The .8965 level is where it has been bouncing upward.  Our Target 1 today was .8959 and our Target 2 was .8953.  We use Target 2 to determine our Reward to Risk and if it’s greater than 3:1 and we like the setup, we evaluate the potential trade closely.  The Daily chart however tells us that price tends to bounce upward at .8965 – so we keep that in mind when we consider our R/R for a short today.

I love the setup as price has lured in breakout shorts twice and pulled back well into the Asian range.  After a convincing break below the UK session lows, we enter short with a Stop Loss just above the Asian session lows – allowing for a retest of the level.

Price moves down and bounces once again at the .8965 area and we close the trade.

This was a bit of counter-trend trade as the market appears long the USD going into today.

Note the GBP candle at the time of the UK economic news releases today.  This is good reminder as to why it is not a good idea to trade in front of major economic news releases and to tighten one’s profit stop if already in a trade…the GBP did it’s entire daily range in one candle.

Good luck with your trading!

Back tomorrow if we find a trade.

Economic news created a lot of volatility for the GBP this session.  After a sell-off reaction to the UK CPI number, the GBP found buyers pushing it back up above the Asian low.  We enter long with a stop below the double bottom and attempt to get to the Asian high for a retracement of the sell-off.  We are closed below it at our profit stop as sellers enter at the Asian high.

As price is pushed lower – we re-enter short for a retracement of the vertical move higher again with a modest stop loss.  The US news pushes the pair downward quickly completing the pattern where we had our stop loss for the long move.  This may appear to be somewhat aggressive but vertical moves are not sustainable and very frequently retrace quickly…just don’t get greedy and use tight stops.

There is more GBP news tonight and a bit of changing tide in sentiment toward interest rate increases.  The market is now expecting an increase later this year – as opposed the the earlier guidance of early 2015.   We will soon see if this pair can make it through the current formidable barrier of 1.7000 or roll over further.

Good luck with your trading!

Back tomorrow if we find a trade.

EUR began the session luring in breakout longs then reversed – closing below the Asian session high and yesterday’s high.  An entry short is taken with a small 9 pip stop loss above structure.  This is a 5:1 R/R setup to our Target 2.  The CHF inversely confirmed the trade.  The CHF allowed a couple of delayed entries long for anyone missing the EUR short setup.

We remove the risk from the trade as price descends and keep locking in profits as it moves even lower.  At the Asian low, we allow for price to come back up and retest but it does not.  Price continues down and as wicks beneath the candle bodies get longer, we tighten our take profit sensing price is losing downside momentum.  As price begins to climb higher we are quick to exit and lock in a nice trade to end the week.

The 1.3500 level has not been broken but we anticipate it will be tested again next week and that this pair will move lower.  Wednesday and Thursday were relatively muted for us with very small gains but overall a nice week.

Good luck with your trading, be selective and enjoy your weekend!

Back on Tuesday if we find a trade.