Forex Tips

The EUR is an interesting pair to trade at the moment after the comments from ECB President Draghi last week.   We want to find short setups that meet our R/R criterion and watch price react at certain levels as the EUR weakens.  Alternatively we would consider trading the CHF long.

The current test re-test area will be 1.3500 figure.  This is an important level but it may not hold and there is clearly a bias short for the EUR.  This however does not mean that it won’t have up days on its way lower. As always an intraday trader must trade what they see…not what their longer term bias may be.

Yesterday there was quite a sell-off as London got underway – after the European traders pushed price higher in their first hour.  As the UK session got underway today, there were no buyers above the Asian highs – which again were put in by the European traders in their first hour.

With a 6.5:1 Reward to Risk ratio to our Target 2, we enter short with a 10 pip stop loss.  As price moves down, we protect our profits and when price moves back above our Target 1, we exit the trade protecting our profits at that level.  The same level also the completes a pattern from last week.

This pair may drop a lot more but be careful around the 1.3500 area as price tends to  re-test such areas and will be telling of its momentum.  We will keep profit stops tight and look for re-entry levels and candle formations.

Good luck with your trading!

Back tomorrow if we find a trade.

CHF moves down to yesterday’s low where buyers stepped in.  As the UK session got underway, sellers entered above the Asian highs and a setup is found.  By placing a stop loss above structure costing 7 pips, we enter short – attempting to get approximately 36 pips to our Target 2.

Our first challenge is to get through the Asian low.  Buyers entered at this level but the buying was short lived.  As sellers pushed price down, we approached our second challenge – closing below yesterday’s low and once again buyers entered pushing price upward.  With a series of lower highs, we remain in the trade ready to close out and lock in our pips, and do so as price bounces upward at yesterday’s low a second time.

Lots of economic news for tomorrow’s session including ECB’s Draghi speaking in the early part of the US session.

Good luck with your trading!

Back tomorrow if we find a trade and if not, it will be next week as we don’t trade Non-Farm Employment Fridays.

A familiar AUD pattern set up as the UK session got underway.  When there is a large move during the Asian session, after major economic news releases, I like to watch for signs that the UK traders will reverse the move.  The run up and pull back above the Asian session highs to lure in breakout traders is called a “wash and rinse”.  Once this completes, watch for signs of the real move – once the orders have been accumulated.

With a stop loss above the session high of 10 pips, if price makes it to the Asian session low, the Reward to Risk ratio is 5:1.  If price makes it to yesterday’s low, it’s still a 4:1 R/R.  With a small stop loss and a large potential reward, an entry short is taken.

As price moves down, we move our profit stop down to lock in pips at structure or for a set amount of pips.

Buyers subsequently enter near an area that was a spike low during the Asian session.  At this point we tighten our profit stop further and get closed out shortly afterward.

Good luck with your trading!

It is a shorter trading week for us as we don’t trade NFP Fridays.

Back tomorrow if we find a trade.

NZD moved up above its Asian high and quickly ran into sellers.  As price began to fade and closed within the Asian range – an entry short is taken with a stop loss above structure.  This setup had a greater than a 4:1 reward to risk to our Target 2.

Price was a little volatile approaching the US Open and we moved our stop loss to plus one pip in the event that the US economic news releases created volatility.  The pair continues down…testing and retesting the Asian low before pushing downward decisively.  As price bounces off our Target 1, we exit protecting that level and give back a few pips.

Good luck with your trading!

Back tomorrow if we find a trade.

GBP double tops at Asian high and begins to fade.  With a lot of institutional traders already short the GBP after its failure to get through the 1.70 barrier, more jumped on short this session as the UK and US traders returned from a long weekend.

After an initial false move higher as the UK session got underway, sellers entered and began to push the pair down quickly to our Target 2.  With an 11 pip stop loss we had a better than 4:1 Reward to Risk ratio setup to our Target 2.

As price passed through our levels with barely a pause – we protect profits as vertical moves can reverse abruptly and an undisciplined trader’s greed can become denial as his profits erode very quickly.

There were a number of setups to choose from this session, but the GBP was our better trade.

Overall a very light news week economically.

Back tomorrow if we find a trade.

The UK traders made no attempt to take out the Asian session high.  After a quick wash and rinse of breakout traders beneath the Asian low, they reversed the market higher and the fade to the downside began.  We enter short with a near 5:1 Reward to Risk to our Target 2.

Price begins to move down to the Asian lows and the only concern is the pending US economic news releases.  We move our profit stop down to lock in a couple of pips should the market get volatile or go against us.  Price tests and retests the Asian low before descending a bit further.  Unfortunately it lost downside momentum and did not make it to our targets or challenge the previous day’s low and we are taken out for modest gains.

Good luck with your trading!

Back tomorrow if we find a trade.