Archives for October 2014

It’s been an active week for GBP economic news, and with the last item out of the way, the GBP showed strength against the USD, EUR and CHF this session.

The GBPCHF has been very active lately unlike the EURCHF.  It has made higher lows daily since Tuesday.  When price attempted to take out the Asian low today…buyers entered.  With a stop loss a few pips below the Asian low, a long trade is entered during the US session.  The first level for price to challenge will be the Asian high, followed by the post news spike high, then yesterday’s high.

Price did almost that.  It moved up to the Asian high retested the level.  It moved higher and lost momentum at the post news spike high, producing wicky candle tops indicative of sellers entering at this level.  As price has been stalling near the 1.5320 level this week, despite the higher lows…it may be a bit of grind to get higher in the near term.  We will see what next week brings us…

Enjoy your weekend!

Back Tuesday if we find a trade.

A fairly quiet session for the EUR today despite lots on the economic news calendar.

As the UK session got underway the EUR attempted to break the Asian low but found buyers keeping price above the 1.2600 figure…for now.  As price moved up, the 1.2670 area became a mini resistance level.  As price tried to push through this level and is unable to close above – a short entry sets up with a stop above the spike high.   Our targets (not shown) are 1.2577 and 1.2560 for the session.  This gives us a better than 6:1 R/R with a stop loss of 15 pips.

First things first…we must have price start closing below the Asian session high and then continue to close below yesterday’s low and the Asian session low.  We also have US Unemployment claims pending.

Price begins to move down then reverses and retests the 1.2670 level again, but does not close above it… which gives us confidence that the level will hold.  The US news pushes price down and we begin to test the Asian session highs, but cannot close below.  Price finally breaks through and stops at the Asian session low.  We are not willing to give back more than half the previous candle’s pips.  Price reverses off the Asian low and takes us out for a modest gain.

We continue to look to fade the rallies in this pair anticipating the October lows to be targeted in the near future.  As mentioned yesterday, the 1.2600 figure will find buyers so protecting profits is paramount.

Good luck with your trading!

Back tomorrow if we find a trade.

The EUR chart continues to set up for shorts.  Be cognizant of the October 10,13 and 15 lows where it has moved upward as it approached the 1.2600 figure.  If this level cannot hold the 1.2500 figure awaits a test.  Be very careful position trading around these levels as you may give back some nice gains.

In advance of the US session today, the EUR made a lower high for the session and a short entry is taken just above the 1.2700 figure. As price moved down, we move our intial stop loss to plus one pip in advance of the US CPI numbers.  Price moves down after the release and continues down one more candle…looking very bearish.  It then began to retrace upward for 2 candles – where we choose to exit before giving back any more of our profits.

Overall we continue to have USD strength and EUR weakness from an economic fundamental perspective.  There is both French and German news tomorrow… if negative the we may see the 1.2600 and or the 1.2500 levels tested.  The US Unemployment number tomorrow will also certainly be watched by traders.

The GBPCHF is a very active pair and has been a good one to trade. (not shown)  The SNB’s Zurbruegg has warned of unlimited intervention and more actions regarding the EURCHF.  This pair currently is barely moving each day, so I much prefer the active GBPCHF.  Keep an eye on the EURCHF 1.2000 big figure for fireworks.

Good luck with your trading!

Back tomorrow if we find a trade.

EUR weakens on quiet news day.  As the UK session got underway, what is sometimes known as “tweezer tops” formed after the first hour of trading.  Essentially it is a reversal formation and we can see looking at the chart that there are no buyers above the Asian session highs.

A short is taken with a 15 pip stop loss above the session highs which equates to a 7:1 Reward to Risk to our Target 2, and there is no major economic news in the calendar for the session.

If you look at the Daily chart for the month of October the range is very clear and our bias remains to the downside.  The swing created this month allows for institutional shorts to enter at levels approaching 1.2850 and play the range down to the swing low areas… while taking profits or adding to their positions along the way based on their current market expectations.  Getting below the 1.2600 figure may require some patience but the charts will reveal the bias.

Price moved almost vertically down once it got going which is not sustainable.  Price cut right through the Asian low, where we would expect it to retest the level.  We move our “take profit” down to just a few pips above the Asian low.  Price continued downward but gave signs of stalling.  We continue to move our “take profit” down and as the longer lower wicks form – indicating buying interest – we tighten our “take profit” and the market takes us out.

As price began to retrace upward it stopped and reversed exactly where the hourly institutional traders defend their positions and back down it went to our Target 2…where statistically it will run out of downside energy.

Good luck with your trading and stay disciplined.

Back tomorrow if we find a trade.

The EUR and CHF pairs trade inversely.  If you miss an entry on one or don’t like the cost of a stop loss on the EUR – look to see where you would need to place it on the CHF.

Although the markets have been gyrating about this month, and stops have been run repeatedly, the overall bias remains in my opinion to be favourable for the USD.  Most economic news from the US is favourable this year.  Much of the news recently from Germany has not been favourable.  This adds up to EUR weakness and USD strength.

Looking at the charts the trend is not nearly as clear to see as it was in September but my bias is unchanged.

As Janet Yellen started speaking today, the USD caught a bid tone.  After 2 higher lows on the CHF and a solid close back into the Asian range – a long trade is taken with a stop loss just below the previous candle’s low and beneath the Asian low.  This meets our R/R of greater than 2:1 for this time of day.

As price moves up, we expect it to test and retest the Asian high.  With further US news pending we move our stop loss to plus one pip which equates to a stress-free trade.  If the news takes us out – so be it.  If the news creates a very bullish move, we ride it up protecting our profit.  Neither happened today but the net result was positive.  After the initial rise up, we lock in 25 pips and as price fades post news – we are taken out.

Always be careful entering in the middle of the Asian range.  I prefer to avoid this area, but if I have a confluence of reasons, I will make an exception using a tight stop loss and my finger ready to click out very quickly should it  go awry.

Good luck with your trading!

Enjoy your weekend!  Hope some of you caught the beautiful move on the CAD yesterday which I missed.

I was away last week and the markets have gone from predictable and trending in the last 2 weeks of September to gyrating with large counter-trend moves for the first 2 weeks of October.

Although the EUR and GBP continue to look weak to me…it’s been really hard to find an entry short in the major pairs.  The EURCHF continues to move downward and may test the intervention level of 1.2000 shortly, but it doesn’t move enough in a session to attract my attention.  Gold has moved nicely upward with the current USD weakness. The trend is murky at the moment as we scan through the charts, after being so clear in September.

The good news is the currency pairs have really picked up in terms of daily range and we look to be returning to the more normal ranges of where we were a couple of years ago.

Currently the Swiss Franc is looking pretty strong and the USD and GBP are looking weak.  As I have been unable to find a comfortable entry in the major pairs, I thought I would revisit the GBPCHF which has come alive again – unlike the EURCHF.

As the USDCHF started to roll over today – the GBPCHF did the same.  An entry short is taken with a stop loss above today’s high.  As price moved down the stop loss is moved to plus 1 pip to remove the risk from the trade in the event the US traders reverse the move.  Price moves down where it tests and retests the Asian low.  We then have a move down to our Target 1 where we allow for a retest, but are not willing to give back many pips once this level is attained.  We close the trade to protect our profits only to see price drop substantially further without us.

An easy way to get a handle on the USD is to look at what gold is doing – as they move inversely. In my opinion the weakness in the USD is temporary.  October tends to be a volatile month for the US stockmarkets and gold seems to be benefitting at the moment.  Watch the EURCHF as it moves to 1.2050 and especially the 1.2000 level for a bounce upward.  Options will be very active at these levels.

When in doubt especially in such volatile markets, it’s better to step aside and come back the next day. Don’t force any trades and keep your stops tight.

Back tomorrow if we find a trade.