Archives for February 2020

EURUSD trade today following a GBPUSD trade yesterday

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February’s final week of trading comes to a close with a surprise ending. Just over a week ago the U.S. equity benchmark S&P 500 made an all time high. The coronavirus seemed largely contained in China and last weekend with a major number of new cases reported in South Korea and then Italy, the world equity markets went into a freefall. This created further fear and the equity markets fell all week…and not in small terms.

I have been waiting to short the EURUSD for a couple of weeks – waiting patiently for it to break 1.0775 – it has strengthened instead and moved above 1.1000 today. Fading bounces can be very profitable but choosing entries is the trick and it’s not a good idea to swim against the current. Last Friday we saw disappointing PMI numbers in the U.S. and surprisingly good PMI numbers out of Europe. The USDX has dropped from nearly breaching 100 to 98.41 at time of writing.

Today as the EURUSD continued its climb above 1.1000 but appeared to rollover around 1.1050… a short was taken after a near triple top failed. We entered short risking 16 pips for a potential 54 pips to our daily target at 1.0974. As price moved lower, we immediately took the risk out of the trade moving our stop loss down to ensure a profitable outcome. The idea was to trade the pair down to the 1.1000 figure and tighten up the profit stop allowing for a possible bounce there. As price continued to move down going into the U.S. open, we tightened our profit stop to 1.1000 then lower and our trade was closed at our target.

Yesterday, the GBPUSD set up for short trade as rhetoric heated up between Britain and the E.U. When the pair failed to exceed its Asian session high and moved lower, a short was taken risking 17 pips for a potential 80 pips to our daily target at 1.2851.

Price moved lower and accelerated through its Asian session low and the previous day’s low. We further tightened our profit stop as price continued lower and our trade was subsequently closed on a bounce.

Next week will be an interesting week for the euro and sterling as the two sides further negotiate the Brexit divorce.

Interestingly the flight to safety has decimated the US 10Y yield each day this week with it being off at time of writing by over 8% just today! Gold curiously is being sold off and is currently down over $73 U.S. today. Where the U.S. equity markets close is anyone’s guess but it’s not looking good with just over two hours left.

Next week will be another interesting week and no doubt filled with coronavirus headlines…hopefully positive ones.

Good luck with your trading and enjoy your weekend!

Shorting the USDJPY again today as risk off sentiment continues

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Monday was an exceptional selling day as the markets reacted to the implications of a pandemic risk for the coronavirus.

On Tuesday the USDJPY moved down but found some buyers near Monday’s low and retraced upward. As the U.S. session got underway, it began to move lower and a short was taken risking 12 pips for a potential 54 pips to our daily target at 109.99.

Price moved lower pushing through Monday’s low then headed to test the 110.00 big figure. With a couple of candles showing long lower wicks (indicating buyers entering) we tightened up our profit stop and targeted 3 pips above the 110.00 figure as our target to close the trade.

We ended the year 2019 with hope that the global economic slow down had abated and Europe was beginning to show signs of inflation. The U.S. – China trade talks had succeeded with a Phase One deal in the making.

In January the coronavirus appeared in China in record numbers, but overall seemed to be somewhat contained within China – with implications of a slowing China economy as a result. Since we live in a global world where people travel, the virus has spread to multiple countries around the world which has very negative implications. As a result the markets are reacting to the fear of what may transpire from here.

Don’t fight the market and trade what you see today as opposed to how you may think this will eventually play out.

Good luck with your trading!

Shorting the USDJPY as a sentiment of fear moves the markets today

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A light day of economic news releases but a significant number of new cases of the coronavirus outside of China has unnerved the markets. As risk off sentiment begins the trading week and the USD remains on its back foot following the weaker than expected PMI numbers on Friday, a short was taken in the USDPY.

Risking 12 pips we entered the trade targeting 45 pips to our daily target at 110.84. As global equity markets were in a tailspin and the the S&P futures pointed to a major sell off at the open, this trade looked like it had potential for a large move.

We removed the risk from the trade quickly as price moved down, but gave it some room. (Last week by having a profit stop a little too close, we had a trade closed just before it dropped vertically.)

As price moved lower today, and the U.S. equity indices sold off heavily, we tightened the profit stop to the high of each previous candle until our trade was closed.

With the positive numbers coming from Germany last week, catching the market offside, the Euro has been able to bounce and the 1.0775 level mentioned last week has not given way yet. My bias remains to the downside as I expect shorts to enter just under 1.0900 on bounces and more shorts to enter around the 1.0950 level.

Remain cautious and nimble.

Good luck with your trading!

Shorting the EURUSD as it trends lower

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The EURUSD is trending lower. When it failed to take out its Asian session high and began to reverse lower, we entered short risking 9 pips for a potential 33 pips to our daily target at 1.0796.

The trade moved lower going into the U.S. Open and we protected our profits by tightening up our profit stop as price continued lower… exiting the trade at our target price – anticipating the 1.0800 area would find some buying interest.

If 1.0775 gives way, I anticipate a move to the 1.0700 area. This Friday’s PMI data will be closely watched by the markets.

Apple’s negative guidance around Q1 earnings as a direct result of the coronavirus in China will likely also weigh on currencies with high exposure to China – which includes the Euro. I will continue to look for EURUSD and EURJPY short opportunities this week.

Good luck with your trading!

Shorting the GBPUSD into the U.S. holiday

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The relationship between the E.U. and Britain continues to be strained while the details of the divorce are worked out. The E.U. has cast doubt on whether this can be accomplished by year end – as desired by British P.M. Johnson.

While the GBPUSD bounces above and below the important 1.3000 figure, my preference currently is to fade rallies above and watch for buying interest as price approaches 1.3000.

Today as price moved down early in the U.K. session, a short was taken risking 15 pips for a potential 59 pips to our daily target at 1.2977. Our first target however was 1.3000…still giving us a better than 2:1 reward for our risk.

After price took out its Asian session low, our target was 1.3000 – an area where buyers have been entering. We tightened up our profit stop after the first attempt fell short and when price bounced a second time we closed the trade.

The major pairs continue to have moderate daily ranges with the GBPUSD being the most active pair.

The coronavirus continues to dominate the headlines as the market attempts to determine its financial impact.

Good luck with your trading!

Small short on the EURUSD as the pair continues its current tight range

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The EURUSD moved up briefly as the U.K. session got underway. The idea today was to wait for it to roll over and trade with the trend lower.

We entered short with a stop loss of 7 pips for a potential 41 pips to our daily target at 1.0841. Speculation of Germany heading toward recession and further ECB easing is putting pressure on the pair.

The pair moved lower taking out its Asian session and yesterday’s lows. We tightened our profit stop and ended up having the trade closed as the pair retraced in advance of the U.S. session.

The pair may continue moving lower taking out 1.0800, 1.0750 and reach 1.0700 in the near term with continued USD strength. On counter trending days, I anticipate shorts to enter just above 1.0900.

Good luck with your trading!