Michael Bridgman

This past week was extremely busy for central banks.  The U.S. had their first rate increase since December.   As opposed to seeing USD strength after Janet Yellen tipped the market last Friday that a rate increase was forthcoming (and the usual rhetoric) we saw a sell-off of the USD.  The markets had lots to digest all week as we heard from ECB President Draghi on Monday, Janet Yellen on Wednesday coupled with an interesting election in the Netherlands, followed by the Bank of Japan and disappointing Australian employment numbers Thursday and G20 meetings Friday and Saturday.

While USD bulls remained poised to trade long, the opportunities to do so were few and fleeting.  With WTI remaining below $50 all week a USDCAD long was found today.  After the bullish U of M Consumer Sentiment number and a bullish reversal setup… a long was taken risking 17 pips for a potential 76 pips to our Target.

Price moved higher and just before the UK close, profit taking brought price down closing the trade for a nice ending to the week.  My earlier 2 trades this week were 13 and 10 pips respectively and not eventful in any way.

I continue to be bullish on the USD but the majors are not trending clearly.  Patience and very selective entries on a session by session basis is my preference for now.

Good luck with your trading and enjoy your weekend!

Taking a look at the daily chart of the USDJPY, we can see since Jan. 27th 2017, the pair has not been able to close above the 115.00 area.  With renewed USD strength based upon an anticipated interest rate increase next week, the pair is trying to move higher… and will get there.  Today the market was focused on ECB President Draghi speech and with slight USD weakness, shorting the pair as it failed to break higher, using a small stop loss worked out twice in today’s session.

Although this was a countertrend trade, we used small stop losses and did not expect the trade to move far to the downside.  As usual we read how price reacted at yesterday’s high and the Asian session high.

Tomorrow will be the NFP release which traders will watch very closely in case there is a substantial miss.  If the number is slightly lower, meets or exceeds expectations, then the market believes the rate hike on March 15th is assured.  As recently as yesterday, the consensus was indicating a 94 percent probability for a rate increase next week.

**** In North America the clocks go ahead one hour this weekend – which changes the U.S. overlap period with the European and U.K. traders.

Enjoy your weekend!

Back next week.

 

 

 

The EUR appears to be sensitive to the polls indicating which candidate is ahead in the pending French election lead up.   If Le Pen appears to have greater support than Macron and Fillon, it will not bode well for the single currency.  Traders will be awaiting the ECB Press conference on Thursday and anticipating a further dovish bias tone from Mario Draghi.

After the U.K. traders began today, the EUR attempt to climb above its Asian session high was quickly thwarted setting up a reversal pattern coupled with a third lower high.  A short is taken with a 9 pip stop loss for a potential 69 pips to our Target of 1.0525 today.  Price moved down taking out both yesterday’s and the Asian session lows before forming a doji looking candle with a long lower wick.  We tightened our profit stop to the high of the doji candle and the subsequent candle closed our trade.

The GBP remains weak with the House of Lords influence possibly delaying the triggering of Article 50 for the moment, and focus tomorrow will be on the U.K. Budget.

Good luck with your trading!

 

What a difference a week makes in changing the sentiment of the markets.

The big question today for traders is Janet Yellen’s wording regarding a U.S. rate hike on March 15th.  Even dovish Fed members have been sounding hawkish this week, so the market is pricing in a rate hike.  If Yellen’s wording is not consistent with that forecast then the USD will weaken.  A lot can happen between now and March 15th so it is never a given until hit happens.

Looking at the majors, the charts are showing USD strength.  The AUD and NZD have been coming off their highs this week and with a stronger USD, and the 10 year yield reaching the 2.500 level, I am looking for short setups.  The Kiwi moved up into the U.S. Open but quickly topped out and reversed.  A short is taken risking 15 pips for a potential 34 pips to our Target.  Price moved down and closed below its Asian low and we allow for it to retest the level moving our stop loss down.  We now have no risk in the trade.  We hoped that price would move down to the .7000 figure but it did not and our profit stop is hit.

Next week looks like it will be exciting with lots of economic news throughout the week and a very closely watched  Non-Farm Employment number on Friday.  Next weekend North America moves to Daylight Savings Time – moving clocks ahead.

Good luck with your trading and enjoy your weekend!

With renewed USD strength and a “risk on” sentiment evidenced in the equity markets and the U.S. 10 year yield, I had my eye on the USDJPY for a long setup.  Price has moved up this week and now surpassed a very significant level on the Weekly chart.  As the U.K. session got underway, price tested and retested its Asian high…forming a familiar “W” pattern.  When price broke bullishly above, a long was taken with a stop loss 10 pips lower and a Target price of 114.75 today.

Price appeared to have difficulty climbing higher and we moved out stop loss up to plus 3 pips and waited.  The pair moved sluggishly higher in the U.S. session before reversing to close the trade for moderate gains.  My bias continues to be bullish for the pair as we watch the market price in a U.S. interest rate hike this month.  As long as the U.S. 10 yr yield continues to increase, gold continues to move down, U.S. equities move higher in the short term and Fed members continue to sound hawkish, my preference will be to look for long setups.

Good luck with your trading!

A conciliatory sounding speech by President Trump to Congress and hawkish sounding Fed members may be the impetus to a stronger USD going forward.  We will know more on Friday, but in the meantime it appears that a rate hike this month is back on – in the minds of the majority of traders.

The GBP closed Tuesday below a technically important level.  The Manufacturing PMI missed today and the GBP weakened.  After the disappointing number and with a close below yesterday’s low… a short is taken.

Price descended but it took an hour after our entry.  It then moved right through its Asian low without retesting the level…then moved down to test the 1.2300 figure where it bounced briefly.  With Construction PMI due out tomorrow, another miss could push the GBP down to test the 1.2200 figure.

The Dow moved up almost 1.5% today, Gold has backed off considerably from its high on Monday and the U.S. 10 year yield is up well over 4% today. I will be looking for USD long setups in the majors.

Good luck with your trading!