Michael Bridgman

We will have to wait for the markets to interpret President Trumps speech before Congress tonight to see whether the USD can get some long awaited strength.  A number of the majors are at important technical levels so large moves may follow.  The question is whether those moves will be up or down?  We also await Janet Yellen on Friday for any clues as to an imminent U.S. rate hike.

The USDJPY moved down during the Asian session and ran into sellers as it attempted to rise early in the UK session.  As it appeared to roll over… a short was taken risking 12 pips for a potential 41 to our Target.  Price broke through its Asian low, retested the level and moved lower again going back and forth in advance of the U.S. open.  After price tested the 112.00 figure and bounced, our profit stop was hit.

It will be interesting to see how the pair reacts tomorrow after the President Trump’s speech.  If price takes out 111.85 and 111.55 – it appears technically like it has potential for a large drop.  If it gets back above 113.00 – I will be looking for long setups.

Yellen will be speaking an hour after the U.K. close on Friday…so there is still time for some large moves between the president’s speech and her’s.

Good luck with your trading!

It’s not surprising to see equity markets take some profits on a Friday.  With USD strength rather muted this week, and a “risk off ” sentiment going into the weekend, the USDJPY looked like a good short candidate.  Price had moved down through 113.00 yesterday and made a series of 3 lower highs durning the Asian session.  Would we see 112.00 today?

As the U.K. session got underway, price made no attempt to rise… it  moved sideways for the first hour of trading hovering just above its Asian lows. The pair then broke to the downside and an entry short was taken.  This allowed for an 18 pip stop loss and a potential 36 pips to our Target.  With ranges having been subdued this week as traders awaited the FOMC statement on Wednesday, there has been potential for large moves since.

When price moved down further, we removed the risk from the trade and waited to see if price would continue to our Target.  As price continued lower, we began to lock in profit as we approached the U.S. overlap part of the session.  Price continued a bit lower as the U.S. session got underway before reversing upward in advance of President Trump’s speech.

I read an interesting note yesterday that insiders were selling 5.5 times as many shares as they are currently buying.  It’s no surprise that with a 15% jump since the U.S election that some profits are being taken.   Be careful out there.

The big economic picture at the moment remains as clear as mud.  Trade what you see.

Enjoy your weekend!

The week had been slow as traders awaited the outcome of the F.O.M.C. statement as to whether March looked like a good time to raise interest rates or maybe…not.  Here we go again… month by month assessing whether the economic data is strong enough for the Fed to raise rates at their next meeting or not.

The outcome yesterday was a weaker USD as it doesn’t appear like the March meeting will bring about an interest rate hike.  U.S. equity markets are up 15% since the election…inspired by tax reform, infrastructure spending and banking deregulation  prospects.

A number of trades set up today requiring very little risk to trade against the USD.

As the ranges have been somewhat subdued this week as traders awaited the outcome of the Fed, it wasn’t surprising to see the market get active with the news behind us.  I like the resilience of both the AUD and NZD (commodity currencies) and found a an entry long into the Kiwi with a 6 pip stop loss for a potential 18 pips to our Target.  The setup was a classic “W” pattern and fortunately the pair moved straight up…keeping us in the trade until the pullback.

The second trade was the GBP which has been beaten down due to Brexit concerns.  It’s important to note that the U.K. economy is doing quite well and the market will be focusing on political risk in Europe with the pending elections.  This to me suggests shorting the EURGBP when the charts look enticing.  Today we had that opportunity, but I chose a GBP long  (my preferred direction at the moment) and as it turns out got out too early.  The reward to risk ratio was a couple of pips under a 3:1 and as price got within  a tick of the Target, we closed the trade… being very cautious.  Oh well…it then moved substantially higher.

I am beginning to wonder if the triggering of Article 50 next month will turn into a non-event for the market.  The European elections outcome implications may be much more concerning to the market over the next few months.  If the EURGBP continues downward and takes out its December 2016 low and continues lower, the .8000 level becomes a probable target.

The USD although on its back foot at the moment will likely strengthen as the market gets a better understanding of President Trump’s fiscal policies.

Good luck with your trading!

 

 

It’s always interesting when we see a big move before a major economic news release, as we saw today with the GBPUSD and EURGBP.   Who knew?

I’m including the GBPUSD and the EURGBP for comparison.  The GBPUSD began to sell off sharply 45 minutes into the UK session.  The EURGBP moved down for 30 minutes luring in breakout traders then reversed and moved strongly upward in advance of the UK Retail Sales release.

The safer way to trade this today was to wait for the U.S. session.  Price had come off its high in the EURGBP…risen as the U.S. session got underway before making a lower high and a 3 candle reversal.  A short was taken with a stop loss above the U.S. session high.  Price moved down to test the familiar levels of yesterday’s high and the Asian session high.  As price bounced upward after testing its Asian high our profit stop is hit and we were finished for the week.

Monday is a holiday in the U.S. and overall it’s a fairly light week for U.S. economic news releases.  The USD was a little stronger on Friday but it may be a slow grind higher with turbulence going forward until we have a better idea as to the new fiscal policies of President Trump.  The market may move its attention more toward Europe next week but we will have to wait and see.

Good luck with your trading and enjoy your weekend!

Despite a continuation of strong economic numbers reflecting the strength of the U.S. economy, the USD continues to slip and the USD index moved down to 100.50 area today.

The first candle of the U.K. session saw the USDJPY drop 27 pips but it went sideways for the most of the session drifting a bit lower before the U.S. Open.  It moved up at the opening and continued until 30 minutes after the economic releases…then began to move down.  We went short after price failed to close above yesterday’s low…witha 23 pips stop loss for a potential 51 pips to our Target.  Price moved down to our Target without our profit target getting executed due to the spread.  As price came back we manually exited as European trader finished for the day.

With the media focusing on President Trump’s administration issues as opposed to optimism about his pending fiscal policies, and the hawkish sounding Fed, traders seem to be quick to sell the USD.

Tomorrow we have retail sales m/m for the U.K. but no U.S. economic releases.

Good luck with your trading!

 

 

 

It’s been an interesting year so far.  Despite the U.S. election outcome well behind us, a stronger U.S. economy, a hawkish Fed, the USD is softer this week so far.  The US Dollar index remains above 101.00.  Commodity prices overall are strong (not including oil) and China’s economy is continuing to improve beating CPI year over year expectations.

Although there was a broad based USD selling today, I avoided a EUR long and instead chose the AUDUSD after a nice reversal setup.  The AUD has been very resilient of late, but sellers tend to emerge near the .7700 barrier.  With that in mind, with a Target today of .7698 an entry long was taken and the stop loss was moved up to eliminate any risk in advance of Fed Yellen’s testimony today.  Although her testimony was not expected to be different from yesterday, whenever she speaks, the market listens, and the potential for volatility is extremely high.

As price reached our Target we exited, as it was an area where yesterday’s high, our daily target and the .7700 barrier all grouped closely together. Could the AUD continue to climb with USD weakness to the .7800 figure?  Yes it could and my sense is that the rate hike perception is leaning more toward June than March.  It’s also interesting to see that gold is staying comfortably above $1200.  This suggests to me that the market is nervous about Europe’s political future.

When it becomes clearer what President Trump’s fiscal policies will be and when the next rate hike is likely to be announced, then the USD will strengthen and it will be onward and upward.  In the meantime, watch the charts and my preference remains to look for EUR short setups.

Keep your stops tight and continue to trade what you see not what others think.

Good luck with your trading!