Michael Bridgman

Got a little bit behind yesterday as I ran into some tech issues.  I will start with today’s trade in the NZDUSD.

The NZDUSD has actually been a beautifully upward trending pair.  Gov. Wheeler speech has thrown some cold water on it – as there may not be an interest rate increase until 2019.  Many have commented on the NZD as being overvalued for some time, but we all know that doesn’t mean it can’t go higher.  After Gov. Wheeler’s comments the pair came down and as it topped out early in the U.S. session, a short was taken requiring a very small stop loss.  The pair dropped immediately and closed below its Asian low and the next candle went through our Target at .7182 where we exited as it came back up.  Overall a very quick and simple trade thanks to a sudden uniform move of USD strength.

On Wednesday, despite the Nikkei having a good day, a “risk off” sentiment trickled through European, U.K. and U.S. equity markets.  As the JPY formed a third lower high for the day…a near triple-top is formed and an entry short is taken.  Price moved down, closed and retested its Asian low before taking us out at our profit stop.

There is growing political uncertainty (risk) as previously mentioned in Europe.  Adding to the issues is Greece (again).  Coupled with elections in Greece which could complicate provisions for further financial support, is also a large EUR 10.5 billion payment due this summer.  If you remember when this happened a couple of years ago, it wasn’t difficult to find EUR short setups.

The GBP keeps selling off but this too shall pass.  If anything, this year I’m searching for long entries in the GBP once it starts to reverse.  Another pair to consider is shorting the EURGBP when this starts to happen.

In the meantime, let’s hope it becomes clearer what President Trump’s fiscal policies are so we can look for trends to develop again.

Good luck with your trading!

I don’t usually look for trades on Mondays, but due to it being a shortened week as I avoid NFP Fridays, I was happy to catch a nice setup on the USDJPY.  The USDX started the week in a very volatile manner and with a very light economic news day the market was more reactionary to political rhetoric than usual.   I suspect a number of analysts were contemplating how protectionist policy and imposing higher tariffs on imported goods to the U.S. would weaken the USD.  That caught some attention!

The USD fell shortly after the London open, then made a small up-wave before rolling over in advance of the U.S. open.  With a stop loss placed 18 pips above our entry for a potential 108 pips to our Target, we went short at the U.S. open.  The U.S. traders pushed the pair lower and we protected our profit as price descended allowing for some room for testing and retesting at the Asian low and previous day’s low. When we saw a long lower wick appear, we tightened our profit stop and the next candle closed our trade for a very nice outcome.

On Wednesday, a nice trade setup occurred in the EURUSD.  Price had been unable to close above its Asian session high.  Thirty minutes before the U.S. open, price once again tried to move higher and sellers pushed it back down to close near its low.  Knowing that there were large sellers lurking at the 1.0800 area – a short was taken risking 12 pips for a potential 85 pips to our Target.  We moved the stop loss to plus 1 in advance of the ADP Non Farm Employment release and continued tightening our profit stop in advance of the ISM Manufacturing PMI release.  A brief move up in price took us out before the PMI release.

January was a very bullish month for the EUR… which was intriguing for me.  There are pending elections in the Netherlands, France, Germany and Italy this year.  The markets are more focused on the new U.S. Administration at the moment than on political uncertainty in Europe.  Price has been rejected at the 1.0800 area and tomorrow will be interesting as the market reacts to the NFP number.

Strong language from President Trump regarding currency manipulation directed at Germany, Japan and China is making things very interesting.  It will also be interesting to see if the USD will have another continued move lower in February.

Read the current trends and pay attention to the critical areas where trends can end,. Trading with the trend is a lot easier to make money.  Critical areas tend to be tested and retested.  Price rarely moves through them without a retest, so lock in profits as the market moves in your favour.  Trade the pairs that are easier to interpret.  If the EUR and GBP are moving opposite directions, look for a setup in the EURGBP.  Trade what you see not what you think may make fundamental sense.  The USD direction remains as clear as mud at the moment with a somewhat hawkish Fed and a president wanting a lower dollar.

Keeping a close eye on USDX, the U.S. 10 year yield and global equity markets will help validate your trading decision.

Good luck with your trading!

Back next week.

 

Many have been anticipating a stronger USD as President Trump’s policies become known.  The DOW hit an historical high yesterday and closed above 20,000 for the first time.  As the trading got underway in London today, the GBP rose to its Asian highs testing breakout traders.  After leaving 2 candles with long upper wicks, price dropped to test its Asian low before moving down further.  Price made a small wave up to test the Asian low again and left 2 candles with long upper wicks, followed by a bearish candle.

An entry short is taken with a 20 pip stop loss for a potential 65 pips to our target at 1.2541.  Price moved down but lower wicks began forming and we tightened our profit stop recognizing that some buyers were entering.  Our profit stop was hit taking us out of the trade but we managed to catch a nice portion of the second wave down.  The first wave happened too quickly for us to find an entry.

U.K. economic releases continue to indicate that their economy is doing fairly well.  The GBP has been beaten down due to Brexit fears of doom and gloom. It wouldn’t surprise me to see the sterling strengthen going forward.  This may be easier to trade in the EURGBP cross than the GBPUSD.

Good luck with your trading!

The EUR has had difficulty staying above the 1.0765 area today.  After it ran into sellers leaving two long wicky candles,  a short is taken requiring only a 13 pip stop loss for a potential 65 pips to our Target of 1.0691.

Price didn’t drop as far as I would have liked but it dropped quickly, had a small bounce at the Asian high, and descended further, before hitting our profit stop and the USD weakness continued.  Although the EUR has been moving up this year so far, it may not take much to send it back toward last year’s lows.  Once the market begins to focus on the pending elections in Europe this year, I think the selling will resume.  It’s had a very good month to start the year.

Trading continues to be tricky…be patient and good luck!

It’s been awhile since I posted a trade and the market has not been too revealing of its direction…yet.  The first 2 weeks of January had low liquidity with many traders being on holidays.  The third week of the New Year was potentially very volatile as there was major economic news daily and the inauguration of President Trump.

Yesterday the USD was quite weak, but I’m not anticipating that to last long.  I’ve been awaiting confirmation of a strong USD trend to emerge, but haven’t seen it yet.  The markets are trying to determine what effect President Trump’s  policies will have going forward.  When that becomes a little clearer, the markets will be more revealing of direction.  In the meantime, it’s always a good idea to follow your disciplined trading plan and trade what you see – not what you read or necessarily think.  It will be a fascinating year and we live in very interesting times.

The U.S. is Canada’s largest trading partner and business is appearing to be as usual at the moment with the new president – which is very bullish for Canada. With a  move up in oil today, and an optimistic outlook for trade between Canada  and the U.S., the USD began to move down against the CAD as the U.S trading session got underway – breaking the range of its previous 2 hours.  A short was taken with a 28 pip stop loss for a potential 110 pips to our target.

The trade moved quickly as price descended to test yesterday’s low, the Asian session low, and moved to our target – where we exited and the move stalled until after the London session ended.

Unless oil continues to move up, the 1.3100 level is likely to prove difficult to get through.  If WTI moves higher toward $55 barrel and the USD weakness continues, then we may see the 1.3000 level tested.   At the moment 1.3080 looks like a good support level.

Good luck with your trading!

The GBP continues to trend downward as we await the High Court decision regarding the invoking of Article 50 for Brexit.  In the meantime, if buyers don’t emerge in the 1.2300 area, there is room for the pair to move down toward 1.2100 support.  The GBP appears to be oversold, but that doesn’t mean it can’t become even more oversold.

We were hoping to get a nice move today as it began to sell off…especially after missing out on yesterday’s move.  We entered short today risking 15 pips for a potential 97 pips to our Target of 1.2277.  After we entered, price moved through its Asian session low and down through yesterday’s low. After leaving a long lower wick, we tightened our profit stop and were closed for modest gains as price moved higher to retest yesterday’s low.

Trading volumes are lower this week as we approach the holidays.  Keep your stops tight as a large order flow can have a more dramatic effect on price movement this week with liquidity being lower.

Good luck with your trading!