Michael Bridgman

The currency pairs are trending nicely once again since the Fed rate hike on Wednesday this week.  Today wanting to take advantage of the trending AUDUSD, we found a short setup requiring a risk of 19 pips for a potential 62 pips to our Target.

After a bearish engulfing candle, we went short and waited for price to break below its Asian session low and yesterday’s low.  In advance of the U.S. session getting underway, we moved our stop loss to plus 1, then continued to lock in profit as price continued downward.  To our surprise, price plunged right through our Target and closed bearishly below it.  Price then attempted to go lower but found buyers setting up the second candle of a three candle reversal.  We exited for bonus pips on a rare day of the market being exceptionally generous.

This pair has been an institutional short lately at .7500 – should it get back up there on a retracement, keep your eyes open as to which direction it goes from there.

As market liquidity is declining going into the holidays, be careful of sudden moves caused by large year end orders.  Keep your stops tight and trade with the trend.

Good luck with your trading and enjoy your weekend!

 

It was a quiet week leading up to the FOMC rate increase… that had already been priced into the market.  The charts were looking a little ambiguous  prior to the announcement but now with the USDX strength, the pairs are aligning nicely for trending moves.

The EUR moved up briefly in the early part of the U.K. session before rolling over to close below yesterday’s low.  A short is taken with a 23 pip stop loss for a potential 90 pips to our Target.  Price moved down and paused just above its Asian low before dropping 47 pips in one 15 minute candle.  We cautiously protected some of the move and continued to do so as price extended further.  When price began to retrace we are closed at our profit stop where our Target 1 would lie.

The EUR was the easiest of the majors to read today and required the smallest SL.  The JPY chart is looking very nice too.    With the interest rate increase finally behind us, and the markets appearing to be buying into “Trumponomics” … next year looks like it’s shaping up to be an exciting year for trading.  The question for traders is whether we will see 2 or 3 interest rate increases in the U.S. in 2017?  According to Bloomberg’s Fed probability calculator, chances of a third hike in 2017 currently lies at 48% – up 9% since Tuesday.

Good luck with your trading!

 

Trading up until Thursday was fairly quiet but in advance of the ECB conference on Thursday, a GBP trade set up as price began to roll over.  Risking 24 pips for a potential 104 to our Target, we went short.  Less concerned about the pending U.S. Unemployment Claims and more concerned about the markets reaction to Mario Draghi’s speech, we felt a little insulated by trading the GBP and not the Euro.  As the U.S. session approached, we moved our stop loss to plus one, in case the market’s volatility moved the pair against us.

Price dropped and our pattern completed.  With price bouncing higher after the initial plunge lower, our profit stop was hit.

On Friday, we were comfortable going back to shorting the EUR as it continues to trend lower.  With the exaggerated move on Thursday, we weren’t expecting to get too much of a move Friday before the weekend.  When price could not go above its Asian high, we waited for a candles to move lower and went short.  As price dropped, we remained cognizant of yesterday’s low and Friday’s Asian low.  Protecting profit as it dropped, we comfortably rode it lower and as the U.S. session got underway we were taken out for a nice gain.

Next week the FOMC is expected to increase the interest rate for a 2016 “one and done” which as of Friday was 100% priced into the market.  If the hike doesn’t occur – we will have an interesting reaction as traders will have been caught offside.  The USD closed the week strong.

Good luck with your trading and enjoy your weekend!

 

 

 

Larger than expected  production cuts by OPEC have caused oil prices to rise and the Canadian dollar is benefitting.  The USD was little weaker today compared to yesterday.  A short in the USDCAD is taken after the third lower high in the session with a stop 18 pip stop loss for a potential 72 pips to our Target.  Price moved almost straight down and we moved our stop loss to plus one because there were 2 economic news releases pending that could have reversed the move.

When price left a long lower wick, we chose to close the trade.

 

With a very strong USD yesterday, we chose to short the AUDUSD.  With a 15 pip stop loss for a potential 49 pips to our Target, the setup looked compelling.  Price moved down to its Asian low and retested the level before moving lower in advance of the U.S. session.  As price moved to our Target, we closed the trade.  The AUDUSD moved down much further without us, but we are always happy to realize our Target price while trading true to our trading plan.

Tomorrow will be Non Farm Payroll and we will take the session off and be back next week.

Good luck with your trading!

When a pair is making higher lows like the USDJPY did today, the idea is to find a pullback and when a candle reversal pattern occurs, to go long with a stop loss below the pullback low –  providing the reward to risk ratio makes sense.

As the London session got underway, price made a higher low, then moved above its Asian high.  I avoid breakout trades and always wait for a pullback.  The pullback followed and we saw a second higher low for the session.  An entry long is taken risking 16 pips for a potential 47 pips to our Target.  This was a nice trade because it ran quickly up to the Target where we exited as price came back off the high of the candle.

Curiously, the USD was weaker after a very strong Preliminary GDP q/q print today.  I know one institutional trader who went long the EUR when he saw the market’s reaction – but he’s not planning on staying in the trade long.  He is just taking advantage of the countertrend  move.  This is the natural flow of a market…there are always those who are willing to sell and others willing to buy.

Music to my ears today when one of my students sent me his trade and he had done better than me while trading the USDJPY today.

Good luck with your trading!

 

As the new week began the EURUSD moved up early in the Asian session before going sideways into the UK Open.  A brief move up was followed by a strong bearish reversal in the first hour of London trading.  A short is taken with a 16 pips stop loss for a potential 61 pips to our Target.  This a familiar pattern and with the Asian low coupled with our Target price, we exited once price touched it.

Political event risk overhangs Europe this coming weekend with Italy and Austria.  Italian 10 year bond spreads over German 10 year bunds will likely widen throughout the week.  The market will be focused on the potential for Italian bank failures.

NFP awaits us on Friday in the U.S., so it will be shortened trading week for me.

Trading Tip:  Many traders think of themselves as risk takers and what they really want is a guaranteed outcome.  This doesn’t happen in trading. There are no guaranteed outcomes when you trade.  As a result, many traders hesitate to put on a trade, even when it  meets their trading plan criteria. Every trade will have risk associated with it!  To be a successful trader requires that you learn to get comfortable with taking risks and take responsibility for your trades.  Follow your trading rules consistently (if they work) and practice, practice, practice.  When a trade doesn’t work out, see if can determine why it didn’t…learn from it, and move on the next trade.

Good luck with your trading!