Michael Bridgman

These are interesting times.  Both the EUR and JPY have strengthened to the USD.  I have a hard time believing that this will last, but in the meantime the markets are telling us otherwise.  WTI  gave up the $30 level today and came close to testing its recent low before buyers stepped in.  Beware if the $27.50 area gives way.  Saudi Arabia apparently has increased its production which makes pricing interesting.

If you can find good trade setups offering appropriate reward to risk ratios, and keep your stops tight, there are profitable trades.

Today, I liked the AUD as it bounced off our downside T2 and reversed early in the US session.  The risk was 20 pips for a potential 100 pips to our upside T2. As the USD weakened across the board, the AUD moved up taking out its Asian low and continued toward yesterday’s low where it left a very wicky candle.  Not prepared to give back many pips, we tightened our profit stop and the market closed us out.

Tomorrow we begin with UK manufacturing production, followed by Janet Yellen testifying and then crude oil inventories.

Be extra careful!

Back tomorrow if we find a trade.

 

 

 

 

Last week I showed USDCAD trades.  Today I will show a CADJPY trade which is also a proxy for oil currently.  The EURCAD is making great moves too while oil is volatile.  Find the best setup in a pair that you are comfortable with and look for the best R/R and/or the nicest chart.

Oil was moving up above $30 last week and is moving down to test $30 this week.

The large percentage moves in oil each day reflect in the USDCAD and the CAD crosses.

Today as the US session got underway… oil continued lower and the CADJPY dropped with it.  If you look at the USDCAD it began upward and with the USDJPY moving downward…a CADJPY short is going to present itself… and it did.  With a small 19 pip stop loss and a potential 100 pips to our Target 2…we have a very nice R/R trade setup with confluence.

The risk was taken out of the trade after the first candle closed.  Price moved down  through the Asian low and yesterday’s low…initially without a retest.  As price moved lower we got a wicky bottom as buyers began to enter.  We tightened our profit stop to the close of the previous candle and the market takes us out.  Equivalent trade setups were in the USDCAD and EURCAD for those that like taking advantage of oil’s volatility.

The $30 level for oil is currently very telling.  If it closes below it, I suspect it may retest the low from January 20th near term…where buyers emerged beneath $28.

Use prudent money management and tight stops!  Be aware of the context of the market and trade what you see!

Good luck with your trading!

Back tomorrow if we find a trade.

This is very similar trade to yesterday.  Oil is very important to the markets and the correlation to the USDCAD is extremely high.  The CAD crosses are also yielding to the Canadian dollar as oil climbs and will punish it as oil declines… in this current market.

Remember that vertical moves are not sustainable and if you look for signs of the slow down or reversal, you can be rewarded quickly as these moves tend to reverse and retrace… making a highly reliable pattern formation.

Today as oil increased the USDCAD came down despite the USD being much stronger overall today as the markets reacted to the BOJ surprise.

As the USD began to soften to the CAD, a short is taken with a 27 pip stop loss for a potential 130 pips to our Target 2.  As price approached its Asian low, it started to find buyers and after giving back 10 pips the trade is closed.  This is the opposite of yesterday when price approached the Asian lows and accelerated.

The CAD crosses are also excellent to trade with one eye on oil, but the stop losses were more expensive this session than the USDCAD.

Oil has had a good week and we can make an equally good case for it going higher as we can for it going lower.  This is why we read price!  A close above $34.50 near term will be bullish.  In the meantime, the Canadian dollar strengthens or weakens with the price of oil.

Good luck with your trading!  Enjoy your weekend!

Back next week.

As oil continues to make headlines and remain above the critical $30 level, the CAD continues to strengthen to the USD and its crosses.  Today a short is taken in the USDCAD pair as it fails to close above its Asian high and begins to move lower with oil rising in the session…fueling the descent.  The move became vertical as price took out its Asian lows.  Vertical moves are not sustainable and are susceptible to very abrupt reversals.  As price tagged our Target 1 and bounced, we chose to exit for considerable gains… as a long wick began to form.

It’s better to lock in profits than to give them back by being greedy…especially at critical levels.

The USDJPY was noticeably subdued awaiting the BOJ.

Good luck with your trading!

Back tomorrow if we find a trade.

Sterling made a higher low after BOE Carney’s comments early in the session.  With a nice reversal setup and a 17 pip stop loss for a potential 95 pips to our Target 2…we entered long.  We anticipate price will retest the Asian session lows, but price moves up and takes out yesterday’s low – where we anticipate it to retest.  As price moves higher a long wicky candle appears with sellers entering above the Asian high,  As this is a countertrend trade, and price has run almost straight up, we want to lock in profits just below the Asian high… in the event of a full reversal.  Price pulled back and closed the trade…then spurted higher without us.

Wednesday is FOMC day and we will stay on the sidelines.

Good luck with your trading!

The USDJPY began to move higher in the U.S. session driven by equity markets and overall risk sentiment.  Oil moving up again today helped too as did the Nikkei closing up 5.88%.

An entry long is taken with a 21 pip stop loss for a potential 56 pips to our Target 2.   We allow for a retest of its Asian high level and as price moved upward, we remove the risk from the trade and begin to lock in profits.  As price was unable to close above our Target 1 and the next candle was very wicky and bearish, we tightened our profit stop allowing a little room beneath T1 and the market took us out.

The EURJPY set up for a really low risk short earlier in the session and I missed it.  Congratulations to anyone who caught it… a very nice setup with a 15 pips stop loss.

The markets are getting interesting.   Lots of major news pending next week.

Good luck with your trading and enjoy your weekend!