Michael Bridgman

With the Nikkei down yesterday and the JPY unable to get traction above yesterday’s low – a short entry is taken.

The JPY setup required a 10 pip stop loss at entry for a potential 31 pips to our Target 2 and it moved nicely to our target before rebounding.

Although the GBP looked good too, I didn’t like the reward for the risk.  The CAD is weakening substantially as WTI moves down taking out 6 year lows, but I have not been comfortable with the large stop losses required.

Good luck with your trading!

Back tomorrow if we find a trade.

I’m including two days of trades today due to a tech glitch yesterday that prevented me from getting Wednesday’s trade posted.

Let’s start with today.  What a week and we still have the NFP number to be revealed tomorrow.  ECB President Mario Draghi had everyone’s attention today when he made his speech.  The EUR after nearly touching 1.05 earlier in the session, jumped well above 1.09.  This will take out a lot of stops, but the trend remains down…so let the buyer beware.  Janet Yellen has been hawkish and continues to reiterate her case for seeing interest rate liftoff being imminent.

Remaining on the sidelines until after Mario Draghi’s comments and not chasing anything led me to the AUD which I prefer to short currently.  Although the AUD has been strong this past month, I will be more convinced if it can close above .7380 and then take out  .7460 near-term.  In the meantime, when the setup presents itself with the appropriate reward to risk, I prefer to short its rallies.

Yesterday was a different story.  It’s highly unusual to see a really large move without news and before Janet Yellen spoke, the GBP hit our targets and then took off as “real money” accounts pushed it lower still.  We left a 100 pips on the table by protecting our Target 2…oh well.

After a second lower high for the session an entry short is taken with trend.   As price moved lower and dipped below our Target 2, we protected our profits by locking them in at T2 and we were closed near the important 1.5000 big figure.  Who knew?  Price retested the level and dropped another 100 pips… all before Janet Yellen’s speech…very unusual.

For me, the trend has not changed and will reasserts itself in the near term.  I remain USD bullish for now and look for setups to trade accordingly.

Stepping aside as usual on NFP Fridays and will be back Tuesday if we find a trade.

BOE Inflation Report Hearings on Tuesday lead to further selling of the Sterling.  We like this trade and  faded the rally earlier again today. I have combined two separate days of trading in this post.  On Tuesday the break of of the previous day’s low gave way to our Target 2.

Today’s trade wasn’t as nice, but fading the rally at the reversal worked.  Price could not sustain above its Asian high and moved down.  A reversal following a very bearish candle beneath the Asian low was not what we expected.  Getting through the 1.5000 big figure going forward won’t be easy especially with a U.S, holiday on Thursday, but a poor Second Estimate GDP on Friday could be the catalyst.

Good luck with your trading!

An upgrade to Windows 10 yesterday after the UK close put my schedule off…these things always take longer that you think, so I’ve posted the 2 days of GBP trading today.

Back tomorrow if we find a trade.

Call it a mid week reversal or just a countertrend day, but the USD came under selling pressure yesterday and both the EUR and GBP moved higher in a “3 drives pattern”.

Today it was back to trend with USD strength and a nice short setup on the GBP in the sweet spot of the session.  With a 19 pip stop loss above structure for a potential 76 pips to our Target 2, we go short and price moved quickly down.  When price moves quickly and vertically, it is prudent to lock in profits along the way – by moving the profit stop after large candles, price targets… like pattern closures, previous session highs/lows, yesterday’s highs/lows and figure numbers.

In today’s example, just before the U.S. open, we are taken out on a small retracement. Vertical moves are not sustainable and it’s better to lock in your profits than to give them back.  On a Friday the reversals can be quick as traders exit positions taking profits – not wanting to hold over the weekend.

Good luck with your trading!

Back Tuesday if we find a trade.

 

Two hours into the U.K. session the NZD drops after not challenging the Asian highs.  Recent soft Global Dairy Trade numbers and persistent low commodity prices have helped devalue this pair.

With a stop loss of 11 pips for a potential 54 pips to our Target 2, a short trade is taken with  trend.  Looking at a 4 hour chart, we can see that price has been stairstepping downward in this pair.

Price chops sideways until the U.S. session opens, then drops testing the Asian lows… before moving to yesterday’s low and descending to our Target 1.  As price lacks any follow through after reaching our first target, we close the trade on the next candle.

Both the EUR and AUD offered nice trade setups with the trend in the U.S. part of the session.

Good luck with your trading!

Back tomorrow if we find a trade.

Overall there was not a lot to choose from in the UK session.  As the EURUSD moved down with the GBPUSD moving up, we looked for a short trade setup in the EURGBP.  We also sidestep (more or less) U.S. news volatility by not being in a USD cross.

As the pair made a third lower high and failed to stay above yesterday’s high, we went short.  Price moved against us at first, but did not threaten our 14 pip stop loss.  Price subsequently began to move back down but fell short of our targets as the UK session came to an end.

The market continues to anticipate further ECB easing – given the weak outlook for inflation there.  The bond market continues to signal the likelihood of a Fed hike in December.

I continue to look for the EURUSD to reach 1.0500 before testing its yearly low – both of which may still happen this year.

Good luck with your trading!

Back tomorrow if we find a trade.