Looking at the 15 minute USDCAD chart, we can see there are no real buyers above the Asian highs or 1.2500 figure.  As the pair reverses we enter with a 17 pip initial stop loss for a potential 100 pip gain to our Target 2 – just below the 1.2400 figure.  As price begins to descend we need to clear the Asian low then the session low.  With the first round of US news pending and price right at the session low, we move our stop loss to just above the Asian low to allow for a retest with the worst case scenario being that we are closed out by the news reaction reversal for a positive trade.

Price retraces upward but does not retest the Asian session lows and begins to descend further.  Once it hits our Target 1, we see long lower wicks indicating buyers entering at this level.  We move our take profit level down in advance of the second round of US news.  The subsequent spike upward takes us out.

This pair is very sensitive to crude oil pricing at the moment…but not always.  The EURCAD and GBPCAD are bigger movers, so I watch the 3 pairs together and look for the best setup.

Good luck with your trading!

Back tomorrow if we find a trade.

ECB President Mario Draghi long awaited remarks were followed by more EUR weakness yesterday.  The forex market will get more interesting from here.  USD strength remains the overall trend – in my opinion.

It’s not unusual to see a bit of profit taking before the weekend or at the beginning of a new trading session.

The UK had a positive retail sales release early in the session and although price dipped – it could not close below the Asian lows.  Overall a very subdued move in the cable today.  Just in advance of the US traders beginning their session, a bullish candle closes above yesterday’s low.  An entry is taken as there are no pending major US economic news releases.

With only four hours left in the session, we will take a 2:1 R/R with our target being the Asian high.  Price begins to move up bullishly when a potential reversal setup occurs mid Asian range.  We protect ourselves by moving our initial stop loss to a plus 3 pip profit stop.  We continue to move our profit stop up as price makes its way higher.  In advance of the UK close we exit the trade at the Asian high where the momentum has failed to take the pair higher.

 

The main risk event of the week is the  ECB Press conference on Thursday.  What will Mario Draghi say this time and will it be enough?  Institutional position sizing will remain light in the meantime.

It is not unusual to see clear trends from the previous year become cloudy in January.  What is highly unusual is having a Central Bank completely surprise the market with an abrupt about face from their comments the week before.  I won’t mention any names.

As the market digests the news and USD trending strength took a hit, albeit temporarily, a short setup is found in the oscillating Aussie dollar.

 

As price ran into sellers above the Asian high and closes back into the Asian range with a lower high – a short is taken.  With a stop loss of 14 pips and our Target 2  60 pips away, we like the setup… preferring to trade with the larger trend.  Price moves lower but stalls near yesterday’s low.  When price breaks through yesterday’s low, we tighten our stop loss.  As price breaks solidly toward the Asian lows, long lower wicks appear… indicating buyers entering.  We tighten our take profit and the market closes us out.

Be extremely careful trading this week and keep your stop losses tight.  Money management is fundamental to trading success.

Good luck with your trading!

Back when we see something we like.

We’re back for the New Year

As 2015 trading gets underway, the charts are not nearly as clear as they were at the end of 2014.

The EUR looks weak still, but it needs to close below the  1.1750 area on the daily chart for the next leg downward to have traction.  It tried to take out 1.1750 level this session, but bounced higher making a third higher low – in advance of the US Open and an entry long is taken.  The setup provided a greater than 3:1 R/R with a tight stop just below the third higher low.  The temporary USD weakness was confirmed with the GBP moving in parallel and the CHF moving inversely.

As price moved up, we remove the risk from the trade by placing our stop loss (now a profit stop) higher to lock in a few pips in advance of the US economic news.

Price moves up on the news going through both our Targets 1 & 2.  As price began to fade we closed the trade at Target 2.  Price is not statistically likely to stay above Target 2 and the subsequent wicky candles forecasted the reversal.

Be very careful with counter-trend trading as the volatility in the retracements tends to eat up profits quickly.  It’s much easier and more profitable to trade with the trend.  The charts are currently conflicting which makes finding trades very tricky.

The EUR is likely to get some downward momentum after is closes below 1.1750.  The ECB Press Conference next Thursday has a lot of institutional money on the sidelines.

Good luck with your trading!

Back tomorrow if we see something we like.

Michael

The AUD set up beautifully for a short early in the US part of the session.  After it failed to challenge the Asian high and classically reversed – an entry short is taken.  What makes this trade setup more powerful is what the institutional traders were seeing on their charts.  If you know how the  institutional traders are interpreting their charts, you would enter this trade with a very high degree of confidence!  Their charts are very simple – no oscillators or nonsense indicators below the charts or silly arrows, Bollinger bands etc. on their charts.  All of that junk is strictly a retail myth, very cleverly marketed and a nightmare for anyone trying to clearly interpret where price is going.  This is why retail traders tend to blow up their accounts!

After 3 lower highs (a powerful signal) and with the trending USD strength, a short is entered with a 12 pip stop loss and a potential 75 pips to our Target 2 which coincides with the .8100 figure today.

As price continures down we move our stop loss down locking in profit and taking any stress out of the trade.  As the session ends, we exit and that is it for our year.  For anyone who is active next week and following this pair…be aware of the May 2010 low of approximately .8066 level.

Volumes will be down over the next 2-3 weeks but there is still lots of liquidity.

I hope everyone has a wonderful holiday season!!!  We will be back in early January.

I received an email today from a former student who has worked hard (hint) at becoming a very successful trader.  I have his permission to share this quote.

“I ended the year great in trading and this month was a record for me, no losses!  Man what a feeling that is….”  from Doug W. in Atlanta, Georgia USA

This is why I teach trading.  I wasted years and thousands of dollars learning what doesn’t work in forex trading – buying into retail myths and cleverly marketed courses by guys who have never traded. To hear of the success of one’s students is what every teacher  strives for!!!  Not everyone is cut out to be a trader.  It is not easy and it’s not for everyone!  If you put the work into it and learn what it is that institutional traders pay attention to…you will be much more successful.

All my best for the New Year!

Michael

With the FOMC behind us…the EUR is moving lower toward its Dec. 8th low.

Entering a trade in the middle third of the Asian range is not typically a good idea.  If I have a confluence of reasons, and the stop loss is affordable, then I will make an exception.  After a triple top, we waited one more candle, and the next candle closed below yesterday’s low.  With the selloff after Yellen’s speech and price breaking below once again, this is a good hint as to the direction the market is moving.  We have a triple top, a break below yesterday’s low, the larger charts are bearish, a 4:1 R/R to our Target 2 (not shown I would have to compress the chart too much) and the trend is down!  The Dec. 8th low is going to be a little sticky most likely to get through.

Dec 8th low – 1.2246

Target 1 – 1.2234

Target 2 – 1.2213

As it turns out price stalls at the Asian session lows – goes sideways and we exit there after exercising considerable patience.

Be extremely cautious entering a trade in the middle of a range…it’s known as the “killing zone”.

Back tomorrow to finish the year…if we find a trade.  Otherwise, have a wonderful holiday season and see you in January.

Good luck with your trading!

If you have any questions, send me an email.