Quiet session overall in the majors with less volume today ahead of the weekend.

We were unable to find a short entry into the EUR, but it’s inverse pair – the CHF looked good as a long. Just before the US economic news releases, a wicky candle appears and we tighten our profit stop, because no one likes a losing trade to end their week.  The news reaction volatility takes us out for a modest gain.

As mentioned yesterday, some institutional EUR shorts were happy to enter as price broke through the 1.3560 area. This occurred too late in the session for us to take advantage of and better them than us, holding a position into the weekend.

We will see what next week brings us.

Good luck with your trading and enjoy your weekend!

Back Tuesday if we find a trade.

A nice short setup in the EUR occurred after the rejection of the Oct. 3, 2013 swing high.

With little news during the UK session to move the market, it was sensitive to Thursday’s US Employment and Core CPI numbers.  Vertical moves are not sustainable, so the clear rejection of the October 3rd high meant that there was some large money selling at this level.  Swimming with the current is easier than against it.

Wicky candles tend to precede reversals and the very next candle was bearish enough for me.  Placing a stop above the rejection candle high afforded a better than 4:1 Reward to Risk to our Target 2.  There was pending news with the Philly Fed Manufacturing Index, but with a 16 pip stop loss above structure, the trade was affordable. Interesting to note that even with a positive Philly number, the sellers entered again at exactly the same level – the Oct. 3rd swing high rejection.

This pattern is one of my favourites and it was too good to resist.  The pattern completed in advance of Bernanke’s speech and the trade is closed.

If the USD strength continues, there is institutional money looking to short the EUR below the 1.3560 area. We will wait to see what price does at this level as it will be interesting to observe.  If the level can’t hold there is potential for a large downside move.

The Aussie also presents further opportunities to sell rallies when the setups are there.

Good luck with your trading!

Back tomorrow if can find a trade.

We’re back from holiday. The AUD looked like a nice short but the Reward to Risk was only 2:1 to our Target 2 not 3:1.  If we are going to risk a dollar in a trade, we are seeking a three dollar reward minimum and only after the US session is underway are we willing to take a 2:1 R/R.

It’s great to be enthusiastic about trading, but it is not prudent to be enthusiastic to trade…always be disciplined.

As long as Governor Stevens wants a lower Aussie dollar, we’re happy to find rallies to short.  In this case, everything looked nice with a series of lower highs, a break below the Asian session lows and a double-top just below the Asian low retest.  The deal breaker was that the stop loss would be just above the Asian session low costing us 15 pips and our Target 2 was 30 pips away.  Although professional trading is not gambling, I’m reminded of the old Kenny Rogers song “The Gambler”.  In it he sings…”you got to know when to hold them, know when to fold them, know when to walk away and know when to run…”

We walked away from this otherwise attractive setup.

On the fundamental side, Lockhart’s comments yesterday suggest that he thinks the December NFP was an anomaly.

Good luck with your trading!  Volumes are still down in most majors.

Back tomorrow is we find a trade…

Reserve Bank of Australia is very clear that their dollar is “uncomfortably high”.  As we have been reiterating for awhile now… we want to sell any rallies and look for short setups.

After the UK and European news was out of the way, the Aussie began to fade.  An entry is taken requiring a 15 pip stop loss for a potential 47 pips to our Target 2.

Price dropped…retested yesterday’s low and continued down to our Target 1 where we exit on the retest.

Be extra careful trading this week as volumes are down for the holiday season.  This will be the last week of the trading year for us.

Good luck with your trading!

Back tomorrow if we can find a trade.

The GBP set up nicely for a short and made a sudden move to the downside.  Sterling had made a series of lower highs and as the UK session got underway, selling continued near the 1.6350 level.  This was where the European traders also began to sell it when they came on.  A 3 candle reversal pattern sets up the trade entry and price drops quickly.

After the initial drop, price does not come back to retest yesterday’s low or the Asian session low, and if it had… being closed out for a quick 15 pips would have been fine.  Price continued to drop… closing very bearishly each candle.  The trade is closed after 3 candles to avoid giving back any of the gain.  When price drops this fast without a pullback and is at or near one of our targets, take profit and don’t be greedy.

Institutional traders have been commenting on the lack of volume this week.  Next week will likely be even lighter.  This is a tricky time of year to trade, so be ultra selective in choosing your trade setups or come back in January.

The EUR hasn’t made it back up to its Oct. 25th high.  Sellers have entered near the 1.3800 level.   The options barrier is yet to be tested, but the month isn’t over.  It will very interesting to see if the 1.3832/5 level is run next week.  Stops have be building above 1.3800 for shorts.

Good luck with your trading!

Money management is paramount to trading survival.  I hope you have had a very profitable year and progressed well as traders.  Contrary to what many forex marketers will tell you, trading takes lots of time, study, dedication and experience to become good at…just like any other worthwhile profession.

Happy Holidays to everyone!!!

Back in January.

Both the AUD and NZD set up for a nice short.  The AUD quickly tested the Asian session lows as the UK session got underway and pulled back twice.  As it showed signs that it was not going higher, a short is taken with a modest stop loss of  14 pips allowing for a 3:1 Reward to Risk to our Target 2.  A series of lower highs, a classic pattern, cheap stop loss and no economic news  made for an attractive setup.

Price dropped, stalled, then dropped again to our Target 2, where we exit.

Good luck with your trading!

Lots of AUD and NZD news in the Asian session today.

Back tomorrow if we can find a trade.