Modest gains in CHF before Mr. Bernanke’s speech today.  The key here was to find a comfortable trade setup, keep the stops tight and get out (to be conservative) before Mr. Bernanke’s speech – which can cause enormous volatility.  The CHF began to move up with its inverse…the EUR moving down at exactly the same time…confirming the trade.  The long on the CHF required a 15 pip stop loss and in retrospect the EUR was the better trade opportunity.

The Asian session high appeared daunting for price to close above until the positive US economic news numbers pushed it above.  Not wanting to give back any more pips than we have to, we close the trade in advance of Mr. Bernanke’s impact.

Good luck with your trading!

Always be aware of pending news and keep your stops tight.

Back tomorrow if we can find a trade.

A session of USD weakness followed the economic news releases.  The CHF and GBP (not shown) set up for very nice trades.  After the European news, it was clear that the CHF could not close above the Asian session highs (hint).  Price dropped to near the Asian session low which set up our trade.  We had further confluence with a tool we use and with a stop just above the session high, we had a greater than 3:1 Reward to Risk ratio to our Target 2.  As price dropped we remove the risk from the trade and lock in profit – should the market reverse.  As price showed signs of stalling, we exit the trade giving back a half dozen pips.

This was a very identifiable trade setup with our methodology.

When I first began trading, I heard that summer trading was not productive.  This is an absolute myth!  There is approximately $4 trillion of currencies traded each day.   If the charts seem erratic…like Monday trading, I wouldn’t recommend trading, but if you have a sound method and high probability trade setups present themselves, then why not take them?  Conversely, if you don’t have a sound method to identify high probability trade setups and know how to exercise sound money management, you will likely lose your account with a 90+% probability. This is a statistic that all brokerages know too well.

Good luck with your trading!

Back tomorrow if we can find a trade.

GBP produces some fairly quick pips with USD showing strength.  Very light news session in advance of the US session commencing.  The GBP has had an increasingly large trading range recently.  This trade setup had the makings of a much larger move than what manifested.

After making a series of lower highs, the pair began to move up and down as the UK traders took charge.  After breakout shorts had been tested twice, an engulfing bearish candle closes below the Asian session low.   A better than 5:1 Reward to Risk ratio to our Target 2 made for a very attractive short opportunity. The trade quickly went in our favour and looked like it had lots of downside potential.  As a wicky candle forms – taking back 10 pips, the trade is closed for a relatively quick profit to end our trading week.

Overall a nice week of summer trading with some very recognizable trading patterns.

Good luck with your trading!

Enjoy your weekend!

Back Tuesday if we find a trade.

AUD moves down once the US traders begin their session.  Very little economic news in advance of Mr. Bernanke speaking and the FOMC minutes due out shortly.  This will have the potential for extreme volatility.

The AUD put in 2 lower highs early in the first half of the session and proceeded downward.  A modest ranging session until the US traders joined in.

A trade short with a greater than 3:1 Reward to Risk ratio to our Target 2  is found.  This is very attractive at this time of day.  Once we see a wicky candle form, we tighten our profit stop and as price begins to find buyers, we exit the trade to lock in our profits.

Always be aware of the news and session changes when you’re trading!

Good luck with your trades!

Back tomorrow if we find a trade.

EURGBP produces a greater than 4:1 Reward to Risk ratio setup following the UK economic news.  The pair explodes upward after the UK economic news is released. When this type of reaction occurs it frequently (not always) will provide an opportunity for a reversal move.

In this case, there were a confluence (not shown) of signs that the pair was topping out.   My students should be able to recognize at least 4.  Trading is an extremely difficult occupation, but some trade setups really stand out for the discerning eye.  This comes from experience, practice and having a high probability methodology – there are no short cuts.

This setup had a classic reversal pattern and a short is taken with a small stop above structure.  As price comes down, we want to get through yesterday’s high, the Asian session high, the Asian session low and make it to our Target 2.  Price is very obliging, but as it bounces off Target 1, we exit the trade very pleased.

A great start to the week!

Good luck with your trading!

Back tomorrow if we find a trade.

A favourite pattern set up during the UK session.  As the AUD continued to set lower highs, a short entry is taken.  This trade is greater than 4:1 Reward to Risk to our Target 2.  With a stop just above the reversal high, we first attempt to make it through the Asian session low.  Price eventually closes below it, then reverses with a wicky candle.  When price begins to move up and closes bullishly above our Target 1, we exit the trade.

NZD offered a very similar trade set up too.

Lots of news in the US session tomorrow, in advance of the Fourth of July holiday on Thursday.  NFP is on Friday and we choose to not trade that day – so it will be a shortened week.

Good luck with your trading!

Always be careful around trading near major economic news releases.

Back tomorrow if we find a trade.