Forex Tips

Some days it’s just too tempting to short the GBPUSD

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I read a quote today from a trader who described the cable as having two types of days lately: ” 1. days where it falls, and 2. days where is makes gains then gives them all back later”.

The political drama in Britain continues and Brexit is anything but a done deal.  This pair will remain vulnerable to headlines, but today after making a third lower high and entry set up early in the U.S. session for risking 18 pips for a potential 80 pips to our daily target at 1.2718.

It’s very hard to make a case for being long the GBPUSD at the moment. If an entry can be found requiring a small stop loss and at least a 2:1 reward for the risk in a short setup, then it is hard for me to resist…especially after missing Monday’s move due to a pending economic news release which ultimately fell on deaf ears.

Any positive news regarding Brexit has the potential to reverse the pair in a blink, so keep stop losses tight and lock in profits.

There is lot of talk about the yield curve tightening in the U.S. bond market and therefore hinting at a recession.  Although the stock markets sold off heavily today, keep in mind that the signal may be flashing… but the slow down may still be a year or two away.  With investors already worried about the global economy, the reaction may be a little exaggerated today and the president’s tweet didn’t help either.

Good luck with your trading!

The markets awaits the outcome of the G20 meetings especially the Trump-Xi “deal or no deal”.

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It appears the market overreacted to Fed Powell’s comments on Wednesday and the USD is strong today as November comes to an end.  All eyes are on the G20 meetings in Argentina as politicians attempt to resolve their differences with other nations.  The outcome of the U.S. – China “deal or no deal” talks will set the tone for what’s to come next.

The EURUSD which made a strong countertrend move on Wednesday softened today and we entered short risking 10 pips for a potential 49 pips to our daily target at 1.1321.  Price had made a series of lower highs and an entry was found in advance of the U.S. open.  We protected our profits as price moved lower and the Chicago PMI release gave us the final push to our daily target, where we closed the trade.

Next week will be an active one!  Fasten your seat belt.

Good luck with your trading!

 

 

 

A relatively subdued U.K. session and then Fed Powell spoke and the USD sold off heavily.

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Today as the USDJPY moved down it found buyers at its Asian session low and a reversal setup gave us an entry risking 6 pips for a potential 42 pips to our daily target at 114.18.  Price moved up very little in advance of the U.S. Open and we moved our stop loss up to protect the trade from going negative if the pending U.S. economic GDP release reaction pushed price lower.   The pair continued to move higher with the moderately stronger USD today.  It paused at its Asian session high, retested the level then moved higher.  We continued to move our profit stop higher and the trade was closed as price pulled back to our profit stop.

This trade was very routine and far from exciting.  The lesson for anyone who doesn’t know it already…is that a trader should always lock in profit as the market can reverse in a blink and you can quickly move from a positive position to a negative one.  What would be worse is to trade without a stop loss.

When Fed Chair Powell spoke today the USD abruptly turned negative.  His comment, “While FOMC participants’ projections are based on our best assessments of the outlook, there is no preset policy path. We will be paying very close attention to what incoming economic and financial data are telling us.” did not sit well with USD bulls.  The USDJPY dropped over 50 pips and the AUDUSD jumped up 90 pips.

Always be aware of the potential effect that a central banker’s comments can have on a country’s currency.

Good luck with your trading!

Shorting the AUD as the market focuses on the upcoming Trump-Xi meeting at the G20 Summit

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The USD was slightly stronger today and global stock markets began the week positively.

The AUDUSD moved strongly higher during the Asian session trading, which usually is followed by a reversal when the U.K. traders come on.  Almost uniformly at the same time today, the majors began to decline to the USD.  A short was taken on the AUD risking 9 pips for a potential 49 pips to our daily target at .7218.

Price retraced its Asian session move in a stair step manner and we closed the trade at the London close.

Both the U.S. and European economies have slowed recently and this has become a concern for traders.  Although a December rate hike in the U.S. is still priced into the market, the next rate hike in 2019 is now in question.  With a slowing European economy, the potential for a rate hike in 2019 is now very questionable.  The good new for Britain is the E.U. accepted their Brexit proposal over the weekend but the bad news is there remains considerable doubt that it will pass in the British Parliament.  Hence the GBPUSD continued downward.

Good luck with your trading!

USD a little soft today as gold and 10 yr yield move up

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The AUDUSD set up for a long today with a slightly softer USD and gold moving up.  Risking 6 pips for a potential 32 pips to our daily target at .7274 we entered long after a “W” pattern reversal and bounce off a simple trendline.  Price moved up in advance of the U.S. Open and we removed the risk from the trade in advance of the pending  U.S. economic releases.  We then continued to lock in profit as price moved higher.  The trade was closed at our daily target.

The Fed’s rate hike cycle looks like it could be coming to an end in 2019, thereby no longer constituting an argument for a stronger USD.  Weak U.S. data will put increasing pressure on the greenback.  The stock markets as leading indicators have already shown concern for future global growth.

The back and forth optimism/pessimism regarding an amicable Brexit continues to weigh heavily on the GBP keeping many traders cautiously away from it.

Tomorrow is a holiday in the U.S. and Friday will be light trading as many Americans enjoy a long weekend.  Happy Thanksgiving!

Good luck with your trading!

 

 

A day of strength for the USD across the majors and equity markets continued their tumble

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Although the equity markets worldwide continued lower today, the USD was strong and gold was on its back foot.

With a uniform move of strength for the USD versus the majors, it was not difficult to find trade setups.  Risking 10 pips for a potential 44 pips to our daily target at .6808, we entered the NZDUSD short.  The AUDUSD set up very similiarly.  Cautious of market volatility when the U.S. markets got underway, we moved our stop loss to plus 1 pip.  From there the pair moved down to our daily target where we exited the trade.

Since the last week’s dovish comments from Fed Chair Powell, the December rate hike probability has now decreased from 75.1% to 70%.

In Britain the 48 letters required to trigger a no confidence vote for  Prime Minster May have not come forth.  Neither has a solution for Brexit.

The markets are exciting as we move closer to year end.

Good luck with your trading!