Monday, November 28, 2011

Trading week 28/11/11

Friday 2/12/11 (7am)
Last night was much more sedate on the FX front. There have been a number of spinning top candlestick patterns on the 4 hr charts for the indices and for some of the major FX pairs. Spinning tops represent indecision. (see charts). I have re-drawn some of the trend lines for the indices and will look at this more closely after the market closes for the week. I am not trading any further this week but, as always, I will be watching with interest and with thoughts ahead to potential set ups for next week.

Next week will be one filled with disruption for me. My son finishes school for the year and there are a number of celebrations to mark this period. Also, our family is going to Hawaii for a week and we leave next Friday 9th. This holiday is to celebrate coming to the end of 2011. I have had to battle cancer, surgery and chemotherapy since February of this year so, I will be very glad to see the end of this year! Thus, there will be the usual FX analysis throughout most of next week but not for the week beginning 12/12/11.

Thursday 1/12/11 (6.30am)
Well, it's a case of 'be careful what you wish for'! I was waiting for some movement on the indices and it certainly came through last night. The head and shoulder pattern on the USDX unfolded as a classic technical pattern. (see charts below this post).

There were huge moves on many of the pairs as some good data out of the US led to a huge 'risk on' rally. All whilst I was sound asleep! There may be some retracement following such large moves or, it may simply continue onwards. I will not be trading for the rest of this week now though as I wait for the dust from this stampede to settle.

My meager TS tally for this week has only been 104 pips. Great by many standards but disappointing for me as my TS signals delivered SO much more this week. My poor trade management skills have cost me lots of pips this week! I have looked at the pip tally for the TS signals that came through last Monday. They are recorded below. You will understand my frustration once you cast your eye over these figures.


A/J: moved 360, currently 300

A/U: moved 380, currently 350

E/J: moved 90, currently level

G/J: moved 160, currently 80

NZD/USD: moved, 120 now 90


USD/CAD: moved 270, currently 190

G/A: moved 420, currently 300

USD/SGD: moved 200 currently 180

Wednesday 30/11/11 (9pm)
Both of the FX indices are still ranging and I wouldn't be surprised if this lasts until NFP out of the US on Friday. (see charts). The USDX is stuck at around the 79 level and the EURX at the 105 level.

You can see on both charts how the ADX is below the 20 level.. This confirms the lack of a clear trend. So, as a result, no new TS trades or signals just now.

Wednesday 30/11/11 (11.30am)
The indices still haven't moved from their previous levels. I'm still waiting for some indication of trend direction from them before taking further TS trades. The two pairs that look to be the most promising, once a trend kicks in, are the E/U and the USD/CHF. So, I will be checking up on these two pairs with each 4 hr candle close.

I'd like to point out here another pair that has just made it higher up onto my radar; the EUR/AUD. I have this pair on my platform at all times but have not paid it a lot of attention of late. It had been trading fairly flat for some time but has given given two fantastic TS trades over the last 3 weeks. (see chart below). The first TS trade was a long trend that yielded 250 pips and the second trade, a short trend trade starting last Friday, has yielded 400 pips and is still running! Entry and exit taken on the candle close with the vertical line running through it.

NB: you may need to click on chart a few times to make it enlarge for viewing.

BTW: I just got this free video from Compass FX sent to me by e-mail. In this short video, Dean Malone talks about the 'risk on' and 'risk off' trade concept. It also discusses correlation. Worth watching, even if just for the southern accent!

Wednesday 30/11/11 (6.30am)
I have checked the results for the TS signals that were observed as of Monday. Their performances are listed below. You can see how the AUD pairs are stand out winners! Not bad!:


A/J: moved 170, currently 150

A/U: moved 160, currently 100

E/J: moved 50, currently level

G/J: moved 90, currently 80

NZD/USD: moved 120 now 90


USD/CAD: moved 90, currently 50

G/A: moved 130, currently 70

USD/SGD: moved 60 currently 30

My poor trade management and, also, time zone issues, meant that I only caught one of these fish! Well, I shouldn't really complain I suppose, at least I caught something worth 100 pips.

Wednesday 30/11/11 (6am)
The markets seem to have had a bit of a choppy night with good news out of the US but concerns still from the Euro zone. The USD did try to fall but failed to close below the neckline of the head and shoulder pattern I pointed out. The USDX is still trading at the 79 level and the EURX at the 105 level. (see charts). It is Non Farm Payroll this week on Friday, a significant and often market moving news announcement. It may take some news such as this to kick the indices out of their comfort zones! I will continue to wait for a clearer sign of trend direction on the indices before placing any further trades.

There have been no new further TS signals. The ones from earlier in the week continue to tick along though. I am annoyed at myself for tightening my stop on my A/J trade. I got stopped out by just a few pips last night and the A/J has moved on up another 50 or so pips since that point! Trade management is the key issue that I'm struggling with in FX trading at the moment! The A/U and A/J have been very good TS trades.

Tuesday 29/11/11 (9pm)
Not a lot has happened since the last candle close. Both of the indices are back to hugging their weekly pivots. The USDX is stuck at the 79 level and the EURX at the 105.3 level. There is not much scheduled news for overnight so, it just may be that price continues to drifts sideways.

I will not take any further trades until there is a clearer indication of trend direction.

I have been stopped out ( by just a few pips) of my A/J long trade for 103 pips.

Tuesday 29/11/11 (5pm)
Well, the 'risk on' trend seems to be continuing with the EURX heading up and the USDX heading down. This is surprising given the negative news that came out during the Asian session! You can check this FX news at Forex Live ( I use this site a lot! Anyway, as they say, 'trade what you see and not what you think'.

I think that there is an interesting technical pattern forming on the USDX known as a 'head and shoulder' pattern. (see chart below). Technical theory states that once the neck line is broken the possible fall is equal to the height from the neckline to the top of the head. For this H & S pattern though that is only about 90 + pips. It is intersting though that any neck line break would also be near a possible daily trend line break. So, a break, close and hold below this level, at around 78.50, would probably be quite significant.

Thus, I will be watching the USDX carefully over the coming hours. I would only look to take one more trade though as most are correlated at the moment anyway. They are either 'risk on' or 'risk off'. I'm looking mst closely at the E/U and the USD/CHF.

My second half of the A/J is still running but is risk free. It is up at around 140 pips and I've moved my stop to lock in 100 pips. It is butting up against the 4hr 200 EMA again though.

The other TS trades signaled last night have all kicked in too. I am finding though that the AUD pairs seem to be the easiest to trade at the moment.

NB: I'm not sure why but you need to click on the charts afew times before they enlarge for easier viewing.

Tuesday 29/11/11 (9am)
The last 4 hr candle on many of the pairs has been a doji style candle. This most probably reflects the indecision and uncertainty about the future trend direction for the USD that exists at the moment. The USDX is hugging the 79 level and the EURX the 105.3 level. These levels are around the weekly pivot points for both indices. I will not take any further trades until there is a clear break away from these levels for both of the indices.

My A/J trade is still limping along. The other signals from last night only moved between 20 ~ 50 pips or so and are currently ranging sideways as well.

It seems that the broader market is at a critical juncture at the moment and simply resting before it takes up on its next big move. It remains to be seen whether that move is a continuation of the recent Long USD 'risk off' sentiment or a reversal to the Short USD and 'risk on' approach, as we saw the start of yesterday. I believe that a lot of caution is needed trading FX at the moment.

Tuesday 29/11/11 (6.30am)
Last nights session, the US session was a bit more choppy than the Asian session. That's not surprising though given the big moves that happened during the Asian session on some pairs. The USDX and the EURX had both broken out past their weekly pivot points. As I write, they are bot re-testing these levels which also is not unusual. (see charts). Many of the pairs chopped around overnight as a result of the indices re-testing these pivot levels.

My A/J trade is still running but had been up 150 pips at one stage, all whilst I was asleep. Price retreated a bit when it reached the 4 hr 200 EMA.

I am going to wait until after the next candle close, 2 .5 hrs away, to see whether the indices continue reversing or return to the risk on approach of yesterday. I will then look to see if there are any valid signals to take.

Monday 28/11/11 (9.30 pm)
There were a few new signals after my 9pm candle close. These are all fairly correlated trades though with the 'risk on' sentiment.

I closed half of my A/J long for 90 pips. I've move the stop on the other half of the trade to lock in 50 pips and have let it keep going. The USDX has currently broken down below my target of 79 and the EURX has currently broken up just above the 105.5 level. It remains to be seen whether this 'risk on' approach will last through the US trading session

Theoretically, I'm in a position to take new trades as my A/J trade is now risk free. BUT...I'm rather tired with renovations here so I will not add to any trades today.

The new signals were:
LONG: E/J, A/U & G/J

Monday 28/11/11 (8pm)
There have not been any more TS signals at this stage.

I am Long on the A/J which is currently up about 30 pips. I got stopped out at break-even on my long NZD/USD live trade. Given that both of these trades were counter trend and, also, that the USDX had not yet closed below 79 (a point that I said I'd wait for before shorting the USD!), I moved my stops to b/e on these trades quite early. I still struggle with trade management...I'm not afraid to admit this!

Anyway, even if there were more TS signals I would wait until my A/J had locked in more profit before taking any further trades.

I'm not able to trade further, or do much chart watching, until tomorrow. We are in the middle of some renovations here so limited internet and time for me at the moment. I'm off now to try and find the modem amongst all of the displaced furniture!

Monday 28/11/11 (1pm)
The market sentiment seems to have changed, at least during the Asian session. There seems to be a 'risk on' approach, that being short USD favoured.

I have had 2 signals so far after my 1pm candle close: LONG on the A/J and NZD/USD. I do expect more signals to fire if this sentiment remains.

These 2 pairs are fairly positively correlated though. By this I mean they both tend to track a similar path much of the time. You can check for correlation of FX pairs at the free site:

I did mention in a post over the w/e that e-mail alerts are not sent after an initial thread is posted. So, if you do want to read about further events during my trading week you will need to check back in manually for yourself later on.

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