Trading week 26/12/11

Saturday 31/12/11 (7am)

Strange times indeed. Both USD and EUR falling. Something big seems to be brewing. (see charts)

The USDX is still trading within a bullish ascending wedge pattern. The EURX has failed to break back up above the bear trend line it fell through earlier in the week. Lots to look forward to next week!

I'd like to wish any readers here a very Safe and Happy New Year!

I'm enjoying this trading journey and will probably post some more 'reflections' later on during next week.

Friday 30/12/11 (6am)

The USD rally paused overnight. There was positive investor reaction to the good US home sales and Italian bond auction data. Hey, never mind the jump in initial US jobless claims though! Anyway, the USDX pulled back a bit towards the daily pivot and the the EURX pulled back to the daily pivot but, also, to the weekly trend line that it broke down from during the week. (see charts) This is not unusual. Often, when price breaks out from a strong trend line, it will re-test this level before making any further continuation move. This may well be the pause here for the EURX before a further big move down.

The lack of TS signals on the 4 hr charts yesterday was warranted! TS signals rely on catching strong momentum and this was clearly lacking over longer time frames in the broader market.

I will continue to be watching the USDX to see how it reacts at the 81 level and the EURX to see how it moves from the current trend line and daily pivot level area of 102.7. Moves on these indices will determine whether we will have a 'risk on' (short USD) or risk off (long USD) sentiment and, thus potential trades.

I am away for 2 weeks as from tomorrow and out later today for our daughter's birthday. Thus, I may not post again until later over the w/e.

Thursday 29/12/11 (9am)

Well, after a quiet few trading days, there was a lot of movement last night during the US session. More Euro-zone jitters sent the USD soaring against the Euro. The USDX spiked up to just under the strong resistance level of 81 and the EURX fell below the bottom trend line on the weekly chart. (see charts).

Silver, which I have been watching here on this blog, seems to have unfolded into the Head and Shoulder breakdown that I previously discussed. (See chart) Silver fell almost 150 pips overnight from the breakdown out of the bottom trend line. In hindsight, this would have been an easy trade with only a small stop needed.

There were some fantastic TS trades overnight for those of you who can trade off smaller time frames and trade through the US session. There was a 100 pip move on the E/U and a 190 pip move on the G/U; both fairly safe and straightforward TradeSpotting trend trades. The E/U trade also had a trend line break for added confirmation. The beauty of these TS trades on shorter time frames is that only small stops are needed.

I am away for 2 weeks from tomorrow so will not chase any of these trades just now. The USDX is approaching the strong resistance level of 81. Thus, I wouldn't be surprised if there was a bit of a pause, or maybe even some sideways action, before any possible further up movement on the USD.

Interestingly, there have not been any TS signals to short either the E/U, A/U, A/J or NZD/USD just yet. Nor have there been any TS signals to Long the USD/CHF, USD/SGD, USD/CAD or USD/JPY just yet either. There has been a TS signal to short the G/U though but, I would be cautious about shorting this pair given it had such a big move last night. I suspect the lack of TS signal reflects the lack of major momentum and liquidity in the market at the moment.

I will still be waiting to see what the USD does around the 81 level before placing any trades.