The 'risk off' rally continued overnight. The EURX has fallen over 140 pips since failing to break back up above the previous broken trend line that I have been waxing on about ad infinitum!. The USDX has continued to rally upwards. It is now pausing, yet again, at the hugely significant 81 resistance level.
I'm on holidays for another week but just trying to keep an eye on things so that I can get straight back into trading on my return. The TS EU short trade from yesterday has continued. This is now up to 200 pips for those who were able to catch this trend trade. This trade had the confluence of a TS signal plus, also, respect of a previous trend line on the EURX. (see chart below)
There was another easy TS short trade on the E/J but this is correlated with the E/U. This could have been picked up off a 4hr chart though. (see below)
Whilst mildly frustrating that I'm not able to pick up any of these trades it is hugely rewarding to see my TradeSpotting system working so well and so consistently!
Thursday 5/1/12/ (8am)
Well, as thought and mentioned in the previous post, the 'risk on' rally did indeed pause overnight. It reversed to become 'risk off' with a rally in the USD as Euro jitters re-appeared.
The USDX rallied back up to the trend line that it broke down through earlier this week. This area also happens to be the weekly pivot and psychological 80 level so, it's not surprising that price has currently stalled there on its ascent. (see chart).
The EURX also failed to break up through its previous trend line break which aslo happens to be in the same area now as the weekly and daily pivots. So, like for the USDX, this is strong resistance. (see chart).
An understanding of this key resistance level for the EURX could have helped some of you catch a down move in the EUR/USD overnight. Those of you who are able to trade off 30 min charts during the US session that is! Sadly, that ain't me! There was a fairly easy 90 pip move using TradeSpotting on this pair. (see chart).
Price on both the EURX and USDX is at a critical level and could go either way. I have my personal thoughts and opinions about this BUT...I have learnt....TRADE WHAT YOU SEE and NOT WHAT YOU THINK! Watch which way momentum moves price on these indices to gauge whether to short or long the USD!
Wednesday 4/1/12 (6pm)
The 'risk on' rally seems to have paused for the moment.
The EURX has still failed to break back up over the previous trend line break out. This is bearish action as it stands at present; suggesting further down move after this re-test of the trend line break out.
The USDX is stuck around the monthly pivot. I'd pause and be extra cautious now, even if trading off shorter time frames. You must trade what you see and not what you think though!
I'm heading out to a BBQ now but thought I'd share what I''m seeing.
Wednesday 4/1/12 (6am)
Sometimes the best way to play these markets is off the shorter time frames. This is not always possible for many though. There were 100 pips on the table to be made today though for those of you who can trade from the 30 min charts. The A/U delivered a text book style TradeSpotting 'long' trade on 30 min charts. The break down on the USDX was further confirmation. This trade would still be running for those who were able to catch it. (see chart)
Some good data and news overnight saw the risk on rally (short USD) continue. The USDX continued its fall but the EURX, whilst bullish, has still failed to break and close above the previous weekly bear trend line it broke down through last week. (see charts). I will still be cautious about this rally until the EURX breaks, closes and holds above this key level. Until then, if trading, I would look to shorter time frames.
Having said that, there have been some fantastic TradeSpotting trades over the last 24hrs. I'm looking back and finding these as I'm away on holidays. Actually, I'm just having a quick look now before heading off to yoga with some friends! Anyway, there were some easy trades, confirmed by trend line breaks as well, on the USD/SGD, USD/CHF and the AUD/USD. (See charts).
Tuesday 3/1/12 (10pm)
I'm just back from a day out and I see that there has been a return to 'risk on' trading. The USDX has broken and closed below its daily bull trend line; a bearish signal. The EURX has failed to close above the previous trend line though which would cause me to err on the side of caution still. (see charts).
Sometimes the best way to play these markets is off the shorter time frames. This is not always possible for many though. There were 100 pips on the table to be made today though for those of you who can trade from the 30 min charts. The A/U delivered a text book style TradeSpotting 'long' trade on 30 min charts. The break down on the USDX was further confirmation. This trade would still be running for those who were able to catch it. (see chart)
Tuesday 3/1/12 (8am)
Not a lot has changed since I posted my indices review. Please read this if you haven't done so already. It will give you the 'road map' for trading this week. There were bank holidays in most countries yesterday so liquidity was low which usually spell ranging or sideways movement. There are bank holidays today as well in China and Japan so liquidity and movement may not return until after tomorrow or later in the week. This means that you need to be very careful with any trading.
The USDX has done very little since I last posted its chart. It is still trading within the bullish ascending wedge pattern. The ADX for this index is well below the 20 level as are the + and - DMI. This makes it easier to see the development of any new momentum trend. I will be watching the ADX on this index carefully!
The EURX is still trading below the 103 level and, also, below the bottom trend line of the descending wedge pattern which it broke down through last week. It has tried to get back up above this level but has not managed to maintain this, for now at least.
I will be watching these indices on and off even though I'm holiday on the NSW south coast. These indices will give the best clue as to whether we will have a 'risk on' (short USD) or 'risk off' (Long USD) approach to the trading.
Family and friends here will be watching the Aus v India cricket, playing backyard cricket, beaching and BBQing so it will be easy to check in on the charts now and then. For now, just back from an early beach walk, updating this blog and the beautiful sound of local whip birds is interrupting Cold Play's "Paradise" as I type. I'm heading back to the beach shortly.
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