The 'risk on' rally has continued overnight with the USDX continuing to fall and the EURX rising. Interestingly, this rally has not been reflected with a rise on the stock market. Hmmm...a bit of divergence here so that spells something...perhaps...caution!
I was stopped out at b/e from my remaining LONG G/U trade due to a news spike. That happens. There look to be some TS signals setting up on a few pairs though which, if the current trend continues, could trigger early next week.
I will post my Indices Analysis later today and a Trading Week Analysis tomorrow.
Friday 27 1/12 (5pm)
Very little has changed from earlier this morning. There is still no new or clear trend on the indices. (see below). I would want to see a break, close and hold below the daily bull trend line on the EURX before thinking that the 'risk on' rally has finished.
I am still LONG on my remaining half of the G/U trade.There is some data and some speeches scheduled for during the US session which are anticipated to make the markets quite volatile.
There has been a trend line break and reversal on the E/J and reversals on the A/J and U/J along with accompanying TS signals to SHORT the E/J. (see chart). I am wary of this signal though as I suspect it is more YEN specific than reflective of any new and lasting broader market trend. This, to me, makes this signal less reliable. I could be totally wrong here but I am playing this final day of the week safe.
Friday 27 1/12 (6am)
The 'risk on' rally has paused a bit overnight with some mixed data out of the US. The USDX is having a bit of a bounce back up and the EURX is down a bit after touching strong resistance in the Monthly pivot at 103.5. The USDX is still trading below the previous narrow trading range though. The EURX, also, hasn't broken down below the daily bull trend line yet so, it remains to be seen whether this is just a further pause in the current 'risk on' rally or a reversal.
I keep suspecting a reversal is just around the corner as I'm struggling to see what is giving this current rally any legs in the first place but, trade what you see! I have to admit I'd be happier trading 'risk off'! This is the beauty of trend trading though; you trade up, you trade down, it doesn't matter. You catch a part of whatever the current trend is.
The G/U LONG is still ticking along though but I decided to lock in some profit given this latest pause. I closed half the trade for 40 pips and have the other half still running with the stop at b/e so the trade is risk free. I'm out for the day taking some boys to golf.
It is frustrating to have missed much of this 'risk on' rally from earlier in the week. It is not surprising that the rally has paused though as I am finding that they usually run better at the beginning of the week
So, for now, I'll be looking out for trend line breaks on the major pairs and indices and for changes in the ADX/DMI levels.
So, for now, I'll be looking out for trend line breaks on the major pairs and indices and for changes in the ADX/DMI levels.
I'm LONG the G/U as per the earlier post. It's currently up about 30 pips. I'm back from the movies ( a sad one) and about to watch the tennis, Federer vs Nadal. I'm just letting this trade go. I've noticed that I now have a TS signal to SHORT the USDX on the 4hr chart. This augers well for my current trade. I haven't seen this signal on the USDX since before the trend line break. I keep saying that I can't understand this 'risk on' rally but I will trade what I see. I just don't get it though.......
I am finding that some pairs are better for my kind of TS trend trading than others. Whilst some, like the NZD/USD, behave very technically, they may not make the best moves. I am finding that the best pairs for me, so far, are the A/U, A/J, USD/SGD, USD/CHF, E/U and E/J. These are, with the exception of the USD/SGD, the most liquid of pairs and, hence not surprisingly, the best to trend trade when your system is a 'herd following' one like mine is.
My TS system continues to have a great performance. I, personally, have struggled to catch all of the good moves this week and am documenting them for learning purposes. I made some poor choices with trades taken but, at least, I have learned from this.
Learning 1:
Last week I had the choice of a few 'risk on' type trade signals. I chose the NZD/USD long over the USD/SGD short. The NZD/USD meandered up slightly for a small profit. The USD/SGD has continued to run into this week and is currently up 250 pips! (see chart). Further more, subsequent signals received to LONG the E/U and E/J were not taken because I was not 'risk free' by then on the NZD/USD trade so, it was a very expensive mistaken trade to take indeed! Note to self: I have dropped the NZD/USD from my watch list and elevated the USD/SGD.
Learning 2:
Also, last week you will probably recall how I had been stalking a LONG on the A/J. I was waiting to break out and up of a symmetrical triangle and, then, to clear the 80.4 area. It did all this on my Fri night and I saw this on my Sat am, just before the market closed. I should have just taken this on the Monday but was out for the day. This trade is currently up 180 pips. (see chart) Note to self: Don't delay, when a TS signal is received...take it. The USDX was still in a bearish pattern so there shouldn't have been any confusion.
Learning 3:
The A/U continues to be a perfect candidate for short term trading as well. For those of you who can trade during the US session of 15 min charts the A/U offers many opportunities to make safe pips. Last night was an example of this with a safe & conservative trade yielding a minimum of 80 pips and possibly as much as 100 pips if left to run. (see chart)
Thursday 26/1/12 (9am)
The USDX has continued to break down and is trading below the previous narrow trading range. The only new signal received is a LONG on the G/U. This has just broken up out of a descending wedge as well, which provides added confluence for this signal. Descending wedge patterns are often viewed as bullish reversal patterns. Lets hope they're correct!
The surge in the USDX was short lived in deed. Whilst it did manage a close above the 80 level, it is now back within the narrow trading range and hanging around the monthly pivot area at 79.65. US Fed news, concerning keeping interest rates low and even dashing hopes of a QE3, pushed the USD lower. You could be forgiven for thinking that no QE3 might cause the dollar to rally but, clearly, this was read as a sign of optimism instead and triggered a return to a 'risk on' rally. The EURX is currently trading above the strong resistance level of the previous trend line from the huge symmetrical triangle that it broke out from late last month.
The new TS sisgnals on the E/U and USD/CHF didn't ever develop on the 4 hr charts. That is why it is SO important for me to wait until ALL of my indicators align. It's frustrating here this week, especially as I missed some earlier signals but, that's how it goes. Interestingly, I don't have a signal to LONG the E/U or A/U or to SHORT the USD/CAD, USD/SGD or Swissie just yet. That's odd but, I have realised, I must trust my signals and wait for them to develop fully.
Wednesday 25/1/12 (10pm)
USDX has broken back above 80. Will need to hold above there though. I'm looking to short the E/U though. TS signal not quite there yet though. Swissie looks better but there are road blocks on this pair with monthly pivot and 200 EMA on the 4 hr.
Wednesday 25/1/12 (5pm)
Very little has changed. The USDX and EURX are still bouncing around in narrow channels. No new charts as they look very similar to the ones posted this morning! (see below). I'm still waiting for a clear break on the USDX before trading further. It is as important to know when not to trade as it is to know what to trade when! There is a bit of scheduled news due out later and this may move things so keep an eye on your trading calendar.
Wednesday 25/1/12 (10.40am)
The USDX is still bouncing around in a narrow channel between 79.5 - 80. The EURX is struggling to hold up above the strong resistance 102.6 level which is the 200 EMA on the 4hr chart. I want to see a clear break and hold on the USDX outside of this channel before being comfortable with any new trend. There is so much negative Euro news at the moment I don't see how the 'risk on' rally can continue. But, I will trade what I see and not what I think!
Markets continued to chop around last night. Fundamental news has impacted on technical patterns. Further downgrades and Greek debt concerns resulted in pushing the USD up against the down trend. The result being a to and fro struggle as evident on the USDX chart.
This kind of indecision makes it hard to trade from the 4hr charts. Most pairs and the metals have just chopped around sideways. Some of the Yen pairs have surged making me suspect some intervention there. Not that I've read anything to this effect yet. The USD/JPY is a perfect example of this (see below). A similar move was made on the A/J.
The USDX has tried to get back above the 80 level but is currently is back below at 79.86. Both DMI lines are below 20 and the ADX is trending down on the 4hr chart though. I will rely on these to assess the next trend and assess TS signals based on this.
Tuesday 24/1/12 (10pm)
I got home to find that my short Swissie trade has just gone sideways all day so I decided to close it. I may regret this tomorrow but it's better to be out of a trade when there is such indecision. That is more like gambling.
Tuesday 24/1/12 (4pm)
The 'risk on' rally has stalled a bit during the Asian session today. I am still keeping my SHORT Swissie though. It broke a key level in the 0.93 so I'm bot surprised it's thinking twice about moving lower. If I'm wrong, I'm wrong. I've hardly had any losing trades on my TS system and it can't be perfect all of the time. We've had significant trend line breaks on both indices so you'd have to expect a bit of chop in the wake. It may evolve that I discover it's best not to trade for a few days after a significant trend line break. I'll see how this period evolves over this week and then decide.
We've been out fishing today and had a most productive day. It's not my thing though I have to admit. We're off to movies shortly so I will update again later.
Do you ever have moments when you feel the world is conspiring against you. I'm having one today! I earlier missed the TS signals to LONG on the A/J (went 100 pips), A/U (went 100 pips) and Silver (went 150 pips!). Last night TS signals kicked in to LONG the E/J and E/U. Also, my Swissie trade that I was stalking before last night kicked in whilst I slept. I have jumped into, albeit a bit late, and time will tell me how prudent that was. (see chart) More aggressive traders would have taken this SHORT from the trend line break and they would be up 70+ pips by now!
The USDX actually fell below the critical 80 level last night. Whilst I was asleep of course! I'm struggling to understand why it's falling, given the relative plight of the Euro that is, but I must remember, trade what I see and not what I think. I actually have a TS signal to SHORT the USDX which is a bearish signal. The bear flag I spotted on this index over the weekend has evolved and seems to continue.
The EURX is looking bullish too and I have a TS signal to LONG this but, it is running up into the 200 EMA on the 4hr and this might cause it to pause a bit. Time will tell. The bull flag I spotted on this index over the weekend has evolved and seems to continue.
BTW: the Short USD/SGD signal from last week is currently up 200 pips!
PS: My day is looking up...my Go Markets MT4 does have USD/SGD after all.
PS: My day is looking up...my Go Markets MT4 does have USD/SGD after all.
There isn't a whole lot happening. China is off this week and there is no further scheduled news. This is no guarantee that some 'comment' won't move things along though.
I still really want to see the USDX close below 80 before having a huge amount of confidence in any further 'risk on' rally. The 200 EMA on the 4 hr chart is currently doing a grand job of holding price up on this index though.
I have missed earlier signals to LONG the A/U, A/J and N/U so I am leaving them for the moment. Silver took off on my Friday overnight too. The pair that currently has most appeal for me though is a short on the USD/CHF. 0.93 is a level of previous S/R and a strong psychological level. If the USD continues to fall I would look to short this pair on a TS signal (currently forming) and a break, close and hold below 0.93. This will probably evolve, if at all, during my overnight.
Really, if it is 'risk on' or 'risk off' you just need one pair to trade as so many of them are correlated anyway!
BTW: the USD/SGD short from last week is still powering along. This is proving to be a great pair. I can't trade on MT4 here though and I don't like using my IB platform to trade FX. I'm asking Go Markets to include it on their platform. Wish me luck!
The A/U and A/J are ticking along. I didn't take them as I have been out all day. It's still school holidays here so I took my son out for the day. Both of these pairs have the DMIs back below 20 again which is strange.
So, looking to the Indices to see if they can shed any light yet on the new trend and the answer is, 'NO'. I posted the flag patterns on both of these indices in my review over the w/e. Go and read this if you have not done so already. Neither index has broken out from the flag pattern yet, both have a falling ADX and both have DMIs below 20. Thus, no clear trend just yet. Remember that China is on New Year celebrations for the whole week.
The signal I had to LONG the A/J from last Friday has delivered up to 50 pips. I had waited for this to breach above the 80.4 mark, which it did but not until late Fri night during the US session so I missed it. I have received a signal to LONG the A/U but would wait until the AUD red flag news comes out at 11.30am before taking this signal.
It is Chinese New Year today so volumes might be low on the broader markets. Chinese markets are closed for the whole week due to New Year celebrations. It is expected that 250 million Chinese will travel during this period to mark this occasion and spend time with family and friends.
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