It's a beautiful morning here and I'm about to head to the beach. The morning is made even better by the look of some charts and how they're setting up for next week.
Both indices are trading within the fairly constricted confines of triangle patterns. The USDX, an ascending wedge and the EURX, a symmetrical triangle. Logic seems to be absent from trading at the moment but hopefully these technical patterns will help point out to what ever the heard mentality is for next week. 'Risk on' or 'risk off', who cares which..... as I'll trade what ever happens.
A/J: Looks like a triangle breakout looming. This actually dates back to 2007!
A/U : another symmetrical triangle
USD/CAD: The Loonie. A triangle or wedge on the daily chart
(I can't upload a chart...maybe too many for this thread...will do so later in my next week analysis.
Friday 17/2/12: Reflections on the week.
This week has been a somewhat frustrating week for me. The TS signals and trend line breaks that I was stalking through the week, and discussed throughout this thread, have yielded a possible maximum of 570 pips. This is a fantastic result for any trading system! This haul was possible from just 4 trades; Short E/U, Long U/J, Long Swissie and Long on the USD/SGD. (charts below).
Whilst I have had a positive result for the week I was only able to manage scraping 171 pips from these 4 signals. I seem to have mastered my trade selection by using my TS signals in alignment with the indices and, also, with the help of trend line breaks. Where I struggle, though, is with trade management and stop placement once I'm in profitable trades. I moved my stops to soon with the E/U short and USD/SGD long trades and was stopped out far too early. I chose to wait for the Swissie trade instead of taking the U/J and the Swissie only went for 50 pips whereas the U/J went for 120.
My trading issues seem to be:
- Trade management: Stop placement.
- Trade Management: Scaling in.
- Trade Management: Choosing which correlated pairs to trade.
Don't get me wrong. These are nice problems to have. Most people struggle with their trade entry criteria. At least I don't have that issue so much any more!
It's been a pretty quiet Asian session today after the mayhem of last night. there are some interesting chart patterns setting up on both the USDX and the EURX that might bode well for next week. For the USDX I've left in the shaded trading channel that the index was stuck in for most of the last 3 weeks. There seems to be an ascending wedge pattern developing though too so it will be interesting to see if that holds price at all until next week.
I have moved my trend lines on the EURX a bit and it seems to be conforming to a symmetrical wedge or triangle pattern so, it too, will be interesting to see if it can hold price until next week.
Friday 17/2/12 (6am)
This kind of market behaviour reminds me of a rather stupid Hanna Barbera cartoon I watched as a kid called 'The Whacky Races'. I'll wait until I've had a glass of wine later tonight to allocate characters to particular pairs and organisations. I do consider though, even at this early stage, that the Greek Debt crisis is 'Dick Dastardly'. Any Gen Ys, or younger, reading this will need to Google it!
So, some better than expected jobs data from the US, best sine 2008!, and positive Greek debt talk, caused a U turn on the 'risk off' rally back to 'risk on'. In hindsight, I'm glad I took a conservative approach with my Swissie trade.
The USDX is currently back at the safety fence of the 79.5 mark and probably hiding there until it works out what to do next. Mutley is probably yapping at his heels!
The EURX is also back at the previous trend line area of 103
These markets are being driven purely by emotion or, rather, fear and greed at the moment. I'm finding that for trend trading they're harder to play from 4hr charts. I'm also finding that they behave a lot more technically at the beginning of the week than at the end.
I'm not going to enter any new trades for this week. I'll write up some reflections later. I'm off to find the channel changer so as to watch something other than this cartoon!
The USDX is still marching upwards but still struggling a bit at the 80 level. I have locked in 25 pips on the Swissie and left the rest to run. Not a huge haul but I'm nervous leaving a trade open when there have been so many unscheduled news announcements etc that tend to impact heavily on price action.
The 'risk off' rally has continued this afternoon. The USD has reached up to near the 80 level which is the monthly pivot, a huge psychological level and previous S/R. It will probably struggle around here for a while, even without any bomb shell Euro news items. The next red flag news is due out of the USA later tonight.
The G/U and U/J don't seem to march to the 'risk off' drum as well as some of the other pairs at the moment. I'm finding the USD/SGD and E/U are the better pairs to reflect risk sentiment of late. The Swissie is ok too but it moves a bit more conservatively and slowly.
The USDX continues to trend up and the EURX down. Unscheduled news can always affect these though.
I have had a TS signal to LONG the Swissie and we have also now had a break out from the trend channel and a close above the 0.925 level. I have taken a LONG trade on this pair.
I have also had a TS signal to LONG the Loonie and this pair has had a trend line break as well. I have taken this trade in simulation only as it is correlated with the Swissie. I've also got the G/U and A/U shorts lining up too. Another case of...'it never rains...it pours'!
I will only take another correlated trade if I get to risk free on the Swissie trade though.
Well, Mr Juncker's positive Euro speak didn't seem to have much of a lasting impact. The USDX is back to marching up from the 79.5 level and the EURX continues to fall from below the bull trend line.
I have another candle close at 1pm and I will look to see if the Swissie has breached 0.925 then.
BTW: There is Aussie Jobs data out at 11.30 which could move the AUD pairs.
Thursday 16/2/12/ (7 am)
Well, there was an emergency meeting just after I posted and there was some news about shoring up the Greek debt saga. So, technical analysis =0, fundamental impact =1. It is almost impossible to trade technically during these volatile periods with so many unscheduled news announcements, especially trading from the 4 hr charts. Shorter time frame trading is much safer at the moment. I wouldn't be surprised if this bouncing continues until next week. So, I might just sit out and watch.
Thursday 16/2/12/ (5.45 am)
Ok, I'm up early and glad I am. This chart action has me excited. It seems that continued Greek woes have spooked the markets with stocks down and the VIX, the fear gauge, up over 20.
The USDX has stuck its head over the 79.50 fence again and the EURX has just tried breaking the daily bull trend line. Things could move fast from this point. That is, unless Mr Zhou pops up again!
Note: you will need to click on charts several times to engage a larger view
Ok, so if this trend on the indices continue we will be 'risk off'. Lots of easy trades will appear but I'm looking for the most technical ones, that is, those with trend line breaks looming as well.
These are on my watch list at this early stage. More should appear later:
Swissie: for a break above 0.925
E/U: break below 1.30
G/U: break below 4 hr 200EMA
Loonie: break up above the bear trend line
I'm still not sure about the new sentiment. At this stage, it seems like 'risk on'. The E/J LONG I spotted earlier looks to be moving along. I don't trade the Loonie but it is setting up for a TS SHORT too shortly with a trend line break for confluence. I'm just watching these though tonight. I'll probably miss these so, if the trend continues, I'll probably stalk the Swissie for a short if it breaks below the 0.91 level.
Wednesday 15/2/12 (8 pm)
I'm still waiting to see which way the market sentiment is heading so, no new trades for now. Some more music to carry you through these "doldrums".....http://www.youtube.com/watch?v=74YzKuLwfB0
It is actually 12 months ago, to this day, that I had my major surgery for cancer. So, I'm taking it easy today, sitting back and giving thanks for all that I have been able to achieve since then, albeit not without the help of modern medicine. It was whilst on chemotherapy that I got stuck into trading my TS system. That in itself is a story!
I have a funny story about the Aussie band above. Apologies to Martin who has already heard this story! I found this group, "Oh Mercy", last year when I was going through chemo. I asked my daughter to help me find them to download etc. Gen Y are SO good at that stuff. Anyway, I told her the album was called 'Great Barrier Grief". Well, the look of concern that crossed her face was priceless! She clearly thought I had slid further into some super depressed state and had resorted to death music. Oh, how I laughed. I still do when ever I think back to that moment. Their music is anything but depressing. They're a great Aussie band.
Anyway, that's it from me. I won't be trading anymore today. I'll wait to see what the new trend sentiment is before I commit.
The following comments today helped to pull the USDX back and promote a return to 'risk on': People's Bank of China Gov. Zhou Xiaochuan continued China's rhetorical support for Europe on Wednesday, pledging that the country's central bank will increase its holdings of euro-denominated assets. I hope he went LONG on the E/U before he chatted!
Anyway, the net result has been a pullback in the USDX to the, you guessed it, 79 level...again. I'm not sure whether we are going to have continued 'risk on' sentiment following these comments though. Thus, I'm not sure which way the very diplomatic USDX is going to head from this mid point. That being said, I'm not confident whether to trade 'risk on' or 'risk off' for the time being. So, I'm just going to wait until I have a clearer idea of direction. I have had a signal to LONG the E/J but, like I said, even with BoJ fiddling these pairs up, I'm not sure of the new trend so I'll let this trade pass.
I've been stopped out of my two trades but they were for profit so I'm ok with that.
Wednesday 15/2/12 (1 pm)
The USDX is currently on the march up again and sitting at the contentious 79.5 level as I write! My trades are still going along. Nothing new to report yet. The Swissie is still away off before I'd take it anyway.
I had also mentioned this week that another 'risk off' trade I was stalking was the U/J LONG on the break of the upper trend line. This did evolve as well with a little help from the BoJ and their perpetual fiddling. I had already committed to taking the other 'risk off' trade though, the SHORT E/U. This is something I continue to struggle with....'it never rains...it pours'. When trends kick in, the pairs often move together and my risk management doesn't allow me to enter as many trades as I would actually like to! This phenomenon is tied up with the 'risk on' and 'risk off' view of trading that I have though. The major pairs work best for me trend trading BUT, from my observation, they are all highly correlated and, thus, essentially the same trade.
If we get a return to 'risk on' though, the E/J is setting up for a LONG with a trend line break! You can't get 'married' to a direction. You have to be flexible and go with what the charts 'tell you'. The USDX is starting to pull back a bit, I think due to positive comments about EU issues coming from China...of all places!
I had also mentioned this week that another 'risk off' trade I was stalking was the U/J LONG on the break of the upper trend line. This did evolve as well with a little help from the BoJ and their perpetual fiddling. I had already committed to taking the other 'risk off' trade though, the SHORT E/U. This is something I continue to struggle with....'it never rains...it pours'. When trends kick in, the pairs often move together and my risk management doesn't allow me to enter as many trades as I would actually like to! This phenomenon is tied up with the 'risk on' and 'risk off' view of trading that I have though. The major pairs work best for me trend trading BUT, from my observation, they are all highly correlated and, thus, essentially the same trade.
If we get a return to 'risk on' though, the E/J is setting up for a LONG with a trend line break! You can't get 'married' to a direction. You have to be flexible and go with what the charts 'tell you'. The USDX is starting to pull back a bit, I think due to positive comments about EU issues coming from China...of all places!
Not much more to report since the 6am update. The markets have paused a bit to draw breathe before deciding what to do next. It seems like the USDX had a little look over the 79.5 'fence', got a fright, and hopped straight back down. It may continue on or, it may reverse from here. Either way, I don't really care now. I don't have any risk on my two open trades, LONG USD/SGD and SHORT E/U. I'll wait and watch to see if the 'risk off' rally continues and, then, consider the LONG Swissie trade discussed below (6am). This is what I do, I trade what I see, up, down, I don't care, I just trade it.
Wednesday 15/2/12 (6am)
Some poor data and more Greek debt worries caused the USD to rally late last night. The USDX is now trying to break up through the significant S/R level of 79.50 that I warned about yesterday. This is a critical level here for it right now. I think it could rocket upwards if indeed it does break through.
My two 'risk off' trades are progressing along nicely. The USD/SGD LONG is back up near 200 pips and the E/U short at about 50 pips. The E/U trade has hit some resistance as expected at the 4hr 200 EMA. I have closed half and moved my stop to entry on the remainder due to this. I might be being too cautious. Time will tell. I'm risk free on both trades now.
My next preferred 'risk on' trade, if this rally continues and the USDX breaks up above 79.50 will most likely be the Swissie. Like the USDX, it has been stuck in a narrow trading range and could break out and up too. I will go LONG if the Swissie breaks, closes and holds above the 0.925 level.
You know, I'm a pretty ordinary cook, just ok as a parent, fairly dud with housework, I'm pretty boring and rather impatient too, I'm a good friend though, BUT...I really think I have cracked it with this 'technical analysis' stuff!
There has been a bit of positive Euro data out tonight which has stalled the USDX rally. This happens a lot of late. News items come out and impact on technical patterns. You've just got to roll with it. Either pack up and go home or, stay in there and trade your plan. I'm doing the latter. I won't win very trade.
I'm still LONG the USD/SGD and up around 140 + pips. I'm also SHORT the E/U and currently down 40 pips. I kind of feel like it's the "boy with his finger in the dyke" for the Euro though. Somethings gotta give sooner or later.
Ho hum...the USDX is back at the all critical 79 level. I wonder if it is in for another night of 'planking'?
WARNING: Keep an eye on the USDX. It is approaching a significant S/R level at 79.5. A break and close above this level could see the USDX run up, fast and furious. It would be a break above a significant S/R level, trend line break and 4 hr 200 EMA break. It could just as easily bounce back down though too. It's well worth keeping an eye on it!
BTW: Something to listen to whilst, hopefully, the E/U falls.
More great Aussie kids.... http://www.youtube.com/watch?v=jNS63fyTs38&feature=relmfu
Tuesday 14/2/12 (5 pm)
We've had a candle close since I entered the E/U short. A tiny little Doji indicating indecision. They need to an invent a new 'indecision' candle pattern as the Doji and Spinning Tops are wearing thin on me....over use!
Anyway, not much has changed on the indices. It's the pause before possible action at the London Open etc. This often happens.
My LONG USD/SGD is up around 140 pips though now.
BTW: Check out the E/J, A/J and U/J. BoJ fiddling again...this is why I won't SHORT any of these at the moment. I'm also a bit reluctant to even LONG the U/J as the trend line break has been manipulated.
Tuesday 14/2/12 (1 pm)
There has been a trend line break and a TS signal to SHORT the E/U so, I have taken that trade. There is a fair bit of resistance to this down move but, as the saying goes, "plan the trade and trade the plan". The 200 EMA on the 4 hr chart is just below price as are some other EMAs and pivots.
Tuesday 14/2/12 (9 am)
To me, it looks like the USDX is trying to put in a bit of a rally with the EURX coming under some further pressure. This could mean a return to 'risk off' trading where I'd be looking to SHORT the EUR etc and LONG the USD.
The pairs setting up for me as the best TS signals and 'risk off' trades are:
E/U: looking for a TS signal and trend line break
Tuesday 14/2/12 (6 am)
The stock market is reading a much better result into the Greek debt deal than currencies. Stocks are currently up about 0.7%. It seems, though, that currencies might be into that stupid and extreme past time of 'planking' as they've moved very little over night. The USDX is still trading just under the weekly and daily pivot and psychological number of 79. The USDX could actually enter the Diplomatic Corps at this rate as it is also hanging at the exact half-way mark of the narrow trading range that it's been stuck in for the last 3 weeks! (78.5 ~ 79.5)
Most of the currency pairs traded in narrow ranges as well and there weren't even great trend trades to bother with on the shorter time frame charts either. The E/U has edged a bit closer to its trend line but the E/J, U/J and Swissie have moved away from their possible trend line breaks just a bit.
I still need to see a clear trend develop on the indices before I will place any new trend trades. I'm still in LONG on the remaining half of my USD/SGD though, just!
There is still no clear overall trend just yet. The USDX is still hanging in there, range bound, and just under the 79 level.
Monday 13/2/12 (5.30 pm)
The 'risk on' rally might be short lived. The USDX is currently trying to push back up. Hmmm. Range trading again....audible groan here. The only way to play ranging markets is for short term trend trading (best during US session) or to try and trade from bounces (not for me!).
So, I'm waiting, yet again, for a better idea of trend direction before further trading.
If 'risk on' continues (ie: SHORT USD and LONG EUR etc): I'm watching for a trend line break up on the E/J and A/U and a channel break down on the Swissie.
If 'risk off' returns (ie: LONG USD and SHORT EUR etc): I'm watching trend line breaks to LONG the U/J and /or SHORT the E/U. Also, a channel break up on the Swissie.
I have already mentioned that if this USD rally continues I am watching out for a SHORT on the E/U as it is near a trend line. I am also watching the U/J here too for similar reasons. Whilst reluctant to SHORT this pair, given the ongoing possibility that the BoJ may intervene to weaken the Yen, I am more happy to take a LONG trade. This notion is more popular with me at the moment as it is approaching a significant trend line as well. Further USD strength could see this pair break up, and ou,t of a descending triangle pattern dating back to Jan 2010!
I would actually want to see price break, hold and close above the daily 200 EMA though, which is also an area of previous strong S/R. Price is currently just under this trend line and sitting on the monthly R1 and daily pivots. It may well simply bounce off this trend line and retrace back down from there as well though. I mention it purely as a worthy pair to watch given that price is near such a significant trend line.
The rally in the USDX paused a bit this morning just after market open as news came through that the Greek Parliament passed the unpopular austerity bill in an effort to secure access to the 130 billion euro bailout fund. The USDX is currently trading at just under the key 79 level that I pointed out. It remains to be seen how long this positive sentiment will last though.
I am risk-free now on my LONG USD/SGD trade and will wait for valid trend TS signals before entering any new trades.
Trading Week 13/2/12
I have posted 2 reviews today, Sunday 13/2/12. My Indices Review and my Trading Week review. Only one e-mail alert will be sent though most likely. Please make sure that you read the Indices Review so that you understand my perspective for the week.
General Comment: The markets have traded within narrow ranges for much of the last 2 ~ 3 weeks and this has made it difficult to trend trade using 4 hr charts. My TS system offered great trend trades though on the shorter time frame 30 or 15 min charts for those who can trade LIVE during the US session. The lack of signals on the 4 hr charts meant that I was kept out of potentially losing trend trades. This is one of the strengths of my TS system; not only getting me into more profitable trend trades but keeping me out of losing trades as well!
There was a return to some technically based trend moves on the longer time frame 4hr charts on Friday. I jumped in early but caught some of this on a LONG trade on the USD/SGD. I have closed 100 pips on this trade and the remainder is currently still going and up 120 pips. I am looking for a new trade signal on the E/U to start off this week as I missed the A/U short whilst I was away on Friday.
I still think the USDX could try to push lower again to test the 78 level so I will be cautious trend trading this week. I will watch to see if it continues to rally or re-trace and I will trend trade along with this, either way, on valid trend signals.
USD/SGD: I am LONG this pair on a valid TS signal and trend channel break out from Friday 10th.
AUD/USD: The Aussie did break down from the trend line as pointed out last Friday with a TS signal to SHORT as well to the tune of 90 pips! I was away and already in the correlated LONG USD/SGD.
GBP/USD: The Cable did evolve into the Head and Shoulder SHORT as suspected for about 70 pips.
EUR/USD: I will be watching this pair this week to see if it breaks the bull trend line. I don't have a TS signal to SHORT just yet but one has almost formed.
GOLD: Gold did break down from the bull trend line as well for over 200 pips!
USD/CAD: I don't trade this Loonie pair but it gave a fantastic TS LONG signal on Friday with the confluence of a triangle break out for over 70 pips.
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