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Latest trading opportunities W/c 8th July 2013

Discussion in 'Jarratt Davis- Trading Signals' started by Jarratt Davis, Jul 9, 2013.

  1. Jarratt Davis

    Jarratt Davis Special Consultant to the FPA

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    Hi Everyone!

    I apologise for not updating you all for so long, I have been on vacation taking some time out to enjoy the sunshine!

    I'm back at the charts and there have been some very interesting developments that we will be looking at in terms of good trading opportunities.

    The three main pairs I am looking at right now are the USD/JPY and EUR/USD.

    First of all let's start with the USD/JPY, which over the last few months has provided a very stable way of making pips.

    The trade on this pair is simple: take advantage of the fact that the Japanese monetary policies are going to weaken the currency.

    Now, recently we had major uncertainty in the markets because traders just couldn't determine whether or not the Fed were going to taper QE or not. This was a very frustrating time because it led to ridiculous moves that were clearly not going to last, and in theory shouldn't have happened. (But this is trading!)

    The other way to look at these moves is as opportunities to get into the market at a fantastic price...

    The USD/JPY pair dropped from around 103.00 to about 94.00! I personally didn't think it would go below 97.00 and was holding several long positions as it fell. There are various ways to handle these types of events, which include having tactical hedges in place and adding to your position at specific prices.
    The most important thing though is to be fully aware of why the moves are occurring and whether or not that changes the original sentiment behind your trade. On this occasion I was a few hundred pips down, but still confident in the trade, because nothing had actually changed fundamentally for the USD and ofcourse the Japanese yen is going to continue to weaken due to QE. So I was happy to hold and even add to the position as it fell further.

    I eventually exited the trade for an overall profit as the pair resumed it's rally after the Fed came out and clarified its position. As soon as they did this everything went back to normal and the pair carried on rising as it had been before.

    It was a fantastic example of why trading is such a psychological game, because even though you know what will happen overall the short term volatility can shake a lot of people out of their positions for losses when in reality they were correct all along in their analysis.

    From this point we are watching the US data and the comments from the Fed still for clues about when they might taper ... The market is currently under the impression that tapering will begin within the next 12 months. So anything that goes against this or changes this view will produce a violent reaction in the price. If we continue to get strong data from the US then we can expect the pair to continue on rallying up towards 110.00.

    My call on this pair is to buy the dips as it pulls back to each '00' level from the current price. If you want to protect yourself from any volatile moves try using a 50 - 100 pip stop on each trade and looking for similar sized take profits. (As ever I will be holding my positions open until the fundamentals convince me otherwise.)

    The EUR/USD is looking extremely bearish due to the fact that the USD is looking stronger and also the Euro is being weighed by recent comments from the ECB suggesting that they are looking at least keep rates really low for a long time and possibly even cut them further. The recovery in the Eurozone is also pretty weak so far.

    Similar type of moves expected here and I will be looking to sell the rallies to each '00' level as it moves back into the 1.30's up to around 1.3500. Again use the same stop and take profit levels if you want to be extra cautious, but I will be trading it in my usual style :)

    Hope that is all clear and if anything changes fundamentally I will be sure to update as soon as possible!

    I will also update in a few days with any other opportunities that I'm seeing.

    Any questions, please type them below!

    Thanks

    J


    - Jarratt Davis
    Fx trader, funds manager and Forex mentor
    www.JarattDavis.com

     
  2. drbarney2

    drbarney2 Private

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    Great to have you back... hope you had a nice vacation...

    Looking forward to your great analysis and trades.
     
  3. ganikazroyal

    ganikazroyal Recruit

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    Thanks very much. I really appreciate your efforts. I just go long on usdjpy but where do we short eurusd because 1.30 to 1.35 is somehow wide.
    I am a newbie that is why I really want to know.
    Thanks.
     
  4. Triantus Shango

    Triantus Shango Sergeant Major

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    @ganikazroyal: how about shorting 10 pips before price reaches key fibonacci retrace levels such as 38.2% and 61.8% (SL behind the next major fib level: so short at 38.2% and SL behind 50% level, etc) and/or major SMA (simple moving averages) either on daily or hourly such as the 100- and 200- period SMA?

    also watch for harmonic patterns such as AB=CD in conjunction with Gartley 222 SELL and butterfly/crab SELL which give theoretical short entry points.
     
  5. Jarratt Davis

    Jarratt Davis Special Consultant to the FPA

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    Hey Ganikazroyal,

    All we are looking to do on the Euro is sell it as it approaches each '00' level .... so if it makes it back up to 1.3000 sell it and then if it rallies to 1.3100 sell it again and so on...

    I will just hold several positions until the price starts to fall based on the fundamentals (It is these that give me the confidence to hold) but if you are a little more cautious you can simply use 50 - 100 pip stop loss on each trade with similar sized take profits.

    Hope this helps, but if you have any further questions please type them in below :)

    (The suggestion below is also a good one, about looking for technical set ups .... We know that if the price enters the 1.30's we are looking to sell so simply look out for any selling opportunities that your trading system gives you)

    Thanks!

    J



    - Jarratt Davis
    Fx trader, funds manager and Forex mentor
    www.JarattDavis.com

     
  6. redrag

    redrag Private, 1st Class

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    Hi Jarratt

    Do you still regard the current weakness in the USD, brought about by Bernanke's "clarification", as only a temporary blip when compared to BOJ intentions and the underlying weakness in the euro?

    Thanks.
     
  7. Jarratt Davis

    Jarratt Davis Special Consultant to the FPA

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    Hi Redrag,

    Yes, my personal view on the whole fed tapering 'will they, won't they' saga is this:

    If they do not taper then nothing has really changed since this whole thing started getting headlines, so the focus will remain on other currencies with a clearer outlook, such as the Japanese yen weakness. (BUT it will be perceived by the market as uncertainty and unexpected)

    If they do taper then this is now what is expected to happen over the next 12 months so this should see the markets continue on as they have been, which means a strengthening USD against pretty much all other majors.

    If things become uncertain again, i.e they start saying that easing could actually go on much longer or that they might not taper after all this will cause traders to sell off the USD and buy into safe haven currencies such as the Japanese yen and Swiss franc. However these moves will almost certainly be reactive moves .... Which in my view just give us a better price to buy and sell at :)

    The last panic move on USD/JPY saw it drop to 94.00, and it's obviously since climbed several hundred pips as the uncertainty was removed.

    The most important thing to understand is whether or not the move is one of fundamental causes or simple uncertainty ..... If it is fundamental we should pay much more attention and plan accordingly, but if it is simply uncertainty then it is vital not to get spooked or squeezed out of your positions as the market moves.

    The point with the USD is that nothing fundamentally has actually changed, if they do not taper, then its the same as it has been, so USD/JPY will rally off the back of the Japanese actions .... If they do taper then this will strengthen the USD anyway which will just cause the rally to happen harder and longer .....

    The reason the price falls and seems so volatile is the uncertainty in the markets and the fact that they markets do not like to be unclear about anything.

    Hope this helps, but if not please just let me know below :)

    Thanks

    J


    - Jarratt Davis
    Fx trader, funds manager and Forex mentor
    www.JarattDavis.com

     
  8. redrag

    redrag Private, 1st Class

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    Hi Jarratt

    That is very clear and very thorough.

    Thank you.
     
  9. forexjosa

    forexjosa Private, 1st Class

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    Hi Jarrat.

    Your posts here shows you trade fundamentals, and as it seems at medium term. On other hand in your site your videos shows you looking for scalp entering (5 min. and 15 min. time frame). You also say there that you don't want to stay too much time in trade. Also your myfxbook shows short time trades.

    What strategy you trade nowadays, or you trade both? If both, regarding fundamental medium term strategy, you usually get how how long in those trades?

    Thank you in advance.

    Regards,

    JP
     
  10. Jarratt Davis

    Jarratt Davis Special Consultant to the FPA

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    Hi Forexjosa,

    The posts here are tailored to the circumstances, which are that it can take quite a few minutes before the post is written, emailed to everyone and opened etc...

    This is not really conducive to short term trading signals, which is why I tend to post more medium term set ups here.

    The longer term set ups can last anything from 1 day to a few weeks depending on how the market moves, but on average i'd say they last a couple of days each.

    As you have seen my trading extends beyond this and includes short term trading which I have used very successfully over the years to make consistent profits from the markets.
    All of my trading is based very firmly in fundamentals whether it is short term or longer term.

    Hope this helps, and if you have any more questions, please type them in below :)

    Thanks

    J


    - Jarratt Davis
    Fx trader, funds manager and Forex mentor
    www.JarattDavis.com

     

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