(Trying To) Keep Things Simple - TradeLog

[tradeprofits]

During the last couple of weeks Cable has sown new lows and currently the pair trades around the 1.5930 level which is clearly a key level, as previous support and resistance; click on the picture below for picture of Cable on the weekly chart.

Just as in the latest post on EUR/USD (Link), there is not really a whole lot of releases this week supporting any kind of upside for this pair. GBP is fairly light on fundamental releases, whereas the USD has been covered in the EUR/USD analysis. Hence, based on expectations to news, further downside seems likely.


Not only have the pair breached the psychological level of 1.6000, but also the lower trendline has been broken which indicates further downside. Looking at the daily and 4-hour chart, the pair has consecutively been making lower lows and lower highs.

Needless to say that the current way in which this pair is trading, waiting for a pullback and then entering on short positions seems to be the perfect strategy. Today further downside seems likely, but just as on EUR/USD I would prefer to wait for a bit of pullback before entering on a short position. A retest of the 1.6000 level seems to be the ideal scenario for a possible short as this would keep the pair below recent swing high, along with testing the level which has proven to be a significant level of resistance.


With the above mentioned elements in mind, I am only looking for a possible short trade on this pair.

Waiting for a re-test of the 1.6000 level seems ideal. Keep an eye on price action, and if momentum starts to fade, a short seems to be in the cards. A stop loss of 60 – 70 pips seems good, as this would place us above recent swing high, and additionally prove to be a good level for a very favorable risk:reward trade.

 

[tradeprofits]

In general we are clearly seeing $ strength across the board, and as you can read in my post about EUR/USD and Cable this week, I expect to see further downside, and the same holds true for AUD/USD. The pair currently trades around the 1.0420 level and if we get some kind of pullback I think a short trade should be a no-brainer.

This bias on AUD/USD is mostly based on general dollar strength and a technical setup compared to that of AUD weakness. Read my post on EUR/USD and Cable to get an idea of my bias on the dollar (recent comment on QE3). In addition to this there is somewhat of a setup showing possible short term downside for XAU, which fits this setup just fine, correlation wise.

Click the picture below to see a the daily chart of AUD/USD. We clearly broke the 1.0500 level which clearly was a key level of support.

Additionally we broke the lower trendline which indicates possible further downside. For now, there is not a whole lot of support holding us back and a drop down to the 1.0170 definitely seems possible. Hence, if we can get a tiny bit of pullback we could be setting up for a very favorable risk:reward setup.


With the above mentioned aspects in mind, I am currently only looking for short this pair.

I would prefer to wait for a pullback to the 1.0500 level and then take a short trade. If we can get in around the 1.0500 level, a stop loss of some 130 pips would place us above the upper trendline and with a profit target of just around the 1.0170 level, we are in for one beautiful risk:reward setup.

 

[tradeprofits]

EUR/USD is currently trading around the 1.4485 level. It´s been a couple of days with sideways action and mixed signals in terms of price action. On the fundamental side, things are pretty much the same, with the recent result from Greece, expectations of a rate hike later this week from ECB along with expectations of a better than previous release on NFP due this Friday. Finally the pair is at a very strong psychological level, which currently acts as resistance.

Bias

I am not having much of a bias currently to be completely honest. I think what we will see if the pair trade within a fairly narrow range of 1.4350 to 1.4550 until news gets released and we can get a clear cut direction for the pair. The reason for this lack of bias is mostly based on fundamentals as I currently have a very vague idea on which of the two is doing better or worse; needless that I think we will see the tipping point from one of the upcoming news events which should give us a stronger sense of direction.

Technical Perspective

From a technical standpoint on the one-hour chart, things seem a lot more tradable, when we leave the bias out. We have clearly broken that bit of a bullish trendline there was on the one-hour chart. Additionally the pair has just now started to show a lower high and a lower low along with resilient price action in recent hours. This looks like a No-Brainer short trade.

From the 4-hourt chart we get a better picture of a possible profit target area. I think the 1.4430 level seems to be a possible area and likely to be touched today based on recent price action. From that point on, a long trade could be in the cards. However, with EUR/USD currently trading at 1.4480 and a possible profit target around the 1.4430 level, you need to keep an eye on short term price action in order to get an optimal entry which can maximize the risk:reward of the trade.

Hence I think a possible short is in the cards based on price action but I don’t think we will see a whole lot of follow-through. That is why a long later today might not be such a bad idea after all.

Ideas

Due to the above mentioned aspects, I am mainly looking for an initial short trade and a possible long trade later today.

I will be paying close attention to short term price action and the time of the day in order to pinpoint a possible entry point. With around 50 – 70 pips in profit target, we should try to get a good entry point so we can get a fairly good risk:reward of at least 1:1

If we do get a move down during the London session to somewhere around the afforementioed levels, I think a possible long trade could be an option with around 50 pips stop and 1:2 in risk:reward

 

[tradeprofits]

Yesterday, we took a short trade at 1.44821 and picked up 50 pips to the downside. As mentioned in the post yesterday <a href="http://www.tradeprofits.net/trading-forex-%E2%80%93-eurusd-fighting-with-1-4500">Trading Forex - EUR/USD Fighting with 1.4500</a>, I would be looking for a long around 1.4430. We did get a bit lower on EUR/USD but through short term price action we were able to catch it on the way back up taking a long at 1.4420 and are so far having around 40 pips in profit with our stop loss at break even. Today I think it is likely we will see a some more upside due to a possible pre-sentiment buying into EUR based on expectations for a rate hike tomorrow. Lets take a closer look.

Bias

My bias is pretty much the same as yesterday. We are likely to see further resilience in the pair without any strong move either to the upside or downside, before we have one of the key fundamental releases which should prove to be the tipping points for a clear cut direction. Take a look at the 15 minute chart below to get a feeling of the current choppy market.

The drop on EUR/USD yesterday was fuelled by a warning from S&P, but nonetheless the pair stayed in the expected range. Clearly the pair reacts highly to even the smallest news but with a short term effect. For now, my bias is pretty much the opposite of yesterday, mainly due to a possible pre-news sentiment of buying into EUR based on the expectations for a rate hike tomorrow, and also somewhat based on the expectations of a worse than previous release on ISM Non-Manufacturing PMI from US which is coming out later today. Keep in mind that we do have a bit of a pre-news sentiment conflict here, with the rate hike outlook and expectations for a better than previous release on NFP this Friday.

Technical Perspective

As mentioned yesterday we did have a break of the main trendline which gave us an indication of a possible short trade yesterday. We did get a drop down to the mentioned level around the 1.4400 level and then the pair bounced. Click the picture below to see the 1-hour chart.

Now just about an hour ago, we had a break of the bearish trendline, indicating possible further upside. However, it is currently trading at a key level of prior support and now resistance. However, I still think further upside is in the cards.

Ideas

With the above mentioned aspects in mind, I am mainly looking for a possible long trade, and a short trade later today could be a possibility, as I think the pair will stay in a fairly narrow range until we get one of the key fundamental news releases.

We are already long from the position we took yesterday, but for those of you still looking to get in on a trade I would pay close attention to short term price action and look for a possible long with 30 – 50 pip stop. I think we easily could see the pair re-test the previous high around the 1.4560 level which would give you at least a 1:2 risk:reward ratio

If we do get a move to the upside and re-test recent highs I might be looking for a possibility to trade it all the way down again. Pay attention to the time of the day, along with price action

 

[tradeprofits]

Yesterday, we took a short trade at 1.44821 and picked up 50 pips to the downside. As mentioned in the post yesterday <a href="http://www.tradeprofits.net/trading-forex-%E2%80%93-eurusd-fighting-with-1-4500">Trading Forex - EUR/USD Fighting with 1.4500</a>, I would be looking for a long around 1.4430. We did get a bit lower on EUR/USD but through short term price action we were able to catch it on the way back up taking a long at 1.4420 and are so far having around 40 pips in profit with our stop loss at break even. Today I think it is likely we will see a some more upside due to a possible pre-sentiment buying into EUR based on expectations for a rate hike tomorrow. Lets take a closer look.

Bias

My bias is pretty much the same as yesterday. We are likely to see further resilience in the pair without any strong move either to the upside or downside, before we have one of the key fundamental releases which should prove to be the tipping points for a clear cut direction. Take a look at the 15 minute chart below to get a feeling of the current choppy market.

The drop on EUR/USD yesterday was fuelled by a warning from S&P, but nonetheless the pair stayed in the expected range. Clearly the pair reacts highly to even the smallest news but with a short term effect. For now, my bias is pretty much the opposite of yesterday, mainly due to a possible pre-news sentiment of buying into EUR based on the expectations for a rate hike tomorrow, and also somewhat based on the expectations of a worse than previous release on ISM Non-Manufacturing PMI from US which is coming out later today. Keep in mind that we do have a bit of a pre-news sentiment conflict here, with the rate hike outlook and expectations for a better than previous release on NFP this Friday.

Technical Perspective

As mentioned yesterday we did have a break of the main trendline which gave us an indication of a possible short trade yesterday. We did get a drop down to the mentioned level around the 1.4400 level and then the pair bounced. Click the picture below to see the 1-hour chart.

Now just about an hour ago, we had a break of the bearish trendline, indicating possible further upside. However, it is currently trading at a key level of prior support and now resistance. However, I still think further upside is in the cards.

Ideas

With the above mentioned aspects in mind, I am mainly looking for a possible long trade, and a short trade later today could be a possibility, as I think the pair will stay in a fairly narrow range until we get one of the key fundamental news releases.

We are already long from the position we took yesterday, but for those of you still looking to get in on a trade I would pay close attention to short term price action and look for a possible long with 30 – 50 pip stop. I think we easily could see the pair re-test the previous high around the 1.4560 level which would give you at least a 1:2 risk:reward ratio.

If we do get a move to the upside and re-test recent highs I might be looking for a possibility to trade it all the way down again. Pay attention to the time of the day, along with price action.

 

[tradeprofits]

Yesterday’s trade plan didn’t play out as expected. Luckily we didn’t take any additional trades before yesterday evening just around EOD. We had one open trade from the day before where we had placed our stop loss at breakeven so that was closed out. The drop yesterday on EUR/USD seems mostly to be a result of Moody´s downgrade of Portugals credit rating and warning about possible default in Greece. As mentioned in yesterday´s post, two days ago we also had a warning from S&P. Obviously this is affecting the pair to the downside and as I also stated in yesterday´s post, even the smallest news announcements are likely to have a fairly significant impact on the pair simply because it currently trades in a twilight zone waiting for both the ECB rate decision along with NFP which will be released on Friday.

Technical Perspective

Looking at the 1-hour chart, we are clearly in a strong downtrend and the pair currently trades around the 1.4300 level. From a price action perspective it looks like we are going to see further downside. The pair had a small bounce on the 1.4300 figure and now moving down for a re-test of this level.

If we zoon down to the 15-minute chart, the pair has been making higher highs and higher lows over the Asian session, and obviously we have to pay close attention for the recent low, in order to determine if we are looking for a long or short trade.

A move down below the 1.4290 level would give us a fairly good indication of possible further downside. However, as I have said many times before, after a strong drop to the downside like the move down we had yesterday, it is always better to wait for some possible retracement before looking for further continuation.

Bias

In spite of the recent downgrade from Moody´s, my bias is pretty much unchanged, at least from a short term perspective due to some possible pre-sentiment buying into EUR based on expectations of a possible rate hike from ECB later today. Because of this I am mainly looking for a possible long trade, if we can get price action confirmation. If we take any long trade, I would prefer to have my stop loss at breakeven at the news release, as if we don’t see a rate hike, I would expect a surge to the downside.

Ideas

With the above mentioned aspects in mind, I am mainly looking for a possible long trade.

Look for short term price action in order to find confirmation for a possible long trade. A pullback to the 1.4300 level and consolidation along with a possible reversal candlestick formation could be a good indication. Around the 1.4300 level I think a 30 pip stop is a good bet, and rather than looking for a level of take profit I would prefer to base this on the time of the day which would obviously be before the rate announcement. If the trade is in profit of say 50 pips, moving stop loss to break even should be a good bet. You want to give it some room as we are likely to see a volatile market during the release. I am not interested in a short trade for now, and I would prefer to give my opinion of direction for the rest of the day, after the news has been released. On a day like this, I think it is a good idea to focus solely on one trade, and make sure to have a hard stop in on any trade you take

 

[tradeprofits]

Today there should be a good chance to catch a pre-NFP trade. Read the details below.

We did have a setup yesterday which did not work out, unfortunately. That was the only trade I took the entire day, as we were waiting for news from ECB. They did hike rates as expected and further hikes are anticipated. EUR/USD did rally all the way up to the 1.4370 level, which is where the pair currently trades.

Along with the rate hike, we did have warnings from S&P and Moody´s in the past couple of days as mentioned in this post <a href="http://www.tradeprofits.net/trading-forex-eurusd-ahead-of-ecb-announcement">Trading Forex - EUR/USD Ahead of ECB Announcement</a>. In addition to this ADP came out yesterday at 157K which was more than double the expectations. Finally we have NFP coming out today, with expectations of a better than previous release, which is supported by the ADP figure. Needless to say that I am a bit ambivalent with the entire situation due to conflicting fundamental aspects. However, I do have some fairly specific ideas. Keep reading.

Bias

After a rate hike yesterday and a fairly light move to the upside, I am close to neutral at this moment, mostly due to the state of the Euro and less so for the Dollar. With the NFP expectation and the actual ADP figure, I think we will see dollar strength today, in the hours up to the NFP release. However, keep in mind that the hours before NFP tends to be thin on liquidity. A couple of hours ago we did have a break of the lower range on EUR/USD and right now it is trading closer to the higher end of the range. I think looking for a trade on USD/CHF or USD/JPY and look for possibilities to long the dollar might be a good bet as well, as well as a possible short on EUR/USD. I have a small bit of bias on EUR/USD to the downside, mainly because the move after the rate hike was somewhat limited (relative to previous releases) along with the ADP figure and expectations for NFP. I am currently in on a short trade on EUR/USD and long on USD/CHF. See the details on my <a href="http://www.facebook.com/tradeprofits">facebook page</a>.

Current state of USD/CHF also gives us an indication of possible further downside on EUR/USD. However, due to the mentioned aspects related to the EUR, the inverse correlation between the two pairs might not be a good as it tends to be.

Technical Perspective

There is not a whole lot to be said here. Everything runs heavily on fundamentals right now and technical analysis tends to less follow-through. Because of this, pin-pointing perfect entry levels are close to impossible and obviously going in with a larger stop loss hence a smaller position size will be necessary.

Ideas

With the above mentioned aspects in mind, I am mainly looking for possibilities to go long on Dollar.

EUR/USD is difficult. A rate hike is obviously good for further upside on EUR/USD. However with the warnings from S&P and Moody´s along with some possible pre-sentiment buying into dollar, I think we are looking at possible downside in the hours coming closer to EUR/USD. I am already short, but anywhere close to the 1.4350 level should be a decent bet. Make sure to keep a larger stop than what you normally use. Alternatively or additionally, a long on USD/CHF or USD/JPY could be a good bet as well. I am already long on USD/CHF, so if you want to get in on that on, waiting for a bit of a pullback would probably be a good idea, and the same goes for USD/JPY. Remember to have larger stops than usually (read; 50 – 100 pips), hence decrease your position size so you don’t risk more just because you use a larger stop. Moving SL to BE around 50 pips of profit would be a good idea. If this would be the case, I would prefer to move my stop loss to break even and keep it open over NFP as if we get a better than expected release, this could be some really good trades. Best of luck to everyone and remember to keep risk low. Things can be very volatile on a day like this!

 

[tradeprofits]

Bias on Cable

Mainly based on latest headlines out of UK, CPI disappointed giving us further downside on Cable, and is somewhat indicative of an unchanged interest rate for next month. Along with this, we are currently seeing a strong risk aversion in the market, mostly due to the current situation in Europe, but also the latest NFP release (although this might seem a bit counterintuitive). Because of this, I think further downside on the pair is very likely, specially with the current technical state of the pair.

Technical Perspective

This is where, in my opinion, this pair get really interesting. First of all, the pair broke the all important 1.6000 level and is currently trading at 1.5930 level. We had a very clean break of 1.6000 and a strong continuation afterwards probably due to a lot of stops getting triggered. Now we had a decent pullback and the pair looks perfect for a short trade.

A short trade from this level seems to be a very good idea, in particular as a swing trade, but also for short term trades if we see risk flows coming back into play this morning around London open.

Ideas

With the above mentioned aspects in mind, I am only looking for a short trade on this pair.

From a swing trade perspective I think this would prove to be a very good level for a short trade. Something around a 50 – 100 pip stop and we should be in for a very favorable risk:reward setup. I am already in on a short term short trade from yesterday, and if you want to get in, I suggest keeping an eye on risk sentiment around London open. If we start seeing a strong dollar, swiss franc and JPY, a short trade should be in the cards. Keep an eye on price action in order to pin-point a good entry level.

 

[tradeprofits]

Bias

First of all, read the analysis on <a href="http://www.tradeprofits.net/trading-forex-%E2%80%93-cable-below-key-level">Cable</a> as several aspects mentioned in that post holds true for EUR/USD. First of all, there is pretty much only bad news out of the Euro zone lately, which obviously makes the ERU plummet. In addition to this, the entire situation, along with recent NFP, is inducing a strong risk averse sentiment, which strengthens the dollar. Join in on <a href="http://www.facebook.com/tradeprofits">Facebook</a> for live updates.

Technical Perspective

Now just as on Cable, this is fairly interesting specially due to the break of the 1.4000 level. However, we have had a very strong move to the downside during the last couple of days which is way a pullback, as always after such a thrust, might be a possibility. However, the pair does seem unstoppable these days and I would clearly prefer to look for a way to short this rather than trying to catch the lows every time after a strong move.

The picture above is just a beautiful technical setup. Yesterday we did have a strong move all the way down to the 1.3830 level and currently the pair trades just around the 1.3990 level. Looking at the daily chart, the pair is setting up for a perfect short trade, in particular for a swing trade, but also for a possible intraday short trade, if we, once again, can see further risk aversion in the market, and pin point the entry around London open.

Ideas

With the above mentioned aspects in mind, I am only looking for a short trade on this pair.

Just as on Cable, I think this pair is close to a perfect level for a short swing trade with something close to a 100 pip stop loss. However, I would prefer to see if I can catch this on a short term basis looking for a smaller stop loss. Just as on Cable, I am currently in on a short trade and hopefully we will see continuation to the downside from here. If you want to get in, wait for London open and keep an eye on price action. Once again, play it safe and keep risk low as always. Keep in mind we did have a very strong move to the downside and a stronger pullback is definitely not impossible.

Falling in Love

Never fall in love with a position is a common phrase used by individuals trading forex. It is however, easier said than done. Right now, everyone is screaming short short short, which might be one reason to look for exactly the opposite. Don’t get me wrong, my bias is still to the downside. But when everyone seems to agree there is no bottom for the EUR, one might be inclined to put everything on red (read; over-leverage, over-over trading). Know that you can easily be wrong and this is exactly why we keep our risk low. There is always another chance to get in on a good setup, but only if you have a positive account balance! Trading Forex is about profitability over the long haul.

 

[tradeprofits]

After a recent break of the 1.4500 level on EUR/USD and a key trendline, a pullback seems like a good possibility which should give us a good chance to get in on a long trade. The pair currently trades around the 1.4520 level and a pullback down around the 1.4430 level could be a possible place to look for a long trade. As always, we don’t enter just because a level is reached, but we look for numerous of reasons for a possible trade, so if the pair does come down to the 1.4430 level, look for candlestick confirmations and zoom in on the short timeframes and keep an eye on price action. Click on the picture below to see a picture of the daily chart on EUR/USD.

As we can see on the daily chart, we are close to making a higher high, and with the recent rally we have now broken the key trendline which is indicative of possible further upside. The pair is currently pushing higher, and I would like to see the pair make a higher high on the daily timeframe before we get the pullback in order to get in on a long trade. The recent high is just around the 1.4560 level, which is just around 40 pips away from the current level.

I think we will see the pair at least hit 1.4550 and probably the 1.4600 level before we get a pullback. If that happens I would be looking for a long entry just around a re-test of the key trendline, which previously was a strong level of resistance and now support. If this lines up just around the 1.4430 level I think we are in for a very good potential long trade.

Trade Idea

If we get a bit of continuation and then a pullback down to the 1.4430 level I would look for a possible long trade with a stop loss just around the 1.4350 level. This would be a stop loss of 80 pips and should put us in a favorable position in terms of risk:reward.