(Trying To) Keep Things Simple - TradeLog

[tradeprofits]

In yesterday’s post I mentioned the 1.4430 level could be a possible level to look for a long trade, if we got confirmation in terms of candlestick formations or reasons in terms of confluence. The pair traded through that level pretty much without any hesitation and there was no apparent reason to go in long at that level, besides the aforementioned reasons of a key level of support lining up.

So I waited patiently and close to EOD the pair had been trading around the 1.4350 level for some time, which gave us a fairly good 4-hour setup, and this is where I took at long trade. As I was planning to hold this overnight, and additionally look more for a swing trade that a short term trade, I took an entry at 1.4364 with a stop loss of 100 pips.

The pair is clearly trading around a fairly good level of support here and we got the pullback we were waiting for. Now obviously I think this is a good setup, but there are a few things which is not exactly in our favor, which you should take into consideration if you plan to jump in on this trade. First of all, the pair was not able to make a higher high on the daily time frame, compared to the recent significant swing high which was formed in the beginning of July. Additionally, I was looking for the 1.4430 level because this was lining up with a re-test of the key trend line. The pair has currently broken back down below this trendline. These two aspects should be taken into consideration, and as always, play things safe. Even with a 100 pip stop loss, the risk exposure on such a trade should be the same as on a trade with say 30 pips stop. I highly recommend you risk no more than a couple of percent’s on any given trade.

I will keep you all updated on the progress with this trade.

 

[tradeprofits]

We currently have a very volatile market. Last Friday we had NFP which came out with no change, not reflecting the expectations for the release. In addition to this we had news from SNB yesterday announcing a minimum rate of 1.20 on EUR/CHF which gave us an immediate surge in the pair, moving it up to 1.20 within a few minutes.

Bias
We often tend to see close to a perfect inverse correlation between USD/CHF and EUR/USD. However, as I have highlighted several times before, when the trigger for a move like the one we had yesterday is based on highly fundamental release from either ECB or SNB, the correlation is likely to fade. This is exactly the case with yesterday’s move. Don’t make the mistake and look for a drop in EUR/USD of 800 pips because of the rally on USD/CHF.

EUR/USD is left somewhat in a twilight zone, at least in terms of relation to CHF, as we had a surge in both USD/CHF and EUR/CHF.

With this in mind, I think we are likely to see a bit of upside on EUR/USD, going closer towards the end of the week. Obviously we have several high impact news releases which could blur the picture, but this is my current standpoint.

Technical Perspective
Take a look at the picture below. This is the daily chart on EUR/USD. The pair currently trades at the 1.4065 level.

On the daily timeframe, the pair is clearly trading in a range, and we are currently in the lower part of that range. The 1.4000 level has proven to be a key level of support at previous tests of that level. Keep in mind this is also a psychological level, which tends to show strength as support or resistance.

The picture above shows the 5-minute chart. The pair is currently trading above our first key level for the day, and we are looking at the 1.4085 as the next level to keep an eye on. In addition to this, the pair has steadily been making higher highs throughout the entire Asian session, and overall, I think further upside is possible.

Ideas
With the above mentioned aspects in mind, I am mainly looking for a long trade. With that being said, we are currently in a long trade from the 1.4005.
With a pullback down to the 1.4000 level, I think there should be a good chance to enter on a long trade. A 50 pip stop loss should be sufficient. The 1.4085 level should be a viable profit target, but I would prefer to hold on for a bit more. A breach of the 1.4085 level and a clear close above it, could give continuation to the 1.4155 level and possible higher. These are the key levels I am looking for.

 

[tradeprofits]

Trading Forex in a profitable manner requires patience and the ability to follow ones plan. <a href="http://www.tradeprofits.net/trading-forex-%E2%80%93-eurusd-more-downside">Recent ideas shared</a> on TradeProfits should be a good indication of exactly that. Now as we are in the week which will end with NFP from US, and lots of other factors to take into consideration, we need to play things carefully. With the recent strong drop in EUR/USD, it can be argued that taking a long would be suicidal, but then again, with a drop like the one we have seen, a pullback is always a possibility.

Bias

My bias on EUR/USD is still that we are likely to see further downside. The pair currently trades around the 1.3240 level. The 1.3000 level would be the next natural level to test to the downside. However, in a downtrend I would prefer to sell on the pullbacks. One reason why a pullback is in the cards, it due to the already strong move down we have seen. After significant moves, profit taking will take place and a pullback will occur. Another reason is that the USD index is coming very close to the 200 EMA;

a level which tends to evoke strong price reactions. If the USD will bounce of the 200 EMA and ease the momentum, dollar crosses will obviously be affected as well. By the look of the eye on the EUR/USD chart, there is currently not a whole lot holding us back at this level before further continuation, but the dollar index does give a small hint, that a pullback could be around the corner.

Technical Perspective

As mentioned above, the pair is clearly in a strong downtrend, but waiting for a pullback and then taking a short trade would be preferable, in my opinion. I am looking for the 1.3380 – 1.3400 level and then the 1.3520 – 1.3540 level.

In case a trade should be triggered, as mentioned above, the 1.3000 level is the next level which would be ideal for a profit target; looking at the charts, the 1.2900 level actually seems far more important, but nonetheless, the 1.3000 level is likely to show support due to this being a psychological number.

Ideas

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

I would prefer to wait for the pair to pull back to the 1.3550 level and then take a short trade with a stop loss of just around 200 pips (slightly above the 1.3700 mark). If the pair is to trade back above the 1.3700 level the price action pattern we have seen so far would be gone (read; lower lows lower highs) and I would not want to be in a short trade anymore. In addition to this, with an entry around the 1.3550 level, a stop loss of just about 200 pips and a profit target at the 1.3000 level, we have an excellent risk:reward setup and a trade not to be missed in my opinion.

Plan Your Trade and Trade Your Plan

Here is a perfect example of a good plan. There is no guarantee that things will work out. The trade might not get triggered because the pair will continue down. The trade might get triggered and then maybe stopped out. Anyhow, the plan is there, and if the trade gets triggered we don’t have to worry about it as all the details are in place, and the risk on this trade is low if it does trigger. Trading Forex is about planning and proper execution of the same.

 

[tradeprofits]

As mentioned in yesterday’s post, I think we are likely to get a pullback on EUR/USD before we see continuation to the downside. One reason why this might be the place, is partially due to the USD index coming close to the 200 EMA which tends to hold as a strong level of support and resistance. Now if the USD index will bounce on this level, USD crosses are likely to be affected from this.

Bias

My bias on Cable is pretty much the same as on EUR/USD. I think we are likely to see further downside. However, before we continue lower I think some upside might be in the cards. Now as with EUR/USD, I would prefer to wait for a pullback and trade the pair to the downside, but as we do have a bit more clear setup here on Cable, there could be a good chance to play this as a long trade for some 100 pips.

Technical View

Now taking a look at GBP/USD on the 4-hour chart, we have clearly created a double bottom (which is only true if we break the high in-between the two low levels, but it clearly looks like that could be the case). Because of this, taking a long around current level might not be such a bad idea.

The pair currently trades around the 1.5440 level and I think we easily could see another 100 pips to the upside.

Ideas

With the above mentioned aspects in mind, I am open for both a long and a short trade on Cable.
Right now I would not mind taking a long trade on Cable with a stop loss below the double bottom low at 1.5320. I would move stop loss to break even at 1.5540 for just around 100 pips (and probably take partial profits) and take final profit at 1.5640 for 200 pips of profit. At that level, a short trade could be in the cards with a stop loss above recent highs at 1.5720ish and look to TP above the double bottom low. Anyhow, I would probably prefer to look for a short trade on EUR/USD.

 

[tradeprofits]

We have seen significant downside on this pair during the latest month. EUR/USD is trading close to 1000 pips lower than where is just about one month ago. The pair currently trades around the 1.3230 level, and it looks like we easily could see further downside. Both the latest daily candle and weekly candle closed as strong bearish candles, but we need to pay attention to the 1.3170 level which proved to be a strong level of support last time it was tested. Not only can we expect more news about the worrying situation in the EURO zone, but we also have a bunch of scheduled releases for the upcoming week. Keep in mind that we are seeing a very volatile market these days and we need to be careful! Read about the <a href="http://www.tradeprofits.net/storm-warning-in-effect">Storm Warning here</a>.


Bias

There is not a whole lot of reason to look for possible upside on EUR/USD at this moment, other than that a natural pullback could be in the cards due to some possible profit taking, and a heavy level of support around the corner as mentioned above. With that being said, my bias is clearly to the downside on this pair and I will continue to look for pullbacks in order to get in on short trades.

Pre-News Sentiment

As mentioned above, we do have an interesting upcoming week, with some fundamental news releases which are likely to move the market. My bias on further continuation to the downside is partially based on the expectations for the releases on the upcoming week, where everything, as of now, points in direction of further $ strength; needless to say that this can be changed the split second when the actual figures are released but until this happens, any pre-news sentiment is likely to be in the direction of further downside on EUR/USD.



Technical Perspective

From a technical standpoint, this also indicates further downside on EUR/USD. We had a strong daily and weekly close on the pair. For now we will focus on the 4-hour chart, and here things are slightly more ambiguous.



As always, when we have seen a strong move down, a pullback is possible, and something we need to take into consideration. The pair currently trades at the 1.3230 level. We have a key level of support at 1.3170, whereas the next level of resistance is at 1.3340 and then 1.3440. Because of this, if does not make sense to take a short from here (in my opinion), as the possible risk:reward of the trade simply isn’t there. I would prefer to wait for a pullback to the 1.3340 level and look for clues to a possible reversal. If no sign of a reversal is in place, I would wait for a retest of the 1.344 and look for a short. With either of these two levels getting hit, a short trade should be in the cards with a good risk:reward. Specially the first resistance level seems like a good bet, as this would line up with the in-between level of the 10 and 21 EMA.

Ideas

With the above mentioned aspects in mind, I am only looking for possible short trades.
I will wait for a possible pullback to the 1.3340 level and look for a possible 4-hour reversal candle and then take a short trade with somewhere around a 50 pip stop loss. If we don’t get any kind of reversal candle, wait and see if we get another thrust to the upside and look for possible reversal candles around the 1.3440 level and look for a similar short trade. With that being said, I would prefer to get in short around the first level mentioned. The best scenario would be a move to the upside during the upcoming Asian session and look for a short around London open. If we see continuation to the upside during the beginning of the London session, I would look for mentioned short setup, around US open.

 

[tradeprofits]

In yesterdays post, I mentioned a possible setup for a short trade. We took a short trade at 1.3374 and if you got in on this trader, there was a possibility to grab around 90 pips in total. As we did have an initial 50 pip stop loss, I was hoping for a bit more and chose to move my stop loss to break even, but we had a strong pullback during the Asian session, and the trade is now close to the entry level. I hope you had a chance to grab some pips from this trade.

Bias

As mentioned in the post yesterday, my overall bias is still to the downside. However, things do look slightly different for now, and I think a short term pullback might be in the cards. This is partially based on correlation with other USD pairs, price action and our two EMA´s. However, we still have an upper trend line which is likely to show us some resistance so I think today might be a good day to wait for a really proper setup, before jumping in. Trading forex is all about planning your trade and trading your plan. If the plan is unclear, its more often than not, a good idea to stay on the sideline and wait for a no-brainer setup.

Technical Perspective

There is not a whole lot more to cover here, since the post yesterday. One key thing to pay attention to is yesterday’s daily candlestick formation, which clearly shows up a possible reversal, and since the close, we have seen upside on EUR/USD. The pair currently trades at the 1.3364 level. We do have resistance about 30 pips higher both from yesterday’s high, the upper trend line and finally that the level itself is somewhat of a psychological level (read; 1.3400). So this is clearly a level to pay attention to. In addition to this, we have the same level of resistance at the 1.3440 level as mentioned yesterday, which is another level I will pay attention to.

Price Action

Now here is one of the key reasons why I might wait a bit, before looking for another short trade. Price action wise on the 4-hour chart, we are now starting to see higher lows but so far not higher highs. With another higher high, I would be careful with any short trades.



Make sure to plan your entry on the right time of the day. If we do see continuation to the upside during London open, I would wait to look for a possible short around London close. Another thing to keep in mind is that correlating pairs, specially AUD/USD and Cable, clearly looks like further upside for now. Because of this, we are also likely to see EUR/USD head higher and another reason why we should be careful with any short trades for now.

Ideas

As mentioned above, we do a mixed picture this morning and I am open for both long and short trades but they will be based on a short term price action setup.

From the 4-hour charts, I think we are better off, looking for a possible short around London close. I am paying attention to the same key levels as mentioned in yesterday’s post. For any short term entry setups, I will be paying close attention to the price action just around London open, and if we do get an initial move down, I might wait for a small pullback and then take a short trade with a tight stop loss. It all depends.

 

[tradeprofits]

For those of you who read today’s outlook Trading Forex - A Bit of Possible Upside had an idea I was looking for a possible short around the 1.3440 level. Unfortunately I wasn’t able to place a trade today once the level was reached but if you did, this would have been close to a perfect trade. The level was spot on as solid resistance, and the pair is now trading back down at the 1.3330 level. So basically the pair is right back at the same level as where it started the day. So where do we go from here?

Bias

My bias hasn’t changed. News from US has been mixed for the first two days, but the Euro zone situation continues to take the main attention and with no significant deviation on US news, I see no reason for a change in bias, other than what I have mentioned in earlier posts regarding some possible profit taking. Tomorrow we will get ADP Non-Farm Employment Change from US, expected to come out at 131 compared to 110K previous release, so any kind of pre-news sentiment should also be to the downside for EUR/USD.

Technical Perspective

As mentioned in todays post, on the 4-hour chart we are still seeing higher highs and higher lows. However, this almost start to look more and more like an inverse flag formation which also gives us a clue of possible further downside. However, the most interesting thing is the daily candlestick formation. Well the day is not over yet, but unless we see a significant move within the next 45 minutes, we are likely to get a good reversal candlestick formation, also indicative of possible further downside.

It is possible that we could see some upside during the Asian session, but I actually think that the pair is very likely to start a move down shortly after EOD. But who knows. I will be asleep shortly and hence I would prefer to wait for tomorrow morning around London open, to look for a possible short trade.

Ideas

With the above mentioned aspects in mind, I still prefer to look for a short trade.

I will pay attention to price action around London open tomorrow morning and look for a possible short trade. The best case scenario in my opinion would be that the pair trades around the current level (Read; 1.3330) and look for a short trade with close to a 50 pip stop loss. Of course, if price starts to move up, right around London open, I will wait on the sideline for an entry short, at a higher level. 1.3440 is still at key level to have in mind.

 

[tradeprofits]

In yesterday’s post Trading Forex - Perfect 1.3440 Re-Test, I mentioned the possibility for a short trade, and early in yesterday´s London session, I took a short trade with a 50 pip stop loss. The trade came up to around 60 pips of profit, so hopefully those of you who were in on the trade had a chance to move stop loss to break even. Once news hit the wire about the coordinated action from central banks, I got stopped out at break even. Yesterday’s price action is a perfect reminder that we should always make sure to have a stop loss in place when taking any trades.

As major central banks agreed to lower swap rates on USD , all USD crosses was heavily affected and we had an immediate move up on EUR/USD to the 1.3530 level – a rally of close to 240 pips in a matter of minutes. With events like this, there is no particular reason to look at the pair from a technical perspective – fundamentals and risk sentiment is the only force in play and we need to think deeper in order to get an idea of further possible direction.

Now actually I think this rally is giving up a very favorable price for a possible short trade, maybe in the upcoming week. I think we will see further upside throughout the rest of this week, but I would be careful only looking for long trades, specially in the upcoming week. Keep in mind that we had the ADP coming out better than expected yesterday, and tomorrow NFP will hit the wire. This will definitely give us some market volatility. Going back to the coordinated action from major central banks, there is a very good read over at BabyPips.

<strong>“Risk assets love this news this morning. The euro is jumping and stocks are rocking and rolling...good for financial market players, but we've seen this before--credit thrown on top of credit to solve a problem that was caused by too much credit in the first place. It seems a dangerous game that lacks any form or imagination. But maybe this time is different.”</strong>

Read the rest of the post here

I do have a couple of ideas for possible trades today, but I have decided to stay on the sideline and let the market calm down. As mentioned above, I think we will see further upside on EUR/USD today and an entry around 1.3450 with a 50 pip stop loss seems like a fairly good bet. However, I see no reason to jump in today. I would prefer to wait for the market calm down, so we also have a chance to base our trading on a more technical setup.

Remember to play things safe, keep your risk exposure low and always have a stop loss in place.

 

[tradeprofits]

The latest trade I mentioned was back on Thursday December 1st, where I wrote a blog post saying there was a good possible trade on EUR/USD if you took a long around 1.3450 with a 50 pip stop loss. If you took this trade, you should have been able to grab close to 100 pips in total.

I decided to stay out of the market for the rest of the week, first of all due to coordinated intervention from several major central banks, and then with NFP during Friday. I thought it would be a good time to let the market make its moves and wait for the beginning of a new week. So here we are, in the beginning of December, and my bias is starting to point to further downside on EUR/USD again.

NFP very close to expectations which is definitely not a bad figure. We had an initial spike on EUR/USD and then the pair started to plummet close to 200 pips from the high of the day. The pair currently trades around the 1.3400 level and my bias is starting to in direction of further downside. However, the pair currently trades between two key zones of support and resistance, namely the 1.3450 level and the 1.3370 level.

My preferred way to trades this would be to wait for a re-test of the upside and look for a possible short trade with a 4-hour reversal candlestick formation. However, I am willing to jump in on a short trade around London open at the currently level if the short term price action supports such a trade. Stops above 1.3460 is recommended.

Ps. A pair which I normally do not trade is CAD/JPY, which looks amazing for a possible short trade from a daily time frame perspective! I will definitely be looking for a possible entry. Keep in mind you don’t want to hold this position overnight (Asian session) due to the possibility of intervention from BOJ.

 

[tradeprofits]

In yesterday’s post Trading Forex - EUR/USD after NFP I mentioned a good possible short trade on EUR/USD around the 1.3460 level if we got a 4-hour reversal candlestick formation. We got a perfect formation, close to a pin-bar and I took a short trade at the close of the 4-hour candle with an entry at 1.34628 with an initial 50 pip stop loss. The trade is currently 90 pips in profit and I am keeping a close eye on this trade around London open. Post a comment below if you had a chance to get in on this trade.

The reason I consider to close the trade around London open, is because the pair currently trades at the key support level mentioned in yesterday’s post – hence the pair is still trading in the range highlighted yesterday.

I still think we will see the pair continue for further downside, but its definitely possible that we will get a bounce at this level around London open. So if short-term price action indicates possible upside in just around an hour from now, I might be closing out. For now I have moved my stop loss to the 1.3450 level locking in a bit of profit and if you are in this trade, I recommend you to do the same.

If you are not in this trade, there is a possibility to look for a short trade, should we get a second re-test of yesterday’s high, again with some 50 pips in stop loss. Another possibility is to wait for the break and close below the 1.3360 level, wait for a pullback to test this level from below as resistance and look for a possible short trade at the 1.3360 level, again with a 4-hour confirmation setup.

Another setup I highlighted yesterday was a possible short on CAD/JPY. The pair did move some 30 pips lower so it would be a good trade, but I still think there is a good chance to get in on this one. I will wait for a pullback to the 76.50 level and look for a possible short trade, again with a confirmation setup.
As always keep your risk low and make sure to place hard stops right after trade execution.