Friday 29th January 2010

Good morning all! Looking at the charts, we can notice a clear 1-2-3 reversal pattern coming into the London session. We are however not certain if this will be the beginning of a sustained upward movement. At the moment, the 1.3987 level is obviously a key resistance line; I could be looking to go Long if it's breached convincingly as we come into the US session.

By the way, I got into that long trade yesterday and got stopped out not long after. That's always the thing about anticipating a reversal; the effects of the hitherto dominant trend might still impact significantly on the markets.

Anyway, I'm hoping for some great results today though I won't be at my trading desk for much longer...

Thursday 28th January 2010

Good morning all! I think the play for this morning is quite obvious; we'll be looking to go long on a clean breach of the 1.4036 Resistance line. Those who can afford to be less conservative should probably be in the trade already. The close at 9:15am will partly determine if some more conservative traders will join the bandwagon or not.

By the way, did you notice how the 1.3973 Support line (I mentioned it in my comment on the last post) performed? Even with the sharp news reaction stemming from US president Barrack Obama's speech, the Support line held firmly and price didn't close below it; in fact, the lowest close which occurred at 3:15am was actually on the 1.3973 mark exactly! How accurate is that?

update (9:43am)

Well, the formation of that hammer at 9:15 surely made any conservative trader hold back on an entry. Price is currently trading below the 1.4036 line. A decent close above that line on any of the next few bars should probably trigger a Long entry for conservative traders as well.

Tuesday 26th January 2010

Good morning all! Sorry I've been off the blog for a couple of days. Well, what can I say? Looks like the Asian session has been busy once again. Right now, it's looking like we might still have an opportunity to go Short. In this particular case, I'd very much recommend monitoring the 1hour chart as well and maybe even taking an entry from there.

Tuesday 19th January 2010

Hello everyone, I just checked my charts now and saw the fantastic Short opportunity that's unfolding. I really hope some of you were able to catch that move. The Set-up was very clear. We had a double top at the 1.4412 Resistance line. If you had entered somewhere just below the 1.4373 Support line, you'd be smiling to the bank right now.

As for me, I believe there's still some more downward potential so I'll be looking to enter a conservative Short trade if the 1.4306 Support line is breached successfully.

Monday 18th January 2010

We didn't have much movement on the Eur/Usd today. In fact, price movement was almost completely horizontal for most part of the day. None of our key Support levels was even reached (talk less of being breached). Traders who took on other related currency pairs like the Aud/Usd might have had better opportunities for entry though.

Friday 15th January 2010

Good morning all! Can you imagine that I was awake and in front of my trading station around 3am... and I didn't take the trade?!!! I had just finished setting up my charts for today's trading and I saw the opportunity clearly but I dismissed it knowing that a lot of similar opportunities kind of wait around till the opening of the London session. I also wasn't prepared to stay awake to manage the position. I woke up to find that the market had moved by nearly 70pips!

Now I'm reluctant to enter a Short trade even though the overall market direction is still southwards. The market has put in so many pips already and besides, there's slight positive divergence on the 15minute chart. I may still be persuaded to take a conservative Short trade if I get the opportunity; let's see how it goes.

Thursday 14th January 2010

Good morning all! Looking at the current state of things, I'm primed to take a Short trade on a convincing break of the 1.4515 Support line.

update

Well people, I'm currently in the Short trade... Now I'm looking to manage it as best I can. If you missed the first opportunity and you're still looking to go Short, you could consider getting in on a breach of the 1.4497 level which seems to be a relevant Support level.

Wednesday 13th January 2010

Good morning! What can I say? The channel continues.... This is the kind of period when proper use of stochastics coupled with a sound scalping technique can prove to be very profitable. Interestingly, I am not a scalper and I hardly ever use stochastics (even though you see them on my charts which is quite odd really). Anyway, I'll be waiting to see when the Eur/Usd actually begins to commit to a particular direction.

By the way, I left an entry order open on my trading desk yesterday (not intentional) and by the time I woke up this morning it was 40pips in the opposite direction.... quite painful! Pls always take time to ensure your trading desk is clear before shutting down (unless it's intentional... of course).

Tuesday 12th January 2010

Good morning! Today's trading is shaping up gradually... very gradually I might add! I usually prefer taking trades when I see some sizeable amount of momentum (and commitment to a definite direction) early on in the London session. Right now, it looks like the Eur/Usd is in a sideways movement... actually kind of like a triangle so we're hoping for a fairly reasonable breakout move.

The chart above shows the closest Support and Resistance levels. We'll probably commit to a trade either way but I'm more inclined to go Short. If the market breaches the resistance at 1.4534 first, I will also consider going Long (but in a very cautious manner).

Monday 11th January 2010

Good morning all! Well, it's obvious that the major retracement I spoke about weeks ago is well underway now. If you caught my Business Day article on Thursday last week, you'll remember that I mentioned looking out for the next significant resistance which will be around the 1.4560 level. From today's price movement, I'd say we're getting warm so be on the lookout!

As far as today's trading goes, it's looking kind of so-so. I'm not too eager about taking a Long trade cos the market has gone quite far already. I might be inclined to consider a Short trade if I see a convincing break of the 1.4479 Support line (with adequate momentum too). A Long trade is not toally out of the question either (since the market is currently trending upwards anyway) but the pattern will have to be quite convincing.

If going Long or considering a divergence trade (there is likely to be negative divergence on the 15min chart soon), the level to look out for would probably be around 1.4547 followed closely by 1.4560 (another reason why I'm not hurrying to go Long!).

Friday 8th January 2010

The US Non-farm payroll and unemployment data was released today. It normally should have come out last Friday but that day was a public holiday (New Year's Day). As always, I'm very cautious about trading on such days so I'm staying out of the markets. I would only have considered a trade if it was a very compelling one and if the set-up occurred well in advance of the US session (i.e. early in the London Session). Another consideration would be to take a trade (with a compelling set-up) after the initial flurry and effects of the news have subsided.

Thursday 7th January 2010

Today's trading started with the market drifting downwards. We took a Short trade when price breached the 1.4376 Support line around 8:00am. Entry was at 1.4368 and the first position was closed at 1.4346 at 11:15am for a profit of 22pips. The second position was also closed at 1.4346 around 3:30pm for a profit of 22pips.

Wednesday 6th January 2010

We didn't get a good entry opportunity today. The market started out heading south but we were weary of taking a Short position because of positive divergence on the 15minute chart. Traders who dared to take the divergence trade (which occurred round about the beginning of the London session) however would have made a very tidy profit. The market did in fact reverse and it drifted upwards for the most part of the day.

Tuesday 5th January 2010

The market started off in the Upward direction once again and we took our Long position on a breach of the 1.4432 Resistance line around 6:45am. Entry was at 1.4439 and the first position was closed at 1.4469 for a profit of 30pips. The second position was stopped out at 1.4431 for a loss of 8pips.

Monday 4th January 2010

Today the Eur/Usd started off in the upward direction and it soon encountered the 1.4315 Resistance line. When that level was breached at the beginning of the London session, we took a Long position. Entry was at 1.4319 and the first position was closed at 1.4357 around 10:30pm for a profit of 38pips. The second position was closed at 1.4409 shortly after the beginning of the US session for a profit of 90pips.

January 1st 2010

Of course, there was no trading Today because it was New Year's Day. Even if the markets were open, I believe this day would still have been better spent with loved ones and family. On that note I’d like to wish you a most prosperous 2010. Somewhere within my heart, I’m convinced that it will be a most outstanding year.

The Week of Monday 28th December 2009

On Monday 28th December, we didn't get any clear entry signals. This is not uncommon around this time of year simply because the markets are closed on some days and have very little liquidity even when they're open. This often leads to a bit of inconsistency in chart patterns. Most times I suggest that traders stay out of the markets during the holidays unless a very compelling trade comes along.

On Tuesday, the market started out drifting in the upward direction. The first barrier encountered was the 1.4382 Resistance line. Price breached this level around 8:15am and we took a conservative Long position. Entry was at 1.4385 and the first position was closed at 1.4411 for a profit of 26pips. The second position was closed at 1.4427 around 2:30pm for a profit of 42pips.

On Wednesday, the market started out drifting upwards and it encountered resistance at the 1.4342 level. We were looking to go Long on a breach of that level but when price finally broke through, it closed too far away. This wasn't much of a disappointment because the market soon turned around and started heading south. We also did not take a Short trade during the US session because we had clear positive divergence on the MACD which was later followed with another strong reversal pattern.

Thursday's trading started with the market trending upwards and so we were primed for a Long opportunity. When price broke through the relevant resistance level which was at 1.4375, it closed too far away and this stopped us from entering the trade. Some traders would have taken this trade based on a different entry parameter but as always, we're sticking to our pre-defined strategy.

Another important lesson from Thursday's trading is never to chase the markets. I've mentioned this in the past but I think it's a good time for me to reiterate it. If you find that the market has moved way past your entry point, just let it go and/or wait for the next appropriate entry setup. Chasing the markets can be likened to attempting to hop on a train after it has pulled out of the station; it could be a very risky venture. It is also a sign of emotional trading which is a potential account killer.

The Week of Monday 21st December 2009

On Monday 21st December, the market started out drifting towards the 1.4339 Support line. We were a bit cautious about taking a Short trade because the pattern wasn't exactly the way we would have loved it to be but our confidence was bolstered by the outlook on the 1hour chart. We took a conservative Short trade around 8:00am. Entry was at 1.4333 and the first position was exited at 1.4303 almost 2hours later for a profit of 30pips. The second position was stopped out at entry by noon.

Tuesday's trading proved to be profitable in both directions. The day started off with the market drifting upwards and eventually breaching the 1.4306 Resistance line. We took a Long trade with our entry at 1.4308 and the first position was closed at 1.4326 about 30 minutes later for a profit of 18pips. The second position was stopped out at entry a few minutes later.

During the US session, we had an opportunity to go Short when price breached the 1.4272 Support line around 4:15pm. Entry was at 1.4267 and the first position was closed at 1.4238 for a profit of 29pips. The second position was stopped out at entry around 7:00pm.

Wednesday's trading started off with the market drifting upwards towards the 1.4266 Resistance line. It was however not able to breach that level until around the beginning of the US session. Entry was at 1.4267 around 1:45pm and the first position was closed at 1.4291 for a profit of 24pips. The second position was closed out at 1.4351 the next morning for a profit of 60pips.

On Thursday, we took a conservative Long trade when the 1.4351 Resistance line was breached. Entry was at 1.4355 around 7:45am and we nearly closed out our positions 2hours later when price crossed below the 1.4351 but didn't close below it. The first position was closed at 1.4390 at 11:00am for a profit of 35pips. The second position was also closed out at 1.4390 around the beginning of the US session for a profit of 35pips.

Friday was Christmas day so the markets were on break. You'll observe that price was basically a horizontal line up until trading resumed on Sunday night.

The Week of Monday 14th December 2009

On Monday 14th December, the market was in no hurry to go anywhere. In fact, it was almost like a horizontal line for most part of the day. We obviously had no entries signaled on this day but then that's part of the game.

Tuesday's trading was very simple and straightforward but best of all, it was also rewarding. The market had been in a tight range throughout the previous day and the breakout move occurred at the beginning of the London session today. We took our entry at about 9:00am once price breached the 1.4628 Support line. Entry was at 1.4628 and the first position was closed at 1.4608 for a profit of 20pips. The second position was closed at 1.4559 around 3:30pm for a profit of 69pips.

On Wednesday, trading started out with the market bouncing off a significant Support line and then heading upwards. A Long trade was signaled around 12:30pm when the 1.4568 Resistance line was breached. Entry was at 1.4572 but our first target was not hit before the market started to reverse. We eventually ended up exiting both positions 2hours later with a loss of 26pips each.

We woke up on Thursday to find that the market had declined by over 100pips during the Asian session! This made us a bit cautious about taking trades but we couldn't resist taking a conservative Short trade when the 1.4366 Support line was breached around 11:15am. Entry was at 1.4360 and the first position was closed at 1.4341 30minutes later for a profit of 19pips. The second position was stopped out at entry around 12:30pm.

Friday's trading started with the market knocking on the 1.4405 Resistance level. Remember that this was previously a Support line which I called in my last article. After price breached that line, it became Resistance. When price couldn't break through the Resistance line, it eventually continued it's downward journey and a Short opportunity was created when the 1.4321 Resistance line was breached around 4:30pm. Entry was at 1.4314 and the first position was closed at 1.4285 for a profit of 29pips. The second position was stopped out at entry around 7:00pm.

The Week of Monday 7th December 2009

On Monday 7th December we didn't have any clear entry signals. This is not uncommon when you have a very strong move the previous day (especially when that strong move is caused by news). It's sometimes as though the market needs a bit of time to 'normalize' itself.

On Tuesday, we didn't have any trading opportunities during the London Session. Price just kept bouncing off the relevant Support and Resistance levels. We eventually found a good opportunity to go Short when price breached the 1.4791 Support line around the beginning of the US session. Entry was at 1.4791 and the first position was closed 30minutes later at 1.4752 for a profit of 39pips. The second position was stopped out at 1.4720 during the Asian session for a profit of 71pips.

Wednesday's trading started with the market drifting upwards. We were looking for an opportunity to go long but it didn't happen because price closed too far away. It turns out that we didn't miss much because price soon made a u-turn without quite hitting what would have been our first profit target. We ended up staying out of the markets on this day.

Thursday's trading was very similar to what we had on Wednesday. The market never got around to giving us a convincing break of the relevant Support or Resistance lines. It became quite obvious today that the market has been bouncing back and forth within a closed range. If anything, this situation made us look forward to Friday's trading with an expectation for a strong breakout move.

I anticipated a strong breakout move on Friday and we weren't disappointed at all. The only issue was that the market faked us out by first of all heading in the opposite direction. We initially entered a Long position at 1.4768 around 12:30pm but we got stopped out at 1.4742 about 2hours later for a loss of 26pips on both positions. The next opportunity came around 3:15pm when we entered a Short position at 1.4682. The first position was closed at 1.4663 for a profit of 19pips. The second position was closed at 1.4611 around 6:15pm for a profit of 71pips.

The Week of Monday 30th November 2009

On Monday 30th November, the market started out close to a significant resistance level on both the 15minute and 1hour charts. Price couldn't break through that level convincingly and it finally started heading south. There was eventually an opportunity to go Short when the 1.5002 Support line was breached around 5:30pm. Entry was at 1.4993 but the market didn't get to our profit target before it started to reverse. We eventually exited the positions at 1.5003 around 9:15pm for a loss of 10pips on both positions.

Tuesday's trading started with the market rising quickly. The best entry would have been on a break of the 1.5044 Resistance line but our entry parameters were not fulfilled since price closed too far above that level. We had to settle for a conservative Long entry which occurred around 11:15am when the 1.5073 Resistance line was breached. Entry was at 1.5074 and the first position was closed at 1.5107 around 5:15pm for a profit of 33pips. The second position was closed at 1.5094 around 9:00pm for a profit of 20pips.

On Wednesday, we were looking out for a Short entry since we had multiple signals that price might be heading south during the day. Interestingly, our entry wasn't triggered because price decided to swing sideways for the most part of the day. When the nearest Support level was eventually breached around 5:15pm, price closed too far away so we ended up staying out of the markets.

The market started out drifting in the upward direction on Thursday. We were looking to go Long and we found our opportunity when price breached the 1.5093 Resistance line at 7:45am. Entry was at 1.5095 and the first position was closed at 1.5117 around 8:30am for a profit of 22pips. The second position was closed at 1.5116 for a profit of 21pips (at 2:45pm).

The non-farm payroll data was released on Friday and as always, it was a significant market-moving event. We generally stayed out of the markets on this day.

The Week of Monday 23rd November 2009

On Monday 23rd November, the market started out moving in the upward direction following positive divergence on the 1hour chart. Resistance was encountered at the 1.4931 level but it was broken around 5:00am. I would have overlooked this opportunity since I don't like taking trades before 6:00am into account but another entry shaped up about 2 hours later.

We took a Long trade when price closed at 1.4934 around 6:45am. The first position was closed at 1.4966 at 8:30am for a profit of 32pips. The second position was also closed at 1.4966 for a profit of 32pips around 5:45pm.

On Tuesday, price started off in the downward direction. We took a Short trade when the 1.4931 Support line was breached around 7:15am. Entry was at 1.4929 and the first position was closed at 1.4897 around 8:30am for a profit of 32pips. The second position was stopped-out at entry about two hours later.

Wednesday was one of those days when you really feel the pinch of following your entry parameters to the letter. The market started out in the upward direction and we knew ahead of time that there was significant resistance around the 1.5004 level. It was also obvious that a breach of this level would likely result in a strong breakout move. Sadly, the market closed too far away when it breached that level around 9:15am and so we had to stay out of the trade. Just in case you didn't notice, the market ended up putting in well over 150pips on that day.

Thursday's trading was a bit of a consolation for missing out on so great an opportunity yesterday. The market shaped up for a Short trade around the beginning of the London session when price breached the 1.5079 support line at 9:15am. Entry was at 1.5076 and the first position was closed at 1.5046 for a profit of 30pips. The second position was finally closed out at 1.4937 the following morning for a profit of 139pips.

On Friday, the market started out with an opportunity to go Short but we didn't take it because the market had already put in about 80pips during the Asian session. That Short trade would have turned out to be very profitable (because the market put in another 100pips or so) but it was good that we were disciplined enough to stay out.

The Week of Monday 16th November 2009

On Monday 16th November, the market opened with negative divergence forming on the 15minute chart. We were looking for a chance to go Short on a valid break of the 1.4954 Support line but it didn't happen. When price eventually breached the Support line, it closed at 1.4904 which was obviously too far away. The strong move was mainly catalyzed by the speech of the Federal Reserve chairman around 6:15pm.

Tuesday's trading started off with the market drifting in the downward direction. The first clear entry to go Short was signaled around 11:15am when price breached the 1.4923 Support line. Entry was at 1.4920 and the first position was closed at 1.4893 around 12pm for a profit of 27pips. The second position was also stopped-out at 1.4893 around 2:45pm for a profit of 27pips.

On Wednesday, price started out drifting in the upward direction. We took a Long trade when the 1.4894 Resistance line was breached around 8:00am. Entry was at 1.4897 and the first position was exited at 1.4937 at 10:45am for a profit of 40pips. The second position was exited at 1.4975 (for a profit of 78pips) around 6:15pm when a clear reversal pattern formed on the 15minute chart.

Thursday's trading was quite similar to what we had on Monday. The market started out drifting in the downward direction and therefore, we were looking for a chance to go Short on a valid break of the 1.4910 Support line but it didn't happen the way we wanted it to. When price breached the Support line around 8:45am, it closed at 1.4898 which was just too far away. We ended up staying out of the markets on Thursday.

On Friday, we had an opportunity to go Short when price breached the 1.4911 Support line at 8:30am. Entry was at 1.4909 and our first position was closed two and a half hours later when price hit the 1.4883 mark. We exited that position with a 26pip profit. The second position was closed at 1.4855 around 3:15pm for a profit of 54pips.