As of 1220am, I have a buy limit to go long at 85.5. Should it fill, my stop would be at 85.3, and the limit sell at 86.5. I was about to place a stop buy order at 86.1, but going long at this price is dangerous, considering where the USDJPY sits within its 1 day upchannel. On the 60min chart, you can see that we are currently overbought. In other words, even if we break 86 in the next few hours, we're likely to have to pull back soon after, as we're near the top of our 1 day upchannel.
None of the other FX pairs are attractive swing longs or shorts at current levels. I missed out on much of the action in FX yesterday, being relatively tied up at work.
It's way past bedtime here, so I'll leave it at that for now, and will update you tomorrow on which of the 2 buy orders triggered.
Thursday, August 12, 2010
Wednesday, August 11, 2010
Short Trades (EURUSD, GBPUSD) following Post-Fed Rally
Being in Singapore, please forgive me for jumping into bed shortly after entering my shorts on EURUSD and GBPUSD post-Fed @ 226am and 239am Singapore time, rather than updating this blog. From now on, assume all blog references to time are in Singapore time, which is 12hrs ahead of New York. Going into the Fed rate announcement, I decided to be flat on both the EURUSD and GBPUSD as their 5min charts suggested that they had still not sufficiently retraced the prior day losses, and were therefore more likely to rise (on the Fed news) from their still somewhat at the time, oversold conditions.
EURUSD
Having observed the break in the EURUSD July-August 10 uptrend support around midday yesterday, and the rise in the EURUSD daily RSI above and back below 70 on its daily RSI, the EURUSD was setting up perfectly as a short candidate. Before shorting though, I wanted to wait for a 50% or 61.8% retrace of the 1.3335-1.3074 fall. Sure enough, w/ the 215am Fed decision, the EURUSD began rallying, quickly approaching the 50% retracement level. Because it was getting awfully late in the early morning my time, I grew impatient on the retracement, entering my short at 1.319 at 226am, which was just shy of the 50% retracement level of 1.3205, and the ultimate peak in the retracement at 1.3225. In other words, I was wearing a 35 pip loss at the peak of the retracement. Fortunately, the trade returned to being in my favor shortly after I went to bed. The EURUSD peaked in its retracement soon after my short, and had I been more disciplined in waiting for the retracement to show clearer indications of ending, my short entry would've been achieved lower than my 1.319. As of this writing, I have closed my EURUSD shrt (at 1.3044 (150 pip gain avg across my 2 a/c's), as the 5min chart suggests we've hit a short-term bottom ahead of the 430/530pm UK figures. Will sit flat and await a short re-entry once we've retraced 38-50% of the down move of the last 48hrs.
GBPUSD
As remarked in yesterday's post, the GBPUSD was the most overbought of the 3 short candidates on my radar (EURUSD, GBPUSD, AUDUSD). I based this observation on the fact that the GBPUSD held the distinction of being the only one of these 3 pairs to have climbed above its Jun-Aug 10 upchannel resistance. Similarly to the EURUSD, the GBPUSD 5min chart suggested that it was more likely to rise immediately following the 215am Fed announcement. I decided to patiently wait for the shorting opportunity on a 50-61.8% retracement of the down move from 1.6.
USDJPY
Going into the Fed @ 215am (215pm EST), I was flat on USDJPY. I earlier entered at 85.8 (11:49am), and closed my long at 85.86 (318pm), eeking out a slight profit, after noticing that the technicals on the 5min of the USDJPY weren't terribly in favor of a long going into the Fed decision. Today, I've sat on the sidelines on USDJPY, preferring the far clearer short signals on the EURUSD and GBPUSD.
Game Plan for 430/530pm and 830pm
I'll sit flat going into 430pm, and will watch the GBPUSD carefully for any 38.2/50% retracement of the downward move since 1.600. For the next few trading sessions, I'll likely only be taking opportunities in the new intramonth trend which is down.
The 830pm US figure'll be more important for my EURUSD, AUDUSD, EURJPY and ES (S&P500 mini) short ideas. As w/ the GBPUSD, I'm waiting for a 38/50% retracement of their downmove of these last 48hrs, before initiating fresh shorts.
EURUSD
Having observed the break in the EURUSD July-August 10 uptrend support around midday yesterday, and the rise in the EURUSD daily RSI above and back below 70 on its daily RSI, the EURUSD was setting up perfectly as a short candidate. Before shorting though, I wanted to wait for a 50% or 61.8% retrace of the 1.3335-1.3074 fall. Sure enough, w/ the 215am Fed decision, the EURUSD began rallying, quickly approaching the 50% retracement level. Because it was getting awfully late in the early morning my time, I grew impatient on the retracement, entering my short at 1.319 at 226am, which was just shy of the 50% retracement level of 1.3205, and the ultimate peak in the retracement at 1.3225. In other words, I was wearing a 35 pip loss at the peak of the retracement. Fortunately, the trade returned to being in my favor shortly after I went to bed. The EURUSD peaked in its retracement soon after my short, and had I been more disciplined in waiting for the retracement to show clearer indications of ending, my short entry would've been achieved lower than my 1.319. As of this writing, I have closed my EURUSD shrt (at 1.3044 (150 pip gain avg across my 2 a/c's), as the 5min chart suggests we've hit a short-term bottom ahead of the 430/530pm UK figures. Will sit flat and await a short re-entry once we've retraced 38-50% of the down move of the last 48hrs.
GBPUSD
As remarked in yesterday's post, the GBPUSD was the most overbought of the 3 short candidates on my radar (EURUSD, GBPUSD, AUDUSD). I based this observation on the fact that the GBPUSD held the distinction of being the only one of these 3 pairs to have climbed above its Jun-Aug 10 upchannel resistance. Similarly to the EURUSD, the GBPUSD 5min chart suggested that it was more likely to rise immediately following the 215am Fed announcement. I decided to patiently wait for the shorting opportunity on a 50-61.8% retracement of the down move from 1.6.
USDJPY
Going into the Fed @ 215am (215pm EST), I was flat on USDJPY. I earlier entered at 85.8 (11:49am), and closed my long at 85.86 (318pm), eeking out a slight profit, after noticing that the technicals on the 5min of the USDJPY weren't terribly in favor of a long going into the Fed decision. Today, I've sat on the sidelines on USDJPY, preferring the far clearer short signals on the EURUSD and GBPUSD.
Game Plan for 430/530pm and 830pm
I'll sit flat going into 430pm, and will watch the GBPUSD carefully for any 38.2/50% retracement of the downward move since 1.600. For the next few trading sessions, I'll likely only be taking opportunities in the new intramonth trend which is down.
The 830pm US figure'll be more important for my EURUSD, AUDUSD, EURJPY and ES (S&P500 mini) short ideas. As w/ the GBPUSD, I'm waiting for a 38/50% retracement of their downmove of these last 48hrs, before initiating fresh shorts.
Monday, August 9, 2010
USDX Continues Short-Term Bottoming
The USDX is looking increasingly attractive on the daily chart, from a price action, MACD and RSI perspective. The USDJPY should see some fireworks as soon as the BOJ makes its announcement (any moment in the next few hours). Regardless of the BOJ announcement, the USDJPY appears to be technically oversold on the daily and wkly as mentioned earlier. Fri's NFP saw a selloff on the USDJPY which brought it within a hair of the 84.8 15yr low. Fri's low just shy of 85 may've been the major double bottom that'll propel the USDJPY significantly higher. Fri, right before the NFP, my raised stop on my USDJPY long was taken out at a slight profit. I'm currently looking to re-enter my long just below 85.85, and am waiting for the USDJPY to bottom on the hrly and 5min.
As for the EURUSD, it's looking increasingly close to a trend reversal, as is the GBPUSD and AUDUSD. The EURUSD has just in the last few minutes broke its July-today uptrend support line. It is oversold on the hrly and 5min though, and I am now awaiting a 1/3 to 1/2 retracement (of the losses from these last 24hrs) before going short.
The GBPUSD and AUDUSD are also oversold on the hrly and 5min charts, and need to bounce before they become attractive shorts in the next day or so. The GBPUSD is the most overbought of the 3 short candidates (see daily), but is nowhere close to breaking its June-today uptrend support. Keep a close eye on the AUDUSD daily as it approaches its uptrend support line at 91. This will probably be the last short among the 3 short candidates.
As for the EURUSD, it's looking increasingly close to a trend reversal, as is the GBPUSD and AUDUSD. The EURUSD has just in the last few minutes broke its July-today uptrend support line. It is oversold on the hrly and 5min though, and I am now awaiting a 1/3 to 1/2 retracement (of the losses from these last 24hrs) before going short.
The GBPUSD and AUDUSD are also oversold on the hrly and 5min charts, and need to bounce before they become attractive shorts in the next day or so. The GBPUSD is the most overbought of the 3 short candidates (see daily), but is nowhere close to breaking its June-today uptrend support. Keep a close eye on the AUDUSD daily as it approaches its uptrend support line at 91. This will probably be the last short among the 3 short candidates.
Friday, August 6, 2010
USDJPY Long Established
I am now long the USDJPY as of 1107 this morning (Singapore time). Entered at 85.988 w/ a stop initially set at 85.88 and since raised to 85.95 (just below the rising channel support). On the hrly chart, USDJPY is currently just shy of the resistance line connecting Jul 28 to Aug 6, but looking slightly bullish on the MACD and RSI. The 5min chart looks somewhat overbought, but appears to have enough juice to power a breakout above resistance on the hrly.
NFP releases tonight at 830pm (Singapore time). Should USDJPY hold above 85.7 within the 1st hr following NFP, I will add to the USDJPY long. If not, wait until the USDJPY falls to 84.8 (15yr low), and observe whether this level holds. If so, add once a recovery above 85 (and retracement back to 85) is made.
NFP releases tonight at 830pm (Singapore time). Should USDJPY hold above 85.7 within the 1st hr following NFP, I will add to the USDJPY long. If not, wait until the USDJPY falls to 84.8 (15yr low), and observe whether this level holds. If so, add once a recovery above 85 (and retracement back to 85) is made.
Thursday, August 5, 2010
Short-Term Bottoming of USDX
The USDX appears to have formed a short-term bottom just above 80. As mentioned in yesterday's post, the 80 level should offer some near-term support, although on a wkly chart, you can see that the USDX is not oversold just yet. W/ the EURUSD closer right now to its Jul-present uptrend support line, the GBPUSD showing signs of fatigue following its surge above its Jun-present channel resistance, and the USDJPY bottoming nicely on its daily, the USDX should have decent upside going into next wk. Although the NFP is most widely anticipated # this wk, any signs of a breakdown in the EURUSD below its month long channel support or a further confirmation of bottoming action on the USDJPY will trigger my trades before NFP. It has been observed in the past that the NFP is a non-event relative to the economic #s preceding it by a day or 2. One idea is to scale into the USDJPY, w/ 1 long initiated today, and another following NFP. I'm currently waiting for the hrly MACD on the USDJPY to be closer to its positive crossover before going long, w/ the understanding that the 5min chart has provided a shorter-term buy signal.
The order of the trades being contemplated is: long USDJPY and short EURUSD. The EURJPY may be a short when risk aversion rises again (and can coincide w/ a rise in the USDX). Better than expected US figures tonight will confirm at least the entry on USDJPY, and quite possibly the EURUSD. The GBPUSD short idea will need to await further confirmation (i.e. testing of its Jun-present uptrend support).
The order of the trades being contemplated is: long USDJPY and short EURUSD. The EURJPY may be a short when risk aversion rises again (and can coincide w/ a rise in the USDX). Better than expected US figures tonight will confirm at least the entry on USDJPY, and quite possibly the EURUSD. The GBPUSD short idea will need to await further confirmation (i.e. testing of its Jun-present uptrend support).
Wednesday, August 4, 2010
USDJPY Swing Opportunity Approaches
With non-farm payrolls out this Fri, and the EURJPY approaching oversold conditions, an attractive swing opportunity is emerging.
USDX
Wkly
Although 80 should provide some short-term support, the MACD and RSI aren't sufficiently oversold to call a bottom in this current 2 month downtrend.
Daily
MACD has tried bottoming in the last few days, while RSI has just entered oversold (<30) territory. Allow the RSI to rise back above 30 and for MACD to bullishly crossover before going long USDJPY.
USDJPY
Wkly
Price: Closing in on Nov '09 low (and 15yr low) of 84.82
MACD: isn't quite bottoming yet; both lines still pointing down
RSI: sits at roughly 35.8, and is still pointing down
Stochastic: oversold at 6.4; wait for cross above 20 for long entry
Daily
Price: near support on late May-present declining wedge
MACD: appears oversold
RSI: sits at 34.7, and has been oversold in much of July (during which it crossed above 30 a few times);
currently pointed down
Stochastic: appears quite oversold and ready to bounce
No other pairs are sufficiently overbought/oversold on wkly charts to warrant a swing entry.
USDX
Wkly
Although 80 should provide some short-term support, the MACD and RSI aren't sufficiently oversold to call a bottom in this current 2 month downtrend.
Daily
MACD has tried bottoming in the last few days, while RSI has just entered oversold (<30) territory. Allow the RSI to rise back above 30 and for MACD to bullishly crossover before going long USDJPY.
USDJPY
Wkly
Price: Closing in on Nov '09 low (and 15yr low) of 84.82
MACD: isn't quite bottoming yet; both lines still pointing down
RSI: sits at roughly 35.8, and is still pointing down
Stochastic: oversold at 6.4; wait for cross above 20 for long entry
Daily
Price: near support on late May-present declining wedge
MACD: appears oversold
RSI: sits at 34.7, and has been oversold in much of July (during which it crossed above 30 a few times);
currently pointed down
Stochastic: appears quite oversold and ready to bounce
No other pairs are sufficiently overbought/oversold on wkly charts to warrant a swing entry.
Monday, August 2, 2010
Returning w/ Swing Approach
My apologies for the long hiatus. After realizing that trading full-time did not suit my temperament and lifestyle needs, I decided to put in a hard stop on my f/t trading and to return to f/t employment. I was falling into the trap of overtrading, due to having too much time on my hands during each trading day. The markets don't always move or present profitable setups, and it is during these slow times that one often develops itchy fingers and jumps into a market for the sake of having a position to follow. What began as a series of compulsive trades (during the first few weeks of my f/t trading last September) over the course of the following months developed into a habit (of entering low probability trades). When this habit of overtrading became ingrained, I realized that I had to end this destructive habit, and decided to stop trading f/t all together.
That being said, there are individuals who can trade f/t successfully, dealing effectively w/ the slower moments during a trading wk. One can turn to exercise, reading, any number of hobbies, or perhaps running some side business. Another approach is to trade with a group of individuals, where camaraderie and the ability to bounce ideas off others can help keep one objective and disciplined.
Going forward, I'll be limiting my trades to swing opportunities, and will strive to only enter the highest of high probability trades (where a trend reversal is beginning on the weekly and daily charts). I'll begin incorporating market views into my blogging going forward, to add accountability to the trades I intend on entering.
That being said, there are individuals who can trade f/t successfully, dealing effectively w/ the slower moments during a trading wk. One can turn to exercise, reading, any number of hobbies, or perhaps running some side business. Another approach is to trade with a group of individuals, where camaraderie and the ability to bounce ideas off others can help keep one objective and disciplined.
Going forward, I'll be limiting my trades to swing opportunities, and will strive to only enter the highest of high probability trades (where a trend reversal is beginning on the weekly and daily charts). I'll begin incorporating market views into my blogging going forward, to add accountability to the trades I intend on entering.
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