USD/JPY Long Opportunity

The USD/JPY formed a Hammer pattern on the daily chart. This is a bullish reversal pattern that indicates a rising price in USD/JPY.

The medium and long-term trend is still down. Therefore the long position size should be kept small.

I entered long today

• Price: 0.8995
• Stop-Loss: 0.8885
• Take-Profit: 92.00

Update EUR/GBP GBP/USD

I had a very large exposure to the GBP. I was short in the GBP vs EUR, USD and JPY.

Pls see my earlier analysis/ trades here:
GBP/USD short opportunity – Head Shoulders Pattern In Daily Chart, 24.09.09
EUR GBP Update, 08.09.09
EUR/GBP establishing an Uptrend, 04.09.09


EUR/GBP
I closed the EUR positions, which were about 50% of my expose. I booked large profits here, because I added to the positions while the GBP was falling. In total I closed 3 positions with profits between 200-400 pips. I expect we have seen a high at 0.9300 and that there will be some retracement. Also I expect the USD to be stronger than the EUR in the short-term. Therefore a GBP/USD short is currently more attractive. If we see a retracement to about 0.9000 I might consider to buy EUR/GBP again (short GBP).


GBP/USD
I am keeping the GBP/USD position open for now. But I locked in profits by setting my Stop-Loss to 1.6000. Medium term I expect further falls to 1.57 and possibly to 1.53. However, a retracement to 1.6100 / 1.6150 is possible after the strong decline.


GBP/JPY
I opened a very small short position this morning at 142.95. The pair moved into profit and I adjusted the Stop-Loss to 142.80. This is a "very attractive pair". The moves a very large and huge profits are possible. However, it is easy to be stopped out as well. Most likely I will concentrate on GBP/USD in the short/ medium term.

Trading The Monday Opening Gap

With Forex “being on” 24 hrs, gaps normally only occur on Mondays after the weekend close. Being in Sydney has the advantage to see the gaps first while the rest of the world is sleeping.

This morning I saw the EUR/USD chart below. And the general rule is
GAPS ALWAYS GET CLOSED!





Of cause there is no 100% guarantee, but the chances are on your side. And this is what Forex trading is all about. All successful traders have loosing trades. But a good win-rate plus good money management (Stop-Loss/Take-Profit) will result in profits.

After seeing the charts above, I placed the following trade.
Limit Order, Sell EUR/USD
P: 1.4710
SL: 1.4740
TP: 1.4650

On top of “the gap rule”, I took a few additional considerations.

• The short term-trend on the 1hr chart was down. So I was going with the trend
• US shares on Fri were down. The USD is currently very much impacted by the “willingness to assume risk”. Meaning the USD falls with rising shares markets and vice versa. So the negative Wall Street result (Dow -0.44%) indicated a stronger USD and therefore a lower EUR/USD

The trade turned out very nicely. Two hours later the chart looked like this (see below). The Sell Limit Order was executed and the Take-Profit target was hit. It does not always work that perfect, but chances are good for making a trade with profit.




And what happened next. Well, of cause afterwards its always easy ;-) It was going down for an other 60 pips.

GBP/USD short opportunity – Head Shoulders Pattern In Daily Chart

• The long term trend in the weekly chart is down
• The upwards retracement of the steep downtrend has potentially reached its top
• This opens a short opportunity for the GBP/USD currency pair

From July 2008 to January 2009 the GBP/USD dropped from 2.0000 to 1.3500. The following upward retracement found its maximum at 1.7000 on 05.08.2009. See weekly chart below.






There is a good chance that the retracement found its top at 1.7000 on 05.08.2009. The daily chart displays a Head-Shoulders pattern that supports that possibility. The Head-Shoulders is a top reversal pattern, so in this case the GBP/USD could turn down again. The neckline of the pattern at 1.6200 has not been broken yet and therefore the pattern is not confirmed. If the pair closes below the neckline, further downward potential to 1.5300 opens up.





Entry Strategy
The most conservative entry option for a short position is to wait until the Heads-Shoulders pattern gets confirmed by a break of the neckline at 1.6200.

A more aggressive option (with more risk and more reward) is to enter a short position before the neckline (resistance) gets broken. Recent price action has been kept under the 1.6500 level. One option therefore is to establish short positions on intraday rallies towards 1.6500.

I took up a small short position at 1.6388. Stop Loss 1.6500. The position is “slightly in the money” with 30 pips (morning 24.09.09, Sydney time). I will consider increasing the position in case the pair goes lower.

EUR GBP Update

Update on the trade suggested on 4th Sep 2009. Link to original trade analysis:
http://market-trading-ideas.blogspot.com/2009/09/eurgbp-establishing-uptrend.html

The EUR/GBP continued the uptrend until today (see 4hr chart below). I took profits at 0.8980. I am still holding a small position in case the trend turns into a longer uptrend. However, at this time I expect a consolidation after the strong rise. The uptrend since early Aug stays intact as long as the pair keeps above the resistance at 0.8800 - 0.8820. I will consider to extend the long position again if a pullback and reversal pattern emerges above the resistance zone.

USD CAD at resistance at 1.0700

I looked at USD CAD yesterday (09.09.09, 08.00 GMT) and found the chart below. I was considering a long position at 1.0700. Unfortunately the market moved up quickly +100 pts so I missed the entry. I will be watching the pair for a better entry (1.0700 – 1.0730).

USD CAD daily

USD CAD weekly

EUR GBP Update

In the recent article I out the opportunity of an EUR/GPB long trade: http://market-trading-ideas.blogspot.com/2009/09/eurgbp-establishing-uptrend.html

I entered at long at 0.8740. The pair moved up quickly to 0.8790, breaking the first resistance. I closed 50% of the position and pulled up the stop to 0.8690. I will hold remaining position and see if a long term trend up can be established.


EUR/GBP 4hr chart



EUR/GBP weekly

EUR/GBP establishing an Uptrend

The EUR/GBP pair is potentially establishing a long term uptrend.





The daily chart displays

Double Bottom: The trend reversal formation has been completed by the break of the resistance (=top between the two lows) at 86.55 on 21.08.09. The second bottom (0.8450) did not quite reach as low as the first (0.8430)

Trend Reversal: The daily chart moved from a downtrend (lower highs / lower lows) to an uptrend (higher highs / higher lows). After the lower high on 24.07.09 (= the between the double bottom pattern at 0.8650, daily close) the price formed the characteristics of an uptrend in the chart

• higher low (05.08.09; 0.8480)
• higher high (27.08.09; 0.8830)

Currently we are seeing a retracement from the higher high at 0.8830. This retracement can be used as an entry for a long position. To determine the entry point I will wait for a reversal patter (like a "Hammer" candle) in the daily or 4hr chart. Currently the retracement stands at the 38.2% Fibonacci level. The price might drops further to the zone between the 50% and 61.8% Fibonacci level. This zone (0.8650-0.8680) falls together with the top between the two bottoms of the reversal pattern. This former resistance had been broken and acts now as a support. A reversal candle in this zone would be a strong entry signal for a long position.

Trading Strategy: Wait for a reversal of the current retracement to enter a long position on the EUR/GBP. Consider the support level between the 50% and 61.8 Fibonacci level.

Non Farm Payrolls (NFP) Trading Strategy

The release of the Non Farm Payrolls (NFP) and Unemployment Rate by the Bureau of Labor Statistics today was one of the most anticipated data releases.

The payroll releases often create increased volatility in the Forex market immediately after the data release. Spikes can go in both directions. Most times it is better to wait for 30 minutes after the release.

The chart below displays the EUR/USD price action after today's NFP release.

• The price went first up 25 pip(1.4255 to 1.4280)
• Then jumped erratic within a 20 pip range (1.4260-1.4280)
• And then fell about 70 pips to 1.4200

The lesson is to wait at least for 30 min after the data release before entering a short-term trade. After that follow the trend.

Update on AUD/USD short

This is an update re the analysis and suggested trade from this post:

http://market-trading-ideas.blogspot.com/2009/09/short-audaud-resistance-at-08466.html

• I closed 50% of the position at 0.8263 (169 pips gain).
• I re-entered short at 0.8350.

Considering the initial Price (P: 0.8432), Stop-Loss (SL: 0.8533) and Take-Profit (TP: 0.8210) combination, this was a bit “un-disciplined” skewing the risk/reward ratio. On the other hand, a 1 day gain of 169 pips was just too tempting.


I re-entered short today at 0.8350. Considering weakness in the share markets, especially in China (see Shanghai Composite), I predict some risk aversion in the near future. This will most likely lead to lower prices on the AUD/USD, because the Australian economy is highly dependent on natural resources/ exports too China.


The next TP targets are just above the recent lows at 82.00 and 78.00. If 82.00 gets reached, I will exit again 50% of the position. I adjusted SL to 85.05

Short AUD/AUD - Resistance at 0.8466

The AUD/USD hit the 0.8466 resistance 3 times since early August and could not pass that barrier. This morning (01.01.09; 9am; EST) I entered a short position. The expectation is that the AUD/USD will not be able to break the resistance and will fall back to the support at 82.40


P: 0.84323
SL: 0.8533
TP: 0.8210




The timing of entering the position was risky, because the RBA interest rate decision was released at 14:30. However, this played out to my advantage. The expectation was a hawkish commentary (indicating rising rates). But the RBA stayed neutral and therefore the AUD droped 0.8412 by now. More event risk tomorrow Wed 02.09.09; 11:30 EST with the release of the Australian Q2 GDP figures.

Also indicating a weaker AUD is the fact that the Australian economy is largely depended on China's hunger for natural resources. China's Shanghai Composite Index dropped 20% over the last two weeks on worries about over-capacities and restrictive lending.