Archive For "November, 2009"

11-17-09

5:14a GMT – For those of you (myself included) who had sell entries yesterday at 1.5015 we just barely missed that level (or at least my broker did) by a razor-thin 0.5 pip. That was followed by an almost immediate 60 pip drop. This was of course after Bernanke’s speech, as many of you commented on yesterday, sent the EUR/USD into a frenzy. For those of you that are curious the comments that supposedly triggered this panic were fairly mundane:

“Today, financial conditions are considerably better than they were then, but significant economic challenges remain. The flow of credit remains constrained, economic activity weak, and unemployment much too high. Future setbacks are possible.”

He is not really telling us anything we didn’t already know – the only surprise here is how the market reacted. Which makes me think this could just be a stop-squeeze in illiquid markets during news.

Daily Outlook: Nothing in the technical picture actually changed since yesterday, as you can see in the graph below so it is business as usual. Because price action did advance quite a bit I am moving up my entry a little (closer to the 1.5050 resistance) to get a better risk/reward ratio.

Trading Idea: Still looking to short above the 1.5015-1.5050 resistance area, though now I will look for an entry higher up, closer to 1.5050 to get a good risk/reward ratio. Targets from 1.5050 are 1.5015, 1.4980, 1.4950 and 1.4915.

(click to enlarge)

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11-16-09

5:14a GMT – Welcome back for another week! I hope everyone had a nice, relaxing weekend. As mentioned on Friday I stayed on the sidelines for the day, however anyone who entered at the 1.4930 resistance did hit their first target, but since then we have seen further EURUSD gains that pulled the pair into the 1.4970 area. I’m going to change it up a little this week and start with a weekly outlook (with the regular daily signal underneath).

Weekly Outlook: As I frequently mention larger timeframe charts yield more reliable signals to enter trades. Too often (and I am as guilty of this as anyone) we become comfortable in our “home” timeframe of 4h, 1h, 30m (or less for some traders) and forget that our timeframe is just a part of the larger forces driving the market. Hopefully with this weekly outlook we can take a step back from our “home” timeframes and view the larger currents under the EUR/USD.

Most noticeably on the chart below (daily) we can see that the EUR/USD has been in a clear uptrend channel for months now. In fact, you can continue backing out and see that the pair has really been in an uptrend since October of 2008 (though we did see dramatic volatility around that period as well). If you back out to the monthly chart we see that the uptrend has actually been going strong since 2001! What does that mean for us, the lonely day traders of the markets? Basically if we had entered longs instead of shorts on almost any trade we had a higher chance of success – it is the difference between swimming with the current and swimming against the current. And in the past 6 months especially the bull-current has been STRONG.

Where is the pair going? Well if the trend holds, then ‘up’ is the easy answer. However we did see some selling pressure last week and last week’s candlestick even resembles a weak shooting star on the charts – meaning we could see more weakness heading into this week. I say it is a “weak” candlestick though because it doesn’t appear at the very top of the uptrend (so it is not an extinction candle) – in fact the peak of the star doesn’t even pierce resistance above 1.5060. The reason the dollar has been so weak (and subsequently the EUR/USD so bullish) is because of the carry trade – US interest rates are at historic lows and the Fed has made it clear that it intends to keep them that way. Because most of the economic news coming out is generally positive big money (banks, hedge funds, etc.) have shorted the dollar to collect the interest they get with it against higher yielding pairs such as the Euro. Until we see a fundamental change in either a) interest rate outlook, b) economic outlook, or c) major profit taking then there is no solid reason for me to call a top yet. Therefore, as much as I would like to be bearish in the pair I remain bullish and think that any losses will be capped by the blue trend support currently around 1.4750.

On a side note on the chart below we can see that volatility in the pair is actually down quite a bit to an average true range of 100 pips per day (from 200 pips per day range in April 2009). Usually when there is a strong trend like this volatility does decrease, but this could also set us up for a major breakout.

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Daily Outlook: So I’m bullish on the week. But where does that leave us today? We saw some profit-taking last week – but EUR/USD losses were limited late Friday as the pair rallied back up above 1.4900.  In the short-term I am looking for a drop to the trend support around 1.4800, and I am a bit bearish below last week’s top of 1.5050. Therefore I will look to sell on a rally below 1.5050, preferably around 1.5015.

Trading Idea: Look for shorts below 1.5050 with targets (from 1.5015) at 1.4980, 1.4950, 1.4915 and 1.4880. Above 1.5015 look for a re-challenge of 1.5050.

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Site Update: Quick site update for you. I mentioned that I was looking to launch something exciting for you this week and while I did get it completed and ready to go I have not had time to write an article on the best way to use it. Basically you probably recall I’ve had quite a few people ask for a candlestick article, which I’ve been putting off a little because there are a lot of decent candlestick articles already existing out there. So I wanted to do something different. Something more useful for you besides just another article. More news on what exactly that is tomorrow…

Also there has been quite a lot of interest in economic news recently. Thanks to Ed for periodically posting economic news for everyone to read, but I’ve gone a step further and added an economic calendar to PipHut. You find that here. There are a lot of great features on the calendar including if you click any event you can see more details about that event, you can see the forecast and previous results and you can see the general importance of the news. Check it out!

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11-13-09

6:26a GMT – What is it about Fridays that makes me not want to trade? Huge drop in the EUR/USD yesterday that kicked out my stop for a small loss (that’s why we always use stops and use good money management, right?) The pair did take an initial bounce of of 1.4950, good for any scalpers, but reversed just short of our first target under 1.4985. We also have some big event risks coming up shortly this morning on Eurozone and German economic numbers. I’ve noticed that frequently before a news event big market makers push the market in the opposite direction that the news will push it before a event risk – presumably to stop hunt. If that is the case we could see a big retracement in the pair tomorrow.

The other scenario I see as likely is a consolidation between 1.4930-1.4810.

Trading Idea: Given the event risk, the big jump yesterday and the general lack of clear direction in the market I will be sitting on the sidelines tomorrow. For aggressive traders I might look for a sell signal between resistance zones at 1.4900-1.4930 with targets at 1.4870, 1.4840 and 1.4810.

Side note: I’ve got some exciting stuff I’m working on this weekend for PipHut for you. I don’t want to ruin the surprise or get your hopes up but I should have something pretty neat for you on Monday if all goes well.

(click to enlarge)

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11-12-09

6:26a GMT – No entry on yesterday’s signal around 1.4930 as the pair once again bounced off of 1.4955 support before rising for a quick 60 pips. The pair entered this 1.4950-1.5050 range on 11/9/09 and has not been able to break free yet as investors try to decipher some of the confusing fundamentals that are coming out of the market. Technically the pair has been in a strong uptrend few days and past couple months, and on the daily chart we still have what looks like a bullish flag consolidation pattern so the bias is up. Therefor I will continue to look for buying opportunities at the range bottom around 1.4950.

Trading Idea: Looking for buying opportunities around range support at 1.4950 with targets at 1.4985, 1.5015 and 1.5045.

(click to enlarge)

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11-11-09

6:26a GMT – It was one of those rare days when it was hard not to make money off of a pair. The EUR/USD cooperated beautifully with our signal from yesterday, dipping into support 3 times and each time rising for at least 50 pips. Even if you were more conservative on the day and waited for candlestick confirmation the pair gave us not 1, not 2 but 3 bullish hammers on the 16:00-18:00 GMT candlesticks to confirm the bullish reversal.

Today we look for more of the same (buying on dips) however I will be a bit more conservative today as the pair has been making some lower lows, lower lows recently which gives me concern that we could be facing a steeper retracement ahead. In favor of the bullish view, however, is the fact that the daily charts appear to show a bullish flagpole/consolidation pattern flag the past several days, signifying possibly more gains ahead.

Trading Idea: Today I will look for buying opportunities above 1.4930 with long targets at 1.4955, 1.4990 and 1.5015.

(click to enlarge)

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11-10-09

7:06a GMT – No entry for yesterday’s signal as the EURUSD continued upward with no real dip toeven  consider buying on. Fundamentally we just saw the forex markets get rocked by a report saying that the UK was the country most likely to lose its AAA credit-rating status. Note that the report did NOT say that they WILL lose their rating, just that they COULD. It was enough to move the markets like the best of rate decisions though, pushing the GBP/USD down over 100 pips in 10 minutes (the GBP/JPY lost about170+) and the USD in general gained against almost every other currency.

In the big picture this changes little fundamentally as big money already knew that this was the case. More interesting, I thought, was a report that came out saying that the world’s oil reserves are actually much lower and closer to running out than world governments let on.

Technically none of this changed much of anything, except to offer traders like us some good entry points if you happened to be watching the markets or PipHut’s twitter page (http://twitter.com/piphut). We had a nice dip on the EUR/USD to support at 1.4950 that I longed for some quick pips back up to 1.5000. The resulting candlestick at that location was a bullish hammer, and I will look to reset a long in the 1.4950 support area.

Trading Idea: Looking for longs in the 1.4930-1.4950 support area with targets at 1.4985, 1.5020 and 1.5045.

(click to enlarge)

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11-9-09

6:26a GMT – Another week another pip! We saw good pips last week off of the EUR/USD rise and, to begin this week, the trend remains strongly to the upside and I will continue to look for buying opportunities on dips. Fundamentally the market is still attempting to figure out whether an economic recovery is actually happening or if it is just government-supported, and IF it is happening for real what the implications for the EUR/USD would be. In the meantime the pair has technically been steadily making higher highs and higher lows. In summary: the short-term trend is up so I will look to buy.

Trading Idea:  We have a support zone between 1.4900-1.4870 and I will look for a failure/bullish signs in this area. Long targets preferred at (from 1.4870) 1.4905, 1.4940 and 1.4970.

(click to enlarge)

Also, a brief update on the signals service I’ve been working on for you. Signals are looking good, offering specific entries/exits on several major pairs with good win rates. I interfaced them into the website this weekend (they are still in testing so still private, before you ask). Here is a screenshot of the interface where you can see the strategies summaries. From the drop down you can select any strategy and view open/closed/pending orders. This is for the past 2 weeks:

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NOTE: A few more details. This is a very rough sketch for you. These are not ALL the strategies and it is not ALL the pairs that will eventually be included. This is just what I have built into the website so far. I just wanted to give you a glimpse of the progress that has been made so far and prove to you that it is coming along nicely…

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11-6-09

5:26a GMT – Are you a top PipHutter? You may have noticed the new leaderboard on the right hand side of PipHut this morning. In short it displays the top commentators of every month (so the current board is for the past 5 days). A quick note to on getting involved – I highly recommend it. Even if you feel like a beginner with not much to offer – I’m sure there’s at least a question or two each day that you could answer! Or at least try to answer. Remember – trying to answer questions builds more knowledge than just asking them.

On to today’s signal! Regardless of which signal you used yesterday (a dip to 1.4810 area or a break of 1.4855) pips were made. After touching 1.4810 the pair shot through 1.4855 and peaked out above 1.4915, netting us good pips all the way. Technically and fundamentally nothing has changed since yesterday – in fact a higher high has been established so if anything we are more bullish now. We will continue to look for buying opportunities on dips.

Trading Idea: We have support in the 1.4830-1.4810 area and I will look for dips in this area to buy on with targets at 1.4855, 1.4880 and 1.4910.

(click to enlarge)

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11-5-09

6:26a GMT – Markets are not for the faint of heart right yesterday. We saw stop-loss hunting in the thin markets before the rate decision announcement (stop-loss hunting: where large volume traders move price action in thin markets with the goal of triggering stops creating a squeeze situation) that was helped by general dollar weakness. USD rate was kept the same, as expected, and reiterated that it would stay low for an “extended” period of time. As long as Euro economy continues to show signs of strength (fueling risk appetite) coupled with a higher interest rate, this should set up a bullish EUR/USD situation for the months to come.

Technically we saw the price action bust out of our trend resistance yesterday (around 1.4800) where it is currently consolidating below 1.4850. Given the fundamental picture given to us by the FOMC decision and the technical higher highs and higher lows I am looking to buy on dips now.

Trading Idea: Looking to buy dips above previous trend resistance (now support) currently between 1.4810-1.4790. Long targets at 1.4845, 1.4875 and 1.4920. I will also consider buying on a sustained break of 1.4855.

(click to enlarge)

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11-4-09

7:26a GMT – We saw what we expected yesterday – there was a bearish bias and we saw a drop of 160+ pips, but support was found near the bottom of the range and since the price has drifted up to the 1.4730 area. Price action never saw the top of the range and the aggressive downward swing broke the bottom support putting the pair into a bearish channel. On the 4-hour and daily charts this bearish channel is beginning to look like  a bearish continuation pattern meaning more downside to come.

Trading Idea: Will look to sell at resistance near 1.4755 or near the top of the channel (currently at 1.4800). Pair is currently drifting at 1.4725 resistance and I will sell this area with a strong candlestick confirmation signal. Short targets from 1.4800 are 1.4765, 1.4730, 1.4690 and 1.4655.

(click to enlarge)

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