Archive For "December, 2009"

12-16-09

5:14a GMT – Bears continued their vicious attack on the EUR/USD markets yesterday dropping another 150+ pips on the day. For anyone keeping score thats more than a 600 pip drop in less than 2 weeks every since we saw that nice shooting star on the daily charts on Dec 3. For our part it has been hard to get a decent entry position in these thin markets as bears have been able to push down prices before we get close to our entry positions! But that is ok – I’m always happier to not take a trade than to take a trade I’m nervous about.

Daily Outlook: Obviously we have a bearish short-term outlook on the pair and we still have some room to work with before we hit daily support around 1.4485/1.4465. You can see on the 4h chart below that over the past few days we’ve seen a repeating pattern of a big bearish drop, about a 16 or so hours of consolidation and then another bearish drop – basically a repeating bearish flag-pattern on the charts.

Trading Idea: I’ll look to profit off of this repeating pattern by getting in on a short around the 1.4580-1.4600 resistance zone (50% and 61.8% fibs) or on a sustained break of the bottom rising trend support. Short targets from 1.4600 are 1.4570, 1.4540, 1.4505 and 1.4485.

(click to enlarge)

P.S.  I’ve been bad about getting back to emails lately – sorry. With the email server going down all my spare time has been about getting that up and going again. As things clear up I’ll get back on top of the inbox :).

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12-15-09

EMAIL ALERT – I know that no email alert was sent out for today’s signal! I’m upgrading the PipHut mail server to handle the increased load. Should be up and running for tomorrow’s signal and hopefully you will get signals quicker too :).

6:14a GMT – Well we had a whole lot of nothing yesterday with the EUR/USD yesterday. Early in the day we did have a move upwards which stalled out around 1.4675 (the 50% fibo of the Dec 11th high/low) and dropped 50 or so pips but that was really the only action of the day. After that the EUR/USD just stumbled about around 1.4650 without any real direction.

Daily Outlook: Despite the lack of direction yesterday afternoon I am still very bearish on the pair as it continues to make lower lows and lower lows. My real concern at this point is that in these thinner markets (markets thin out toward the end of the year/holiday season) we can see a big spike in volatility, and a big spike in volatility is usually preceded by a tight range day. Just like we had yesterday. So keep that in the back of your mind when deciding whether or not you want to enter that trade :). We do have some sentiment news coming out of Germany around 10a GMT and some inflation news coming out of the States around 13:30 GMT. You can read more about the day’s news events/details at the forex calendar here.

Trading Idea: Looking for selling opportunities, but will look higher up as volatility is a serious concern in these holiday-thin markets. I am looking for short candlestick signals in fairly big band of resistance, currently 1.4700-1.4730. I will look on the 30m, 1h and 4h charts for a good entry signal. Short targets from 1.4730 are 1.4700, 1.4675, 1.4640 and 1.4605.

(click to enlarge)

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12-14-09

5:01a GMT – Do you remember my post a few months ago entitled “Who uses PipHut?”? It was basically a breakdown of the various countries where PipHut is the most popular. However, as I found out last week there was one whole continent that was not being properly accounted for – Antarctica! I know PipHut has only gotten more popular since that post but last Friday when a PipHutter named Tenkis commented that he was stationed near the South Pole and was a daily follower of the site even I was shocked! To prove it, Tenkis took a picture of himself in Antarctica and uploaded it to the forum under the topic “World PipHut” – click here to view it! Very cool! I would also encourage any piphutters around the globe to upload a pic of themselves with some sort of PipHut printout as well!

On to today’s signal..

Great week for signals last week as the last three have been spot on, complete with nice candlestick signals on multiple timeframes to confirm the trades. Coming into this week the picture is much less clear fundamentally as Dubai has shown progress that they will not default on their loans, many of which are Euro-based. This sort of government-financed security fuels risk-appetite like kerosene on a fire, which would mean positive gains for the EURUSD.

Daily Outlook: However, besides the potential for the pair being oversold, the short-term technical picture for the EUR/USD could hardly have a more bearish trend at the moment, and therefore I am still (cautiously) looking for opportunities to sell the pair on. The pair has broken rising trend support after support recently, the most recent being the lower blue trend line on the chart below (connecting the 12/9-12/10 lows).

Trading Idea: Looking for selling opportunities near former rising trend support (now resistance) just above 1.4700 (which is also the 61.8% fib of Friday’s big drop). Because fundamental signals are mixed I will definitely wait for a candlestick confirmation before entering. Targets from 1.4700 are 1.4670, 1.4640, and 1.4605.

(click to enlarge)

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12-11-09

4:28a GMT – Another picture perfect signal yesterday as the price just kissed our resistance at 1.4750 after the news passed and then formed a shooting star on both the 30m and 1h charts. I know many of you profited off this but unfortunately I was outside shoveling myself out of 40+ cm (15 inches) of snow and missed the signal.

Daily Outlook: This week we have seen a major bearish break of daily support, a quick drop and currently the pair is consolidating in a triangular wedge patter. In general this type of pattern is a consolidation pattern – meaning it is a bearish signal because the preceding flag is bearish. As such I am biased toward the downside. It is the end of the week and we do have some news tomorrow (EUR Trichet speaks at 12:15, USD retail data at 13:30) – all of which can increase volatility. I expect one of the news events to push us out of this wedge pattern.

Trading Idea: 1.4775 is the key bearish resistance level – as long as this holds I will remain bearish on the pair. If the wedge is broken to the upside I will look for signals to sell below this level. If the bottom of the wedge is broken (currently around 1.4700) that opens a challenge of 1.4665, 1.4635 and 1.4600. Short targets from 1.4775 are 1.4745, 1.4710 and 1.4670. If 1.4775 is broken to the upside it puts 1.4850 back into play as a long target.

(click to enlarge)

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12-10-09

5:14a GMT – Shooting stars on the 30m chart have really been providing solid sell signals for me the past few weeks – have you all noticed the same thing? In general if the star is near resistance and is higher than the 10 or so preceding candles (meaning that it qualifies as an ‘extinction’ candle) it has been a very reliable sell signal. Take a look at the 30m chart below with shooting stars circled in blue:

Of course nearly anything has been a good sell signal this week – the EURUSD has dropped almost 500 pips since December 3rd! That includes our signal from yesterday too – we had a near picture perfect pierce of our resistance at 1.4775 with the tip of a shooting star (10:30 GMT on the 30m charts) that was quickly followed by a nice drop. If you missed the first entry the markets were kind enough to provide a second opportunity to enter above 1.4770 a few hours later on a 13:00 GMT rally. I ended up covering at 1.4700 after my third target at 1.4670 was not reached for +75 pips profit.

On to today – you can view the forex calendar here but we have the GBP and CHF announcing rate decisions (12:00 and 8:30 GMT, respectively), trade balances for the USD and CAD (13:30 GMT) and initial jobless claims for USD (13:30 GMT). The news I’m watching closely is the US initial jobless claims. It was a jobs report last week that sent the USD on its major rally and I believe it will be this report that defines the direction of the pair for the coming days.

Daily Outlook: On the 4-hour chart below we can clearly see that after the strong rising trend support was broken the pair has entered into what appears to be a bearish continuation pattern -(aka a “death spiral”). Technical outlook is therefore extremely bearish in the short-term however we have the big news events mentioned above that could thin out markets and make for some aimless ranging in the morning hours.

Trading Idea: I will stay out of the EURUSD until the news has been announced at 13:30 GMT. Until then there might be some (very short-term) trades worth taking at the top of the 30m channel  (shown above) where the last shooting star just touched off of. Also a break below 1.4700 will most likely open way to another challenge of 1.4670 for a quick 30 pips. After news events I will look for a shorting opportunity off of 1.4750 with targets at 1.4715, 1.4675 and 1.4640.

(click to enlarge)

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12-9-09

6:42a GMT – When I wrote in yesterday’s signal that the bears had circled wagons and looked to be in firm control I still thought the bulls would be able to muster a little bit of a fight. Turns out the bulls played the role of punching bag yesterday as bears continued the downward pressure, smashing through 1.4775 support. Price action never got to yesterday’s signal entry, but there were candlesticks worth entering on all major timeframe charts that captured some nice pips. On a side note – this is why I only trade with me trend direction on the day. Anyone jumping at bullish signals more than likely got punished for doing so. If you go with the trend you can get punished, but usually the punishments are not as harsh.

Daily Outlook: With bulls showing little strength and strong daily support broken signals point toward more EURUSD losses and I will look for shorting opportunities. My preferred shorting zone would be 1.4775 (resistance and a 23.6% fibonacci retracement) as that would offer the best reward/risk ratio, but I will also look for shorter-frame shorts on candlestick signals with very tight stops as bears appear to have a firm grip on the markets at the moment.

Trading Idea: Under 1.4775 shorts are preferred with targets 1.4745, 1.4710 and 1.4670. On a clean break of 1.4775 look for a possible re-challenge of 1.4900.

(click to enlarge)

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12-8-09

4:44a GMT – Before we get to today’s forex signal, have you heard that expression before, “circle the wagons”? As far as I know it is an early American expression from a few hundred years ago when the early US settlers were moving west across the Great Plains of the country. They didn’t get along so well with the Native Americans and when they would attack the settlers would circle their wagons in a defensive position to help fight off the attack. We saw a similiar defensive move yesterday as bears attempted and succeeded in consolidating their gains below former trend support which signals a short trade on the day.

Though the  EUR/USD is giving us some short directional signals, fundamentally I believe this USD rally will be relatively short-lived as long as Bernanke signals no action on raising USD interest rates. He again talked about USD strength yesterday but so far that is all he has done – talk. His actions have supported a weak dollar and as long as risk appetite is in the market that signals further dollar weakness against the higher-yielding Euro.

Daily Outlook: That being said, I’m primarily a technical trader and the short-term trend is down. We had a huge 200+ pip drop on Friday, the break of rising trend support that has held for the bulk of the year and bears were able to hold and consolidate some of those gains yesterday. With that in mind I will be looking for a signal to sell near resistance around 1.4900.

Trading Idea: Shorts preferred in resistance zone of 1.4900 with candlestick confirmation. Tight stops, targets at 1.4865, 1.4830 and 1.4780.

(click to enlarge)

Forum Signals: Did you know PipHut has new user forums? Below are some interesting items brewing over there – feel free to jump in, participate and learn! Post your own charts, get feedback on trades, learn new systems, you name it! Stuff happening right now in the forum:

1) We had guzz4geez accurately predict the AUDUSD drop when he spotted a head and shoulders pattern on the AUDUSD charts – link
2) David continues to chronicle his mad scalping system for the EURUSD M1 charts – link
3) Remy found a textbook example of a fibonacci retracement – link

In short, for more signals, more interaction and more learning make sure you are checking out the forums!

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12-6-09

5:14a GMT – Lots of action on Friday! I took a small loss on my long which got about 15 pips in the profit before turning south and hitting my tightened stop. The markets themselves became extremely volatile – dropping over 200 pips in just a few hours – as the US jobless rate slowed much, much more than expected losing only ~10k jobs instead of the expected ~120k. Hours worked actually increased month-over-month, which is an early indicator for production output. These numbers spurred a fear in the markets that the USD would raise interest rates much earlier than anticipated  thereby making the EURUSD carry trade less appealing.

Coming into the start of Monday morning it is clear the market is still divided on how to react to the news, with half the analysts declaring the uptrend broken (the bottom resistance was pierced depending on where you plotted it) and a steady diet of traders licking their chops at the opportunity to buy so close to the channel bottom. Both arguments have merit. Technically we are still in a strong uptrend however the pair is making a bearish flagpole consolidation pattern on the 4-hour charts at the moment.

Daily Outlook: With signals completely mixed and volatility peaking I will stand aside today. No trade is particularly appealing in either direction at the moment and definitely not worth of my hard-earned equity :). Bernanke does speak today but I expect little of value from him unless he offers specific timeframes USD interest rate increases – information he is very unlikely to divulge.

Trading Idea: The main strategy for the EURUSD today is to stand aside and let the markets give us a more appealing trade signal. That aside there will be good selling opps at fibonacci retracements of Friday’s fall a 38.2% (~1.4945), 50% (1.4980) and 61.8% (1.5020). There will also be good potential buying signals on another dip to 1.4825.

(click to enlarge)

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12-4-09

5:41a GMT – Yesterday’s signals produced a trade (which is still open) at 1.5050 (currently a little bit in the profit) though I have tightened the stop as 4h charts are leaning toward a bearish consolidation pattern. Another reason I have tightened the stop considerably is because on the daily chart a bearish shooting star was produced so today could be a bearish profit-taking day for the markets. The AUD/USD trade I mentioned in the comments produced good pips as well :).

As far as yesterday’s news went Bernanke again talked about protecting the dollar – but the markets have heard this many times from Bernanke and never have his actions matched his words. In fact his actions (historically low interest rates) have said the exact opposite: that he at the moment cares very little about the value of the USD. One interesting thing he did say at his Senate meetings was that he would consider using interest rates to “burst” asset bubbles before they got too big.

Daily Outlook: Even as I write this we are seeing a bit of a bounce in the EUR/USD, which is good for our trade, but the signals for today are a bit mixed. The bearish shooting star on the daily chart yesterday and the potential double-top at 1.5140 are signals for a potential return to channel bottom around 1.4880. I will keep my long open from yesterday with a tight stop, though a break of support at 1.5025 will open the short-term bearish challenge of 1.4970. If it reaches this level I will look for bullish candlesticks to buy on.

News Events: Be weary of the Non-Farm Payroll (NFP) data and the US unemployment data due to come out around 13:30 GMT. Markets are usually choppy around news events.

Trading Idea: On a break of 1.5025 look for a challenge of 1.4970 support, around which I will look for buying opportunities with targets at 1.5000, 1.5030 and 1.5065.

(click to enlarge)

Update Graph: Big drop today. Wanted to post this longer term chart to give you some perspective on the drop. Looks like a better buying opp as it approaches that lower trend support doesn’t it?

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12-03-09

6:14a GMT – EUR/USD did indeed bounce off of yesterdays signal’s 1.5050 support and would have provided a quick 50 pips (possibly more, it’s at 1.5107 right now). Unfortunately I didn’t enter a long as I was waiting for a bullish confirmation candlestick to confirm the long signal. I know some of you did take that long and are now in the profit.

Daily Outlook: For the rest of us, I will look to reset longs with a similar trading strategy around 1.5050-1.5030 support zone. Pair remains within the the bullish channel I showed you yesterday after recently making a new 2009 high – so there is little reason to look for shorts at the moment.

Trading Idea: Looking for entry signal between 1.5050-1.5030 support zone. Targets from 1.5030 at 1.5060, 1.5095 and 1.5130.

Event Risk: Lots of news today (thanks for the reminder Nnagozie)! Be cautious around these times as markets could be thin and volatile. Starting at 12:45 GMT we have the EUR interest rate decision, initial jobless claims, nonfarm productivity, and Trichet and Bernanke speaking. No major changes predicted but the dovish/hawkish comments always can move the markets on thin volume. To read more about these events check out the Forex Calendar here.

(click to enlarge)

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