February 3rd, 2009 at 11:07 am
Currency funds.in: General, Trades
Ever wondered what kind of returns professional currency trading funds achieve? With all
http://fxmadness.com/wp-content/uploads/2009/02/gbp-jpy-02-03.jpg
There is no point in going over these trades one by one, but this more than I normally take. Typical day will see , on average, two trades. Guess it was the effect of a narrow range for the day with a lot of half ass moves. There is another one under way right now, with an entry at 128.48 and 60 pips objective.
I’m adding another buy order that can be posted here. It is a buy in NZD-JPY.
http://fxmadness.com/wp-content/uploads/2009/02/nzd-jpy-02-03.jpg
Intended entry is at 46.08 and target 47.00. Looks to me Yen is getting weaker, so I’ll likely have more JPY trades.
Hope nobody is depressed by how unimpressive the pros results are. In my view, individual trader can do much better, but not over night. It takes some time, yet
February 2nd, 2009 at 11:27 am
Silly or what?in: General, Trades
Got home yesterday, watched the rest of Super Bowl and went over newspapers that accumulatedin my absence. The game received a lot of coverage, as always, including this interesting tidbit.The shortest commercial ever in Super Bowl history was purchased by “Ivar’s”, a local fast food company, specializing in seafood. This one was to be only half of the previous
http://fxmadness.com/wp-content/uploads/2009/02/gbp-chf-02-02.jpg
Order is at 1,6960 with 500 pips objective. At the moment I don’t see trade on 1H chart, but it is possible, depending on farther price development. As of right now, 4H chart is the play.
Taking a look agai at a possible short trade in AUD-NZD. Same one discussed last week and then cancelled.
http://fxmadness.com/wp-content/uploads/2009/02/aud-nzd-02-02.jpg
My plan is to sell it at 1.2440, with target of 1.2300-1.2310. I have a feeling Kiwi will be looking more and more attractive as the week progresses. Order I
February 1st, 2009 at 7:52 am
Breakout dilemma.in: http://fxmadness.com/wp-content/uploads/2009/02/gbp-chf-02-01-e1.jpg
Price is very close to a potential resistance level of about 1.6950. Considering speed of this advance to date, it is very possible that will see a breakout above this area. This presents couple of problems. Objective could be as high 1.7800, but most logical http://fxmadness.com/wp-content/uploads/2009/02/gbp-chf-02-01-e2.jpg
My idea for a good buy set up includes some price pullback. It doesn’t really matter how much, as long as it is easily noticeable. This would make current resistance level much more important and present one more buying opportunity at better price. This would require zooming in to 1H charts, something I do all the time. BTW, EUR-GBP looks very similar. It should be understood, above scenario is something I would like to see, not something that will necessarily happen. Risk is that Pound just keeps going up and I’m not on board. For me, this is mitigated by the fact that I already have a longer term GBP-JPY position, discussed in last post, plus couple of other trades not covered in the blog. So, I am only an observer for now.
This here is a buy order which will be placed before market opens.
http://fxmadness.com/wp-content/uploads/2009/02/cad-jpy-02-01.jpg
CAD-JPY buy order on 4H chart at 74.94. My objective is quite ambitious, 79.00. Frankly, it would not be a bad idea to simply buy it at the open (depending on any gaps), risks are small, but this position would have to be watched closely. I will be traveling then, so can’t do it. Should make it home in time to for
January 29th, 2009 at 12:00 pm
Sour Kiwi.in:
http://fxmadness.com/wp-content/uploads/2009/01/nzd-jpy-01-29.jpg
Order was filled
http://fxmadness.com/wp-content/uploads/2009/01/gbp-jpy-01-29-e.jpg
On this platform it happened to be 123.00 level. Yesterday, right before, FED announcement, I closed half of this position for almost 540 pips gain. Trade size
January 28th, 2009 at 12:02 pm
Mixed news.in: General, Trades
News regarding US economy are simply amazing these days- not a shred of something positive. All we hear are job cuts followed by even more cuts. Today was no exception. Boeing announced
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-01-28.jpg
http://fxmadness.com/wp-content/uploads/2009/01/gbp-chf-01-28.jpg
100 and 300 pips respectively. I’m leaving these pairs alone for now until prices form promising set ups. Pound has more upside potential, but targets were reached and I’m satisfied with the outcome.
Here is one possible trade I’m considering now.
http://fxmadness.com/wp-content/uploads/2009/01/aud-nzd-01-28.jpg
Kiwi is trying to crawl out of the whole it is in and this looks promising, sell in AUD-NZD. Order is placed at 1.2458, with 120 pips objective. I set it under both previous lows and 100 SMA( at this moment). These 2 possible reasons for support converging here. If both of them go, probabilities of positive outcome increase.
Moment for
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January 27th, 2009 at 11:51 am
Indecisive markets.in: General, Trades
Strange day today in world of currency trading. I call it indecisive market, while in reality it should be ” Mike is confused” or something of that sort. Most notably Yen is behaving oddly from my
http://fxmadness.com/wp-content/uploads/2009/01/nzd-jpy-01-27.jpg
I expected to be in this trade by now, although at the moment I’m glad it didn’t happen. Price missed my entry by 2-3 pips on this platform and registered quite a steep decline into consolidation area. NZD is not the strongest currency at the moment, but all Yen crosses look like that. Only difference is degree of confusion. This here 4H chart doesn’t look too bad, but 1H is a real mess with all kinds of conflicting clues. The pattern of Yen behavior seems to be: if fundamentals are inconclusive JPY is getting stronger until a little clearer consensus emerges. Only to get muddled up next day. For now I retain my original buy order and place additional one at 46.00. If this happens target would be 47.80. Depending on how Yen pairs act some adjustment might be needed.
Yesterday’s post had a just opened short trade in EUR-GBP.
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-01-27.jpg
It was a second position in a row at 0.9440 and, just like the first one, also brought 75 pips.Next sell at 0.9328 was triggered shortly after. This one has an objective
January 26th, 2009 at 11:46 am
From depression to elation.in: General, Trades
I love internet. The almost immediate access to information, not having had to wait for tomorrow newspaper, continues update throughout the day. Let’s not forget the possibility of trading financial markets (for better or worse). But there is one thing that internet publishing has very much in common with other
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-01-26-e.jpg
When EUR-GBP made new high on this chart, I moved sell order to under most recent low. Finally the price moved my way and trade was opened at 0.9440. target was changed to 75 pips, above possible support, where my initial sell was. Turned out to be fast trade. Once the price ran up I went short again at the same level 0.9440. This trade is still live. My target is once more 0.9365 or 75 pips. Possible important development on 1H chart is the emergence of the 0.9335 region as a very strong support (blue line). Chances are that IF that goes, following move should also be swift. That’s why I have another sell order there, with 100 pips objective. But we are not there yet. First, current trade has to reach conclusion.
I’m also placing a buy order in GBP-CHF.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-chf-01-26.jpg
This one is at 1.6165 with 300 pips objective. Admittedly, it is unlikely to play out tomorrow, GBP is falling again. All the cheers might have been premature. But it will not hurt to have an order in this area for now. I can always move it.
NZD-JPY from
January 25th, 2009 at 10:26 am
Forex rumors.in: General, Trades
World of Forex trading is full of rumors. Blogs, forums and chat rooms are filled with all kinds of “information” which is normally nothing more than personal opinions of writers. And sometimes just wishful thinking. Probably no other event fuels the rumor mill more than intervention. Real or imagined. Currently Forex cyber-world is abuzz with expectation than Bank of Japan is going to step in and halt the rise of Yen. Recent statements from Japanese officials would surely support this assumption. One must remember, however, that by issuing these vague threats of intervention, they try to influence market sentiment, without having to commit themselves. Interventions are expensive, and BoJ or any other central bank, don’t want to do it unless it seems absolutely necessary to them. Also, http://fxmadness.com/wp-content/uploads/2009/01/nzd-jpy-01-25.jpg
I have a buy order in NZD-JPY at 48.07, with a 200 pips objective. This is the resistance level price has to go through before it gets any higher. Most of JPY pairs charts look very similar. For example, CAD-JPY had a buy point at around 71.60. Price moved above it late on Friday. This is encouraging for all other crosses. Doesn’t guarantee success, but a positive sign.
More rumors. Pound situation is apparently serious enough to be a subject of next G-7 meeting. Probably “grave concerns” will be expressed combined with more rethorics of “united front” and “strong response”. I want to start selling EUR-GBP with or without G-7 impact.
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-01-25.jpg
It was tried last week for a small loss. Market is developing a congestion zone, with signs of possible turning. Sell order was placed at 0.9328 with 100 pips objective. If this works, more trades will follow.
Few posts ago I floated an idea of buying GBP-JPY using daily chart. Want to buy it if price goes above high of previous daily candle. Target is 136.00. This can
January 23rd, 2009 at 12:00 pm
Clawbacks???
http://fxmadness.com/wp-content/uploads/2009/01/nzd-jpy-01-23.jpg
Initial buy at 47.75 was my test trade before I committed to entering into other Yen crosses. Price kept drifting lower and last night, when sell off accelerated I closed it for 117 pips loss, only to reenter it few hours later for a good trade. Why? It is easier to see on next chart.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-jpy-01-23-e.jpg
After another sell off price undercut latest low and started to build reversal pattern. This happened after the initial move of European session, when prices often turn, especially on Fridays. Mostly in anticipation of US data coming out over next few hours. For me, who have spent days seeking a good, low risk buying situation, this was it. Very low risk, momentum turning, time of the day… None of the factors alone made for a great reason, but together they made sense to me. So I bought all JPY crosses, including the NZD-JPY above. This is as discretionary as discretionary trading gets. Beast didn’t hit the target of 123.00, but other pairs reachedtheirs.
http://fxmadness.com/wp-content/uploads/2009/01/aud-jpy-01-23-e.jpg
Turned out to be a very good day. All other orders mentioned in the blog over last week remain active. For example, AUD-CHF buy from yesterday. Next
January 22nd, 2009 at 11:43 am
Market talk.in: General, Trades
Market talk only today. Yen and Pound pairs (most of them) largely consolidated today, after large swings day before, but then everybody can see it by him/herself, so why waste time? My trades, at least the ones posted here were mixed. EUR-GBP short was closed at a loss.
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-01-22.jpg
I took 51 pips loss and placed another sell order at 0.9272. This is subject to be moved under next higher low, if it forms. Objective would be about 130 pips, should this trade be executed here. Since it might be moved, final target
http://fxmadness.com/wp-content/uploads/2009/01/aud-chf-01-22.jpg
This probable buy is on 4H chart, with entry at 0.7680, targeting 200 pips. I’m using intermediate term chart, so it should be no surprise in this scenario takes a
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January 21st, 2009 at 11:50 am
Nothing to sell.in: General, Trades
These are words of famous investor Jim Rogers. They pertain to situation in UK. When asked about the reasons behind economic decline in Great Britain he said: “It’s simple, the UK has nothing to sell.” This is why we are witnessing this fantastic
http://fxmadness.com/wp-content/uploads/2009/01/nzd-jpy-01-21.jpg
I was waiting for bullish candle on hourly chart, When it formed I bought it (top of the bearish candle), 46.77. Objective was 100 pips. price came just short and I got out 47.43.Well, yen made another run for it just few hours ago. Big push, 200 pips here, and 400 pips in GBP-JPY, hitting 120.00. I’m placing trailing buy orders on some Yen pairs. For NZD-JPY buy level is 47.80 for now. If this was to happen, target would be 49.80.
Pound crosses start to look attractive to me so I’m also tracking them with Pound buy orders, starting with EUR-GBP.
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-01-21.jpg
Potential sell at 0.9322, with 80 pips objective.Now, GBP-JPY I have a special plan for. Depending on how today ends, what the candles look like, I might place
January 20th, 2009 at 11:35 am
All time low.in: General, Trades
The beast, GBP-JPY, has been receiving frequent mention on these pages, so it is only fitting I also note this. This pair has just suffered an ultimate ignominy, an all time low. Price reached as low as 125.20, but it is likely to deepen it by the time this post is written. Pound fell hard, as the details of British bailout plan were digested. I’m the first one to admit that I didn’t see it coming. My expectations were to see a little back and forth around the low, but ultimately thought it would hold. Fortunately for me, I withheld from trading Pound crosses, wanting to see how this really big piece of fundamental news plays out, as http://fxmadness.com/wp-content/uploads/2009/01/aud-chf-01-18-a.jpg
Turned out to be much more trading than anticipated. After entry at 0.7625, price fell to just under 0.7500. I put Fib tool over the previous up swing. 0.7500 happens to be right at 0.62 retracement, as well as sitting on 100SMA, which I often use as support/resistance. Confluence of factors which made me open another http://fxmadness.com/wp-content/uploads/2009/01/nzd-jpy-01-20.jpg
Nod that Kiwi is strong, just the opposite. But is right at a level of last low. I want to see a bullish hourly candle first, before any trade takes place. When and if this happens, parameters will depend on how the chart looks like. It might be time to start planning some GBP long trades, but charts have to b
January 19th, 2009 at 11:49 am
Another scam.in: General, Trades
Following the footsteps of Madoff, another scam is emerging. This one involves a hedge fund manager from Florida. Reports suggest that one Arthur G. Nadel, who operated out of Scoop Management Inc, has disappeared and fund’s accounts are empty. Amount apparently missingis in the neighborhood of $350 million.Already scores of people came forward, each claiming hundreds of thousands of dollars intrusted to Mr Nadel.Alleged perpetrator is
http://fxmadness.com/wp-content/uploads/2009/01/aud-jpy-01-19.jpg
Gaps were not very large, so I was looking for minor gains here. I don’t try fill the gap completely, rather just most of it. Small gain was realized on the initial trade, but the reverse was weak. Objective was 62. 00 just under the high. It didn’t happen, price broke and I closed with minor loss. First part of the strategyworked, second didn’t. There was one benefit, however. Involvement here kept me away from opening a longer term trade which was intended, originally, at 61.70. I decided to close the gap first and get into that position if price moved above the high point. Have to wait longer.
I’m adding a buy order in CAD-CHF.
http://fxmadness.com/wp-content/uploads/2009/01/cad-chf-01-19.jpg
Breakout here is very possible. Plan is to buy at 90.85, with a 100 pips objective. Incidentally, I’m in the trade featured yesterday, AUD-CHF. Now just
January 18th, 2009 at 10:01 am
How will Pound react?in: General, Trades
Over last few weeks I have been on the lookout for long trades in Pound pairs, with mostly decent results. It has hit either all time or multi year lows against just about everything else there is to trade. It is possible a bottom was reached, but this theory will be tested over next few days. In face of ever deteriorating banking situation in UK (rings a bell for those of us in America), British Treasury is ready to extend another lifeline to ailing banks. Latest report calls for drastic revision of the terms of http://fxmadness.com/wp-content/uploads/2009/01/eur-nzd-01-18.jpg
Kiwi was hammered last week, but chances are this is the extent of it. To put this theory to the test, plan is to short EUR-NZD just under last days low. On this platform it means a sell at 2.3950. Objective is two pronged with first one about 2.3300 and then 2.2500. Since this is a daily chart I don’t expect quick resolution. From few days to couple of weeks is the likely time span.
Another potential trade is in AUD-CHF.
http://fxmadness.com/wp-content/uploads/2009/01/aud-chf-01-18.jpg
Here I
January 17th, 2009 at 11:45 am
Anatomy of a trade.in: http://fxmadness.com/wp-content/uploads/2009/01/gbp-jpy-11-17ed.jpg
Price was moving down establishing minor lower highs in the process, market as “A” amd “B” on the chart, with “B” being most recent. Sign of possible turn came when high “B” was taken out at “C”. This is when I took a loosing test trade in EUR-JPY. Most other Yen crosses went on to undercut lows once again, but GBP-JPY didn’t make a new low, indicating strength in GBP. The beast moved in a sideways fashion for a bout a day and I placed a buy just above the high at “C” or 132.22, with 134.00 objective. At this time my trades in NZD-JPY and EUR-JPY were turning around and I decided to put buy orders in all yen pairs at the same spot as here. The fact that GBP-JPY didn’t make a new low, made it particularly attractive for a buy. It increased probability for a successful upside move. Once the trade was triggered it took only few hours to reach the objective. Week of waiting, but
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January 16th, 2009 at 12:32 pm
Furious trading.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-chf-01-16.jpg
Initial breakout was a little jittery, but then the price moved. I liked what I saw so much that at the intended target of 1.6570 only half position was closed and the rest was held for another 100 pips. I also like the following drop in price, because this should present another buying opportunity soon.
AUD-CAD was also briefly mentioned in that post. Here is what happened.
http://fxmadness.com/wp-content/uploads/2009/01/aud-cad-01-16ed.jpg
These trades were intended to be entered in reverse sequence, but I screwed something up and this is the way things turned out. Outcome was not as good as the one above, butto do with entering longs in NZD-JPY and EUR-JPY. They were done at the market, followed by breakout trades.
http://fxmadness.com/wp-content/uploads/2009/01/eur-jpy-01-16.jpg
http://fxmadness.com/wp-content/uploads/2009/01/nzd-jpy-11-16ed.jpg
Both positions started shaky, but eventually found bottom(at least for now) and went my way. Ultimate outcome was good. I’m glad it’s Friday and it’s over for now. Time recharge batteries.
Tomorrow, ti
January 14th, 2009 at 11:13 am
Rough day.in: General, Trades
It was a rough day of trading. Large intraday swings pretty much everywhere. Euro found itself being pummeled, apparently on news that S&P downgraded Greece’s credit rating. I’m not sure why anybody would take rating agencies seriously after the mortgage backed securities debacle, but evidently they still carry some wait. Interestingly enough, Pound is showing some strength. Perhaps it will gain momentum.
Yen crosses remain very choppy and my EUR-JPY trade didn’t do well.
http://fxmadness.com/wp-content/uploads/2009/01/eur-jpy-01-14.jpg
Loss of 86 pips. This was the only JPY pair I tested, so no big deal. Just have to wait for a better set up and keep watching latest highs. Trailing buy orders. Although I’m tempted to just buy NZD-JPY right about now and maybe EUR-JPY. The risks are very small and large potential. I’ll have to give it some thought and decide before sleep. That’s right, sleep. Forex trading is best at night and morning here on the west coast, so my life is upside down.
I’m going to test if the Pound is really getting stronger buy a small trade in GBP-CHF.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-chf-01-14.jpg
Buy is placed at 1.6420 with an objective of 150 pips. AUD-CAD also looks inviting as a buy at 0.8280. It is a difficult trading environment, though, made in
January 13th, 2009 at 11:31 am
Evil server.in: General, Trades
Here I was yesterday trying to write an update when I got this dreary message on the screen - “Internal server error”. What the hell is “Internal server error” and what does it have to do with me posting something? I swore at it a few times but it didn’t go away. I called the hosting company. They apologized, telling me that their best men were working on the problem, but failed to explain what the problem was. Eventually I realized that even if they described the nature of the malfunction on a minute, subatomic level, I still would
http://fxmadness.com/wp-content/uploads/2009/01/gbp-cad-01-12.jpg
This is chart as it was yesterday, without today’s action. As I feared, behavior became erratic and I simply bailed out with a minor loss. I will probably try it again if , or intention for a trade, in NZD-CHF. After few days of detours it finally happened.
http://fxmadness.com/wp-content/uploads/2009/01/nzd-chf-01-13.jpg
Worked out very well for a 100 pips profit. Kiwi is falling hard.
Yen accelerated its advance and is threatening lows from few weeks ago in most crosses. While some correction was expected, this is a little bit surprising, but that is what markets do. At any rate, no big deal, I wasn’t in any large JPY short(long crosses) positions. At this moment I still think that the lows will hold, more or less, and I’m getting ready to watch for reversal.
http://fxmadness.com/wp-content/uploads/2009/01/eur-jpy-01-13.jpg
I will not be trying to catch the bottom, this means no choosing some arbitrary number where to get in. Rather trailing the most recent minor high with a buy or
January 11th, 2009 at 10:39 am
Crime didn’t pay.in: General, Trades
This time crime didn’t pay for pirates of the coast of Somalia. After receiving ransom for a release ofhijacked tanker, it is reported that five of them drowned in high sees while making a getaway. Apparently their speed boat overturned. I guess the weight of, what, $3M in bills just pulled them down to the bottom. Already there are voices out of Somalia blaming naval surveillance for deaths of pirates, as if they were doing some noble deeds. Very ironic- first they got what they wanted and immediately after what they deserved. I’m bringing this up because my of ties to maritime industry, which makes me follow these matters with both interest and disdain.
On a more mundane subject, Yen has enjoyed a few days of strength. Here is a daily chart of AUD-JPY, but most of JPY pairs have very similar profile.
http://fxmadness.com/wp-content/uploads/2009/01/aud-jpy-01-11.jpg
In my view a large and important bottom is being built. This process will likely take at least few more weeks, if not months, but I’m getting slowly ready for trades on the long side. I don’t think we will see new lows. With that in mind I marked an approximate area where turn around could be expected. I’m sitting on sidelines and watching 1H charts. Over next couple of days I’d like to see hourly charts to start building minor bottoms. Should the sell off accelerate, however, I will start trailing minor highs with buy orders. For now, though, taking it easy and waiting for patterns to emerge, of the type that you can see all over this blog. GBP-JPY short term buys are always in play.
In all honesty I don’t see all that much at this time to get excited about. This is possible exception.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-cad-01-11.jpg
Plan is to sell GBP-CAD at 1.7880 with 200-220 pips objective. This potential trade is challenging, since GBP-CAD is not easy to trade. It moves fast and there is a lot of spikes. On top of that, both currencies have been showing strength, so multiple bounces are possible. In a little broader picture, though, I think GBP will take a little break which should help this trade- if it happens. Due to erratic nature of this cross movements, this position will be
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January 10th, 2009 at 10:54 am
Another look.
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-weekend-weekly.jpg
On this chart most recent low is around 0.8250, so trend has not been broken yet. That said, last few candles created a very strong reversal pattern. Those who trade of candlesticks, should be entering short positions now. Myself I jumped the gun, and started to sell earlier, but was using smaller magnitude charts for entry. One must remember that presence of reversal formation, even as strong as this one, does NOT guarantee end of trend, only strongly enhances probabilities. The odds are augmented by powerful, parabolic run before. Sharp crushes tend to follow them. For all practical purposes, this chart has makings of reversal, but it is not confirmed yet on technical merit.
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-weekend-daily.jpg
Daily charts shows that current move reached 62% retracement level of previous up swing. If we don’t see reaction in this area, and price continues to fall we should see confirmation of reversal soon. Price swings have been historically extreme for EUR-GBP, which presents special challenges for trading either daily or weekly charts. If one was to enter a short position here, the proper stop would be above latest high, which is 1000 pips. Huge by anyone’s standards and difficult proposition. Entering about week ago was far less risky. From now on I’m looking at these charts for guidance only, with trades being taken only on 4H and 1H charts. Intermediate term chart (4H) has broken under 100 SMA and fell below recent low, so, by my definition, it is in a down trend. As a matter of fact I expect corrective move there to about 0.92-0.93, before the sell off resumes. Also, we should start seeing decrease in daily trading ranges, which are still extreme.
GBP-CHF is in a very similar situation.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-chf-weekly2.jpg
Just like EUR-GBP, we have great example of a candlestick reversal pattern. One thing about candles is that their significance increases with time frame. Nice formation on weekly charts has bigger chance of being correct, or predictive, than this same formation on, say, 15M charts. However, trend is not broken yet on this chart. So far just corrective move, with good potential for reversal.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-chf-daily.jpg
Daily chart shows that so far price retraced only to about 50% of most recent swing. This was enough for my trade which I closed yesterday(last post). Entering long positions using any of these charts, while correct, would carry large draw down potential of about 1800 pips. Just like EUR-GBP, this pair had a historical price move of parabolic nature, so chances are high that long trend is reversing, but once again, no confirmation yet. Smaller time fra
January 9th, 2009 at 11:32 am
What a week.ago. The nation’s unemployment rate bolted to 7.2 percent in December, the highest level in 16 years, as nervous employers slashed 524,000 jobs, capping one of the worst years in modern history for American workers. This is rather serious. On top of that, analysts expect January to be worse, because employers tend to wait with bad news until after the holiday season. Also, a lot of employees are forced into working less hours, or even jobs are converted into part time positions in in order to save costs.
Currencies reacted sharply, with USD getting stronger. Euro lost about 300 pips, although Pound seemed to be holding ground. It is sliding now. And Yen is raising head again. It had been stealthily getting stronger for last few days and today this process accelerated. Which didn’t work well for my daily GBP-JPY trades, however, there is nothing really to complain about.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-jpy-01-09.jpg
While I scrambled for few The move that came was faster than expected. The following chart is 3H chart, for better viewing.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-chf-weekly-edited.jpg
For some reason this broker doesn’t offer weekly charts, but the high the week before was just above 1.5800. My entry was placed at 1,5830. Once the move started , it didn’t look back. When it hit 1.6900. I pulled the plug for a great profit of almost 1100 pips. Why? Frankly, holding trades for as long as intended is not really my cup of tea. Secondly, since gain was so big so fast, I’d hate see it evaporate now. While I think the up move will continue, there is a good chance we will see a consolidation of some duration. Also, I thought it would be fitting to top a great week with a very good result. This has been an extremely good week for me, catching big moves in targeted crosses. I’ve been getting some emails about it so let me clear something out- results achieved this week were NOT typical and can NOT be expected very often. Normally after periods of above average returns caution is advised. It is very easy to start trading too large and/or getting into too many trades. Gains can evaporate very fast because trader is very full of himself. Happened to me before and more than once.
Tomorrow
January 8th, 2009 at 11:47 am
History is made.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-aud-01-08.jpg
The move through my buy level of 2.0825 was powerful, and reached the target of 2.1150 fast. Nice 325 pips. And no, I don’t have any regrets about not
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-daily2-edited.jpg
The fill was at 0.9670, with original objective at 0.8800. Two days ago, when this pair started to stall, I adjusted it to 0.8900. This was reached on the rate cut news. This is the biggest gain ever for me in this cross- 770 pips. So, a little bit of history is made for me. Under more typical circumstances one would have to wait a year for this kind of moves. Now it happened in a week. Strange times….
I will sketch some thoughts about EUR-GBP on Saturday, if anybody cares. There is one more trade from a few days ago to cover, but that has to wait till tomorrow. In the meantime I’m switching gears to NZD-CHF.
http://fxmadness.com/wp-content/uploads/2009/01/nzd-chf-01-08.jpg
For whatever reason commodities currencies have been under pressure last 2 days. I’m sure somebody has a fine explanation for that. Decided to sell NZD-CHF. This cross gets very little coverage, but it is not too bad. Currently, it moves enough for a decent potential profit and the spread is not
January 6th, 2009 at 12:09 pm
Toyota in trouble.in: General, Trades
US automakers are not alone in feeling pain. Toyota, which just recently has passed GM as the world’s largest producer of cars, has taken a rare step of shutting down production for 11 days.Only plants in Japan are scheduled take this drastic step. This follows three days shut down that took place in December. This step highlights the impact of the relentless decline in global demand for cars, which plunged over 35% in December. To be fair, Detroit’s troubles started well before recent economic slowdown, and were somewhat different that Toyota’s. Regardless, most, if not all, world’s car producers are suffering.
Forex commentators were quick to link this development with Yen weakness, which is probably pile of crap. Let’s not forget that over last few months there were NO good news coming from Japan and Yen still managed to stage a great rally, which is overdone now. I strongly suspect, any news from Japan could be used as an excuse for falling Yen. Well, reporters have to write something.
Weakness in JPY came at perfect time, when I was ready for it. Some pips were made yesterday, few more today.
http://fxmadness.com/wp-content/uploads/2009/01/nzd-jpy-01-06.jpg
This is a trade form the
http://fxmadness.com/wp-content/uploads/2009/01/gbp-jpy-01-06.jpg
Three trades, all winners. For the last trade I used 15M chart, that’s why target was a little bigger. In the interest of simplicity it is easier to show them all on 5M chart. I like falling Yen and hope it keeps doing so.
Pound had shown decent gains last few days, but is this turn around for real? It movedtogether with the “commodities currencies”. If this is real strength in GBP, it should also appreciate against other members of this pack. I will test it by placing a buy order in GBP-AUD.
http://fxmadness.com/wp-content/uploads/2009/01/gbp-aud-01-06.jpg
This is not a typical trade I’d be looking for. I think chances are high for price moving sideways for a some time- long time in relation to the chart used.
January 5th, 2009 at 12:02 pm
Stimulus.in:
http://fxmadness.com/wp-content/uploads/2009/01/eur-cad-01-05.jpg
I passed on the original breach of my sell price at 1.6732 right after open( see last post) but few hours later price made another run down. This time order was placed at new low of 1.6720. About 8 hours later target of 1.6300 was reached for a very healthy 400+ pips gain.
My patience in following EUR-GBP also paid off.
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-01-05.jpg
Price moved higher after the open but just missed the sell order I had at 0.9650. Another sell set up was created around 0.9540, so I took it for 39 pips. Very shortly afte, the breakout order at 0.9445 pips was filled. This trade worked out as outlined in last post, reaching objective of 0.9310. These are good results for one day of action in EUR-GBP, at least for me.
I also decided to close AUD-JPY not long after open.
http://fxmadness.com/wp-content/uploads/2009/01/aud-jpy-0105.jpg
This netted 202 pips, short of initial target, but my NZD-JPY order just was filled, I was active in GBP-JPY long trades and had so many other other trades that decided to settle for a sure thing and take some money of the table. It doesn’t happen very often when virtually all my trades worked as planned. I hope this will set the tone for 2009.
EUR-GBP
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January 4th, 2009 at 10:28 am
Back to normal.in: General, Trades
Now that all the holiday seasons are over, we can get back to normal. For a while we are done with dead days in the middle of the week, unpredictable spreads, lousy fills and even lousier service from brokers. We can start loosing money on our own accord, without having an excuse “broker screwed me”. But more seriously, January has a tendency to be a busy month, with large moves and wide daily ranges. Following dreadful 2008, banks, hedge funds and other big money managers will be starting to implement their investment and trading strategies for the year. This means that large pools of money will probably
http://fxmadness.com/wp-content/uploads/2009/01/eur-gbp-01-04.jpg
Two sell orders here, one at 0.9650 targeting 0.9500. One more at 0.9445 with an objective of 0.9310. It is entirely possible for the price to stall within this wide range, in which case I might look for trades with smaller gain potential, but for now I operate on the premise that swings remain large.
Yesterday I wrote about EUR-CAD using daily chart. For my own trading I want to use 4H charts.
http://fxmadness.com/wp-content/uploads/2009/01/eur-cad-01-04.jpg
Once again, couple of sell orders here, with one presenting special challenges. Currently price is almost at the level where I would like to sell, BUT I really want to see little bounce in price first. If it goes through my sell level right after the open, I will most likely pass on it and wait for the run up in price. Chances are I could miss JPY where I continue taking long trades on 5M or
January 3rd, 2009 at 10:42 am
The big picture.in:
http://fxmadness.com/wp-content/uploads/2009/02/gbp-chf-weekly2-e.jpg
This has been truly historic sell off, hitting 1.5000 level, an all time low. It seems absolutely overdone and has marking of parabolic run. When price behaves like this, it also has tendencies to correct in rapid fashion. My plan is to buy it above the most recent weekly candle. Should the price continue down, I’ll keep moving entry level with it. First objective would be 1.7400, or about 1600 pips, while possible second target could be as high as 1.9300. With targets this large, one also has to be willing to give a trade fairly large room to fluctuate, few hundred pips. Specifics will depend on most recent low when the trade is entered and some other factors, like price behavior on smaller time scale. At any rate, my view on GBP-CHF is sizeable correction over next few months, maybe as high as 1.9300, with rather limited downside risk.
One currency which has received very little attention lately is CAD. Seems that it disappeared from the radar screen of press, together with it’s value. Canadian dollar has been loosing ground against the majors, except for GBP, which itself is the poster child for the unwanted. Some signs are showing up, indicating that maybe CAD is turning the corner here.
http://fxmadness.com/wp-content/uploads/2009/01/eur-cad-daily.jpg
This is a daily chart of EUR-CAD. I’m not surprised that it doesn’t get much coverage, because it is very difficult to interpret. The last move from 1.4800 to 1.7500 has possibly come to an end with this nice double top and correction maybe finally here. Charts suggest pullback to about or just under 1.600 area, at least for now. Since this chart is not technically friendly, I would not be going for any more than that. Even though chances are high for t
January 2nd, 2009 at 10:27 am
From Russia, with love.in: General, Trades
As a New Year present, Russia has decided to cut natural gas delivery to its neighbor, Ukraine. One has to understand that this is the major holiday in both countries involved, equivalent of Christmas elsewhere. Time to exchange gifts. There you have it, from Russia, with love. The move came in an apparent attempt to recover unpaid gas bill from Ukraine. Also, dispute about futureprice is cited as a reason. Both countries were quick to assure that deliveries to Europe will continue uninterrupted. While Russia’s reasoning may very well be valid, observers point out to other, politically motivated objectives behind the move. One only has to wonder, is this the way of the future, when GOPEC (gas OPEC) is fully formed? I’m not part of this “Let’s bash Russia” crowd, only find timing of this move, well, peculiar.
First trading day of the year turned out to relatively active, as far as price movement goes. Trading platforms opened at different times and some showed large gaps. These were not the kind of gaps I trade, they were not evident on platforms which opened earlier. Nonetheless this early activity was a little confusing, so I largely set on my hands. On the time frames that are featured here in this blog I found only one nice breakout ( one I participated in that is), buy in CAD-JPY.
http://fxmadness.com/wp-content/uploads/2009/01/cad-jpy-01-02.jpg
My target was higher, but decided to close it here, at 75.59 and call it a day. Earlier in the week in post the progress as warranted. Also
December 31st, 2008 at 11:11 am
Nice finish.in: General, Trades
Trading year has come to a close for me and it was a very nice finish. I was planning to write a little review of 2008, but the day turned out to be so eventful, that no time for reflection is left. It will have to wait till later. For now just a look at today’s trades. Sterling is growing some spine after a long and steep decline, which helped my EUR-GBP trades. They were outlined in previous post.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-31.jpg
After a good trade yesterday, I was waiting for a development of another bearish candle on 4H charts. I’m using 1H here to show more detail. Shortly after my last update the candle formed and I entered a short at market- 0.9745. Objective was 100 pips. After a slow start price began to move after European open and my target was reached. Another sell order was waiting just under previous low, at 0.9615. It was triggered just after the first trade came to a conclusion. At this point I pretty much expected to sit on it for a couple of days, but, rather to my surprise, price just kept on falling and hit my objective of 0.9515. Total of 200 pips, in two trades, very good for one day of trading EUR-GBP. I will take a look at what maybe next for this pair in a later post.
Swissy also “played ball” and my USD-CHF trade worked as intended, if barely.
http://fxmadness.com/wp-content/uploads/2008/12/usd-chf-12-31.jpg
Nice breakout with entry at 1.0640 and target of 1.0740. On this platform the highest recorded bid was 1.0741, so my objective was reached with 1 pip to spare. One more possible trade in CHF was mentioned in last post, a buy in AUD-CHF. I didn’t include a chart because the set up was almost identical to this one. And so was the result.
http://fxmadness.com/wp-content/uploads/2008/12/aud-chf-12-31.jpg
The difference is that here price really moved, way above the 100 pips target. This was very nice finish to a good year and I’m glad it came to an end on a positi
December 30th, 2008 at 11:41 am
Worst ever.in: General, Trades
Japanese stock market closed its last trading session of the year.For NIKKEI average it was the worst ever year, with a loss of 42.1%. It may seem strange, considering that Japan didn’t have the same kind of credit problems as other countries. They had own real estate bubble back in 1989-1990, but even thenEUR-GBP trade. I used 4H charts, with an entry at the end of a bearish candle.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-30.jpg
The candle I waited for was completed right after I finished writing yesterday’s post. I went short at 0.9737 and 100 pips objective. Target was reached fast, for a nice gain. After that I was looking for reversal on 1H charts, but it didn’t happen. Instead, price made new high. Right now I’m planning another if the price dips under the low of about 0.9620 for 4H charts. If current candle will turn out to be bearish enough I might short it at the market again, with similar target.
After big moves on Monday, things are already slowing down before New Year. While I don’t expect much and want to be done before this time tomorrow, I’m placing few new orders.
http://fxmadness.com/wp-content/uploads/2008/12/usd-chf-12-30.jpg
One of them is a buy in USD-CHF at 1.0640, with 100 pips objective. Other Swissy crosses look similar, like AUD-CHF.
I’ll try to post something tomorrow and then take a day off to meet New Year.
Mike K.
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December 29th, 2008 at 11:12 am
Birthday rally.in: General, Trades
Right from the open Euro went on a run. And a strong one, too. I think European currency was celebrating 10th anniversary and had a birthday rally. It has already been 10 years since Euro was introduced on January 1st 1999. That was for non-cash purposes, with the coins and notes following in 2002. I’m going to leave to economists to sort if EUR achieved its intended purposes ( lower borrowing costs, ease trade and tourism, boost growth, etc,.), but it surely have seen change in fortunes. First few years Euro was steadily loosing ground, but then followed it with a multi-year bull market. From the traders perspective, introduction of Euro was not a welcome development. It eliminated http://fxmadness.com/wp-content/uploads/2008/12/gbp-cad-12-29.jpg
GBP-CAD fell under 1.7800 and I went long at 1.7754. I expected a decent bounce here, and with small stop took the trade. In all honesty I was looking for sharper run up, to about 1.8000 for this leg, but this didn’t happen. I got out at 1.7855 and Pound fell into new depth of misery.
Few days ago in a post Another cartelI talked about long EUR-CAD trade. I placed an order and, well, forgot about it.
http://fxmadness.com/wp-content/uploads/2008/12/eur-cad-12-29.jpg
Got sloppy and overlooked that this order has not been cancelled. Hate when this happens, because the outcome is usually bad. This time I lucked out and took 255 pips. With the number of trades I take in few different accounts I forget things sometimes.
I took a few tr
December 28th, 2008 at 9:52 am
Opportunities?in: General, Trades
Price ranges have contracted sharply last week. Most of it can be attributed to Christmas and typical holiday related slowdown. Also, preceding couple of weeks had been volatile above average. Prices for most pairs consolidated within trading ranges, established, in most cases, on 4H charts. These kind of contractions don’t usually last very long, especially in an environment of world wide financial crisis. The most dramatic moves are likely behind us, but any unexpected fundamental news ( and there is plenty of these) can send currencies on the run. With current price ranges being relatively tight, this might mean decent trading opportunities.
One of these possible opportunities is in AUD-JPY.
http://fxmadness.com/wp-content/uploads/2008/12/aud-jpy-12-28.jpg
This 4H chart shows a promising buy set up at 63.62 and a large objective of about 67. This being an intermediate time frame, trade might take few days- couple of weeks. Breakouts above most recent highs on 1H charts, like 62.40, also offer decent opportunities. I presented very similar set up last Sunday. That one was for NZD-JPY and is still valid. Frankly, CAD-JPY and few other yen pairs look like this.
Something I have not commented on in a while is EUR-GBP.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-28.jpg
Most recent low on 4H chart is a sell, but so might be current level. I will give it a shot by selling at the market IF I seen strong bearish candle on this time frame. One might also zoom to 1H charts and sell latest minor low.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-cad-12-28.jpg
I have not covered GBP-CAD in a very long time, I think. With the Pound still residing in the cellar of Forex house, this might be a little premature, but risks are fairly small. Potential buy at 1.8080 is typical of the trades I take. Should the price fall under 1.7800, however, it would be inviting to buy it then. Small risk of about 100 pips or so, which is not often for this cross.
There is
December 27th, 2008 at 10:45 am
Next holiday.in: General
With Christmas just behind, and it was very nice Christmas for me, it is time to look at next holiday in the calendar- New Year’s Day. It just few
December 26th, 2008 at 12:18 pm
Scam of the century.in: General, Trades
I didn’t bother much with market related news yesterday, it was a holiday after all, but I managed to catch something interesting on CNBC. They had this one hour special called “Scam of the century”. It was done in style of “investigative journalism” and along the lines of “Age of Wal-Mart”, another special they did couple of years ago.I’m sure everybody can guess what “Scam of the century” was about- Mr. Madoff and his Ponzi scheme. Show covered couple of interesting tidbits. Apparently when Madoff’s sales people were courting hedge funds for business, they willingly disclosed the method he supposedly used to achieve above average returns. In 1998 they made a presentation to some fund in Boston. After the disclosure was made, fund manager called his top trader and asked him to trade the strategy. It comprised of position in S&P futures, which was hedged with options. This strategy was traded in a dummy account
http://fxmadness.com/wp-content/uploads/2008/12/eur-jpy-12-26.jpg
About 40 pips gain, but trade size was marginal, just a little play, not serious trading.Outside of that, very little happened and I think it was wise of me (for once)
December 24th, 2008 at 11:04 am
Merry Christmas!in: General, Trades
From I could see today, Forex traders didn’t have have too many chances for a Christmas bonus. Just like previous couple of days, not very much has happened, unless one was trading CHF. Swissy became very active, gaining some strength first and then retreating. Moves were rather large by comparison to other currencies. I have not been active at all, and, frankly, didn’t feel compelled to trade. Just closed my CAD-CHF position from last post. This happened shortly after I wrote it.
http://fxmadness.com/wp-content/uploads/2008/12/cad-chf-12-24.jpg
Price came short of objective and I just got out, with a minor profit of 29 pips. I’m done till at least Friday, probably Monday. Most brokers will be closed tomorrow or operate in limited capacity and the only remotely possible action might be in JPY. Some economic numbers are scheduled for release.
On a more uplifting note, we have about 10 inches of snow on th ground and it is still snowing. Beautiful set up for a white Christmas, which just makes your spirit soar. Normally we have never ending showers here this time of the year, so it is a welcome change. I want to wish everybody great holiday and Merry Christmas!
Mike K.
http://fxmadness.com/wp-content/uploads/2008/12/marry-christmas5.gif
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December 23rd, 2008 at 11:30 am
Another cartel?in: General, Trades
With Russia as a ring leader, energy ministers from 12 of the world’s leading exporters of natural gas met in Moscow on Tuesday to create a producers’ group that consumers fear could develop into an OPEC-style cartel. Vladimir Putin, warned that the era of “cheap gas” was coming to an end, and said members of the group would co-operate to make the gas market “predictable”. Russia, the world’s biggest gas producer and the driving force behind the group, said it would not be a cartel, but would work to enhance energy security at a time when the gas market is becoming increasingly globalised. At the same time they are pushing for higher world gas prices to reflect what they see as its value as a relatively clean source of energy and potential as a transport fuel. Not surprisingly, another strong voice for forming cartel is from Iran. Just like Russia, this country has some strange visions of grandiosity, based solely on relatively large reserves of oil and gas. Should this happen, we can expect Russia to try to meddle even more in world affairs, with vague threats of cutting production or deliveries.
Very unlikely that the current group would be able to cooperate
http://fxmadness.com/wp-content/uploads/2008/12/cad-chf-12-23.jpg
Yesterday I lost 74 pips in CAD-CHF, and today I gave it another go. Bought at 0.8917, looking for 60-70 pips. Entry was at the end of that hourly bullish candle. I had 2 reasons to enter into this trade. One, I was bored, two, look at number one. Neither one is a reason good enough, but I’ve been sticking to reasons for a long time. This is my idea to go crazy (risking 50 or so pips with 1:1 margin). Real adventurer I am. In case CAD gets weaker again I have this order pending.
http://fxmadness.com/wp-content/uploads/2008/12/eur-cad-12-23.jpg
More seriously, ifthis level is breached, following move could be good for as many as 300 pips. Time is an issue, with Christmas nearby, one would have to be
December 22nd, 2008 at 11:32 am
When markets choppy, trading gets sloppy.in: General, Trades
When trading resumed, on Sunday, it looked for a while, good things were going to happen, By that I mean decisive, directional moves, something worth fighting over. After last week, this was a valid assumption. Sadly, it seems that somebody hit a snooze button, or Christmas jitters were officially declared. Most of the moves that happened were short, full of fake breakouts, all kinds of ugly things. But that’s all right, most currency pairs are pulling themselves into short term consolidation, within larger patterns (4H charts). I’ll just have to wait it out or look for set ups on shorter time frame.
In my last post I talked about a long entry into CAD-CHF. Here is the outcome.
http://fxmadness.com/wp-content/uploads/2008/12/cad-chf-12-22.jpg
Fake breakout. I pulled the plug on it with 74 pips loss. Normally, I would have given it more room, but I’m still in AUD-CHF trade and since CAD was also loosing ground against AUD, I closed this one.
Early on things looked good for JPY crosses. GBP-JPY was fast out of the gates and I managed a trade.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy-12-22.jpg
Highlight of the day. Nothing after that, until about 2 hours ago I saw one more breakout which should reach 133.90, but didn’t take it. For tomorrow I’m on a lookout for moves in all JPY crosses. Yen seems to be getting weaker as Toyota expects operating losses for the first time in, well, forever.
December 21st, 2008 at 9:03 am
Scandal is spreading.in: General, Trades
As more and more details about Madoff’s Ponzi scheme are emerging, its repercussions are also spreading wide. It appears that a large number of charitable organizations are also effected by the scandal. More and more companies who managed money for those organizations are coming forward and admitting to investing with Madoff Securities. Also, many of wealthy individuals duped in the scheme, were supporters of charitable causes. In light of the scandal, looks like much of this money will not flow to its end users any more. This is one of the saddest footnotes to this still developing story. I mean, he lost a lot of money for banks, but it is not like they were doing much better on their own. Just look at the size of the bailout congress appropriated for financial industry. Entire banking community was just as bad in fulfilling their fiduciary obligations. Hedge funds, another sector effected by Madoff’s mad alchemy? It is expected that by the year’s end number of hedge funds that will have failed or closed in 2008 could reach 1000. They also don’t need another scapegoat for their own failures. But the impact on of this affair on some of the charitable activities in this country is both shocking and sad.
I don’t expect very much to happen next week, as explained in previous post. At least I’m using Christmas as an excuse to cut my week short. Regardless, some trading will be done over next few days.
http://fxmadness.com/wp-content/uploads/2008/12/nzd-jpy-12-21.jpg
I placed couple of buy orders in NZD-JPY, as this chart shows. Price movement has been wide and loose on this time frame, that’s why such large distance between the order. I would prefer to go long here on 1H charts, with smaller targets, but right now I don’t see a trade there. Not yet at least. It might change by the time Europe opens, so I’ll be watching that chart closely.
Another potential trade is in CAD-CHF.
http://fxmadness.com/wp-content/uploads/2008/12/cad-chf-12-21.jpg
If the move up happens, I’ll want to get in at 0.9150 looking for 180-200 pips.Just like always on Sundays, I’ll try to take advantage of any gaps that
December 20th, 2008 at 2:54 pm
Trading during Christmas.in: General
With Christmas just few days away, some people, those who hold jobs, will have more time available than normally. They might be tempted to trade. From my personal experience, this is not the best of ideas. Some brokers will stop trading altogether, while others might offer limited access, with extremely wide spreads. Liquidity drops dramatically, since most professional traders and market makers take time off. This year Christmas day falls on
December 19th, 2008 at 1:03 pm
This is confusing.in: General, Trades
Earlier today a story from Associated Press hit the wires screaming “Oil rises on strengthening dollar”. O.K., time out here. Until today press was linking oil rise to weakness in dollar, or the other way around. Now it is the opposite. Have I buried my head in Forex charts so deep, that I don’t notice anything else? Or are the journalist running out of ideas on how to explain something or other in financial markets? As far as we have seen over last few years oil was rising when dollar got weaker and vice verse. But what do I know? With the http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-19a.jpg
My entry was at 0.9367, with 80 pips objective, which was reached, if barely. Trade was twice the size of preceding ones, so the gain was decent. From now on I’ll track 4H
http://fxmadness.com/wp-content/uploads/2008/12/aud-chf-12-19a.jpg
As is the case with most breakouts, price retreated back into “staging area”. So far this move doesn’t look all that evil, so I stay in trade for now.In all frankness, though, it would be better to place the buy order now at around 0.7630.
Euro looked really weak earlier and there was fairly long sideways movement in EUR-USD. I considered that an excellent opportunity to short.
http://fxmadness.com/wp-content/uploads/2008/12/eur-usd-12-19e.jpg
When the break finally came, it produced 100 pips very quickly, in few minutes. And yes, I also trade the majors, but try to focus on crosses in this blog. I
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December 18th, 2008 at 11:39 am
Recent headlines.in: General, Trades
I’ve managed to find myself with nothing to do for about an hour earlier on. It is rather unusual, since my work day is always full. At the time chart of EUR-GBP was on one of the screens, so I decided to do web search on recent articles in financial press that mentioned the pound. Here is a sample of titles that came up:
“Sterling tumbles towards parity with euro”,
“Sterling smashed again”,
“The inevitable decline of sterling”,
“More pound punishment”.
On and on it goes, with no end in sight. Few pages of various articles came in my search and not one had anything positive to say about Pound. Granted, GBP keeps falling in a lamentable fashion, some would even call it scandalous, but surely there must be somebody out there who is at least little bit positive about the old cable. Isn’t current sentiment just a bit too Pound pessimistic? Of course I’m saying it because I’ve been unable to catch a nice break in price of EUR-GBP. On a positive note, my losses have been marginal so far, comparing to the total number of pipsI make/loose daily. More on this at the end of this post.
Quick review of the Kiwi trades I didn’t cover yesterday.
http://fxmadness.com/wp-content/uploads/2008/12/eur-nzd-12-18.jpg
My original order at 2.4230 didn’t get filled first time price hit that level. This was just ofter the FOMC decision. I reentered the order and it was triggered soon after. Few hours later price moved strongly and bounced just as hard. Since I had 3 other trades in NZD crosses and this one was clearly the weakest of them, I decided to get out with profit of 61 pips.
http://fxmadness.com/wp-content/uploads/2008/12/aud-nzd-11-18.jpg
Sell in AUD-NZD was a little unlucky. Price missed my target of 1.1790 by a few pips and jumped, so I took some pips of the table, 71 of them. Overall not a bad string.
It would appear that both EUR and CHF are hitting a wall, or at least taking a breather. They had an impressive run, so maybe it is time for a break. With this in mind, AUD-CHF looks like a good buy opportunity.
http://fxmadness.com/wp-content/uploads/2008/12/aud-chf-12-18.jpg
Order was placed to go long at 0.7608 and an objective of about 130 pips, or 0.7740 area. As far as EUR-GBP goes, I keep moving my sell order ever higher to
December 17th, 2008 at 11:35 am
Everything but kitchen sink.in: General, Trades
FED has spoken. Target interest rate slashed to 0-0.25%, basically nothing. Looks like our central bank is the winner in the unofficial race between CB’s to zero. That is not all. At the same time it was announced that FED will be an active buyer of long term Treasury securities, hoping to lower interest rates on these debentures and thus help to revive economy. Program of buying mortgage backed securities was also mentioned ($600 B) as well as plan to facilitate other consumer loans like car, student, credit cards and so on($200 B). There was more, the statement was the longestI have ever heard. I’ll leave it to economist and journalist to digest the details. To me it looks like FED is throwing everything but kitchen sink into the crisis. I guess they are saving the sink for the next employment report. If following NFP is as bad as the recent ones, sink will go as well.
Stock
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-17.jpg
Loss of 38 pips, as soon as the previous high was taken out. I have to wait longer for correction….
Now the good news, really good. CHF-JPY trade has already reached its target for a nice gain.
http://fxmadness.com/wp-content/uploads/2008/12/chf-jpy-12-17.jpg
Entry was at 78.10, objective 79.80. It was reached much faster than expected, +170 pips. and i thought CHF-JPY was boring… That same post, from Sunday, I think, also featured NZD-CAD as a buy.
http://fxmadness.com/wp-content/uploads/2008/12/nzd-cad-12-15.jpg
Once again, this came sooner than I thought it would, but after a nice breakout, target was reached, if just. This trade netted 210 pips. I just closed NZD-JPY trade which didn’t happen last week, at 51.94, a little short of intended level, but still 62 pips ahead. My remaining trades NZD trades are also closed alr
December 16th, 2008 at 11:11 am
Madness of Madoff.in: General, Trades
I think it is only fitting, here on FX Madness, to discuss somebody else’s mad behavior. This time around it is one Bernard Madoff, who is accused of running the biggest Ponzi scheme in history. This former NASDAQ chairman apparently milk and lost about 50 billion dollars from investors world wide. I thought that only governments are capable of blowing this kind of money. Details are murky, but seemingly only about half of this amount has been accounted for. Number of high profile institutions are among the victims- HSBC, Banco Santander, Nomura, BNP Paribas and Royal Bank of Scotland. So far international banks have admitted to about 10 billion in losses, but the figure is expected to grow. To rub salt into the wound, Mr. Madoff was an expert sought by Washington regulators who asked for advice on any number of regulatory issues over the years. In 2000, Madoff served on the government’s Advisory Committee on Market Information, established to protect investors by ensuring accurate and full public disclosure of information to them. I would say he knew what he was doing from inside out. While his former bodies, the regulators, are running around trying to sort this mess out, Mad Madoff is out $10 M bail, probably laughing his head off. This is a good one, proves you can’t trust anybody, no matter what the pedigree and provenance.
I’m adding one more order to my growing list of trades. Kiwi is showing strength, I’m going to test it.
http://fxmadness.com/wp-content/uploads/2008/12/eur-nzd-12-16.jpg
I’m trying to sell this cross at 2.4230, with a target of 300 pips. This should show if NZD really is gaining momentum.
I’ll will cover
December 15th, 2008 at 12:27 pm
Some strength in Pound.in: General, Trades
After what seems like an eternity, Pound has finally found some legs. Very nice run against USD, CAD, JPY, CHF even gains on Euro, well, small ones. I’ve been trading pound crosses a lot, or at least trying to.There was no Pound specific news, that I’m aware of. Regardless, this boost is welcome.
There is a small change in my shorting EUR-GBP.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-15a.jpg
There are to sell trades now, one at 08980, with an objective of 0.8895 and another at 0.8875. Target for this one is 0.8780.
Trading of GBP-JPY also had good results.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy-12-15.jpg
Total of 3 trades today, two winners and a looser. For now I’m still shooting for 60 pips on these short term trades. Yesterday I covered CHF-JPY. Order was filled and I’m in. There really is not much more to cover, I expect to sit on it for a few days.
I’m adding one more order, a sell in AUD-NZD.
http://fxmadness.com/wp-content/uploads/2008/12/aud-nzd-11-15.jpg
Order is placed at 1.1940, with a 150 pips objective. Once more, this is a 4H chart, so this potential trade will be given some time. Also, depending on how things unfold, target might be extended to 1.1670-50. Another order, or set of orders, covered yesterday, NZD-CAD is still valid and active. Neither of the orders was filled as price stalled in 0.6800 area.
Busy
December 14th, 2008 at 10:31 am
Distorted charts.in: General, Trades
Time to start new week, but I have a small problem.Sharp moves that happened in JPY crosses late Thursday and early Friday, have rendered 1H charts distorted in my eyes. Few other pairs were effected as well. This applies only to hourly charts. Those swings were not out of whack on 4H charts, and smaller time frames have built up enough history since then to be useful. Unfortunately, hourly charts are my “staple” when it comes to this blog. That’s why I’m looking at a little different trades than usually.
http://fxmadness.com/wp-content/uploads/2008/12/nzd-cad-12-14.jpg
On this 4H chart of NZD-CAD I think there will be a an upside breakout at 0.6940. My objective is 0.7150. In the event price moves down first, another buy order is placed at 0.6650, with a target 0.6875. I don’t expect quick resolution of these trades and not placing firm stops, but rather keep mental ones at about half the objective values.
Next potential trade is in a cross I rarely trade, CHF-JPY. Other Yen pairs present better opportunities most of the time, or move more. This time, however, exception is warranted.
http://fxmadness.com/wp-content/uploads/2008/12/chf-jpy.jpg
Another 4H chart, with an entry point at 78.10, objective 79.80. Just like in the example before, I don’t think fast result will happen, but then again, this is an intermediate term chart, so expectations and mind set have to adjusted accordingly. If by this time tomorrow these trades are not triggered and hourly charts create some better set ups, these trades will probably be cancelled.
This week again I’m looking for downside moves in EUR-GBP, with, hopefully, better results. GBP-JPY 5m upside moves are always in play. This being Sunday, there might be some gaps on the open, which I will try to exploit.
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December 13th, 2008 at 1:55 pm
Story of EUR-GBP.in: General
Last week I was following EUR-GBP, trying to catch a breakout to the downside. This pair kept on eluding my efforts, making new highs instead. By Friday price reached just under 0.9000 level, almost touching an all time high from 1995. Very impressive. Here is monthly chart of this cross.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-13m-e.jpg
These kind of multi year highs often provide a solid support/resistance for prices. Chances are high we will see some reaction in the neighborhood of 0.9000. Whether it is a reversal or only a pause in a very long term bull run is impossible to tell at the moment. Weekly chart provides a little better view.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-13w-e.jpg
This chart shows a possible parabolic price run up, or blow out top. When price behaves in this way, very often the following reversal is dramatic and steep. If this advance doesn’t slow down very soon, probability of sharp fall will increase with every new bar. Good way to capture profit in this kind of conditions is to place a sell order just under the low of most recent bar, with initial stop at the top of the same bar. If the price moves in the the direction desired, objective can be established. In this example one could look for an entry around 0.8550, seeking objective of 0.8200, which happens to be important Fib level, as well as previous minor high. Extended target could be 0.7700, most recent low. If somebody expects a prolonged sell off, Parabolic SAR could be used as a stop for the trade. Frankly, though, I would like to seebearish candle to form first, as the last one was decisively bullish. I have to wait another week to see what develops.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-13d-e.jpg
Daily chart shows a better entry if this same tactic was to be used, with corresponding objectives. Movements have been so large lately, that even on this chart targets would be in hundreds of pips, very high for this pair. I might use weekly chart to establish a short position if there is bearish candle
December 12th, 2008 at 1:12 pm
Currencies and Detroit bailout.in: General, Trades
Last night senate voted down proposed bailout of US automakers. Response was swift and severe. Asian markets sold off and currencies followed. Yen rose dramatically, breaking through 90.00 USD-JPY level, the supposed “line in the sand” sketched out by Bank of Japan. In an interesting twist of events, Shoichi Nakagawa, Japanese finance minister, made a statement that ”intervention isn’t in my mind at all”. But he did say he was watching currency movements with “great interest” and was “shocked” by the sudden moves. As violent as the initial reaction was, it also didn’t last long. JPY reversed and kept weakening, albeit in more measured pace.
This event effected one of trades I mentioned yesterday, buy in CAD-CHF.
http://fxmadness.com/wp-content/uploads/2008/12/cad-chf-12-12.jpg
Price dipped to under 0.9600 and I entered a long trade at 0.9592. After few hours it started to go my way and stop was placed at 0.9558. Not long after that results of the vote on Detroit bailout hit the wires and Canadian Dollar hit the skids. I was out with 34 pips loss. Needless to say, remaining order at 0.9760 is cancelled.
Not everything was bleak. Reversal of JPY presented some opportunities in GBP-JPY.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy-12-12.jpg
Two good trade produced 60 pips each. Admittedly I got a little lucky on the second trade, as my objective was overreached by only 3 or 4 pips. There was one more trade later on, but after some choppy moves I closed with 14 pips loss.
Any
December 11th, 2008 at 11:16 am
Euro - nice run.in: General, Trades
Euro put on strong show hitting 1.34 against USD. This was the case against most other currencies as well. Needless to say, this put another wrinkle into my plan of shorting EUR-GBP, which made new high yet again. Once again I’m moving sell order to a few pips under recent low. Swiss central bank cut interest rates to 0.50% and CHF is almost even with JPY in a race to 0%. Speaking of JPY,yesterday I covered briefly its cross with NZD.
http://fxmadness.com/wp-content/uploads/2008/12/nzd-jpy-12-11.jpg
Price pulled very close to my entry of 51.32, but fell several pips short. Order is still valid and we will see what happens tomorrow. Objective is 52.20.
Swiss Franc got stronger today although not against all currencies. One of the exceptions was a Canadian Dollar.
http://fxmadness.com/wp-content/uploads/2008/12/cad-chf-12-11e.jpg
Trying a couple of buy orders here. One is breakout at 0.9760, with an objective of 0.9850. Another buy zone is if a pullback happens to just under 0.9600.
December 10th, 2008 at 11:42 am
Change of pace.in: General, Trades
Markets have definitely changed behaviour over last couple of weeks, and most notably, this week. Daily ranges have contracted dramatically in relation to last few months and are closer to historical averages. This means that market dynamics are much more typical now, if there is anything like “typical” or “normal” in trading. I don’t mean this to be a prediction, but since it is almost middle of December, this kind of market conditions might be prevailing for the best of the year. The month of January is normally very lively. Those who got spoiled during last few months will have to adjust now, while others can breath easily.
Financial Times had an article about Pound today, more precisely about EUR-GBP and possibility of parity. Long list of economic reasons were listed why it is likely. Since I’ve been following EUR-GBP over last few days, I read it. The tone of article reminded me of press releases calling for EUR-USD at 2.0000 about 6 months ago and EUR-USD 1.0000 over last few weeks. While this might happen(anything can) this has a making alarmist journalism near market extremes.
My own trading in EUR-GBP, was, well, slow.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-10.jpg
With the pair making new high, I moved my sell order to 0.8720. Objective here will be 50 pips or more, depending on the size of preceding up move.
Market changes were most visible to me in GBP-JPY. Moves are very tentative, shaky. Lots of really small swings.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy-12-10.jpg
On the first trade I got out at probably the worst moment, loosing 27 pips, but “reloaded” right away and pulled in 60 pips. Shaky behavior made me decide to close third trade with minor gain, right before the market decided to push on. Such is trading.
I posted a possible trade in EUR-AUD yesterday. My sell order stands there for now. Intermediate term chart was used, so it might take some time before this trade even happens.
New Zealand dollar looks like it is getting ready for some move and I’m placing a buy order for NZD-JPY.
http://fxmadness.com/wp-content/uploads/2008/12/nzd-jpy-12-10.jpg
Entry level is at 51.32 and objective 52.20. NZD also looks good against USD and AUD. I don’t think we should expect any powerful move, but who knows?
December 9th, 2008 at 11:18 am
Sitting on my hands.in: General, Trades
Slew of economic numbers came out of Japan today. Without getting into details, they were all bad, yet the Yen managed to get stronger. No dramatic moves, just steady climb, or fall, if we look at the crosses. Interesting. Meanwhile, Bank of Canada cut rates by 0.75%, rather surprising the markets, well, market participants. Overall, however a very quiet day. I spent most of it sitting on my hands.
Behavior of JPY made me wait for most of the day before I entered into any short term GBP-JPY trades. There simply were no upside breakouts, all the minor highs held. Eventually, though, I managed couple of trades.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy-12-09.jpg
First breakout was rather uninspiring and my target of 100 pips was way out of line. I settled for 14 pips gain, and waited for next one. Objective was adjusted to my historical average of 60 pips for these kind of trades, and second trade produced just that. Frankly, for the way most of the currencies moved today, I consider it good result.
My other intended trade, in EUR-GBP, didn’t happen.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-09.jpg
Pound kept on loosing ground here all day, forming both new high and minor low. My sell order was moved up 0.8655. Now back to waiting.
I poured bunch of charts today and most of them like prices contracted to yesterdays ranges. Hourly charts are full triangles and similar patterns, which I don’t trade, but don’t show anything of what I’m looking for. Seems like I have to wait for more price development, before placing new orders on 1H charts.
There was one interesting set up I found on 4H chart of EUR-AUD.
http://fxmadness.com/wp-content/uploads/2008/12/eur-aud-12-09.jpg
Looks to me like this cross is ready for another leg down. As far as I’m concerned, confirmation of going under 1.9235 is needed. That’s where I put a sell order, with on objective of 1.8900. I’m not sure if I’ll follow with this trade, because depending on what happens on shorter term charts of all other
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December 8th, 2008 at 12:11 pm
Pound still loosing weight.in: General, Trades
Looks like our automakers are going to get some kind of government help. The details are not yet decided, but apparently deal is very likely. Well, it is rather logical. Once you start bailing out some industries, many others will want help too. They will have valid point - “If these guys received some money, why not us? We are just as important to US economy.” Problem is where do you draw the line? Dollar has been getting stronger, partly because of view that USA is proactive in handling current crisis. This perception might change into “wasteful spending” should Uncle Sam continue this process into other industries.
Meanwhile the Pound is still loosing ground. Granted, GBP had a decent run up against JPY and USD. At the same time it managed to set new low against EUR. This didn’t help my cause, or rather trade. Plan was to sell EUR-GBP at 0.8603.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-08.jpg
Price broke and snapped against me. I pulled a plug on it at 0.8643 for a loss of 40 pips. Still think this pairs is about ready to stage a correction, so new order was placed to sell at 0.8571. Should the price keep making new highs, I’ll be moving sell order to just under most recent low. Target will depend on the preceding up swing, but most likely will be between 50-100 pips, with 1H chart being the primary time frame for now.
No a more inspiring note, NZD-JPY trade worked out very well. Price dipped slightly, not enough to to trigger my lower trade, but then made a nice run and produced few pips.
http://fxmadness.com/wp-content/uploads/2008/12/nzd-jpy-12-08.jpg
Target of 51.10 was reached, with only few pips to spare. I really like these instances when trades work out almost exactly as planned, makes me think like my work is validated. On the same token, I also know this will not happen all the time…
Since there were no gaps at the open to speak of, I didn’t have to baby sit additional trades and decided to take similar position in GBP-JPY. This was done on another platform, where I have some spare capacity. Buy level for this trade was also posted yesterday.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy-12-08-edited.jpg
This produced 190 pips. This drop that followed in all JPY crosses creates a decent buying opportunity just about know, with likely run on previous highs, but I’m passing on it. Done for the day.
Tomorrow I’ll f
December 7th, 2008 at 9:36 am
Before the open.in: General, Trades
Economic calendar is really full for this week, but in all honesty, not much of it looks like real market movers. Possible exceptions are Japanese GDP numbers on Monday and Michigan Sentiment on Friday. Frankly, currency have calm down dramatically over last couple of weeks, so scheduled news releases might not produce massive moves, barring any huge surprises. This is good news for people who read charts, since we rely on rather orderly price flow. Of course there is always a chance for developing story to wreck havok with the markets, but this is something we have to learn to live with at any time.
The much beleaguered Pound showed some signs of life late on Friday. Short term indication of reversal is evident in EUR-GBP. This pair has just made an all time high and I think is going to take a break. Historically this has not been the best cross to trade, but over last few months daily ranges have increased substantially, and with large pip value, about 14.65 per pip on standard lot, it is attractive.
http://fxmadness.com/wp-content/uploads/2008/12/eur-gbp-12-07.jpg
I have a sell order at 0.8603 with an objective of 0.8530. Decent target using 1H charts. Daily chart looks very promising as well. This reversal might be much bigger, as low as 0.8200. I’ll leave it for another post.
For all the talk(writing) I did yesterday about AUD-JPY, relatively short term trade I’m looking for at the moment looks a little better on NZD-JPY chart.
http://fxmadness.com/wp-content/uploads/2008/12/nzd-jpy-12-07.jpg
Kiwi seems a little bit stronger than Aussie and the set up is more to my liking. I’m looking for a breakout at 50.15, but if the price moves lower before I will be
December 6th, 2008 at 12:42 pm
Aussie-Yen.in: General
My last post mentioned pending buy order I had in GBP-JPY. The entry was at 134.95, seeking 100 pips gain. Order was filled while I was whiting the post. Here is what happened.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy12-06.jpg
Rather surprising run took place, taking the price to well above 137 and meeting my objective in the process. It was nice way to finish the week. This loose end tied up, I’m going to take a look at AUD-JPY. Last week I followed it with mixed results, trying to take trades on the long side, using mostly 1H charts. After the massive sell off over last few months, I think this cross is building a long term bottom here. This would be the case for most JPY pairs. I chose AUD-JPY for this analysis because it made an all time low of about 55, a fate other currencies avoided, although GBP-JPY is not far away now.
http://fxmadness.com/wp-content/uploads/2008/12/aud-jpym-e.jpg
As we can see on this monthly chart that price has stabilized after historic sell off. Trading ranges have contracted, which suggests potential end of the down trend, or at least start of a sideways movement until new fundamentals emerge and influence traders decision making process. This should be viewed with optimism by those who are bullish this pair, since important, long term turning points take rather long time to develop. Just look at the market bottom from 8 years ago. While jury is still out, it looks like early stages of similar process are taking place now. Monthly charts are not a tradeable time scale(not for me at least) but they are important element of trading landscape.
http://fxmadness.com/wp-content/uploads/2008/12/aud-jpyd-e.jpg
Zooming it to daily charts, we see that price is contained within the span of last leg down, an area between 74 and 55.I would expect this market to stay roughly within this this area for some time, maybe 2 months or so. The red zig-zag is not to scale, just a representation of approximate next moves. Somebody who trades triangles, pennants and wedges should be able to see them here. I don’t use these formations myself, since there is great degree of subjectivity in drawing them. We should see, on daily chart, price being pulled towards 100MA, or vice verse, depending on the point of view. Undercutting the low of 55 doesn’t necessarily mean resumption of down trend. Personally, I don’t see another major leg down of 1000 pips or so, but rather slow up turning process.
http://fxmadness.com/wp-content/uploads/2008/12/aud-jpy4h-e.jpg
4H chart is more of my trading time frame, together with 1H graphs. On this time frame I like the price starting to “hug” 100MA, important step in turning. I’m watching areas at points A and B. These two levels must be taken out before we can start talking about longer term reversal. Incidentally, recent minor lows, 1 and 2, are not of any real importance here. The only level that matters on this chart is the low of 55. My trading here will be limited to long positions, mostly on 1H charts.
A lot of
December 5th, 2008 at 12:02 pm
Yen on the roll.in: General, Trades
News of the day was probably the employment data from USA. Net loss of 533,000 jobs was way above the estimate of 335,000. This the steepest drop since 1974. Despite that, dollar got stronger against most currencies. Most, but not all- Yen was even stronger. It is not the end of trading day, so there may be some more developments. Closing on Friday often sees a counter move in last few hours.
JPY’s strength didn’t suit me, since I was looking to short it. First short term trades in GBP-JPY, for which I use 5M charts.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy12-05.jpg
There was only one decent set up, which I entered at 135.88, only to be stopped out almost immediately, for a loss of 55 pips. As of this writing one more buying opportunity is emerging. I have an order at 134.95 with an objective of 135.95, or 100 pips. Whatever happens, I will want to be out of it before the close.
The cross I’ve been following most the week, AUD-JPY, didn’t produce a trade.
http://fxmadness.com/wp-content/uploads/2008/12/aud-jpy12-05.jpg
There wa no buying opportunity, that I could see, so I stayed on the sidelines. Looks like all JPY crosses are rebounding right now, but I’m not placing additional trades, except for the beast buy I mentioned early. I’m rather surprised by this continued Yen run, it is not like everything is rosy there.
December 4th, 2008 at 11:36 am
Rough trading.in: General, Trades
No question about it, Thursday has been rough. Sharp direction changes on news of rates cuts. Sweden, EU, UK and New Zealand all cut rates. Of most interest to me today was the announcement from Great Britain and NZ. Once again, I don’t try to predict moves based on news releases, but existing positions might be altered depending on how the markets react to them. Not only did I trade my daily GBP-JPY long jumps, but also a short GBP-NZD position. This sounds confusing, but both crosses were traded on completely different time frames, seeking different magnitude of moves, so, in my mind, there was no conflict of interest. New Zealand financial authorities cut rates by 1,5% and BOE shed 1% to 2%. Here is how the interaction on GBP-NZD looked like.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-nzd12-04.jpg
My sell order was filled at 2.7420 and price swiftly moved towards the target of 2.7000, but came short at 2.7050. At this point my trade was up 370 pips. GBP rebounded on the news of rate cut and closed the trade at 2,7232, for a gain 188 pips. I was lucky I didn’t wait any longer. Even though, I consider this trade a success.
AUD-JPY trade was not as good. First, price just hit the buy level and I was in.
http://fxmadness.com/wp-content/uploads/2008/12/aud-jpy12-04.jpg
Right away things apart on my trade and I got stopped out for 50 pips loss. This pair has been moving in a range for last couple of days, so chances were, the range would hold. I zoomed in to smaller time frame, found another set up at just above 60.00 and managed to recover 50 pips. I still think there will be a breakout to the upside, so placed new buy order. It is marked on the chart.
Just to illustrate how things changed in Forex trading, think about how markets reacted to rate changes just one year ago. Currencies gained strength when central bank raised rates. Now it is exactly the opposite, slashing rates gets rewarded. Things are more convoluted than that, of course, nothing here is that simple. Riksbank (Sweden) cut rates today by more than consensus and the Krona lost ground. Go figure.
Tomorrow
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December 3rd, 2008 at 11:15 am
Who has the patience?in: General, Trades
Somebody has defined trading as 90% boredom and 10% terror. I don’t recall who was it or where I heard it, but sometimes it seems to be true. The boredom applies to periods when trader is supposed to wait for the right set up to materialize. This can be very challenging since it requires great deal of patience- something most people or in short supply of. Everybody envisions trading before engaging in it as some kind thrill ride full of rewards. Reality is very different, as a lot of it is waiting game. Even scalpers, individuals who try to get in and out of the market, often within minutes, sometimes have to wait for hour for the a trading signal to materialize. For them it is an eternity. What happens very often, people are trying to bend rules of their trading strategies, in order to enter the market. These usually turn out to be questionable trades, bringing on losses. I think something like that has happened to everybody who has been around for a while.
Since I trade number of strategies across several accounts, I stay relatively busy, but today was much slower for me than an average day. The trade I featured yesterday, long AUD-JPY was testing my resolve. Few times I almost entered earlier but managed to control my emotions.
This is where I stand now.
http://fxmadness.com/wp-content/uploads/2008/12/aud-jpy12-03.jpg
Price made couple of runs on the entry level, but didn’t penetrate. As of this writing, order is still valid and remains open.
I looked through all kinds of charts while sitting on my hands, and this caught my attention, GBP-NZD. To be exact, it was 1H chart that i looked at first, but that would look too confusing if shown in such a small snapshot, so I went up a level to next magnitude chart, 4H graphs.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-nzd12-03.jpg
Fairly large congestion are has developed. Eventually price will breakout out from this zone. In light on miserable GBP performance, it looks like a drop is likely. This cross has high cost of trading, anywhere from 20 to 35 pips spread is the norm, so objective and stop have to proportionately large. I’m
December 2nd, 2008 at 11:43 am
Trend exhaustion.in: General, Trades
Every trend must come to an and. It can happen in a climatic fashion, or in a series of smaller and smaller moves. Trends can be very long or extremely short and this applies to any time frame. By trend length I mean number of bars, or candles. In currency trading we also see very well defined trends during specific session (Asian, European, US) and daily trends. Those would be directional moves, lasting more than one session. Such was the case yesterday with GBP pairs. Pound moved down decisively and remained in strong down trend all day. Even though Forex is 24H a day market, trading is not equally active all that time. Most of the time liquidity and activity drops at around 10-11 AM PST(my location). This is the time when daily trends tend to come to an end, and some bounce or easing can be expected. That was the reason why yesterday I entered into the long GBP-JPY transaction. This is what happened.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy12-02a.jpg
Chances were good that by that time we had seen the low for the day. Price moved slowly sideways(by comparison with the preceding plunge) and than crept up. My expectations were for a more meaningful bounce, to 142(greed ) but that didn’t happen. About 8 hours after entry position was closed for 91 pips gain. Next day was starting and new dynamic expected, so my trade, based on end of day correctional move, had to be closed.By comparison, Tuesday(today) didn’t exhibit a daily trend(well, sideways). It is common for most currency pairs to run out of steam at around 11AM PST(give or take an hour) and have some sort of reversal.
Reserve Bank of Australia cut rates but 100 points and it now stands at 4.25%, move that was widely expected. RBA, unlike many other ones, at least has some more distance before it gets to 0%. AUD has been getting weaker in tandem with GBP but perhaps it is ready to show some strength. I will try buying AUD-JPY.
http://fxmadness.com/wp-content/uploads/2008/12/aud-jpy12-02.jpg
I plan to enter a long position at 60.72 with a moderate objective of 61.50. I’m going to pursue it with some diligence. If the price gets lower, as it is doing
December 1st, 2008 at 11:43 am
Trades update.in: General, Trades
Turned out to be very busy day, on top some additional work piled up, so I’m just going to do some quick update of trades discussed yesterday. First EUR-CAD. Price drifted upward but failed to reach my entry point at 1.5850.
http://fxmadness.com/wp-content/uploads/2008/12/eur-cad-12-01.jpg
That trade is no longer valid. My other order was filled at 1.5645. Objective was 1.5550. Price missed it by a hair and I decided to close it, exit happened at 1.5584 or 61 pips gain. Turned out to be just in time.
Another potential trade mentioned yesterday was in GBP-JPY. I was looking to enter around 148.70. Well, beast sank like a rock, all the way down to 138.15 or so. Just a few minutes ago, however, I decided to test if we’ve seen daily low and went long.
http://fxmadness.com/wp-content/uploads/2008/12/gbp-jpy12-01a.jpg
Notice, this trade is taken on different platform, for reasons explained before. I simply bought at the market, 138.74 exactly. I’m risking about 140 pips and
November 30th, 2008 at 9:27 am
FED has a fan.in: General, Trades
Here is a nugget of information I stumbled upon recently. Reserve Bank of Zimbabwe commended both FED and UK financial authority for following the lead which they, Bank of Zimbabwe, established couple of years ago. What follows is a part of the news release:
“Here in Zimbabwe we had our near-bank failures a few years ago and we responded by providing the affected Banks with the Troubled Bank Fund (TBF) for which we were heavily criticized even by some multi-lateral institutions who today are silent when the Central Banks of UK and USA are going the same way and doing the same thing under very similar circumstances thereby continuing the unfortunate hypocrisy that what’s good for goose is not good for the gander….
As Monetary Authorities, we commend those of our peers, the world over, who have now seen the light on the need for the adoption of flexible and practical interventions and support to key sectors of the economy when faced with unusual circumstances.”
Well, Bernanke&Co can sleep easy now, scoring this high praise. Perhaps we should pay more attention to what Reserve Bank of Zimbabwe is doing in the future? It is not my intention to belittle Zimbabwe, but find this report a little humorous.
Euro got much weaker on Friday and it’s possible this trend will continue. I’m going to try trades on a short side in EUR-CAD.
http://fxmadness.com/wp-content/uploads/2008/11/eur-cad.jpg
This set up includes 2 sell orders. If the price moves up I plan to sell it at 1.5850, with an objective of 1.5680. Should the price keep falling, there is a sell order at 1.5645. This trade would seek about 100 pips gain.
I’ve been covering GBP-JPY a lot here and today is no exception. First a look at 4H, where we had an interesting development. For the first time in a long stretch, price on this time frame moved above previous high - points A and B on the chart.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy4hedited.jpg
This in itself doesn’t guarantee reversal here, but it would be the first step in establishing price turn around. Currently there is a sideways movement. For somebody with bullish outlook break above 148.70 might be good entry point for this magnitude of a move, as the chart indicates potential rise to as high as 158. I’m not going to take this trade, because price can easily slip back to the black circled area, and remain there for days or even weeks. I think that 1H chart presents better opportunity.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy1h.jpg
Entry here is still the same at 148.70, but objective would be much smaller at 152.00. More importantly, here I can have decent stop for the trade. Currently price is still some ways from the entry and so precise S/L point can not be chose yet. For that I must wait for farther price development. However, with 300 pips objective, I’m confident good spot for stop can found in 100-150 pip are below entry.
As always on
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November 28th, 2008 at 10:11 am
Tradition continues.in: General, Trades
Once again Swiss Franc has been alive on Thanksgiving night. I didn’t know if trading was possible for me, since I was hosting a dinner. Once that was over, I turned computer on to check the action. It was already past midnight(on the west coast) and European session was well under way. Being tired, I didn’t plan on active trading, but USD-CHF looked very promising so I placed an order.
http://fxmadness.com/wp-content/uploads/2008/11/usd-chf-11-28.jpg
There was a nice breakout of exactly the type I’m looking for at 1.2080. With US session expected to be dull, as it usually is on Friday after Thanksgiving, my objective was fairly small. 70 pips or 1.2150. Nice little trade. That was it for me, no more trades. Still in holiday slumber, which is good. These
November 26th, 2008 at 1:23 pm
Thanksgiving and trading.in: General, Trades
Here we are, day before Thanksgiving. Relatively slow day, especially when compared to recent volatility. Even couple of fairly important news failed to spur currencies. EU announced its own stimulus package, to the tune of EUR 200 billion, while China cut interest rates to prevent economic slump. Markets must still be digesting the $800 billion borrowing boost declared by FED yesterday. I didn’t have time to get into details of that yet, but if banks are forced tolend money it is possible that big part of it will go to unqualified borrowers and then we are right back where we started. Should they employ due diligence and sound lending practices, than surely FED’s mandate will not be fulfilled.
This whole situation sounds very promising, but is murky at best.
There was one exception to otherwise dull day- Swiss Franc. CHF came under pressure across the board. This gave me reason to reenter NZD-CHF long trade.
http://fxmadness.com/wp-content/uploads/2008/11/nzd-chf-11-26.jpg
Price spiked down to about 0.6410, level I considered “attractive”, and started to move up. I bought at 0.6482, with 0.6600 objective. It came relatively fast. I’m not going to pursue it any farther on 1H chart. In my view favorable set up is just about exhausted on this time frame. Higher magnitude chart, 4H is starting to look promising, but it might be few days before there is a possible trade.
Tomorrow, Thanksgiving day, is just about a dead day for trading. Some brokers don’t operate at all, some will permit trading but the spreads will be awful. In general it is not worth while trading tomorrow. Far better to enjoy time with family, or just a break from computer and charts. The night after the dinner, however, might be another story(US time). Here is a snapshot of USD-CHF from Thanksgiving night 2006.
http://fxmadness.com/wp-content/uploads/2008/11/uc1125-holiday.jpg
And USD-CHF in 2007
http://fxmadness.com/wp-content/uploads/2008/11/usd-chf-thanks07.jpg
I happened to take trades on both occasions. Results are not as important as movement. It is very possible we will see it again, during European session. I don’t try to encourage anybody to trade, because there is no way of knowing if there will be any opportunities. For traders who never trade European open, because of their schedule, work etc, this might be a rare chance to follow the markets at this time, since most people have Friday off. Happy Thanksgiving!
Mike K.
http://fxmadness.com/wp-content/uploads/2008/11/turkey7.gif
November 25th, 2008 at 11:45 am
Ready for holiday.in: General, Trades
I’m getting in holiday mode and trading is taking a second seat. One has to break every now and then and Thanksgiving is providing perfect excuse for that. As far as I’m concerned, today was a confusing day, looking from the standpoint of the charts I analyze here, which are mostly 1h graphs. Tomorrow is traditionally one of the slowest trading days in the year and I don’t expect much to happen. Speaking of confusing charts, here is NZD-CHF.
http://fxmadness.com/wp-content/uploads/2008/11/nzd-chf-11-25.jpg
The breakout I was waiting for happened, only retreat immediately. I took a loss of 61 pips on this trade. This “whipping” action distorts charts, from my perspective, and makes them unattractive. I considered for a while buying again right before I took this snapshot, but decided against it. Some more time is needed for the price action to develop farther, before I make any decisions here. NZD-CHF is left alone for now, although if it moves lower, to about 0.6400 or so, it will become attractive again.
I took one trade in GBP-JPY using 5M charts.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-11-25.jpg
This one worked, produced 100 pips. There was second decent looking entry, marked by red elliptical object at 147.00, but I didn’t take it. Too late in the day for me, I was closing the shop. Over all, not much to write home about.
At this point I don’t see a trade set up that I would be excited about, so most likely I will only try to take couple of “beast” trades on 5M charts. Since my
November 24th, 2008 at 11:48 am
Citigroup today, who tomorrow?in: General, Trades
It seems like there is no end to bailout campaign. Today it was Citigroup who called on Uncle Sam for helping hand. This time around they are getting $20 billion on top of $25 billion received earlier. In addition, government also will guarantee a mountain of Citi’s potentially loosing assets. Here are the details as reported by Associated Press.
“As part of the plan, Treasury and the FDIC will guarantee against the “possibility of unusually large losses” on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.
Under the loss-sharing arrangement, Citigroup Inc.will assume the first $29 billion in losses on the risky pool of assets. Beyond that amount, the government would absorb 90 percent of the remaining losses, and Citigroup 10 percent. Money from the $700 billion bailout and funds from the FDIC would cover the government’s portion of potential losses. The Federal Reserve would finance the remaining assets with a loan to Citigroup.
In exchange for the guarantees, the government will get $7 billion in preferred shares of Citigroup. In addition, Citi said it will issue warrants to the U.S. Treasury and the FDIC for about 254 million shares of the company’s common stock at a strike price of $10.61.”
$300 billion forone bank? I just hope that our financial authorities REALLY know what they are doing, or all this might lead to a forced devaluation of dollar. Or, perhaps, it is a goal, since chances of repaying federal debt in today’s dollars are rapidly falling into low order of probabilities. I’m going to leave this topic alone for now. There will be plenty more opportunities to discuss it later.
Trade from yesterday, CAD-JPY long position, worked out as planned.
http://fxmadness.com/wp-content/uploads/2008/11/cad-jpy-11-24a.jpg
Entry was at 76.50 and target of 78.20 was reached very fast. Nice 170 pips. I only wish all trades were like this…. Canadian Dollar had some day, gained about 500 pips against USD. There were no gaps at the open to speak of, so I have to wait till next week for some of those.
I’m taking a look at NZD-CHF, cross that is mostly overlooked by traders. It doesn’t move as much as, say JPY pairs, so the objective is less ambitious here.
http://fxmadness.com/wp-content/uploads/2008/11/nzd-chf-11-24.jpg
I expect an upside breakout and placed an order at 0.6605. Target is at 0.6680. Chances are that from now on things will quiet down, due to Thanksgiving in a
November 23rd, 2008 at 9:02 am
Holiday week.in: General, Trades
With Thanksgiving this week, we should expect a little different dynamics in market behaviour. Historically, it is a relatively slow week, comparing to days preceding it. I still expect Monday and Tuesday to be rather active, but later on most financial markets should quiet down. This includes Forex. Now, that would be “typical” Thanksgiving week. As we know, last few months have been anything but typical and this could include next few days. Personally I think that most traders and decision makers are really tired of this constant uncertainty and will use Thanksgiving as an excuse to cut the week short and just get away from it all.
There still could be couple of trading days with good opportunities. Just like I did last few weeks, I’ll look for opening gaps. If I find any promising ones, I’ll try to document any trades resulting from them, for a discussion on these pages later.
Japanese Yen close sharply lower on Friday. By that I mean JPY got weaker and the crosses moved higher. Most of the time when this happens(not always) this tends to continue for a few hours after the Sunday open. I’m going to see if this tendency is manifested today. For that I’ll use CAD-JPY.
http://fxmadness.com/wp-content/uploads/2008/11/cad-jpy-11-23-edted.jpg
Two prong scenario here. Breakout above 76.50 makes it a buy with an objective of 78.20-30, or 170-180 pips. There is a confluence of resistance factors just under 76.50. If it holds, my plan is to buy CAD-JPY if the price falls to just above most recent low of about 73.25. This translates to entry in the 73.50-70 area.
GBP-
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November 21st, 2008 at 1:50 pm
Another crazy day.in: General, Trades
Friday came (almost) to an end and it proved to be another wild run. Not just in Forex; stocks basically recovered all of yesterday’s losses. It is truly amazing, behavior of the markets. It shows you just how confused participants are. This applies to everybody, small retail trader, trading institutions, market makers and everybody in between. I was done trading very early for Friday. Skipped the US session and went for a walk. Bought USA Today. I read very rarely, but there was something that caught my attention. Long article about just how strangely all markets are behaving. There was a comparison of many investment vehicles, like stocks, commodities, real estate, developing markets and so on. Focus was on how just about everything is loosing value at the same time. It was called unprecedented, with all experts mentioned there expressing their confusion about current situation.
Trade I planned yesterday, long GBP-CHF worked out as planned.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-chf-11-21.jpg
Entry was at 1,8200 with a target of 1.8300. Turned out to be good trade, making 100 pips.
Short term trades in GBP-JPY were productive as well.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-11-21.jpg
I only took 2 trades. First one started to pull back before it reached my 100 pip objective, so I jumped it for a gain of 58 pips. Second one was much better, gaining 100 pips very fast. I decided to call it a day, close the week on high note, and didn’t take any more discretionary trades. That’s why I was done early.
Vast m
November 20th, 2008 at 12:00 pm
Race to a Zero.in: General, Trades
What is it? Race to a zero? It seems to be latest activity world central banks are engaged in. Zero being 0% interest rates. looks like we have an ongoing competition. Yesterday Bank of England announced that is considering another very large rate cut. That was perhaps one of the reasons Pound took a turn from very sick to critical and plunged again. Not be outdone, FED is constantly hinting of another cut if necessary. Bank of Japan is only 0.3% away from, what seems to be, a target. Is there some grand prize awaiting those who reach that magic level? One really has to wonder, as consequences might be dire. We would dive from problem into another. I’m not even getting into details, that can be left to academics, economists and people who voice very smart sounding opinions, but, curiously enough, are not known for any trading skills. But seriously, is it where we are heading? Zero percent rates?
Yesterdays dive in GBP-Jpy put a kibosh into my longer term trade. It started really good, running up about 140 pips my way only to reverse on a dime and fall like rock.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-11-20-edited.jpg
I decided to dump it with a 100 pips loss, well, 103 pips. Turned out to be a right decision.
Friend of mine, a well known trader, called me yesterday and asked “What are you doing?”. “I’m trading”.”Why? You should use this time to go to a doctor and have your head examined. And everybody else who is trading now. Take a vacation and start again after New Year”.
He might as well be right, but the truth is, I see current environment as a challenge. Furthermore, I believe we are experiencing rare market conditions, and from a long term perspective, it is important to be reasonably active now. Huge, hands on learning opportunity. A lot of lifelong traders claim these are the most difficult market conditions they ever faced. I don’t want to miss it.
Next trade from last post, EUR-CHF.
http://fxmadness.com/wp-content/uploads/2008/11/eur-chf-11-20.jpg
Breakout was nice and price moved swiftly to my target, only to reverse within 10 pips of a target. I managed to get out at 1.5275 with 35 pips.
With only one day left in a trading week, I’ll focus on GBP pairs in this blog.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-chf-11-20.jpg
I’m going to try a buy here at 1.8200, with 100-120 pips objective. Also, tomorrow I’ll post Friday’s GBP-JPY trades on 5M charts. One final thought, we
November 18th, 2008 at 11:27 am
Boring day….in: General, Trades
Until about an hour ago, that is. Just as I’m ready to call it a day, things are beginning to move. I’m skipping any late action in favor of relaxation and an upkeep of these pages. On sunday I mentioned a trade on hourly charts of GBP-JPY, outside of my daily routine. That was to placed on another trading platform. I did right posting my comments. That broker does not maintain fixed spreads, but rather changes them depending on market conditions. When markets opened on Sunday there was increased volatility in all Yen crosses, so the spreads expanded considerably. They jumped to 30 pips for the beast. This made me to move the buy order to 146.60. Here is the chart.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-11-18-edited.jpg
This proved to be a stroke of luck. Price came close to it and retreated twice so far. This is still a valid order and I keep it.
Trade in AUD-CHF didn’t happen, not yet at least. I’m adding another one in Swiss Franc, this time EUR-CHF.
http://fxmadness.com/wp-content/uploads/2008/11/eur-chf-11-18.jpg
Entry is meant to be at 1.5240, with 100 pips target. Tomorrow should be more interesting day (for me) so I’d better hurry up with my relaxation plans
November 17th, 2008 at 12:53 pm
Fading the gap.in: General, Trades
Last Monday I was able to show a trade which “closed” the weekend gap but there was no “fading the gap trade”. Fortunately, I was able to do it yesterday. This time around, though, there was a little different twist- I missed “closing the gap” trade. The pair used was EUR-JPY, just like last week.
http://fxmadness.com/wp-content/uploads/2008/11/eur-jpy-11-17.jpg
Trading opened on most platforms with about 150 pip gap to the downside. I was looking for an entry point toa long trade and close the gap. Price slowly moved up the lower boundary of the gap. I expected formation of reaction point-minor high in that area, about 120.70. That would be my buy level. At that time price movement accelerated, and passed my potential buy area, which caught me completely by surprise. No trade. But I placed a sell order, for “fade the gap” trade. My rule of thumb is enter it when gap is about 2/3 closed. In this case it was 121.70. It all happened rather fast. Once the trade was filled, the objective was set to the low just before the gap was being filled. On this chart it was 120.15. Price missed it by few pips and I got out shortly after at 120.67 or 103 pips.
Lately I’ve been doing a lot of these trades. They are easy to recognize and implement and, if successful, set a nice tone for the week. These kind of market conditions don’t last forever, though, and eventually there might be a prolonged period of time when the gaps are nonexistent or too small for trades. That’s how markets work, any one condition changes slowly over time.
I took few trades on 5M charts of GBP-JPY. Despite of overall large daily price range, only one of those trades met my 100 pips target.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-11-17.jpg
Remaining trades produced much smaller gains, but I can’t complain. Positive day, no losses.
At the moment I don’t really see any trades on the time frames suitable for this blog which I would like to take. Possible exception is AUD-CHF.
http://fxmadness.com/wp-content/uploads/2008/11/aud-chf.jpg
It is not strictly speaking extremely promising set up, but better than just about anything else at the moment. I placed a small buy order at 0.7965. Target is 0.8100. For anything else I must await farther price development, and keep buying 5M breakouts of GBP-JPY. There is one more matter regar
November 16th, 2008 at 8:46 am
Analyzing “the beast”.in: General, Trades
The Washington summit of G-20 countries is making headlines, but not only because it is happening. The leaders “vow to cooperate” and “present united front”. That about covers it, as not much other than a fine photo session is being accomplished. The only item of remote interest is that Prime Minister, Gordon Brown, secured the international cover he wanted for his planned tax giveaway. Citing relatively low level of public debt, he expect this to be of some help to UK markets. Details of this plan are(of course) still unknown, but it might just provide some boost to the Pound.
As promised here is a look at GBP-JPY. These are chart analysis, not influenced by earlier Pound remarks.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-daily-edited.jpg
Daily chart of GBP-JPY over last few weeks. On Thursday market made new low at around 138.00, if only by few pips. This presents one of rare occasions that MACD divergence happened and has good chances of being “predictive”. This claim is based on statistical analysis of hundreds of such formations I’ve done over the years. This does not guarantee that this potential buy signal will be successful, only makes the probabilities higher. One think about MACD divergences- they do NOT indicate market bottoms or tops, only temporary retracement within current trade. And yes, sometimes they will happen at extremes, but that is not how they should be used. In case somebody thinks this is long term buy opportunity, projection target derived from last down swing (assuming it is complete), would be a 161.8 Fib extension, putting it at around 1.8100. This is market by “A” on the chart, which, interestingly, coincides with an previous minor top. I’m writing it as matter of interest, because I’m looking for something else here. Form reversal on this time frame will be confirmed only when the market moves above 165.5, latest high.
My own research and occasional use of MACD divergences calls for smaller targets. Most often reached retracement level is 61.8 Fib, which on this chart would be about 154.50. I try enhance chances of reaching the target by lowering it t0 50 Fib level, which here is about 151.50.
Here is another look at the same chart.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-daily-edited-2.jpg
Red line represents approximate price behavior for immediate future. I think we will stay within 165.00-138.00 band for some time. The longer price stays here, the better the chances for large and prolonged eventual move up. Daily bar closing here under the low of 138.00, would call for adjustment in analysis.
Since I’m primarily shorter term trader, there is another trade that I’ll be taking.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-11-16.jpg
This 1H chart of GBP-JPY. Buy signals here is given on a break above 146.40, objective of 151.00. Notice that this target is consistent with daily chart analysis, more specifically, the 50.0 Fib level mentioned earlier. This trade will be placedon another trading platform with different broker, so as not to
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November 14th, 2008 at 6:42 pm
Finally!in: General, Trades
This refers to my long standing trade in AUD-NZD. It was originally featured inthree weeks ago. I bought it at 1.1490 with a target of 1.1900. Intermediate term chart was used for that trade, the cross was trading sideways at that time so my expectation was for rather slow progress. The set up had high probability of success, but the time was an issue.
http://fxmadness.com/wp-content/uploads/2008/11/aud-nzd-11-14.jpg
The move finally started yesterday. Today price hit 1.1800 and retraced. This being Friday and just before G-20 meeting I decided to move my target lower to 1.1800. Next time price moved there, I was out with 310 pips gain. I still think we will see 1.1900, my previous objective, but it seemed a good move to pocket some profits. This trade took longer than most of trades, but since I used higher magnitude chart, my mind set from the start was for lengthy wait.
In yesterday post I promisedto post my today’s trades in GBP-JPY. Here is the chart.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-11-14.jpg
I took three trades. One lost 60 pips, the remaining two made 100 pips each. Just simple breakouts, nothing fancy.
If I find some time tomorrow, I’ll write something about targets. How to choose calculate them. It is my belief, that a trader should have an objective BEFORE a trade is entered. Not that it can’t be changed later, but there must be a plan for every trade.
Most of currencies had spikes both ways today, only to finish the day about unchanged. This is rather confusing, but not really surprising, with G-20 meeting looming over the weekend, Personally, I doubt anything of substance will come out of it, just enough to create even more uncertainty and indecision….
Now that this blog has built a little bit of a history, I’d like to exchange links with other bloggers. I’m looking for contact from people who keep similar blogs. They don’t have to be only focused on Forex, but should be trading oriented. Stocks, futures trading blogs are welcome. Also, if you have a quirky,
November 13th, 2008 at 7:16 pm
Yesterday’s trades.in: General, Trades
Just a quick update about trades mentioned yesterday. Trade in GBP-AUD didn’t happen, as things went even more sour for the pound and price took a nose dive. Seems like sterling has some terrible disease and everybody wants to get as faraway from it as possible. When everything is doom and gloom, it usually is a sign of bottom forming. I’ll leave that for some other time.
My other trade, CAD-JPY worked out O.K.
http://fxmadness.com/wp-content/uploads/2008/11/cad-jpy-11-13.jpg
Price was moving slowly, relative to most recent swings, so I decided to close the trade at 78.30 or 100 pips gain. This was at the lower end of my expectations for this trade, but still I’m rather happy with the timing. Following decline, which lasted only an hour, would have shaken me out of it, before this substantial rally happened. And no, I didn’t get back in. This trade was over, and for the time I don’t have interest in CAD-JPY. Some pips were taken on my usual GBP-JPY long trades. Speaking of the beast, tomorrow I’ll post Friday’s trades in GBP-JPY.
G 20 meeting is taking place in Washington this weekend. With this in mind it should not be a surprise ifFriday is rather quiet, as players await news and
November 12th, 2008 at 7:32 pm
Confusing news.in: General, Trades
Things are getting more interesting daily. In the latest twist, US treasury decided to not purchase troubledloans from depressed institutions. That was the original purpose for the money approved by congress. Now it seems the funds will be used for capitalization of companies. Authorities probably realized that 700 Billion was simply not enough to go around, especially with new needs popping up daily. Personally, I can’t keep up with all what is happening, and I don’t see how anybody can make any sense form this deluge of information. Thankfully, there are charts and they can be used for trading. If I wasn’t a technical trader, I’d probably take a long vacation now.
In the last post I profiled a trade in EUR-NZD. Here is how it turned out.
http://fxmadness.com/wp-content/uploads/2008/11/eur-nzd-11-12.jpg
My entry was on a breakout of 2.2085, with an objective of 2.2400. I must admit, even though I expected rather fast trade, it was a surprise to see it come to completion in less than 2 hours. Very fast 315 pips. Couldn’t it be always like that?
Once again Japanese Yen went on a run against all the other currencies. Most victimized were, once again, GBP and AUD. I decided to get on the long side of another cross, looking for a bounce.
http://fxmadness.com/wp-content/uploads/2008/11/cad-jpy-11-12.jpg
Little over an hour ago long position in CAD-JPY was established at 77.30. I’m not trying to find a bottom here, only some short term correctional move. Objective is 100-150 pips, probably closer to 100 pips.
Speaking of currencies that have been taking a lot of beating lately, Pound and Aussie. I’m looking for a play between them.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-aud-11-12.jpg
Buy order is placed at 2.3800, target at 2.4200, or 400 pips. It is shaping up to busy for the rest of the week.
Over the weekend I will take a closer look at GBP-JPY on daily charts. I’ve been getting a lot of emails about this cross lately. While it is very flattering, I’m just another trader and not some kind “beast” specialist, so my opinions must be viewed through a prism of own analysis, before money is
November 11th, 2008 at 8:00 pm
More news…in: General, Trades
Once again there was plenty going on in currency markets. For an average trader perhaps the most notable were moves in GBP. Pound just continues to fall ever lower. By now everybody is used to low valuations of GBP-JPY and GBP-USD. Today Sterling made a new low against Euro, since the inception of common currency. Today moves are attributed to dismal UK retail and home sales. The same story as everywhere else…
Russian Central Bank announced that it will no longer defend Ruble at current level. This basically means they are open to currency depreciation. Ruble sold sharply as did Russian stock market, signaling strong outflow of capital. In US government pumped more money into AIG, bringing the total to date to 153 billion for this one company alone. With banks claiming their piece of the pie, and now automakers all out demanding help, the 700 billion rescue package will not last much longer. And then what? Nobody has an answer and I don’t want to think about it.
Meanwhile USD is getting stronger, with likely more upside potential. Since I didn’t post new trades here yesterday, there is nothing to report. At the moment I’m looking to get into EUR-NZD .
http://fxmadness.com/wp-content/uploads/2008/11/eur-nzd-11-11.jpg
Plan is to buy at 2.2085 with a target of 2.2400. This paircan move fast, so if this breakout happens, it might be a quick trade. Also, buying GBP-JPY of short term charts.
Mike
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November 10th, 2008 at 7:46 pm
Trading gaps-case study.
Just like I promised yesterday, here are a couple of weekend gap trades from yesterday. I suggested using GBP-CAD, but since the gap didn’t there I used JPY crosses, AUD-JPY and EUR-JPY. Following snapshots will explain how I look for entry points. I use mainly 5M charts to enter. Gaps were to the upside, so my intention was to sell both crosses.
http://fxmadness.com/wp-content/uploads/2008/11/aud-jpy-11-09a.jpg
Here we see when first potential point of entry was established at 67.45. At the same time target is decided to be 66.75, about 2/3 of total gap width.
http://fxmadness.com/wp-content/uploads/2008/11/aud-jpy-11-09d.jpg
As the price continued to develop, my entry point became even more conclusive, but still no fill. Price made another run up.
http://fxmadness.com/wp-content/uploads/2008/11/aud-jpy-11-09e.jpg
Unfortunately for me, there was no good entry point established higher, so my eventual trade was filled at 67.75. Price kept moving down sharply and target of 66.75 was met fast( I know, there is an error in the snapshot), for a gain of 70 pips.
Another cross I was following for this demonstration, EUR-JPY, fared a little better. It started largely the same, establishing entry point at the same time as AUD-JPY.
http://fxmadness.com/wp-content/uploads/2008/11/eur-jpy-11-09-c.jpg
I placed an order at 126.18. After this price behaved a little differently than AUD-JPY and I managed to find a better entry point.
http://fxmadness.com/wp-content/uploads/2008/11/eur-jpy-11-09-g.jpg
Notice a minor low marked “A”. This was a well defined selling point which happened to be at 127.20. My target for this trade was at 125.85, also about 2/3 of total gap width( or height, depending on your view). Gain of 135 pips. The 2/3 rule is a little flexible, I simply don’t try to squeeze every possible pip out of these trades. It is because the gaps will differ slightly from platform to platform and there is no way of knowing which one is “true”.
Notice that I didn’t attempt to “fade” the gap, reverse the trade at the target. Reason was that the trade happened late in a day. After going over hundreds of examples of gaps, statistically speaking, chances for a “fade” being successful, diminish with the passage of time. In the article I mentioned 24H
November 9th, 2008 at 12:22 pm
EUR-USD.in: General
I try to avoid posting trades that involve USD. Reason is very simple. Everybody and their mothers seem to have an opinion about Forex trading this days, and, inevitably, that is confined to dollar based pairs. It all creates information overdose, since there so many opinions floating around. For the most part I’d rather focus on the broad world of currencies trading outside of the US dollar. Nonetheless, I did receive a fair number of questions about EUR-USD, so I’m going to take a look at it.http://fxmadness.com/wp-content/uploads/2008/11/eur-usd-11-09-edited.jpg
This chart covers recent few months worth of daily data for this pair. As we can see price dropped about 4000 pips very fast. This is “fast” in relation to how long it took for the price to climb to 1.6000 level. This move down was very directional, with very little in terms of bounces and congestion areas. This presents a dilemma of sorts- sell off already met or exceeded possible down targets using most common technical analysis.Over last couple of weeks price created a trading range of about 1000 pips, between 1.3270 and 1.2260 or so. I would expect it to be contained within this range for some time now (few weeks), with down side bias. Bias exists because we are in a bear market and until we have a clear reversal, this takes precedence. Should the price break outside of this range, next target would be 1.1500 area.On the upside there will not be much room, as the 100 SMA will keep moving down and is going to act as a ceiling, at least the first time it is probed. On fundamental side neither one of these currencies has much to offer at the moment. Their lamentable, but since US appears to be taking most proactive stance during current turmoil, chances are that USD will be getting a little stronger. Kind of like choosing the lesser of two evils. So here it is, my view on EUR-USD. Admittedly not very interesting, but I really don’t see any great trading opportunities here. Day trading should remain interesting though, because daily ranges are still high and will probably remain so for now.
Yesterday I posted an article about trading weekend gaps. I just wrote it few days ago, but it was already published on few websites. I will take a couple of trades today as I see some gaps developing before the open. To demonstrate it GBP-CAD will be used.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-cad-11-09.jpg
This pair closed Friday at about 1.8600 and early quotes so far indicate an opening around 100 pips lower. This will probably change a little bit by the time this is posted. I will be looking for a buy signal using reversal formations on small time frames like 5M and then I’ll try to sell it if the upper ranges of the
November 7th, 2008 at 7:36 pm
Surprised, once again.in: General, Trades
This happens to me often. After all these years of watching the markets, thousands of trades and being relatively successful, I get surprised by markets behavior. This, time however, it was in general terms, not causing any additional losses. I’m talking about the reaction today to all the news coming out of US. It was mentioned on these pages before, but I repeat every so often, I don’t trade economic news releases. By this I mean not trying to predict if particular announcement will meet the estimate, and positioning myself (trades) in line with my guesswork. That said, I’m trying to be aware at what time news are made public, so as not to place unnecessary orders around those times.
Looking at the economic calendar yesterday, with the sheer number of big news being scheduled, I truly expected some decisive moves in USD pairs. News didn’t disappoint, they turned out to be important. Unemployment shot up to 14 year high, at 6,5%, while economy shed some 240,000 jobs. All this failed to cause any substantial movement in USD, especially comparing to yesterday. While it didn’t cost me any money, I was surprised.
My focus was elsewhere, like the GBP-CHF trade I mentioned yesterday.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-chf-11-07.jpg
I managed to pocket 72 pips in short time, so I’m very pleased. Somebody asked me yesterday about short term GBP-JPY trades, so here is what happened today.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-11-07.jpg
Three trades, 2 winners and one looser. Little smaller targets, as dictated by preceding swings. I think that daily ranges of GBP-JPY, will keep slowly contracting and my targets for this trades will gradually get smaller. But not just yet.
Another trade which was posted in this blog , long AUD-NZD, is still trapped in range.
http://fxmadness.com/wp-content/uploads/2008/11/aud-nzd-11-07.jpg
This trade was taken with this possibility in mind and rather longer time frame for completion. I’m sitting on it for now.
Over
November 6th, 2008 at 7:36 pm
New President.in: General, Trades
Elections in America are over and we have a new president. It will be truly interesting to see if he indeed puts an end to wars and what tax and economic policies are instituted. Obama is inheriting a real mess on many fronts, and I don’t really think he will be able to change many things around fast. Time will tell.
More central banks are cutting rates. Bank of England was really aggressive and slashed them by 1.5% to 3%. This is a large drop for normally rather conservative BoE.At the same time European Central Bank lowered their rates to 3.25%, a half percentage point.I suspect there will be still more cuts around the globe. Problem is, that influx of cheap money might put us right back where we started- another mountain of bad loans. And what then? Who knows.
I had to skip update yesterday. Some days there is just not enough time to do everything I want to. At times I feel that my plate is just too full…
The GBP-CHF trade I was talking about didn’t work out as planned.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-chf-11-06.jpg
Original trade at 1.8730 turned sour right away and I took 75 pips loss. I took another swing at it later and entered at 1.8455 and managed a 100 pips gain. Looks like GBP-CHF going through rather cyclical daily routine, so I decided to enter it long again here about an hour ago at 1.8375. I hope to see about 60-80 pips out of this.
For fundamental traders Friday will be busy. There are a lot of scheduled releases in US. Some of them are important, like non-farm payroll and
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November 4th, 2008 at 5:33 pm
Big day.in: General, Trades
Americans are hitting the polls today to elect new president. Personally I’m glad it will over soon, because I’ve had it up to my ears with all the commercials. Governor’s race here in Washington is even worse. Nothing but dirty laundry and mud slinging. Very depressing, really.This is exactly the atmosphere that makes all politicians a look slimy. Thankfully it happens only every four years.
My trade from yesterday did very good, meeting the target.
http://fxmadness.com/wp-content/uploads/2008/11/eur-chf-11-04.jpg
I bought EUR-CHF at 1.4915 with a target of 120 pips, or 1.5035. I was pleasantly surprised by this trade as the objective was met rather swiftly. As I stated in last post, this pair moves a lot this day and is a very viable trading instrument.
This is in stark contrast with the trade I have in AUD-NZD, which is coming along at a snails pace. I’ll post the snapshot tomorrow.
GBP-CHF looks like a good buy to me.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-chf-11-04.jpg
Order is placed at 1.8730 and objective about 150 pips. Simple breakout.
I’m curious to see how USD will react to results. I try not to post Dollar trades in this blog, but it doesn’t mean I don’t trade it. I run few accounts using
November 3rd, 2008 at 3:53 pm
Election.in: General, Trades
With the presidential election tomorrow, I didn’t really expect too much going in USD pairs, until after that. Boy, was I wrong. Dollar made strong gains against EUR, CHF and GBP. I thought this would be nothing day, kind of like the stock market turned out to be. Speaking of election, I believe Dollar will continue to get stronger, no matter who wins. After all, we will have new president and for some time at least there will be this feeling positive changes which should benefit the USD. Three- four months down the road, once everybody realizes it isbusiness as usual after all, confidence will dive again. Call me cynical, but until government shows political will to fight debt(at least not to pile up new one), long term USD outlook remains abysmal, although it might go as high as parity with Euro in near term.
In took couple of trades in GBP-JPY Sunday afternoon my time.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-11-03.jpg
First one made 100 pips and second 60. For the second trade I was targeting 150 pip gain, but didn’t get and settled for less. Not a moment too soon, as it turned out, because from that point price fell like a rock to about 156. I marked a sell arrow on the above chart as “A”. This would have been proper sell point for anybody trying to catch this down move, at 160.90. No, I didn’t take it, since for now I only trade UP here, but marked it as a matter of interest.
Swiss Franc is under some pressure and I think it will continue, an order was placed to buy EUR-CHF.
http://fxmadness.com/wp-content/uploads/2008/11/eur-chf-11-03.jpg
My intended entry is at 1.4915, objective 120 pips. Few years ago this was very boring pair to trade. You had to use weekly charts to have trades with potential of 120 pips. Not any more. EUR-CHF is very dynamic and extremely liquid cross. By some accounts, the volume here is higher than USD-
November 2nd, 2008 at 10:25 am
GBP-JPY close up.in: General
After staggering plunge, GBP-JPY had rather sharp rebound last week. And, frankly, due to the size of these moves, it all looks a little messy. I’m going to use couple of popular technical tools and try to make a little bit of sense out of this.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-10-31.jpg
On 4H charts, the last major, identifiable price swing was the move to the down side from about 182.00 to 138.00. Normally this kind of swings are visible on weekly charts, not 4H, but it is what it is. Last week’s rebound pushed the price to 165 level. When Fibonacci retracement tool is applied, we can see that 61.8% level was reached. This is very typical. Statistically speaking, when the price does not exceed this level, major trend(down) is still intact. It doesn’t mean that the trend will continue, only that it hasn’t been broken yet.
The current minor high of 165 is also important because of couple of other reasons.
http://fxmadness.com/wp-content/uploads/2008/11/gbp-jpy-10-31-a.jpg
Previous low (A) is remarkably close to current high (B). Very often support point act as resistance levels when the trends are trying to revers. It is called “change of polarity’ and happens very often. Another interesting development is proximity of 100 simple moving average, which also acts as a resistance here. Look at points (1) and (2). The 100 SMA behaves a lot like trendline. I don’t use trendlines, because they are ambiguous and largely depend on the perception of the person drawing it. This 100 SMA is drown by computer program and not influenced by opinion of the chartist.
All this indicates that 165 area will be an important resistance level for near future. For now, though, as far as 4H chart is concerned, price is in a “no man’s land” with immediate down pressure. I expect it to drift down to 149.00 level. Lower would be even better. After that we should start seeing an
October 31st, 2008 at 6:31 pm
BOJ follows FED.in: General, Trades
I didn’t post anything for a very simple reason. It was my birthday and I had some people over. Being a considerate host, I chose to keep them company rather than leave them alone. With this bunch, you want keep an eye on them…. Just kidding, great friends.
Bank of Japan cut interest rates from 0.5% to 0.3%. I see it as a largely symbolic gesture, since everybody else is doing and the cut is only 0.2%. BOJ does not have too much room to maneuver with when it comes to rates. At this level they are abysmal. Currencies showed no reaction to speak of on the news.
FED started releasing money from the bailout package. I’m not going to pour over the details of this operation, since they are available in all newspapers. There was something I found peculiar. FED is pressuring banks to immediately put this money to use, start issuing new loans. Recent reports claim an increased number of credit cards delinquencies. This indicates average credit worthiness of potential borrower is falling even more. If banks start making hasty loans to every Joe Six-pack who walks through the door, pretty soon we’ll find ourselves in another crisis. How would that be called? Post real estate bubble-bubble? FED-bubble? Or just bubble-bubble?
After great start of the week, last couple of days were sub par for me. At least in light of trades posted here.
The latest one I described was a buy in GBP-NZD.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-nzd-10-31.jpg
Trade was filled at 2.8265 and was promptly stopped out at 2.8140, for a loss of 125 pips. At this time I have no plans for reentry. Failed breakout, loosing trade, moving on.
Another trade featured here was long trade in AUD-NZD.
http://fxmadness.com/wp-content/uploads/2008/10/aud-nzd-10-31.jpg
Entry was at 1.1490. In my previous post I indicated that this trade would need quite a bit of room to “breath” and wide stop loss was needed. This is what happened. Nice spike up, followed by relatively sharp drop and a decent recovery. It was not expected to be a fast trade, given 4H time frame and recent tendencies in this pair. For now I’m holding this position.
On
October 29th, 2008 at 8:26 pm
Rate cuts.in: General, Trades
Word for the day are rate cuts. Cuts, cuts and more cuts. FED lowered the rate to 1%, China to 6.66% and there is talk from Japan about possible drop of the rates, although BOJ doesn’t have all that room to maneuver, since there is not much in term of rates to begin with. And, frankly, now FED is also scraping the bottom of the barrel. On top of that loans to central banks of Brazil, Mexico, South Korea and Singapore were announced, each $30 Billion.
There was not much movement when the decision was made public. We will read in Thursday’s papers very insightful explanation that “rate cyt was already factored in”. Personally, I avoid trading USD pairs during these times, so I never really worry about how the market responds.
I’ve been following JPY crosses for some time, with my daily GBP-JPY trades reported here. So far this pair has bounced over 2000 pips from last weeks low, and AUD-JPY over 1200. These are good size bounces, even compared to preceding sell off. It is possible, this will come to a halt here. But more about later.
My GBP-JPY trades from Wednesday.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-29.jpg
Total of three trades and they all came to a conclusion very fast. First one made 100 pips, than I lost 70 pips, followed later by a gain of 150 pips. The first trade surprised me with it’s speed, but what is even better, spreads were almost normal and no slippage. Seems like trading conditions are getting more stable. For now.
AUD-NZD buy order I highlighted yesterday was triggered.
http://fxmadness.com/wp-content/uploads/2008/10/aud-nzd-10-29.jpg
The breakout finally materialized. Now I have to sit on it for a while, since this is 4H charts.
Potentially promising situation is unfolding in GBP-NZD, so I will give it a try.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-nzd-10-29.jpg
Move above 2.8265 indicates objective of of about 2.8550. Very simple breakout, not much to comment on.
Tomorrow I will not discuss short term trades in GBP-JPY, but rather take a look at a little longer time frame and run couple of possible scenarios of what is
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October 28th, 2008 at 8:23 pm
Bounce.in: General, Trades
No sooner possible intervention in Yen was mentioned, prices bounced, and hard. This is exactly what BOJ hopes to accomplish, without actually committing any money. But make no mistake, this was not an intervention. They look completely different. Out of the blue price start jumping 40, 50 or more pips in single ticks, liquidity dries out, you can not get filled, or it takes few minutes and by the time your trade is confirmed(normally should take a second or two) you are filled 100 or so pips above your intended price. You are getting on the phone to call your broker and scream bloody murder, but the line is busy. This wasn’t it, only nice, orderly market bounce. Granted, the moves were large, about 1600 pips daily range in GBP-JPY, but nothing extraordinary in the light of recent behavior.
I maneged 2 good trades in the beast.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-28.jpg
First trade made 120 pips, second 150, after which prices moved another few hundred pips. Needless to say, I didn’t expect it, so there was no more trades. Obviously, I missed on a lot of pips, but using this time frame, 5M, my targets are dictated by the size of most recent swings, that’s why I look for 100-150 pips gains. These are still historically very large objectives. When GBP-JPY behaves in more “normal” fashion, with daily ranges 200-300 pips, my objectives would only be 40-60 pips. However, since this cross is swinging wildly, like a yo-yo in hands of drunken sailor, might as well try to take advantage of it.
I used 1H chart for trade in GBP-CHF. Here things didn’t go exactly as planned.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-chf-10-28.jpg
Trade with an entry at 1.8150 was shaken out rather fast, for a loss of 60 pips. I probably didn’t give it enough breathing room. Regardless, second trade followed at 1.8260. This worked very nicely, one hour trade and 150 pips gain. Overall a good day. I’m looking for more tradesto the upside in GBP-JPY. Price is retreating now.
There is very interesting situation developing in AUD-NZD.
http://fxmadness.com/wp-content/uploads/2008/10/aud-nzd.jpg
I’m looking at 4H chart. For some time price has been trying to get above 1.1500, without success. With every failure, the chances are increasing for next try at this level to got through. I placed a buy order at 1.1490, with an objective at 1.1900. Since this is a higher magnitude chart, it will likely take
October 27th, 2008 at 7:35 pm
Possible Yen intervention.in: General, Trades
These must be great times to be a financial journalist- there is no shortage to news to cover. Once again there was a barrage of new developments concerning all markets. Here is a couple of interest to currency traders. South Korea cut interest rate by 0.75%, but since Won is not widely traded by retail public, probably few people even noticed. The second one might be very important- possible coordinated intervention to bring down from these ridiculous levels. Japan’s reward for largely avoiding the credit bubble is a soaring currency. For those who don’t remember, their own bubble took place in 1989-1990, when it reached unprecedented level. Downtown Tokyo was valued at more than half of California. Japanese stock market hasn’t recovered yet. But back to currencies.Such has been the ferociousness of the yen’s rise since the summer – up 15 per cent against the dollar since the end of July, and much more against others – that the Group of Seven leading economies said on Monday it was “concerned at the excessive volatility” and may “co-operate as appropriate”. This means intervention, selling yen and buying others. Coordinated efforts would mean that resources of few central banks are used at the same time. For as long they they are talking, nothing is likely to happen, they just hope that markets will take start correcting themselves because of the prospect of intervention. However, if we here few more remarks like that and than it gets quiet- watch out! Bank of Japan is not very happy with Yen this high and they will likely start acting with or without help from others. From personal experience with past interventions, I know they can come at any time of theday. They happened in the middle of Asian session, early New York and just after Americaclosed its business day. There is no pattern. They don’t want to piggy back anybody, but rather to change minds of players and reverse their opinions. Interesting times ahead and some wild ride, although not as severe as last few weeks. Since about all carry players have been shaken out already, there might not be much resistance, but, regardless, it will have to be done several times before trends truly change.
While we wait for the intervention, I keep playing with with GBP-JPY upside breakouts. There was a very good one yesterday right after market opened.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-27.jpg
One of my favorite set ups- gap on the open. Very often they get filled within few hours. This one was especially nice, since 5M chart provided beautiful entry point at 147.50. I usually don’t try to close entire gap, but about 2/3 of it. These things very from platform to platform and I learnt long time ago that it doesn’t pay to try to squeeze these last few pips. I made 125 pipshere and another 45 on another trade later on.
I also covered GBP-CHF here yesterday, here is what happened.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-chf-10-27.jpg
The upside move didn’t happen. I’m simply moving buy order down to 1.8150. My target for this one 1.8300.
So, I have this order pending, plan to keep buying short upswings in GBP-JPY and keep watch on news coming from G-7 meeting and BOJ. Next few
October 26th, 2008 at 1:20 pm
Baby steps.in: General, Trades
I spent last few hours going over the charts, after I had given it a rest over the weekend. Unfortunately, picture didn’t get any more clear. The pound looks very encouraging after this large bounce late on Friday. Question is - is it enough? I mean, does it really indicate beginning of some substantial rally in GBP? My views on GBP-JPY are known, I’ll be buying it on upside breakouts of short term charts. But what else?
I’m not ready to commit myself to anything substantial, but this here doesn’t look half bad.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-chf-10-26.jpg
There is a small gap down on the open, I would have preferred to be an up gap, but I’m willing to take a small trade and break above 1.8645. These are very tentative steps, just to the water, so I’m looking for no more than 100 pips. I don’t want to just enter it at the market, because it might easily fall right back down to test Friday’s low, and the distances are so large. These kind of swings are only great if you are on the right side of them. Being on
October 25th, 2008 at 12:03 pm
Panic.in: General, Trades
This is it, the only way to describe what has happened lately in Forex trading. And Friday was likely the cherry to top off the sour cake for most traders. GBP-JPY plunged another 2000 pips in a day before rebounding sharply. And AUD fell out of sight. People are asking why are some currencies loosing so much ground? Well, few years ago I could have thought that maybe I got drunk way too much, fell in a coma and during this time Australia and UK were declared uninhabitable and that’s the reason why nobody wants to hold these assets. But there was an answer in today’s business section of my local paper. Mind you, it was written by somebody, who’s finance expertise was honed on analysing neighborhood drive trough espresso stands. “Money is flowing into the safety of Japanese Yen”. What safety? On the same page of this paper there is also a comparison of major world stock markets over last 6 weeks. And “safety” of Japan was demonstrated by Nikkei performance- drop of 41.4%, the most of major indices. This includes 10% hammering on Friday.
First, all those still holding carry trades have seen their positions either liquidated by margin calls, or people simply dumped them. And if anybody thinks carry trade was not popular after last year, well, it is not true. Just a week ago I received an “Urgent report” from none other that Russell Sands, who claims to be one of the original turtles. Never mind, that he didn’t finish the turtle experiment. Nowadays, he is an expert of Forex trading and peddles unwanted services and advices. He was “urging” me to purchase his course and learn how to use 100:1 leverage and make 500+% percent just by using the carry trade. “First time revealed secrets of master forex traders”, that’s how he framed it. Doing it last week I’d be broke in matter of minutes. At one point on Friday GBP-JPY fell 400 pips in 5 minutes. Even a more modest margin of 25:1 would kill an account during this time. At any rate, liquidation of carry trades was one of the reasons for JPY rally.
Another one is that institutional traders have a herd mentality. Once it is apparent that money is flowing into something, they do it. Not necessarily because it makes sense, but because everybody else is doing it. In this case, their performance is comparable to other people with similar jobs. Most of them will have results (good or bad) somewhere in the middle of the pack, so their jobs are safe. Lemmings on the run. An avalanche of institutional money was needed in order to create a move of this magnitude. Commodities are falling, stock markets are collapsing,
the so called “professionals” can’t really sit on the sidelines with all the money. It is a luxury reserved for individual traders. Pros have to produce, so they run around like chicken with heads cut off, not knowing what to do, until they find a flavor of the month, like Yen and they all jump all over it.
Not that I was much smarter, since I didn’t see this coming. But than again, I don’t recall ONE voice from a year, or even a few months ago, that buy this time AUD-JPY would be at all time low. As a matter of fact, I have been nipping at GBP-JPY on a buy side, against the trend, with mostly decent results. And on Friday, after this stunning drop, my strategy finally paid off.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-25.jpg
Three quick trades, each for 100 pips gain. The first one lasted all of 4 minutes. Yes!
I also had a trade in EUR-USD, much earlier in a day, which was stopped out for 50 pips loss.
http://fxmadness.com/wp-content/uploads/2008/10/eur-usd-10-25.jpg
Tomorrow I’ll take a look at a week ahead, and try to find something worthwhile. Not that technical analysis are all that useful at the moment, but neither
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October 23rd, 2008 at 11:49 am
Yen gets even stronger.in: General, Trades
Things have leveled off a little bit over last 12 hours. That of course is only by comparison to the to the moves preceding it. In reality the ranges are still huge by any-body’s standard, though it looks like side ways action. Yen still looks as if it was fed steroids. GBP-JPY, for one, dipped under 155.00. This is almost 10,000 from from the high just one year ago. The chart I posted yesterday is really telling.
In my short term GBP-JPY trading I managed couple of trades.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-23.jpg
First one was good for 100 pips gain, while the second one did not reached it’s target and eventually was settled below entry for 11 pips loss. More of it tomorrow.
Another trade for tomorrowis in EUR-USD.
http://fxmadness.com/wp-content/uploads/2008/10/eur-usd-10-23.jpg
On this 1H chart I set up a buy order at 1.2950, looking for about 100 pips gain. We’ll see what happens.
On the fundamental front there is no shortage of news concerning currencies. Let’s see, rate in New Zealand were cut to 6.5%, while in Hungary raised them in order to defend the Forint, which had been in an awful tail spin. Polish Zloty also has been taking massive beating, as well Swedish Krona and scores of other currencies of smaller countries. People who trade news, or fundamentals must be busy with the amount of information coming out daily, but I don’t think it is easy to digest it all. If you took some losses lately trading forex, you can find some comfort in the fact that even large
October 22nd, 2008 at 8:01 pm
What a plunge.in: General, Trades
A lot has happened today. USD just keep charging forward, as expected, and is likely to do so for some time. The Yen, however, is even stronger and moves in JPY crosses are staggering. GBP-JPY plunge simply takes a breath away. Pound has not been under such pressure for a long, long time. Here is a monthly chart of GBP-JPY, and the last bar is ridiculous, with full week still left in October.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-22.jpg
Current candle is as big as the one in 1998, when LTCM collapsed, an event talked about for years after. I’m sure ongoing market developments will be written about, too. The sell off today was so severe, I didn’t have a single trade on 5M charts to the upside. Big fat zero.
Frankly, when I look at this chart I’m amazed that I’ve managed, on balance, be profitable taking only long trades here. As strange as it sounds, I will continue buying short term upside breakouts. With moves that big, any correction, even minor, can produce easily 100 pips.
My position in GBP-NZD was closed.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-nzd-10-22.jpg
The market started to turn and I wanted to packet some profit, so the trade was closed at 2.7115, for 495 pips. Market will likely continue lower, but taking profits here felt like a right thing to do. Especially since my other trade didn’t work out.
http://fxmadness.com/wp-content/uploads/2008/10/aud-chf-10-22.jpg
This trade didn’t work. I was wrong and about 3 hours after entry 75 pips loss was taken. Well, tomorrow is another day. In all honesty, after today’s moves I re
October 21st, 2008 at 7:23 pm
More BANG.in: General, Trades
Tuesday came and went with a bang! Dollar got much stronger on very nice, directional moves. And so did JPY. Personally, I’m surprised at the strength of Yen. After all, I keep playing upside with GBP-JPY, with relatively good results. Not today however, the beast fell like a rock, daily range was 880 pips. Now, that’s some move. With this in perspective, I did’t do too bad. Loss of 100 pips on one trade and a gain of 80 pips on the second one, for a total of 20 pips loss for a day. Being persistent SOB, more buys tomorrow on 5M charts.
Pound, however, takes pounding. This is not too bad for my other trade in GBP-NZD.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-nzd-10-21.jpg
I estimated a potential for this trade to be about 1000 pips, but most likely it will be closed sooner. It depends on how long it takes and if I find some other trade with, in my opinion, high probability. For now this stands.
Another trade was entered short while ago in AUD-CHF.
http://fxmadness.com/wp-content/uploads/2008/10/aud-chf-10-21.jpg
I followed it last week, but my entry point was not met, as the price moved away. I just entered it at 0.7850 with only a 100 pips objective. If this
October 20th, 2008 at 7:49 pm
Chipping away.in: General, Trades
Fairly standard day, with USD getting stronger again. I think it will continue to appreciate for the foreseeable future, pretty much across the board. Only the pace will probably get slower. But since I don’t really trade on this kind of time frames (not often that is), it is not all that important. I went to work on GBP-JPY, but registered onlt one trade which netted 80 pips.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-20.jpg
Missed second leg up and after that it was all downhill, for the “beast” that is. Another one of my orders was filled this one in GBP-NZD.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-nzd-10-20.jpg
This is 4H chart, so I expected a little back and forth here, as well as few days to see this thing come to conclusion. My objective here is about 1000 pips, but a lot will depend on how long situation will unfold.
A lot of interesting news coming out tomorrow. Nothing really profound, but the announcements are coming from Australia, Great Britain, New Zealand, USA
October 19th, 2008 at 8:22 am
Reversals or not?in: General, Trades
After the huge moves in preceding weeks, last period gave us a little bit of consolidation. I’m talking about the currency pairs that experienced the most movement. All crosses of AUD, NZD, JPY and GBP. Question now is, has the reversal started, or is it just some sideways move? Due to the size of earlier moves, this is very difficult question. I’ll use AUD-JPY as an example.
http://fxmadness.com/wp-content/uploads/2008/10/aud-jpy-10-19.jpg
Some people use trendlines to define when a trend is broken. I find them ambiguous and subjective, so no trendlines for me. Previous highs/lows is what I’m looking at. They are very objective, price either moves above/below them, or it doesn’t. No guess work. In order for trend to be considered reversed, or broken, the most recent, preceeding price high/low most be taken out by subsequent price development, on the time frame of interest. In this example I’m looking at a daily chart. Latest high before this sell off leg was at point “A”. The down trend is not broken until price moves above that point. For as long as we are between “A” and “B”(lowest point), we are in consolidation phase. Directional trading on this time frame during this period is going to be very challenging, because of the sheer distance between these two points. Stops needed for trading here would need to be ridiculously large, and, for most people, untradeable. Reasonable option is to trade smaller time frames, like 1H or so.
I would prefer to see another move down to undercut point “B”. Once that happens, reversal confirmation would be move above the highest point between “B” and the new low. As of this writing, that would be “C”. I don’t know if this is going to happen, only that I’d like to see it. This would give me more confidence to trade daily time frame, as the stops, and targets would become more manageable. Until than, it is smaller time frames, and targets, for me.
Like my old stand by, GBP-JPY, small objective upside break outs.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-19.jpg
Another interesting set up is found on 4H EUR-AUD chart.
http://fxmadness.com/wp-content/uploads/2008/10/eur-aud-10-19.jpg
This a sell at 1.8970, with something like 700 pips objective. This pair has been moving a lot lately, but I don’t really expect any more 1000 pips days, so this
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October 18th, 2008 at 9:49 am
Day off.in: General, Trades
Friday turned out unusual for me. Something very unexpected happened and I had leave computer behind to attend to personal matters. Hence no update and no trading. In all honesty, though, I didn’t miss anything. markets went to sleep. Last post covered a straddle order in GBP-NZD. Here is how it looks like right now.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-nzd-10-18.jpg
Price remains well inside the range. These orders remain valid for now.
Over all I had a good week. Out of the trades covered in this blog there were couple of good ones, in GBP-USD and EUR-AUD. My short term trading in mostly GBP-JPY was also positive. Tomorrow I’ll look at couple of daily charts, as well as some immediate trading opportunities, as I see them.
Have a gre
October 16th, 2008 at 10:40 am
Which way now?in: General, Trades
Last couple of weeks remind me of behaviour of the ocean; massive storm came and created huge waves. Then the winds quieted down, but the waves are still churning for some time, with waves becoming progressively smaller. Eventually the ocean is relatively smooth, until next storm arrives. In a hurricane season the wait is not too long. That’s what happened to the markets- dramatic moves turning into smaller and smaller swings and now they are waiting for new force to move them. With fresh batch of fundamental announcements expected tomorrow, more moves should be on the way.
Here is an example of this relative calm before the storm, GBP-NZD
http://fxmadness.com/wp-content/uploads/2008/10/gbp-nzd-10-16.jpg
After huge up move, market settled into a range, at least on this time frame, with little clues about direction. Statically speaking, chances for another leg up are little better than down, but one never knows. I like this set up for a straddle trade. I have a sell order at 2.7610 and a buy order at 2.9100. This breakout might be good for as many as 1000 pips, but since it is 4H chart it can easily take a week or two.
I’ve been rather undecided about what to do today, as price action was unclear to me. I was looking at GBP-JPY for short term trades. After the sell off late yesterday, somehow I managed to miss the revers. But I squeezed in one trade, which netted 80 pips.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-16.jpg
This was the highlight of my day. Tomorrow I’ll also be looking at AUD-USD. It has been moving like crazy and finally the spreads narrowed enough to
October 15th, 2008 at 11:29 am
Correlation?in: General, Trades
Have you noticed how correlated has US stock market become with the Dollar? It is inverse correlation, when stock market falls, USD gets stronger. Wonder if there is a way to exploit it? I just received an email about just that, among many others. My mailbox is flooded with all kinds of Forex products. Somebody claims that they have a system of trading USD based on S&P 500 movement. Few years ago I looked into something like that. After some trial and error I came up with some rules. Had to do with behaviour right after New York lunch. pretty much as soon as i had it figured out, it stopped working. I don’t believe correlations are PREDICTIVE. Even though the markets may move in unison, or in inverted manner, it doesn’t mean that move in one happens before the other. Even if that was true, the time interval would be to small to make it a viable trading strategy. That’s my experience at least, so I’m going to pass on this new offer.
I managed to close GBP-USD trade I had since Sunday. Exit price was at 1.7500, on the last upswing, for 370 pips gain.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-usd-10-15.jpg
I took couple of trades in GBP-JPY and made 110 pips between them, Interestingly enough, yesterday I lost 80 pips here and prevailing trend was up. Today prices drifted lower, yet I managed to scramble some gains. Trading can be strange indeed…
http://fxmadness.com/wp-content/uploads/2008/10/gbp-jpy-10-15.jpg
My last post mentioned possible trade in AUD-CHF. It didn’t happen, since prices moved sharply in the opposite direction. For now I keep the order live, but in reality it is not likely to be filled soon. Right now I need to take a step back and give the price some time to develop. Today’s action was a little confusing, so I’m not planning any trades on 1H, or similar time frames, which are suitable for this blog. Again, probably couple of trades in GBP-JPY, upside
October 14th, 2008 at 10:17 am
Busy day.in: General, Trades
Strangely enough, there were not very many news coming today. Not the kind that shake the financial world, at least. But frankly, it is about time to have a little slower day. The Asian session was still on steroids, so I remained busy. About the time I was posting yesterday notes, my short order in EUR-AUD was filled.
http://fxmadness.com/wp-content/uploads/2008/10/eur-aud-10-14.jpg
My entry was at 1.9940 and about 5 hours later I was out at 1.9440. Nice 500 pips gain, especially in such a short time. The pip value is lower now, since AUD came under pressure, but still a very good score. Speaking of pip value, JPY is high. My trades in GBP-JPY were less productive today. In spite of the “beast” moving up, and me buying the upside breakouts, I somehow managed to loss 80 pips between 3 trades. I’m not going into details, since I have better news and don’t want to crowd this post with too many charts.
In my Sunday post I indicated buying GBP-USD. Entry was at the open.
http://fxmadness.com/wp-content/uploads/2008/10/gbp-usd-10-14.jpg
I entered at 1.7130 with the target 1.7750. I used daily charts for this set up. So far it moved faster than anticipated, maybe not so much over last 10 hours. At this moment I think I should have closed at around 1.7600, but I’ll sit on this position. I just have to make sure that if this turns sour, some profits are protected.
For tomorrow, I’ll look at GBP-JPY again, buying upside swings. Hopefully, I’ll manage to be more attentive. Also, here is something else for me to look at.
http://fxmadness.com/wp-content/uploads/2008/10/aud-chf-10-14.jpg
AUD-CHF is a possible buy at 0.8190 and an objective of 0.8400. We will see.
At this point, I think that moves over last couple are only corrections to these over the top runs from before, not reversals. Not yet. Problem is that last swings of previous moves were so large, the we are likely to stay within ranges established by them. This means trading ranges of hundreds, even thousands of pips. Until prices establish new Low/Highs or take out old ones old trends are not broken (technically speaking). Trading is never ending p
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