Posted on October 15, 2008 at 22:04 in Uncategorized by Pierre CharleboisNo Comments »
I posted a trade suggestion earlier today that turned out to produce a very big move. The pair now appears to have topped and reversed.
I would not just simply jump in. However you can watch for breaks of swing lows to sell. Use the previous candle high as the stop-loss.
Cheers
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_15_08_blog_3-271x300.jpg
USD/CAD makes record moves
Posted on October 15, 2008 at 9:17 in Uncategorized by Pierre Charlebois1 Comment »
The USD/CAD pair made a record 670 pip move in one day last week. This suggests thatthis pair will likely remain highly volatile for weeks to come.
What this means to traders is that this pair should provide great trading opportunities at virtually any time of day in any market. As a trader I know I often have to wait for volatility and need to follow market times in order to be at my trade station when news is pending. However, with the high volatility of this (and many other pairs) we can look for breaks at all times of the day, when it’s convenient for us.
So going forward, use a simple trend-line break technique on the 15 minute chart. Trade in the direction of the break once a candle has closed beyond the trend-line with stops at the previous candle extreme.
Good trading.
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_15_08_blog-300x231.jpg
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_15_08_blog_2-300x231.jpg
New FX Weekly Report just posted
Posted on October 12, 2008 at 18:00 in Uncategorized by Pierre CharleboisNo Comments »
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-10-12.html
New report just posted on where the major pairs are likely to go this week.
Cheers and good trading!
Is the EUR/USD now poised for a retracement
Posted on October 12, 2008 at 16:54 in Uncategorized by Pierre CharleboisNo Comments »
I had posted this view of the EUR/USD on Thursday. Indeed the break lower provided a great trading opportunity.
http://blogs.fxstreet.com/disciplined/files/2008/10/eurusd_oct_9_081-282x300.jpg
Here’s the current view and where I belive we should be looking for the next trades.
http://blogs.fxstreet.com/disciplined/files/2008/10/eurusd_oct_12_08-300x284.jpg
Cheers and good trading.
EUR/USD showing good trading opportunities
Posted on October 9, 2008 at 9:17 in Uncategorized by Pierre Charlebois2 Comments »
The EUR/USD is trading in a range and consolidating before it’s next big move. I’ve identified the most important barriers and trend lines to use as breakout points for short term trades.
Breaks of the levels here should provide good trading opportunities.
Cheers
http://blogs.fxstreet.com/disciplined/files/2008/10/eurusd_oct_9_08-282x300.jpg
How are banks doing now that the bailout plan is passed?
Posted on October 7, 2008 at 22:07 in Uncategorized by Pierre CharleboisNo Comments »
here’s a great article on the interest rate spread that banks charge each other on there overnight rate. Basicaly what bank pay each other for short term loans.
http://www.tradingpostfinancial.com/blog/archives/Watch-the-TED-Spread-for-Change-for-the-Better.html
New FX weekly report just published
Posted on October 6, 2008 at 10:08 in Uncategorized by Pierre CharleboisNo Comments »
I just published my weekly report.
The best trades will likely be on the JPY pairs for some time.
Cheers
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-10-06.html
USDCAD produces small trade
Posted on October 1, 2008 at 10:00 in Uncategorized by Pierre CharleboisNo Comments »
Now we have a larger range to watch.
I believe the next trade is a sell below 1.0550
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_oct_1_08-249x300.jpg
USD pairs could be signaling a trend reversal is close at hand
Posted on October 1, 2008 at 0:03 in Uncategorized by Pierre CharleboisNo Comments »
Most USD pairs are looking ripe for reversal. In particular I like the look of the USD/CAD on the 15 min chart. A triple top is in place and price is about to slip below support.
Cheers
http://blogs.fxstreet.com/disciplined/files/2008/10/usdcad_sept_30_08_2-239x300.jpg
With the failure of the bailout plan the JPY charts should plumet
Posted on September 29, 2008 at 21:39 in Uncategorized by Pierre CharleboisNo Comments »
In times of uncertainty the Carry Trade unwinds.
The carry trade is where investors borrow from Japanese banks and re-invest in higher yielding markets like savings and stock in another country.It is also done on the spot market by buying JPY pairs while selling other pairs to offset possible losses as the market fluctuates. In theory the JPY go up and interest is paid on the offsetting trades.
Now what if the JPY starts to strengthen too fast and the JPY pairs fall faster than other pairs go up. What if holders of foreign assets need to pay back the JPY they have borrowed, as their assets become worth less? The trades no longer offsets and positions need to be unwound as they start going negative. So during financial instability JPY pairs go DOWN!
So I would look for selling opportunities on all JPY pairs.
Cheers and good trading.
Tags: Carry Trade
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Posted on September 29, 2008 at 9:58 in Uncategorized by Pierre CharleboisNo Comments »
A buy on the pull-back with stops below the low presents a good risk reward.http://blogs.fxstreet.com/disciplined/files/2008/09/gbpusd_sept_29_08-283x300.jpg
Bailout plan not a done deal yet
Posted on September 29, 2008 at 9:49 in Uncategorized by Pierre Charlebois1 Comment »
There will still be one or two days before the plan is finally passed.
http://money.cnn.com/2008/09/29/news/economy/bailout/?postversion=2008092909
Tentative Deal for Bailout to be Voted on Monday
Posted on September 28, 2008 at 10:42 in Uncategorized by Pierre CharleboisNo Comments »
It appears as of this morning in Washington that an agreement is prepared for vote by congress on Monday. How this will effect the opening market is a big question.
http://www.bloomberg.com/apps/news?pid=20601087&sid=asBqtU7twpAY&refer=home
http://www.nytimes.com/2008/09/28/business/28bailout.html?bl&ex=1222747200&en=486a776f9f184e9c&ei=5087%0A
What will happen to EUR/USD this week?
Posted on September 27, 2008 at 15:34 in Uncategorized by Pierre CharleboisNo Comments »
We are witnessing one of the most historic events in the last 100 years!
Please see my report on the US Bailout and how it will effect the currency markets.
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-09-27.html
Tags: US Bailout
GBPand EUR vs USD Still unclear
Posted on September 26, 2008 at 4:18 in Uncategorized by Pierre Charlebois3 Comments »
The current pattern is still unclear. My bias is for a further move down but I’m cautious. There are levels defined by yesterday’s highs and lows. These levels could be good break points for a day trade.
Cheers
http://blogs.fxstreet.com/disciplined/files/2008/09/eur_gbp_usd_sept_26_08-300x174.jpg
EUR and GBP not in sink against USD - Wait for signal
Posted on September 25, 2008 at 10:03 in Uncategorized by Pierre CharleboisNo Comments »
The GBP and EUR are not really moving one way or the other. The GBP appears on the cusp of a turn whereas the EUR is still stuck in range. So which of the two currencies is leading?
I am going to wait on the sidelines until the patterns clear up.http://blogs.fxstreet.com/disciplined/files/2008/09/eur_gbp_usd_sept_25_08-300x164.jpg
Cheers
If your going to learn how to trade you need to learn how to lose
Posted on September 24, 2008 at 9:34 in Uncategorized by Pierre CharleboisNo Comments »
Remember when your mother would say: You need to learn to lose gracefully. I don’t know about you but I had no idea what the h#$l she was talking about. I was angry and upset and mad at myself and everything and I didn’t even know what the word ‘graceful’ meant.
Fast forward 40 years latter and you know what… I still fill the same when I lose. So what can I do differently? First of all I have to recognise the problem. Realising that it does me no good to stay mad and not address what’s happened. Then consciously look at the problem as a learning experience. What did I do right? Did I follow all my rules. Was money management good? Did I enter at the right place? Etc.
If I made any mistakes I congratulate myself for doing a good review and I re-enforce that I will be more structured to what was missed on my next trade. If I did everything right, then I know it was the market that went against me and I know this will happen a certain amount of times per successful trades.
By doing this I learn how to lose gracefully and when I do lose, I have a plan to work through my upset rather than re-enforcing it. Do you have a plan to be graceful in loss?
Good trading,
EURUSD poised to break out
Posted on September 23, 2008 at 23:33 in Uncategorized by Pierre CharleboisNo Comments »
This flag pattern is shaping into a double or triple correction. A break to the upside is favoured.http://blogs.fxstreet.com/disciplined/files/2008/09/eurusd_sept_23_08_2-300x292.jpg
Conflicting signals on the EUR/USD, Use breakout strategy
Posted on September 23, 2008 at 11:10 in Uncategorized by Pierre CharleboisNo Comments »
In the last 12 hours or so we have seen the momentum come out of the EUR/USD. We are either basing to go higher or starting on our way down.
I talk about psychology and follow trader sentiment by way of COT reports and sentiment indexes. At this time the COT still favours EUR strength. (Here’s a great report to follow by Jamie Saettele) Whereas the current move is flagging and the trend is in danger of reversing.
So for now, use a breakout strategy for the next move.
Sorry folks the image loading tool is not working at this time.
EUR and GBP likely to continue to beat-up USD
Posted on September 22, 2008 at 14:59 in Uncategorized by Pierre CharleboisNo Comments »
Here’s asnapshot of EUR/USD.
http://blogs.fxstreet.com/disciplined/files/2008/09/eurusd_sept_22_2_08-284x300.jpg
Jumping on a moving train is scary. Wait for a pullback or consider using the current candle low on the 1 hour chart as a stop.
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[ 本帖最后由 hefeiddd 于 2009-4-7 20:49 编辑 ]
Posted on September 22, 2008 at 9:51 in Uncategorized by Pierre CharleboisNo Comments »
If you have been following my blog I had said the EUR/USD may well be poised for a move much higher.
There are two possible Elliott Wave counts I’m following and both point higher. The most probable right now is we have completed a leading diagonal and we should head higher.
What’s most important here is to simply observer that we have broken important trend-lines and barriers. Pulls back are possible however I would use these as opportunities to buy.http://blogs.fxstreet.com/disciplined/files/2008/09/eurusd_sept_22_08-300x295.jpg
How to choose a broker
Posted on September 21, 2008 at 23:48 in Uncategorized by Pierre Charlebois1 Comment »
I’m responding to a fellow that is inquiring about risk with brokerages I thought it important to address it here. It’s an important subject. I am not an expert but here are a few things to consider on your research.
I was reading your comment and I’m not quite clear on what it is you’re asking. Do you have an account with this firm and are you concerned about your deposits?
Firstly let me tell you that I have a personal relationship with some of the annalists at FXCM in the New York office so my answers may be a little bias.
What is it you are concerned about? If you are worried you may loose your money on deposit with a broker then here are some things you should consider.
Regulations vary in each country. I was very fortunate several years ago when my broker RefcoFX collapsed under a scandal. My account was with RefcoFX Canada and my deposits were protected under Canadian regulations and I lost NOTHING. In fact my account was picked up by Man FX Canada and I have carried on with this broker without interruption. We have very good banking and brokerage regulations in Canada. If you reside in Europe you may consider FXCM UK as they offer segregated funds. This too offers a level of protection. Do a little more research to find out the regulations in each country and how your deposits are protected.
As far as how much they charge per transaction I think FXCM are quite competitive. Remember that some brokers offer lower spreads at less volatile times but the rates likely float and would result in higher spread during busy trading times. How fast orders are executed and fractional pricing also play a role. And does the broker with lower cost have a trading desk you can call in the event you computer is down and you need manual execution? Regarding the ‘Roll Interest’ this is a function of leverage for some brokers. Different leverages produce different costs of ‘Roll’. And don’t forget, you will be paid on ‘Roll’ as well if you are on the right side of the trade.
My final advice for you is to call several brokers and talk to their customer service reps. Ask all these questions and then make an assessment based on what you believe provides you the service and protection you want.
I think this subject would be great for discussion on Rob Booker’s Forex Radio. I’ll propose it to him.
Cheers.
Tags: FX Brokers
Where to now for the USD versus other majors
Posted on September 21, 2008 at 11:45 in Uncategorized by Pierre CharleboisNo Comments »
Please see my report: http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-09-21.html
Tags: Carry Trade, Dollar, eur/usd, forex, GBP/USD, USD/CAD
The USD is taking a hit as expected
Posted on September 19, 2008 at 1:22 in Uncategorized by Pierre CharleboisNo Comments »
In my previous post(s) I’ve been sugesting that the trend is still up and we should see EUR and GBP strenth.
In early trading there is a strong move up, following a correction so look for further break-outs.
http://blogs.fxstreet.com/disciplined/files/2008/09/eurusd_sept_18_4_08-299x300.jpg
Are we in a new uptrend on EUR/USD and GBP/USD?
Posted on September 18, 2008 at 22:53 in Uncategorized by Pierre CharleboisNo Comments »
Here we are at crossroads on whether we should be going up or down on USD pairs.
I think we have some clear resistance to focus on. I believe break above these levels bring out the buyers once again.
http://blogs.fxstreet.com/disciplined/files/2008/09/eurusd_sept_18_3_08-273x300.jpg
http://blogs.fxstreet.com/disciplined/files/2008/09/gbpusd_sept_18_08_3-273x300.jpg
Tags: down, euro, forex, gbp, up
Here’s a great article from one of our bloggers
Posted on September 18, 2008 at 22:34 in Uncategorized by Pierre Charlebois1 Comment »
I was reading Gerry Furst’s blog because I think he is well tuned into the market overall. I tend to follow the other markets enough to know when to put my holdings into cash. (As I did last year). However I don’t have as good a view on it as Jerry seems to.
http://blogs.fxstreet.com/1stonforex/2008/09/17/amazing-bewildering-unprecedented-criminal/
Gerry is someone you might like to follow over the next few weeks and months as he has a great read on all markets. something that will affect currencies in a big way.
Cheers
EUR/USD hits 1.4480 - Now what?
Posted on September 18, 2008 at 10:07 in Uncategorized by Pierre Charlebois2 Comments »
When looking at a pattern like this a trader must ask himself: Is this pair basing to go higher or is it retracing before continuing lower?
In Elliott wave theory there is a pattern referred to as a leading diagonal. There is also a pattern that is very common that is a triangle and appears in the 4th wave position. In these two cases the outcome price directions are opposites.
At this time the current pattern fits both criteria. This happens fairly regularly as it is much easier to read theses patterns after they complete. During the forming process it can be rather subjective.
So, the best thing to do is look for all the possibilities and trade the one that shows the most promise at a time of reversal or break-out.
If you don’t know Elliott Wave theory, that’s OK because you can simply use good judgment around trend-lines. The key is to pick your entries where risk is limited.
Had I been observing the charts when the top candle formed on the hourly chart I would have considered a sell trade with a stop at the high. I might still, if the price rebounds back toward the line then resumes a downward direction.
So wait for the opportunities and trade accordingly.
http://blogs.fxstreet.com/disciplined/files/2008/09/eurusd_sept_18_08-300x297.jpg
http://blogs.fxstreet.com/disciplined/files/2008/09/eurusd_sept_18_2_08-300x297.jpg
Tags: diagonal, Elliott Wave, eur/usd, forex
If you don’t think trader sentiment is what moves the markets
Posted on September 17, 2008 at 23:42 in Uncategorized by Pierre Charlebois2 Comments »
Consider this.
We are at a critical juncture on the EUR/USD pair. A break above the line and a subsequent revisit of resistance at 1.4484, would represent the first time in several weeks that we have been moving up rather than down. Many traders are waiting for this level as it has now become the defining line between an up or down trend.
I stress this because it is the emotional sentiment of the majority of the traders that will be at play here; jumping on at this point to either unwind their short positions or enter into longs.
It won’t so much be the news itself. But rather the traders reaction to the expectation. So wait for breaks and jump on the bandwagon if they happen.
Good trading
http://blogs.fxstreet.com/disciplined/files/2008/09/eurjpy_sept_17_2_081-300x294.jpg
EUR/USD move as expected
Posted on September 17, 2008 at 20:12 in Uncategorized by Pierre CharleboisNo Comments »
We saw the .618 and trendline hold. This could be the signal that the counter trend is well underway.
I would expect EUR strength for some time (days/weeks) ahead. Of course a break below 1.4100 changes the bias.
Cheers
http://blogs.fxstreet.com/disciplined/files/2008/09/eurusd_sept_172_08-268x300.jpg
Now what after the FOMC announcement? - EUR/USD recovering?
Posted on September 16, 2008 at 22:17 in Uncategorized by Pierre CharleboisNo Comments »
After much gyration in the price immediately following the FOMC minutes release, we are now back at a greater level prior to the news.
This suggests a bottom may have formed on the pair. As I stated in my previous post, the trend-line on the one hour chart could be the place to consider the trend as going up. A break above should result in a new high. A break above 1.4450 should deliver the pair to $1.50.
Conversely a break below $1.41 would provide an opportunity to sell with targets near the low at 1.3878
So watch these levels and trade accordingly.
http://blogs.fxstreet.com/disciplined/files/2008/09/eurusd_sept_16_3_08-299x300.jpg
« Newer posts – Older posts »
Posted on September 16, 2008 at 10:16 in Uncategorized by Pierre CharleboisNo Comments »
The EUR is under pressure again after a sudden recovery last Friday. So what should we expect from traders based on the news from the FOMC.
Many economist will simply argue that if the news points to higher interest rates then the USD should gain and of course if reductions in the bank rate are immediate or perceived to be coming in the next release, then USD weakness is what will result.
Well, I was reading a report recently and the truth is that at FOMC news release times the EUR/USD trade does not regularly follow these fundamental rules. What tends to happen is the news is a catalyst for what the overall sentiment of traders is, and the direction of the price is based on the traders reaction to the news. So what is most important to know is what the street is expecting and how close on or off the mark the announcement is.
Trying to be acutely aware of this sentiment is very challenging. So as a technical trader my default is to wait for the initial movement (first 30 minutes or so) and then consider a trade if the price direction clearly appears. I also prefer to take a trade on this news in the ‘General Direction’ or ‘Current Trend’. Let’s examine what that could be right now.
http://blogs.fxstreet.com/disciplined/files/2008/09/eurjpy_sept_16_08-296x300.jpg
Currently on the Daily chart, a turn to a new direction may be taking place. This is not yet completely clear, so unfortunately it’s not a great indicator yet. However what it does tell me is the downside is likely limited. Next we see we have just broken a trend-line on lower time frames (1 hour chart). So I am most likely to see how the traders react tothis trend line and then trade above or below this line.
http://blogs.fxstreet.com/disciplined/files/2008/09/eurjpy_sept_16_2_08-296x300.jpg
If I don’t get clear strong direction in the move during the following 30 minutes, I will sit this out and wait for the ‘General Direction’ to become clear again over the next day or two. Sometimes the best trade on big news like this is to wait for the price to leave the range which in this case will determine the greater trend.
Good trading!
Oversold Pairs are Reversing!
Posted on September 15, 2008 at 1:01 in Uncategorized by Pierre CharleboisNo Comments »
Please see my report.
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-09-15.html
I would expect dollar weakness for some time going forward now.
1.75 looks like a temperary bottom on the GBPUSD - 1.85 could be next
Posted on September 13, 2008 at 13:28 in Uncategorized by Pierre CharleboisNo Comments »
Here’s the image from just a few days ago that produced what I refer to as a beacon candle. We have seen a very strong rejection of the low of this candle at $1.75.
http://blogs.fxstreet.com/disciplined/files/2008/09/gbpusd_sept_9_08-268x300.jpg
What we have now is an ‘Engulfing Candle” that now suggests more upside is very possible. Having said that, re-tracement is likely before a continued move up.
What is particularly interesting is that we have now retraced almost all the way to the other extreme of the “beacon” candle. What to watch for next and how to trade this forward would be to expect a pull back around 1.80 and then trade the break if it pierces through to the upside. If this event occurs the next likely target is 1.85 which is the next cluster of candles.
http://blogs.fxstreet.com/disciplined/files/2008/09/gbpusd_sept_12_08-300x283.jpg
Thanks for the Comments
Posted on September 11, 2008 at 21:05 in Uncategorized by Pierre Charlebois1 Comment »
I have been receiving a number of very positive comments lately from readers who seem to be benefiting from some of my posts.
What I say to you is congratulations. I know this seems a bit strange to say when I am the one getting the accolades but the truth is that the teacher shows up for the student that is ready. So congratulations to YOU for being open to learning more about yourselves as well as trading techniques.
Learning the techniques is the easy part. Learning how to deal with oneself when winning or loosing is what will make you a good trader. How to improve on patients and discipline is what will accelerate your profitability in trading.
Cheers all
The Hardest Part Of Trading Is Waiting
Posted on September 11, 2008 at 2:26 in Uncategorized by Pierre Charlebois4 Comments »
There are two voices I my head whenever I trade. One saying: Don’t miss the big move . The other says: Don’t jump the gun. So which one do I listen to? Well… both I guess. What I have learned over time (and am still learning to be better at) is that I have to be sure when I pull the trigger; that my emotions aren’t dictating my trading.
When I trade emotionally it’s because I am trying to make up for an earlier loss or lack of a gain where I missed a very good move. Both of these sentiments can get me into trouble.
In order to combat this, I pre-plan my trade and then wait for the trade to come to me. This is where I make the best and most consistent trades. Right now, I have to keep telling myself that a turn is coming and it will be strong. AND it has not started yet and I must be patient and wait.
This is definitely one of the hardest things for me to do. “Waiting” is not my nature as I always feel like I will be missing something. As a teacher of mine once said: Trades are like busses. There’s another one coming around the corner.
So don’t jump the gun and move back into the market when a turn is evident.
Off to the Forex Expo in Las Vegas
Posted on September 10, 2008 at 9:37 in Uncategorized by Pierre CharleboisNo Comments »
I will be attending the FX Expo over the next three days. I will try and post when there. Please excuse my absence from posting if I am not able to do so.
Looking For Key Support and Resistance Using Candlesticks
Posted on September 10, 2008 at 9:33 in Uncategorized by Pierre CharleboisNo Comments »
Here’s a great example of how Candlesticks can help identify where key support and resistance may lie on a chart. These two candles with their extremely long wick show rejection areas at price points that created sudden and sever reversals. A range is likely to develop between these two points and I dare say the pair should be observed for abreak-out the next time either one of these levels is breached.
Keep these two levels well in view over the next several days and weeks as they will surely come into play in a very important way when the volatility returns.
http://blogs.fxstreet.com/disciplined/files/2008/09/eurjpy_sept_10_08-273x300.jpg
How To Read Market Sentiment In Candles
Posted on September 9, 2008 at 10:22 in Uncategorized by Pierre Charlebois2 Comments »
http://blogs.fxstreet.com/disciplined/files/2008/09/gbpusd_sept_9_08-268x300.jpg
I like to count waves (Elliott) to get a sense of the general direction and how far a move should go. However I usually don’t enter a trade unless I see a Candle or pattern of several Candles that potentially shows a reversal or continuation point.
I expect that some sort of bottom is forming on the EUR/USD and GBP/USD and reversals are due on many pairs. However this change may take days or weeks yet to unfold. I will hold off entering on a buy until the market shows me that a rejection has occurred at a price point. These Candles and Candle patterns come in many forms. And over the next few post I will place snapshots of such patterns as I believe when we see a turn on most of the pairs it may be quite dramatic.
For now, I will draw your attention to a candle on the GBP/USD Daily chart. This is a type of Doji (small body). And of all the candles patterns identified, this one seems not to have a specific name. So I am calling this one a Beacon Candle. What is interesting about this type of candle is it has identified two very strong rejection points in a single day. What this does for us is shows what price point traders were not willing to go beyond. The next time we break either the upper or lower point of this candle, it is likely we will see a break-out.
Keep an eye on these levels. They will surely become important in the next few days/weeks.
Cheers
A Strong Change in Trader sentiment is happening
Posted on September 8, 2008 at 7:00 in Uncategorized by Pierre CharleboisNo Comments »
Please see my article and charts for market sentiment and potential direction for this week.
http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-09-08.html
How Will the Non-Farm Payroll Figures Affect the USD?
Posted on September 4, 2008 at 16:53 in Uncategorized by Pierre CharleboisNo Comments »
The market is consolidating ahead of the US payroll figures. What does this mean to us as a traders?
I was working with a group that I mentor and I was pointing out that the best traders have the ability to shift their styles of trading depending on what sentiment the market is in. Meaning that if the market is in a strong trend ‘Continuations are the best trades. And if the market is sideways or correcting then ‘Reversals’ are best.
As we are waiting for this big event, if you want to trade over the next 24 hours or so, then look for channels to form on the shorter term time frames; such as the 15 Minute charts, and trade the reversal. I recommend looking for Doji’s and Trwezer top/bottom candles at trend lines to pick up 25 to 50 pips per trade.
Here’s an example on the GBPUSD:
http://forex.typepad.com/disciplined/images/2008/09/04/gbpusd_15min_sept_4_08_2.jpg
Note this channel is now well defined and presenting multiple opportunities for 50 plus pips at a time.
Developing an ability to identify current market sentiment is a little difficult to explain. However common sense of when and why the market would potentially go sideways for a period of time is the best place to start. In this case, waiting for one of the most market moving events will most often result in nice opportunities like this one.
Good trading…
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Posted on September 2, 2008 at 16:46 in Uncategorized by Pierre CharleboisNo Comments »
http://forex.typepad.com/disciplined/images/2008/09/02/gbpusd_sept_2_08.jpg
Late last week I wrote that a bottom could be formingon the GBP/USD. This turned out not to be the case. In fact what appeared to be an ending diagonal has turned out to be a leading one.
So, I would expect more downside looking for a bottom between here and the $1.75 area. Be patient and wait for a good indication the reversal has started as this should be obvious when it happens.
Good trading.
Does it fell like everybody is waiting for something to happen?
Posted on August 28, 2008 at 17:20 in Uncategorized by Pierre Charlebois4 Comments »
http://forex.typepad.com/disciplined/images/2008/08/28/gbpusd_aug_28_08.jpg
Ever notice that. That there sometimes seems to be a tension that builds in a room. And then… all hell breaks loose. This is the feeling I’m getting right now about the FX Market. Do you fell this as well?
The USD has been strengthening for weeks and sooner or latter traders are going to align there overall sentiment and emotions and send the markets the other way.
sometimes when this happens a pattern know as an ending diagonal develops (Elliott Wave). This usually signals a strong reversal if indeed the pattern is correctly identified. I say this because there is always the chance of a miss-read.
What I watching right now is the possibility of an ending diagonal on the GBPUSD. The pattern shows up because there is a fight going on between the Bulls and Bears. So a relatively consistent pattern shows up at the end of long market move that once complete gives way to a sudden correction.
Here’s a snapshot of what I’m watching. I will wait for the pattern to show sings of completion and when I see an engulfing candle in the opposite direction I will become a buyer.
Cheers and good trading.
Don’t Throw Good Money After Bad
Posted on August 27, 2008 at 17:04 in Uncategorized by Pierre CharleboisNo Comments »
I’m currently reading (re-reading) the Way of The Turtle. It’s written by one of the original group that was mentored by some of the worlds most successful traders. I highly recommend this book.
I keep finding great little gems of wisdom that all add up to a great way of approaching trading. Here’s the piece I want to share today.
Don’t Throw Good Money After Bad: I remember my mother saying this. And the older I get the smarter she has become. In the book this is referred to as "Sunk Cost effect". In business "Sunk costs" have been spent and cannot be recovered. Have you ever worked for a firm where there was an almost foolish tendency to stay with an old system and try to keep repairing it even when it was so inefficient because there had been a recent investment in the system or process?
How about that old car. When someone spends thousands on the transmission only to have the motor blow up, that it will now cost several more thousands to replace or repair. When does it stop? where to you get out?
The same goes for trading. So to be a good trader, one needs to not view a draw-down as a real value. It just simply isn’t. Even if the market turns in your favour, you still have to make up the total loss before you start making profit.
So learn to set firm stop losses and get out where you know you should the first time. Don’t throw good money after bad.
Trading as a Business – How to make money on the Markets
Posted on August 19, 2008 at 17:11 in Uncategorized by Pierre CharleboisNo Comments »
I’ve written about this in the past and will continue to write about it in the future as I believe it is the most important piece for most traders to understand.
First of all; here a few questions to ask yourself.
* How much money do you expect to make from trading? $1,000/month, $10,000/month, $1,000,000?
* Do you have a plan on how you will get there? How much you should increase every month towards your goal?
* Do you have a specific system that is written down? It should be in a form where you could give it to another trader and they would understand it. And even if you trade on fundamentals you MUST have a technical trading plan to go with it.
* Have you tested it over a period of time? How many paper trades have you done for your system? More than 100?
* Do you understand how to use a Stop-Loss to keep your risk at less than 5% of your account value?
I have been in business all my life. Worked for many organizations and have personally owned my own businesses. The only ones I have ever seen succeed over the long-term are the ones where planning and risk management where always in focus. So now ask yourself how does a successful business run?
* Is there planning for revenue and expenses and risk?
Does a successful business launch into something without testing and risk assessment?
Does a successful business now when to cut losses?
Does a successful business have rules and guidelines and policies to follow?
Do you see what I’m getting at? You must measure and have a benchmark to measure against. If you don’t know what you are aiming at you will have no focus and no real way of knowing you are moving forward.
I’ve heard some other teachers and mentors say that the real test is in a live account because this changes the dynamic and real anxiety comes into play. I agree with them BUT I do not believe you simply jump into a live account without a road-map on what you plan to do. If you don’t know where you’re going… any road will do.
I’ve also just posted a new technical report: http://www.fxstreet.com/technical/analysis-reports/fx-weekly-report/2008-08-19.html
The No. 1 Rule in Trading - No one can Accurately Predict the Markets
Posted on August 15, 2008 at 14:36 in Uncategorized by Pierre Charlebois1 Comment »
I thought it timely to post this as I have received a few comments lately asking for specific prediction on the EUR/USD.
For those of you who are new to trading please learn this one rule right away and never forget it. No one can predict any specific market. Certainly some annalists can come close or be right some of the time but this is quite rare.
The way I trade and what I always recommend to all traders is to never risk more that 5% of your account on any trade by way of the use of a stop loss. NEVER GO OVER THIS! And in fact 2% should be your limit.
You should never enter a trade unless you have written the following down.
[*]Where is my entry price point and why?[*]What is my stop-loss that I will NOT go over?[*]Where is my profit point exit.If you can not answer these questions on every trade you make then until you can, trade only in a demo account until you do this every time and you are profitable.
Treat trading like a business. You would never spend money in a business unless you know the exact amount. Do the same with your trading.
If you are trying to find the bottom on the EUR/USD this is like trying to catch a falling knife. For goodness sake… Let the knife hit the ground first.
I will write more about "Trading as a Business" in the next blog.
Cheers
We have seen the Terminal thrust on the EURUSD today
Posted on August 14, 2008 at 23:26 in Uncategorized by Pierre Charlebois4 Comments »
I would not yet be certain a bottom has formed on the EUR/USD but we certainly moved closer to it today. I had mentioned in my previous post to expect a sudden move down and behold, we saw this happen during the previous session.
I would use caution until we have a clear rejection of the low before becoming an aggressive buyer, as there may still be one final swing lower.
What I would watch for here is a final capitulation of the low in an aggressive and powerful move upward to be the signal that the temporary bottom may be in place.http://forex.typepad.com/disciplined/images/2008/08/14/eurusd_aug_14__2_08.jpg
Cheers
A Noticeable Change in Psychological Sentiment on the EURUSD
Posted on August 14, 2008 at 16:35 in Uncategorized by Pierre Charlebois1 Comment »
How can we go form such a dramatic move, almost historic in fact to now just moving in a narrow range, trading only a fraction of the amount of just a few days ago.
In Elliott Wave terms (and I love the way Elliott theory helps identify trader sentiment) this is a characteristic of a wave 4 which is where we appear to be in the current pattern. You see traders are now cautious and are taking some profits. Wave 4’s don’t usually move a lot and seem to be purposed mostly for burning time. In fact this is the most common place to see a ‘Triangle’ form. As the ‘Triangle’ develops the anxiety finally builds and pushed the price out the end usually in what is known as a terminal thrust Wave 5.
Note that wave 5 is often known as the fools wave as those who are trading it as a continuation are jumping on a bandwagon that has gone far enough and is usually about to change direction with a blow-off top/bottom.
So be patient and wait for a sign that a least a temporary bottom is place before making any new trading decisionshttp://forex.typepad.com/disciplined/images/2008/08/14/eurusd_aud_14_08.jpg
.
Do you believe what you see?…Or does you mind play tricks on you?
Posted on August 8, 2008 at 16:40 in Uncategorized by Pierre Charlebois1 Comment »
Looking at some of the charts these last few days I hear a voice in my head saying: That can’t keep going deeper? This move has to be over now… For sure this will start correcting next session! Sound familiar? Have you been looking at some charts and doing the same?
We are seeing an almost unprecedented move in favour of the USD over the last few weeks. Trader sentiment has definitely changed towards the Dollar and we are now in a correction of years of overselling.
What happens to our minds in cases like this is as the move goes deeper and deeper we go into a state of disbelief almost, about how far the moves are going. So we want to benefit from the move but part of our minds won’t allow us to jump into a trade in the current direction because it’s akin to jumping onto a moving train. So we watch, thinking that the move will be over soon and that we can catch the counter trend rally. What usually happens here is we do this far too soon and we are stopped out or go negative on our trades at which point we start adding to average down and find ourselves fighting a tide that turns into a tidal wave.
So how do we counter our bad programming?
On your trade plan/rules sheet write down at the very top the most important question to answer before making any trading decision. Are we in a “Trending Market”? or a “Correcting Market”? This is known in Elliott Wave Terms as “Motive Impulsive” “or “Corrective”. What this should do for you is identify what trading type to employ. In a Trending Market you should be trading CONTINUATION trades and in a Correcting Market you should be trading REVERSALS. If you learn to train your mind to key in on this first then when you look to trade, you thoughts should be focused on what is the next best trade rather than on the disbelief of how far the move is going.
Having said that; counter trends will come along in the next few days. Don’t try to guess when… Wait for a clear signal before any new trades. If you miss the counter trend, don’t worry, these moves are just the beginning of more to come over the next few months.
What will the FOMC rate bring today?
Posted on August 5, 2008 at 16:33 in Uncategorized by Pierre CharleboisNo Comments »
We have uncharacteristically seen a tremendous amount of movement going into the FOMC rate and policy release today. What appears to be driving the market is speculation that the US policy makers are changing their tone on planed rate increases and that a series of upward changes is coming.
We see once again that emotions move the market, not the event itself. This suggests that the very thing to look for once the minutes are released is if the news now disappoints. We are going into the news release highly overbought on the USD. So if traders don’t get the news they expected they may very quickly turn the other way. If they get the news that has been rumored then further continuation is the likely result. The question in that case however is how far can you stretch an overstretched elastic?
So… expect more volatility and be prepared to change your direction bias if the news disappoints. Remember the news may still be that rate increases are coming, but if the language is weak about it, this too may cause a reversal.
How do fractals show us trader sentiment and emotion
Posted on August 1, 2008 at 17:06 in Uncategorized by Pierre CharleboisNo Comments »
Here’s a great example on the CHF/JPY for fractal observation.
http://forex.typepad.com/disciplined/images/2008/08/01/chfjpy_aug1_08.jpg
It is possible that this pattern is creating a pattern at the end of a similar pattern of one larger degree. In the drawing you can see similarities in the last part of the pattern compared to the larger overall shape.
It is still difficult to tell on this pair if the final pattern is complete. When it is, we will see evidence in this in an overall sentiment change by the traders. You see it’s the emotions of the traders that create these patterns making them ever so smaller (or sometimes larger) in appearance as the emotions oscillate back and forth in what they are believing and feeling as they trade.
In this case as the patterns becomes smaller, they are changing their minds with increasing frequency withing the greater overall bullish sentiment. What will eventually happen is a final very small pattern looking just like the largest one will form at the end of the channel (This may or may not have happened as it is hard to read the last smallest pattern). When this occurs, then the overall greater sentiment will take place with a longer term direction change and a new pattern will emerge.
This will provide great trading opportunities knowing the general direction of the pair going forward for some time to come. In fact this reversal will likely foretell a multi-year top.
This theory is also somewhat evident in Sunil Mangwani’s blog of http://forexology.fxstreet.com/2008/07/harmonics-withi.html
« Newer posts – Older posts »
Posted on July 9, 2008 at 19:12 in Uncategorized by Pierre Charlebois4 Comments »
How many times have you heard someone say that? How does it apply in trading?
One of the biggest psychological challenges we face as traders is making a plan and then sticking to it. We usually see the potential target when we first enter a trade but as my Mom used to say… after a little while we can’t see the forest for the trees.
We become distracted and loose sight of our original goal in a trade. We get caught up in the fear of loss. If we are in profit when we re-examine the trade we fear loosing what we have gained short term and get out too soon, or if in draw-down we fear loosing more. In both cases fear drives us to make a short term decision contrary to our original gaol. We must fight the resistance of closing the trade without re-checking our plan and where our goal is set. If you can follow this one simple rule of no trading without review of the plan you could be on your way to lager profits.
Trading is unlike anything else we do for money. If we are working for someone or a company and we work for a week, even if we leave after that week we are usually still paid for the time we put in and loose onlyfuture earnings. But in trading this is not the case. Trades can often go into profit by 100’s of pips only to retrace back to negative or worse, hit our stop as a loss. So this is akin to working for a week not knowing if we are going to be paid AND in fact we may have to pay money at the end of that week. Not one of us would work on that basis for anyone would we?
So how do we overcome this problem? What do we need to change in ourselves and how do we do that? Well… it’s back to developing discipline in order to make progress. We need to change our programming by creating new experiences we can trust. In order to do this we have to start with one very basic rule. Do not make any trade unless your plan is documented. With an entry point, a stop-loss point and a profit point. At the top of this plan write down:
I will remain in the trade to my target goal or in the case of a loss, I will accept it as a risk well managed. (Of course you must use good money management of less than 2% risk of your account and look for opportunities that reward better than 1:1 Risk/Reward ratio)
Make it a win either way. When we learn to accept both losses and wins as forward momentum in our trading we will then see acceleration in the capital of our accounts.
Here’s the opportunity on the EUR/JPY
http://forex.typepad.com/disciplined/images/2008/07/09/eurusd_july_9_08.jpg
We appear to have a proper triangle unfolding that at this time is providing a few different possibilities for trades. If the assessment is correct, we should see a return close to the bottom trend-line, so a sell here is appropriate. At the bottom trend-line we should see a reversal and should buy as then new highs above the upper trend-line should print. Remember good money management and stop-loss use.
Good trading.
Be ‘Smart Lazy’ when you work your system
Posted on July 7, 2008 at 19:29 in Uncategorized by Pierre CharleboisNo Comments »
I can’t remember where I read this before and I wish I could credit the writer. I learned a lot from remembering this simple edict. I searched the Net to see if I could find the article without success. However I did come across an interesting website http://www.lazyway.net that seems to depict the meaning the writer had intended. I would suggest you follow up with a visit to this site as I have subscribed to their blog feed and am finding the daily input very helpful.
What the original article was trying to say was… STOP outsmarting yourself by adjusting the trading system. That’s right… almost all new traders constantly break the rules of the system they are employing. In turn what happens is when introduced to a new system, they see it as the Holy Grail and do what I call ‘System Jump’ as the new system is the answer to better trading.
What we need to do to be successful is not become better at understanding a new system but rather at simply following one. Be LAZY and just follow the rules of the current system you’re using. Don’t change them, don’t adjust them, don’t add to them, and most of all… Don’t blame the system for your lack of capital growth in your trading account. Be LAZY and try not to think too much!
In the book the way of Way of the Turtle, there is a lot of reference to how difficult it is for anyone to follow even the most simplest of rules when trading. That there is a disconnect between what rules traders say they are following AND what it is they do.
Bottom line is that it is not knowing a good system to trade that will make you profitable in the long run; but rather it will be your ability to apply your system consistently that will make you a successful trader.
Why Market Psychology Points to a Possible Multi-Year High on the EUR/USD
Posted on July 4, 2008 at 4:49 in Uncategorized by Pierre CharleboisNo Comments »
http://forex.typepad.com/disciplined/images/2008/07/03/eurusd_july_3_08.jpg
Based on the move down from Thursday’s NFP and ECB’S Interest rate increase and press release we have to look hard at how dramatic the move is and ask ourselves what the market psychology might be based on such a move.
What has become the group mentality of the EUR/USD traders for such a reversal to happen? Why in the world would we see such a rejection of the current highs when this seems to go against what should have happened logically on news such as this. Indeed I would suggest that logic has very little to do with the current move and it is completely based on the current ‘feelings’ of the majority of the group trading. What could the evidence be telling us? Let’s consider the following.
I’m an Elliotticien, and as such, believe in the effect of the combined psychology of traders on the markets and that it can (at times) be read by the action of the market based on patterns and severity of the move. Having said that, I tend to use Elliott Wave for the bigger picture and try not to get too caught up in the subtle moves on the lower time frames. There are so many situations when multiple counts are valid, that I always consider each possible count when trading. Oh ya… Back to the move today…
1. The rejection of the price level is clear - No ambiguity here
2. The rejection comes extremely close to the 1.6018 top that was the previous strong rejection point
3. The rejection comes in face of a rate hike by the ECB and more negative news for the US - (Opposite move would have been normally expected).
Also the move down appears to be a 5 wave Motive Impulsive move as coined by Elliott. These moves come also as first legs of corrections so this is where we need to temper our view and not be overly confident about the top. However we can be Bullish for now, expecting a correction upward and then a resumption of the downward move. As each trend-line along the way down is breached, we can increase our confidence in the top being in place.
So for now, look to sell on bounces, knowing that the combined psychology of all the EUR/USD traders is strong rejection of any price above $1.59
BTW. In the outside chance a new high is reached, it should be very short lived.
How to trade the EUR/USD this month - Identifying ‘Risk’
Posted on July 2, 2008 at 18:06 in Uncategorized by Pierre CharleboisNo Comments »
http://forex.typepad.com/disciplined/images/2008/07/02/eurusd_july_2_08.jpg
I love it when the market reaches these important price levels. Not just because of the overall opportunity but also because we can now start to zero in on where risk belongs. With risk defined the potential takes shape.
The previous top at $1.6018 ended in a ‘Wedge’ or in Elliott Wave terms an ‘Ending Diagonal‘. These diagonals show up after extended moves and mark a place where the market strongly rejected any new extremes. So what will happen next time this level is re-visited? Let’s look at the psychology of it.
As the level was strongly rejected the first time, what should we expect the sentiment to be the second time we reach or breach this level? Ask yourself what happens when you enter unfamiliar territory. When you cross the line to a place where you are not so sure you belong. Did you ever sneak in somewhere you shouldn’t be? Or maybe found yourself in a room full of people you simply didn’t relate to. Anxiety rises and you start looking for a way out.
So watch any new top with anticipation of a reversal pattern. When a top appears to be in place, then we will know where risk (stop-loss) belongs.
Can You Describe The Trades You’re In? Why we need “Good Habits”
Posted on July 1, 2008 at 17:40 in Uncategorized by Pierre CharleboisNo Comments »
If someone asked you why you entered a particular trade, would you be able to list the criteria you used to enter? And what about your stop-loss; can you provide a clear explanation as to why you chose it? And do you have a clear target on where you will exit in profit? And if not, do you have a clear price or set of criteria for moving your stop-loss when you are in profit.
Whether you are new to trading or have been doing it for some time, successful or not, you need to be able to answer these questions before entering any trade. I’m not suggesting you need to recite each trade from memory, however if you can’t, then do you have the trade(s) logged?
Why is this so important? You were clear in the moment you made the trade right? The trade met all you’re criteria for entering right? Well I ask you… How would you know if you can’t explain it clearly now or refer to it in you trade log?
For me personally, I have learned that with a plan, I stay in trades much longer for much greater profit. It was certainly difficult at first, especially when waiting to move my stop-loss based on my criteria for better swing trades. In fact, having a good set of rules and criteria for when I move my stop has made the biggest difference to my trading success over the years.
So, fight the resistance of not documenting your rules and keeping a trade log. This one small task may be the best ‘good habit” you ever got into.
Keeping your cool in a swing trade + Opportunity on the USD/CAD
Posted on June 27, 2008 at 22:56 in Uncategorized by Pierre CharleboisNo Comments »
http://forex.typepad.com/disciplined/images/2008/06/27/moving_stop_too_soon.jpg
I said I would focus on
addressing finding an easy way of doing what’s hard (being
disciplined enough to stay in a trade for greater profit) and that I
would share the occasional chart. Well here we go.
Why is it most traders
can’t stay in a trade beyond the first wave? Entering trades at
break-out points or important technical levels means you are entering
at very high volume times along with many other traders who also see
the potential at the same level.
After a brief move to
profitably, the price action often goes into a period of re-tracement.
As traders see their trades reverse and begin to loose money; fear
based thinking takes hold and as the price moves back towards their
entry level, a mini panic ensues by a portion of the group of traders
and they sell quickly before their gains return to zero. So the price
you enter your trade at is often re-visited on a retrace due to this
phenomenon.
Therefore; for greater profit in ’swing’ and
‘position’ trading, risk should be maintained at its original level,
until a clear swing high/low is established.
In the example
shown here the trader entered the order at the
trend-line break placing his stop at the low. If
the trader moves his stop to break-even on the first profitable move,
the position would be stopped out on the next swing-low.
By
waiting until the next swing low is defined and then moving the stop
to break-even, the trader is now in a profitable trade rather then
just a break-even one.
Now that you have this
knowledge we need to practice it (in a demo account of course).
Please see my posting on the FX Weekly report for more detail about
how to trade the USD/CAD this week.
How To Stay In Positions Longer For Greater Profits
Posted on June 27, 2008 at 7:56 in Uncategorized by Pierre Charlebois2 Comments »
I knew that would get your attention… That’s what everybody wants right… The Holly grail of trading right? Staying in positions for days or even weeks and gaining 300 to 700 pips in a trade, right?
Well this is possible but very few traders actually want this. It would seem anyway, because I would argue that if this were the case, I (and you) would know a lot more traders that actually stay in positions for a number of days or even weeks. And I know very few. So there is a disconnect between what traders SAY they want and what they DO.
I don’ know the exact statistics but from my experience in coaching and training other traders I would say that learning trading isn’t what’s difficult, but rather learning to remain in the right position at the right time for greater profits is what the real challenge is. Simply knowing this and actually doing it is what separates the really good traders from the rest of the pack.
What is, in my opinion, the biggest single difference between the average trader and the best of traders is in the way they approach their own challenges around the psychological pitfalls we all encounter. And what is the one trait these extraordinary traders have in common? Is it their technical expertise? Their knowledge of economics? Luck? Experience? Here it comes… the part where you say to yourself: “Yeah this guys is going to say it’s discipline and that this is what will make me a better trader‘. BINGO!
What irony. Most of us got into trading because of its promise of providing freedom. And now, you keep being told you need more focus and discipline. This doesn’t sound like freedom does it.
So this is what my focus on this blog will be: Finding an easy way of doing what’s hard. Cause let’s face it folks. We either act… or we are acted upon. So let’s learn to trade smart, not hard. (And I’ll share the occasional technical chart set-up too).
« Newer posts
Posted on July 9, 2008 at 19:12 in Uncategorized by Pierre Charlebois4 Comments »
How many times have you heard someone say that? How does it apply in trading?
One of the biggest psychological challenges we face as traders is making a plan and then sticking to it. We usually see the potential target when we first enter a trade but as my Mom used to say… after a little while we can’t see the forest for the trees.
We become distracted and loose sight of our original goal in a trade. We get caught up in the fear of loss. If we are in profit when we re-examine the trade we fear loosing what we have gained short term and get out too soon, or if in draw-down we fear loosing more. In both cases fear drives us to make a short term decision contrary to our original gaol. We must fight the resistance of closing the trade without re-checking our plan and where our goal is set. If you can follow this one simple rule of no trading without review of the plan you could be on your way to lager profits.
Trading is unlike anything else we do for money. If we are working for someone or a company and we work for a week, even if we leave after that week we are usually still paid for the time we put in and loose onlyfuture earnings. But in trading this is not the case. Trades can often go into profit by 100’s of pips only to retrace back to negative or worse, hit our stop as a loss. So this is akin to working for a week not knowing if we are going to be paid AND in fact we may have to pay money at the end of that week. Not one of us would work on that basis for anyone would we?
So how do we overcome this problem? What do we need to change in ourselves and how do we do that? Well… it’s back to developing discipline in order to make progress. We need to change our programming by creating new experiences we can trust. In order to do this we have to start with one very basic rule. Do not make any trade unless your plan is documented. With an entry point, a stop-loss point and a profit point. At the top of this plan write down:
I will remain in the trade to my target goal or in the case of a loss, I will accept it as a risk well managed. (Of course you must use good money management of less than 2% risk of your account and look for opportunities that reward better than 1:1 Risk/Reward ratio)
Make it a win either way. When we learn to accept both losses and wins as forward momentum in our trading we will then see acceleration in the capital of our accounts.
Here’s the opportunity on the EUR/JPY
http://forex.typepad.com/disciplined/images/2008/07/09/eurusd_july_9_08.jpg
We appear to have a proper triangle unfolding that at this time is providing a few different possibilities for trades. If the assessment is correct, we should see a return close to the bottom trend-line, so a sell here is appropriate. At the bottom trend-line we should see a reversal and should buy as then new highs above the upper trend-line should print. Remember good money management and stop-loss use.
Good trading.
Be ‘Smart Lazy’ when you work your system
Posted on July 7,
Why Market Psychology Points to a Possible Multi-Year High on the EUR/USD
Posted on July 4, 2008 at 4:49 in Uncategorized by Pierre CharleboisNo Comments »
http://forex.typepad.com/disciplined/images/2008/07/03/eurusd_july_3_08.jpg
Based on the move down from Thursday’s NFP and ECB’S Interest rate increase and press release we have to look hard at how dramatic the move is and ask ourselves what the market psychology might be based on such a move.
What has become the group mentality of the EUR/USD traders for such a reversal to happen? Why in the world would we see such a rejection of the current highs when this seems to go against what should have happened logically on news such as this. Indeed I would suggest that logic has very little to do with the current move and it is completely based on the current ‘feelings’ of the majority of the group trading. What could the evidence be telling us? Let’s consider the following.
I’m an Elliotticien, and as such, believe in the effect of the combined psychology of traders on the markets and that it can (at times) be read by the action of the market based on patterns and severity of the move. Having said that, I tend to use Elliott Wave for the bigger picture and try not to get too caught up in the subtle moves on the lower time frames. There are so many situations when multiple counts are valid, that I always consider each possible count when trading. Oh ya… Back to the move today…
1. The rejection of the price level is clear - No ambiguity here
2. The rejection comes extremely close to the 1.6018 top that was the previous strong rejection point
3. The rejection comes in face of a rate hike by the ECB and more negative news for the US - (Opposite move would have been normally expected).
Also the move down appears to be a 5 wave Motive Impulsive move as coined by Elliott. These moves come also as first legs of corrections so this is where we need to temper our view and not be overly confident about the top. However we can be Bullish for now, expecting a correction upward and then a resumption of the downward move. As each trend-line along the way down is breached, we can increase our confidence in the top being in place.
So for now, look to sell on bounces, knowing that the combined psychology of all the EUR/USD traders is strong rejection of any price above $1.59
BTW. In the outside chance a new high is reached, it should be very short lived.
How to trade the EUR/USD this month - Identifying ‘Risk’
Posted on July 2, 2008 at 18:06 in Uncategorized by Pierre CharleboisNo Comments »
http://forex.typepad.com/disciplined/images/2008/07/02/eurusd_july_2_08.jpg
I love it when the market reaches these important price levels. Not just because of the overall opportunity but also because we can now start to zero in on where risk belongs. With risk defined the potential takes shape.
The previous top at $1.6018 ended in a ‘Wedge’ or in Elliott Wave terms an ‘Ending Diagonal‘. These diagonals show up after extended moves and mark a place where the market strongly rejected any new extremes. So what will happen next time this level is re-visited? Let’s look at the psychology of it.
As the level was strongly rejected the first time, what should we expect the sentiment to be the second time we reach or breach this level? Ask yourself what happens when you enter unfamiliar territory. When you cross the line to a place where you are not so sure you belong. Did you ever sneak in somewhere you shouldn’t be? Or maybe found yourself in a room full of people you simply didn’t relate to. Anxiety rises and you start looking for a way out.
So watch any new top with anticipation of a reversal pattern. When a top appears to be in place, then we will know where risk (stop-loss) belongs.
Can You Describe The Trades You’re In? Why we need “Good Habits”
Posted on July 1,
Posted on June 27, 2008 at 22:56 in Uncategorized by Pierre CharleboisNo Comments »
http://forex.typepad.com/disciplined/images/2008/06/27/moving_stop_too_soon.jpg
I said I would focus on
addressing finding an easy way of doing what’s hard (being
disciplined enough to stay in a trade for greater profit) and that I
would share the occasional chart. Well here we go.
Why is it most traders
can’t stay in a trade beyond the first wave? Entering trades at
break-out points or important technical levels means you are entering
at very high volume times along with many other traders who also see
the potential at the same level.
After a brief move to
profitably, the price action often goes into a period of re-tracement.
As traders see their trades reverse and begin to loose money; fear
based thinking takes hold and as the price moves back towards their
entry level, a mini panic ensues by a portion of the group of traders
and they sell quickly before their gains return to zero. So the price
you enter your trade at is often re-visited on a retrace due to this
phenomenon.
Therefore; for greater profit in ’swing’ and
‘position’ trading, risk should be maintained at its original level,
until a clear swing high/low is established.
In the example
shown here the trader entered the order at the
trend-line break placing his stop at the low. If
the trader moves his stop to break-even on the first profitable move,
the position would be stopped out on the next swing-low.
By
waiting until the next swing low is defined and then moving the stop
to break-even, the trader is now in a profitable trade rather then
just a break-even one.
Now that you have this
knowledge we need to practice it (in a demo account of course).
Please see my posting on the FX Weekly report for more detail about
how to trade the USD/CAD this week.
How To Stay In Positions Longer For Greater Profits
« Newer posts
FX Weekly Reporthttp://www.tradingmetro.com/images/otipierre_163.jpg
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Pierre Charlebois is one of Trading Metro's Senior Trading Coaches and also maintains a blog on FXStreet entitled "The Disciplined Investor".
He has a no-nonsense technical approach and uses several disciplines including Elliott Wave Theory, Candlestick Formation and Pattern Recognition in his teaching and swing trading.
Latest Entries
USD still appears likely to softenSunday, April 5, 2009
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I'm not so sure of the current direction however there seems to be technical targets that suggest a little more Dollar weakness before the sentiment shifts.
USD Index
http://www.tradingmetro.com/blog/uploads/WindowsLiveWriter/USDstillappearslikelytosoften_D8CE/usdindx_Apr_5_09_thumb.jpg
EUR/USD - My bias is to the upside but my conviction is not at all strong
http://www.tradingmetro.com/blog/uploads/WindowsLiveWriter/USDstillappearslikelytosoften_D8CE/EURUSD_APR_5_09_thumb.jpg
GBP/USD - With the break of the trend-line the upside possibility is strong. However some retracement may happen first.
http://www.tradingmetro.com/blog/uploads/WindowsLiveWriter/USDstillappearslikelytosoften_D8CE/GBPUSD_Apr_5_%2009_thumb.jpg
USD/CAD - It hard to tell if we will re-visit the lower trend-line however it seems to be the most reasonable assumption
http://www.tradingmetro.com/blog/uploads/WindowsLiveWriter/USDstillappearslikelytosoften_D8CE/USDCAD_APR_5_09_thumb.jpg
Cheers and good trading
Posted by Pierre Charlebois in FX Weekly Report at 15:25
Will USD continue to strengthen? Or will there be a rebound?Sunday, March 29, 2009
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We are in the middle of a range now and it is difficult to establish an argument technically about where the currencies should move vis-a-vis the USD. My preference for now is to move to shorter term trading while waiting for the patterns to unfold this week.
Dollar Index.
Not at all clear on direction.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/WillUSDcontinuetostrengthenOrwilltherebe_E660/usdindx_mar_28_09_thumb.jpg
EUR/USD
EUR/USD
A break from 1.3260 should provide direction
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/WillUSDcontinuetostrengthenOrwilltherebe_E660/EURUSD_Mar_29_%2009_thumb.jpg
GBP/USD
Trend-line rejection seems strong
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/WillUSDcontinuetostrengthenOrwilltherebe_E660/GBPUSD_Mar_29_%2009_thumb.jpg
USD/JPY
I'm expecting one last thrust downward however I'm not clear if the pair has topped.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/WillUSDcontinuetostrengthenOrwilltherebe_E660/USDJPY_Mar_29_09_thumb.jpg
Cheers and may you have a prosperous week of trading.
Pierre
Posted by Pierre Charlebois in FX Weekly Report at 16:23
Has the USD weakened enough for now?Sunday, March 22, 2009
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The view of the Dollar index is quite different this week compared to last. The question now is will this move continue or will we reverse once again towards Dollar strength. My view is that the lower trend-line may be a reasonable target however the price action getting there could be very choppy. This week could prove to be a mostly corrective affair with the EUR and GBP entering into fairly choppy price action.
USDIndx
There is a barrier around 82.20 that could be resistance this week
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/HastheUSDweakenedenoughfornow_AACA/usdindx_mar_21_09_thumb.jpg
EUR/USD
The barrier of note here is 1.3850 at it may intersect with the descending trend-line
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/HastheUSDweakenedenoughfornow_AACA/EURUSD_Mar_21_%2009_thumb.jpg
GBP/USD
The break of the 1.4675 area is important if the up-trend is to continue
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/HastheUSDweakenedenoughfornow_AACA/GBPUSD_Mar_21_%2009_thumb.jpg
USD/CAD
Strong rejection suggest the majority of the move down is likely over
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/HastheUSDweakenedenoughfornow_AACA/USDCAD_Mar_21_%2009_thumb.jpg
Cheers and good trading
Posted by Pierre Charlebois in FX Weekly Report at 12:09
USD index at pivot point of 87.35Sunday, March 15, 2009
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The focus over the last few weeks has been the USD index. The level at 87.35 is proving to be the place to watch for a break or re-tracement. As I prepared this post the price was right on that pivot point. I'm sure a very volatile move is about to take place in a retrace or break-out to the downside.
The price action is not yet revealing which way this should go from here. So stay aware and vigilant to what will happen in the coming 24 hours.
Cheers and good trading.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/USDindexatpivotpointof87.35_116DF/USDindx_Mar_15_09_thumb.jpg
Posted by Pierre Charlebois in FX Weekly Report at 19:50
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Latest Entries
Dollar Index shows strong 'Head and Shoulders' patternSunday, March 8, 2009
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This week my focus is the USD index. The index represents the general value of the USD as measured against several other currencies. It is a good indicator of the general trend for the USD when patterns may not be so clear on other pairs. Then, if the Index provides a strong signal you can look for entry and stop levels on theEUR/USD and GBP/USD pairs.
The current view offers the strong possibility that a top is in place and that we are headed down. The best place to consider becoming bearish the USD is below 88.00.
Remember that as the index goes down , the EUR/USD and GBP/USD will go up. Re-tracement is likely to start the week but I suspect USD weakness will be the predominant sentiment.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/DollarIndexshowsstrongHeadandShoulderspa_126E6/USDindx_Mar_8_09_thumb.jpg
Posted by Pierre Charlebois in FX Weekly Report at 20:58
Volatility set to rise dramatically this weekSaturday, February 28, 2009
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Last week I wrote about the double top on the USDIndx. We saw some dramatic moves around the highs and the price has come back to rest once again within pips of this important level. What is noteworthy is we briefly broke the old high and came back a market-close to rest just below this critical line of .8843.
So although there is a lack of real clarity in the direction the moves at the beginning of the week, (maybe even Sunday at opening) will likely be fast and furious. Look for extreme momentum and a trend to develop after either a break out or break down. This of course will translate into all USD pairs.
Good trading.
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Posted by Pierre Charlebois in FX Weekly Report at 06:52
Is there a crack in the USD strength?Sunday, February 22, 2009
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This week the focus for me is on whether or not the trend has changed. Many currency pairs have now had varying degrees of re-tracements and so the question becomes will these moves continue or are these just corrections that will suddenly reverse once again.
Fundamentally it is hard to tell. The situation in Europe is such that the Euro really shouldn’t be seen at this time as a quality hold during difficult times. This is not to say things are much better in the US, however overall the USD is driven by one government whereas the Euro is governed by many. In the long run it will be difficult to bolster the Euro to the same degree that is possiblein the US. So on the bigger picture the USD should continue to come out ahead.
However, for the short to medium term is the USD overbought? Has the tide turned against the greenback for the next few weeks? I think we have to hold out this notion as a good possibility based on the highly volatile reversals of last Thursday/Friday.
What to expect this week: Volatility is the word for the week. We know from experience that once we break out of a range or pattern the following moves are strong, swift and fast. So a strong pull-back may be in the cards prior to a continuation counter to the USD. Be aware that strong swings in both directions are quite likely.
The move of the week belongs to the USD/CHF. I had posted the potential of such a move on my blog. See me during the week athttp://blogs.fxstreet.com/disciplined (Scrool down to see the CHF posting)
Cheers and good trading.
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Posted by Pierre Charlebois in FX Weekly Report at 08:29
Volatility set to rise in coming week(s)Sunday, February 15, 2009
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I am just focusing on two pairs this week that are providing a glimpse into things to come.
I often talk about fractals in the form of patterns that repeat themselves in a diminishing form moving to smaller and smaller patterns of similar shape. When this happens at the point where the pattern breaks down we see volatility return and a breakout ensues. I can't help but notice two pairs in particular that are displaying potential in this manner. Here' a look at those pairs and the levels to watch for break-outs or reversals. (Note that a strong break in these pairs would reflect across the the market in general)
The EUR/USD
This pair is displaying a potential diagonal within a diagonal.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/Volatilitysettoriseincomingweeks_9A11/EURUSD_Feb_15_09_thumb.jpg
The USD/CAD
This pair is a triangle within a triangle.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/Volatilitysettoriseincomingweeks_9A11/USDCAD_Feb_15_09_thumb.jpg
Cheers and good trading!
Posted by Pierre Charlebois in FX Weekly Report at 10:57 | Comments (0) | Trackbacks (0)
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Latest Entries
USD under pressure - Will the USD loose more ground this week?Sunday, February 8, 2009
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With volatility rising here, what way will happen to the USD. Will it correct further and give up more of the recent gains or will this be the tipping point for a resurgence in its strength.The best trades will likely come when the current patterns are broken.
Cheers
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Posted by Pierre Charlebois in FX Weekly Report at 17:14
GBP or EURO - Who’s leading who?Sunday, February 1, 2009
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This week I want to point out how the GBP and EUR were for most of Friday moving in opposite directions against the USD. This a fairly rare occurrence and certainly signals that times are still quite volatile and uncertain in the currency markets, not to mention all other securities.
Many currencies are at tipping points are which way the may head for the week. And I think the big questions is; will the EUR catch up to the GBP or will the GBP weaken to reflect the downward moving EUR.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/GBPorEUROWhosleadingwho_CA5E/EURUSD_Jan_31_09_thumb_1.jpg
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Let’s see how the week unfolds.
Cheers
Pierre
Posted by Pierre Charlebois in FX Weekly Report at 14:23
Many currency pairs at important technical levelsSunday, January 25, 2009
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Volatility seems to have jumped over the last few days including the opening session for the week (Sunday the 25th), with a surprising counter move on the EUR/USD and GBP/USD pairs.
With such high volatility right off the bat early in the Japanese session, I would expect much of the week to be very active.
Cheers and good trading
Pierre
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/Manycurrencypairsatimportanttechnicallev_1082E/USDINDX_Jan_25_09_thumb.jpg
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Posted by Pierre Charlebois in FX Weekly Report at 18:47
Continued USD weakness suggested by technicalsSunday, January 18, 2009
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I've post the USD index this week as there are now two strong rejections of a descending trend-line. A break of that trend line would suggest a period of Dollar strength, however at this time the rejections point to the index heading lower. The US Presidential inauguration may have an effect, however that should show up longer term and not necessarily affect this weeks sentiment.
Cheers and good trading,
Pierre
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Posted by Pierre Charlebois in FX Weekly Report at 18:17
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Ranges expected to continue this weekSunday, January 11, 2009
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Although I'm suggesting the ranges should hold up this week this still opens the door to high volatility. Technicaly most currency pairs are still in a corrective mode of the larger moves that took place in the last quarter of 2008. I would for ranges to continue this week as no clear directions have taken place. What I would expect in the months to come would be renewed moves continuing the what was started in the last quarter however I would expect this is still 3 to 6 weeks away.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/Rangesexpectedtocontinuethisweek_FBA0/EURUSD_Jan_10_09_thumb.jpg
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/Rangesexpectedtocontinuethisweek_FBA0/GBPUSD_Jan_10_09_thumb.jpg
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Posted by Pierre Charlebois in FX Weekly Report at 17:53
A New Year... A new direction for the USD?Sunday, January 4, 2009
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Longer term, I believe the USD will strengthen in the medium term being the first several months of 2009. Going into this week it is hard to tell however where the USD will go in the first full week of 2009.
It is said that in equities (stocks) the first week of January usually reflects what we should expect for the year. It is not as clear-cut for currencies. However the first few weeks usually do reflect how the balance of the first quarter will go. Overall we are certainty going to have continued high volatility so opportunities will certainly be available.
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Posted by Pierre Charlebois in FX Weekly Report at 18:22
Dollar ended week lower - Will USD weakness continue into Xmas?Sunday, December 14, 2008
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Last week I was suspect the Dollar was going to weaken some. We did the CAD and the EUR gain throughout the week. Will this now be the trend for the month? And if so, will the lagging currencies such at the GBP catch up?
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http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/DollarendedweeklowerWillUSDweaknessconti_C7C1/EURJPY_Dec_12_08_thumb.jpg
Posted by Pierre Charlebois in FX Weekly Report at 14:12
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USD still safe heaven - When will it break?Sunday, December 7, 2008
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We had quite an event on Friday with dismal numbers out of the US. One would normally surmise this should equate into a weaker Dollar. However the opposite is still happening. Sooner or later the Dollar should loose favour when risk appetite returns however this is not yet evident. use caution as long as the USD is caught in it's range.
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Posted by Pierre Charlebois in FX Weekly Report at 14:18
Is the Dollar ready to strengthen again?Sunday, November 30, 2008
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The last few weeks I speculated the that the Dollar Index was in an ending diagonal which would signal a turn. Indeed we saw this turn and we are now in a re-tracement of the counter-move.
The question this week is are we going to see further counter trend? I would think we need a little more counter-trend prior to another positive Dollar move.
Cheers and good trading!
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Posted by Pierre Charlebois in FX Weekly Report at 17:55
When will the USD range finally give way?Sunday, November 23, 2008
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USD/IDNX
I’m still watching the USD Index very closely. What is of particular interest is the closing price on Friday was a perfect match for the previous swing high. It has managed to make new highs during the week but the struggle to stay above is great. The shape of the diagonal has changed some but it is still intact as an important pattern. What happens at the top of the range is going to tell the story for the next move.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/WhenwilltheUSDrangefinallygiveway_E70C/USDINX_Nov_22_08_thumb.jpg
EUR/USD
Here too the pattern is intact and I am waiting for strong sign for direction. Anything is possible right now. I am trying to keep my bias neutral until better evidence is provided by a break of upper or lower trend lines.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/WhenwilltheUSDrangefinallygiveway_E70C/EURUSD_Nov_21_08_thumb_2.jpg
GBP/USD
As with the Euro, a range has developed that could send the price either way. The bottom is a strong pattern but we have seen many apparent bottoms form that should have resulted in a turn before. Again I am trying to keep my bias neutral awaiting further evidence.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/WhenwilltheUSDrangefinallygiveway_E70C/GBPUSD_Nov_22_08_thumb.jpg
USD/CAD
Well, I said several weeks ago that a double-top around 1.30 was quite possible. I must admit, even I’m surprised that we got all the way there. It the action from the current range that should now determine the next trend.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/WhenwilltheUSDrangefinallygiveway_E70C/USDCAD_Nov_22_08_thumb.jpg
EUR/JPY
This pair is closely mirroring the EUR/USD. The lower ascending trend-line was broken but price action quickly reversed, so a direction here is not clear either. Be patient and wait for the next break.
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Posted by Pierre Charlebois in FX Weekly Report at 16:26
We are at important levels coinciding with the G20Sunday, November 16, 2008
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My focus this week is on the USD/index. It has some very defined trend lines that create the correct look of an ending diagonal. I would express that extreme caution and vigilance is required around the current trend-line as this pattern can also be viewed as a leading diagonal or in other terms; basing to go higher.
The key is to wait for good signals at the defined levels for break-throughs or break-downs. Considering all the attention being given the markets this weekend by the G20 summit we could/should be in for another volatile week.
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Posted by Pierre Charlebois in FX Weekly Report at 08:58
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Are traders going to finally capitulate on the USD?Sunday, November 9, 2008
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The USD is still being favoured as the safe haven currency in this mess. The thing is though, just a few short weeks ago some annalists and news media where reading the USD its last rights. Expecting further demise.
Overall sentiment (Fear) is what moves the market and sooner or latter this fear based thinking will flip back against the Dollar. At least for a short time.
So keep an eye and ear to the Media. When they start saying the Euro and the GBP are doomed, then I would start expecting a reversal.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/AretradersgoingtofinallycapitulateontheU_F37A/EURUSD_Nov_9_08_thumb.jpg
EUR/USD - Could go either way - I'm expecting a thrust downward and then a reversal. BUT - A break above the range would result in a strong climb.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/AretradersgoingtofinallycapitulateontheU_F37A/GBPUSD_Nov_9_08_thumb.jpg
GBP/USD - Same as for EUR/USD. Play the break of the range when it breaks out.
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EUR/JPY - Again here's a pair that offers a nice range and should a thrust downward take place I expect it will be limited as a correction should go a little higher.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/AretradersgoingtofinallycapitulateontheU_F37A/USDCAD_Nov_9_08_thumb.jpg
USD/CAD - Everything here points to a double top. However this pair has a mind of its own and is very volatile and needs to be traded with extreme caution.
Cheers and good trading
Posted by Pierre Charlebois in FX Weekly Report at 17:18
It's all about the USDSunday, November 2, 2008
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It's not hard to see by the patterns on all major pairs that the currency market is moving based on a value highly associated to the USD. Right now the market is moving as 'One market; All markets' and will likely continue to do so for some time to come. (Maybe even for months ahead yet)
You can see by the charts that most pattern as highly correlated and traders are very attached to what the USD is doing.
It's hard to be sure if we will see more correction to the big recent gains of the dollar but I would suggest we do need a little more balance in the market in the form of some USD weakness for may a week or so.
Having said that the levels to watch are quite well defined so trade accordingly.
http://www.tradingpostfinancial.com/blog/uploads/WindowsLiveWriter/ItsallabouttheUSD_10217/EURUSD_Nov_2_08_thumb.jpg
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Cheers
Posted by Pierre Charlebois in FX Weekly Report at 19:09
Are we there yet?Sunday, October 26, 2008
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We really have to start asking ourselves if this one way ticket of USD strength is going to last forever. Well, in fact it is just when we start believing there is no end that a reversal occurs.
I'm not saying it is happening yet, however more and more evidence is starting to show that a capitulation is underway. Meaning that a final thrust has or is taking place.
One you have reviewed the charts here I would suggest you have a look at Jamie Saettele's report on Daily FX. You may find it interesting as well as useful.
http://www.dailyfx.com/story/bio2/Dollar__and_Yen__Bulls_on_1224865528908.html
Cheers and may you have a good week of trading.
Pierre
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Posted by Pierre Charlebois in FX Weekly Report at 18:05
Is there support yet for EUR and GBPSunday, October 12, 2008
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We have seen unprecedented volatility on many currency pairs. But the one that stand out is the USD/CAD. 670 pip range in a single day of trading. There has not been a swing in this currency pair in their known modern history float, which is over 30 years.
Because of the uncertainty in all markets the USD and JPY rein supreme as positions are unwound in all other equities and commodities.
I would expect continued strength in both these currencies in the medium and long term. For this week I expect some consolidation before resuming the current trends.
Good trading,
Pierre
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Posted by Pierre Charlebois in FX Weekly Report at 15:57 | Comments (0) | Trackbacks (0)
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USD at Crossroads on many pairsMonday, October 6, 2008
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USD is on breakout on many pairs. What is interesting is it is at such thresholds even though it is highly overbought and fundamentally it is difficult to understand why this move has been so dramatic considering the state of the US economy and the ‘Bailout Package’.
One explanation might be the overhead of the ‘Carry Trade’ and the unwinding of many other trades such as in Oil and other commodities that were high flying over the last few months. Remember that even Gold has been softening and gold is usually a flight to commodity in times of economic uncertainty. Also of note is we are at extremes in sentiment indexes that usually signal a reversal. With all of this going when we see a reversal it will be dramatic and add to the roller costar ride we seem to be on in many currencies.
So here’s my take on what we might see next:
Now with some relief on the credit markets, although I don’t believe this will help stem the coming recession it might give some temporary relief. As such this might be the climate required to cause a temporary reversal. I’m not saying there is a bottom in place on the EUR/USD or the GBP/USD, however we should be expecting that when a turn comes it should be dramatic and obvious.
What is usually the best trades during such times is to bet on the JPY. Japan went through a crisis of non-confidence some years ago and as much as their economy relies on world markets as much as everywhere else, they have been cleaning up their financial systems and should weather the storm better then the other G8 economies.
There are many possible counts by Elliott Wave standards and as such I am choosing to view this as a neutral indicator and will be looking for daily candles for clues on where the moves will be. For now, I still view the trend towards USD and JPY strength until a strong reversal takes place.
The EUR/USD has spent weeks in the oversold however the move does not appear over. Waiting for a strong reversal signal is recommended before changing your bias.
The GBP/USD is very much in a similar situation. So I am on the sidelines waiting here to pounce at the right time as well.
The USD/CAD is truly at a critical place. Having broken through both the .618 Fibo of the last major move down and breaking a long-standing trend-line. Much more of a move up strongly suggests the bottom may be in place for some time. Especially if commodities like Gold and Oil continue to soften. (Not to mention potash and copper).
EUR/JPY is a highly volatile pair however if you’re lucky enough to catch a strong downward move, you may consider keeping a small position on for the long haul as an expected a multy year correction is underway and the JPY should continue to strengthen for some time. If you don’t like the stop-losses required on this pair consider the CHF/JPY.
Good trading!
Posted by Pierre Charlebois in FX Weekly Report at 07:57
How Will the Bailout Effect USD And The Currency Markets?Saturday, September 27, 2008
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That's the $700 billion questions isn't it?
The truth is both exciting and also quite frightening. We are witnessing an historic time in the world financial markets, not just in the US. The fact remains that the US economy is something equivalent to 25% of the world economic output. You can't have a situation like this happening in the US without severe affect on the rest of the world. The world has not witnessed anything like this since 1929. When your kids and grand-kids go to University they will be taught about this time in economics and politics as being one of the greatest events of the last 100 years.
It will be interesting to look back on this 20 or 30 years from now to see how this event changed the world of finance and I'm sure, politics as well. With the most historic US election happening at the same time, Hollywood script writers couldn't have imagined such a scenario! As a result, all markets have been going sideways for days now waiting on a final outcome on the 'Bailout' plan. What happens this weekend will shape the future for many years to come. What is important to remember is that most world economies trail the US by about 6 to 12 months (in normal times). With this kind of event this will surely be accelerated and the spill over effect will ripple quickly throughout the rest of the world.
Because all markets are moving sideways awaiting more news, it is very difficult to read waves and patterns. So what happens immediately after a resolution on the plan is difficult to project. If you are planning to trade as the market opens and a final plan is approved, be prepared for the possibility of EXTREMLY volatile moves.
Please be cautious and trade with very good money management. Keeping risk below 2% of your account is strongly recommended.
As a result, this week I will simply be pointing out what I perceive to be the most important barriers. Breaks and turns will likely happen at the defined levels. The challenge will be in the volatility as this may cause false actions.
Cheers and good trading.
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Posted by Pierre Charlebois in FX Weekly Report at 13:23