DailyForex.com Blog

I got up late today, 6:45am, after a nice relaxing and fun-filled weekend in New York.  I partly decided before even turning on my computer that it is the end of the month and the quarter, and it is a Monday, so it is perfectly ok to NOT trade today.  Of course, after about an hour of sitting here, I saw an interesting trade set up on GBPUSD so I took a sell trade.  I noticed that Canadian GBP news was coming out soon, but I figured that this news would not affect my trade too much, so I kept the sell trade through the news.  In just a few minutes my trade went very much against me, up to about 50 pips in negative territory.  When I put the trade on, I noted that my stop and point of reversal would be 1.9965, since this was the last resistance area.  Price got to within 15 pips of this level, and started back down.  I began to feel a bit better.  Then price started falling nicely and was again flirting with the same level at which I sold at.  My trade got up to +21 pips, but I kept thinking that my previous analysis was correct and that GBPUSD would go down further.  My target was 1.9850.  But again, price stalled and started heading back up.  I ended up closing the trade at break even, after 3 hours in the trade, no pips in my pocket.  Truly, I was a bit mad that I did not just take the +20 or so pips, but in the end, break even is still following my rules:  Protect my trading account principle at all costs.  So, boring day, no pips, but tomorrow is another day, another month, another quarter.  By the way, I reached my goal of 200 pips per week this month, especially with the nice AUDJPY trades.  Starting July I will increase lot size on the AJ trades by 1 minilot.Â

Today was a wild trading day for me.  As I have mentioned, I have been concentrating alot on the GBPJPY pair lately, and today was no exception.  For most of June this pair has been trending up.  Today started continuing its up trend, and I was on board for the ride.  For months I have been trying to figure out how ar this pair will go before retracing back down, I kept thinking that since the daily and weekly 200ema were virtually the same price, 214.05, that would be a good magnet for a possible top.  But even after the economic news today, price only got as far as 213.90, just shy of my target.  As price was topping out there, I noticed that oil again was ticking back up as the morning went on, and so the dow also continued its decline.  I took profit on the GJ long trade and entered a long trade on EURUSD, this pair has been following along with oil price fluctuations quite nicely.  My scalping self wanted to short GJ, but I was wary of trading against that trend, plus I was tired from a long week, so I avoided GJ, set my limit target on EURUSD at 1.5751, the M1 pivot, and took a little nap.  Well, two hours later my EURUSD hit the target, but man oh man, that GJ fell all the way back to the weekly pivot, about 200 pips!  Oil has made a new high at $140 and thus the dow fell big today.  Tomorrow might be interesting..

Wow, as soon as I mentioned the massive head and shoulders pattern on the weekly GBPUSD, price touched the neckline at 1.9400 and then turned around headed right back up about 400 pips!  I was able to secure some of this move up, but not as much as I would like, it moved much faster than I was expecting.  Now this pair has tested the down trendline from the top at 2.0400, then it blew right on through it like an elevator ride.  Since this pair has had very little retracement after all this up movement I am expecting price to at least retrace down to retest this same trendline, that would bring this pair back down to around 1.9780 area.  This will be a nice place to buy, placing the stop loss below the trendline. 

Meanwhile my AUDJPY trade worked out very nicely, I took profit at 103 for +210 pips.  Took about a week or so.  Now I will wait for this pair to retrace back down and look for another possible buy.  Maybe next week.. 

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Wish I could post the beautiful head and shoulders pattern on the weekly chart on GBPUSD here!  The neckline of the pattern is sitting at 1.9400, this has been very strong support for many months.  Can it break down?  If USD continues to be strong as it has lately, then it is quite possible.  If 1.94 does break, the first target sits at 1.8400, thats 1000 pips…. of course, being the weekly chart, this will not break and fall 1000 pips, most likely.  It will take several weeks to get there I suppose.  In fact, the next support down would be 1.9100 first.  If price cannot break 1.94, then continued ranging up to 1.9800 will happen.  Remember some weeks ago there was an inverse head and shoulders on the daily chart, actually two different inverse h&s patterns, both failed to the downside for several hundreds of pips.  Is this a clue that price wants to continue retracing down?

Also, I have placed a buy on my AUDJPY swing play at 100.90, stop loss is below the 100sma on the 4h at 100.40, targets are 102.00, then 103.00.  Will keep you posted.

Large gap down in the GBPJPY pair this Sunday at open, gapped down about 70 pips.  What is a gap?  A gap happens when price closes the week on Friday at a certain price but opens on Sunday at a much different price, meaning there was price action during the off hours over the weekend.  The theory says that price gaps must be filled, so many traders will be poised at their buy/sell button at 5pm EST on Sunday when forex brokers open for trading to see if there is a gapped price compared to the closing price.  If a major price gap is evident, they will trade in the direction of the gap hoping that price will retrace to close the gap.  The GBPJPY is a perfect example of a great gap trade.  Price opened at 205.90, and immediately started ascending in the direction to close the gap, closing price was 206.75.  It only took nine 15minute candles to close the gap for about 75 pips.  Be aware, price gaps do not always fill, in fact last Sunday a big gap occurred too, and was not filled.  But I see these gaps filled more often than not, so do trade them with a good stop loss and you can end up winning much more than losing playing this strategy.  Good trading!

Ah May is over.  A super strong ending for the JPY pairs, I must say.  This month I ended up booking +721 pips.  Not bad, but not quite my goal of +200 pips per week.  Yes, I made a few mistakes this month.  I have been concentrating very hard on GBPJPY pair the most and also trading EURUSD when I see a good set up for intraday trades.  While I have been viewing the charts the past couple of days, I have decided to add another currency pair to my repertoire: AUDJPY.  It has nice wide swings, perfect for swing trading.  Since it has a decent swap rate I am only going to enter buy trades to hold for a few days to reach a predetermined target.  I think adding this type of trade could be nice because I should be able to just set it and forget it, and still concentrate on other intraday trades.  I will start out June only trading one mini lot per trade to see how it goes.  I will post the trades taken and performance each month here.  Ahhh the fun of being a trader!  Have a great weekend, see you in June.

Lately the price of oil has been skyrocketing, reaching new highs every week the past few weeks.  With $135 hit last week, all the news keeps talking about is high gas prices and how that affects the average American citizen.  The past 2 weeks every time oil started surging up, the dow would start dropping, dragging the JPY pairs with it.  For my JPY trades I regularly watch the dow futures chart, but now I find myself also watching oil and also gold prices.  When JPY and dow are correlated and gold and EUR and oil are correlated, it certainly helps with picking trades and picking the right direction to trade!  Today was the first trading day after the Memorial Day holiday, so I was not sure if price action would move in one direction or continue to range.  Most currency pairs did range again today, and I did not make too many pips.  But it is interesting to watch how oil dropped in price by about $4 from last week, as did gold prices drop today.  As those two commodities started dropping, then the USD regained some strength.  Many “experts” have been expecting USD to strengthen again, so I keep watching the charts for any signs of this.  Maybe today was the beginning of such a reversal, it is pretty early yet to tell.  How can we tell if USD will continue to strengthen?  I will be looking specifically at EURUSD pair, for continued down moves after making a lower high just two days ago.  I will also we watching AUDUSD for similar reaction.  IF USD can begin to strengthen then I would also expect to see the dow index strengthen too… which would mean good time to continue buying the JPY pairs up.  Of course, there is another option rather than a reversal in USD or continued weakness:  ranging.  Good trading..

Just checking out all the daily candlesticks after my trading today and saw interesting price action on GBPUSD pair.  It appears that a few days ago price has made a quadruple bottom near 1.9370 and has moved modestly up from there.  Today was a nice move up and tested the daily 50ema before consolidating.  Also price nearly tested a trendline down from the peak at 2.0380 from mid March.  Looks like if price can climb back above the daily 50ema and that trendline, there can be enough momentum to reach the monthly pivot at 1.9841, then the 200ema, then possibly on to the next down trendline that hovers near 1.9950 area.  This trendline is very significant as it is the one that connects the all time high at 2.1100 set in November.  This is a good 300-400 pips away but I have marked all of these levels on my charts so that when I drill down to the smaller time frames to intraday trade, I will not forget they are there.  We shall see if USD can weaken again enough for these levels to be hit.  Good trading.

Some people think flawless execution means always buying at the low and selling at the high.  This is not the case.  Actually flawless execution means acting on an opportunity (whether entering a trade or exiting a trade)  the very moment you realize that it is an opportunity without hesitation.  Unfortunately this is easier said than done, but it can be learned.  Flawless execution does not mean perfect winning trades every time, it means always being able and flexible to immediately ACT when you see the opportunity in the market when it reveals itself.   We as traders have this constant conflict:  I am a risk-taker because I am a trader, but, I want guaranteed outcomes every time.  These two things can not work together.  And so, we hesitate when we see an opportunity.  This hesitation along with the fear of making a losing trade was killing my trading career fast.  Luckily I learned (before I lost all my trading account) to practice taking every trade opportunity that the market presented, no matter what.  Track the results, and shoot for 60-70% winners per month.  Because I figured that my system was good, it was just my identifying of trade entries and exits was needing more practice.  So that is what I did.  And within about 2 months, my trading improved drastically, because I stopped beating myself up and was getting better at ACTING and EXECUTING in the market.  Take the action and then move on.  This was a huge lesson for me.

Trade entry and exit is really important for successful trading.  Because my strategy is maximum profit in minimum time, my trade entries and exits are much different from a trader who swing trades and is looking for hundreds of pips profit in several days time.  Today I traded the EURUSD pair, at 5am when I turned my computer on, this pair was moving down below the daily pivot point and also the weekly pivot point.  So further downside was very likely for the rest of the day.  I prefer to enter a trade when I see a break of support and then a pullback to the 15minute 5ema.  So I waited about 20minutes and sure enough price pulled back, so I entered the sell trade at 1.5473.  With EURUSD I like to use about a 25 pip stop loss, which put my stop for this trade ABOVE the weekly pivot at 1.5492. GOOD!  It took my sell trade about an hour to reach the daily M1 pivot at 1.5419.  I watched as price hesitated there for about 5mins, so I decided to take profit there.  +54 pips, not bad!  Five minutes after I took the profit, price continued down, pretty much for the rest of the day.  But I did not get upset over missed pips, I am perfectly happy with 50 pips in one trade in one hour.  Consistency is the name of the game.  Good trading!Â