Sterling Enters Consolidation Phase

Yesterday I closed my long euro position when it hit above the 1.1820 level. The support line currently holds at 1.1750 and only at this level, I will be looking to long again.

In the mean time, Sterling has dramatically rallied from 2-year lows of 1.7049 to trade at 1.7240 at this point, hitting earlier highs of 1.7338. Cable is in price consolidation mode and should dip back into 1.7170 - 1.7200 region. A sustained closing price above 1.7205 level for this week should set off a further rally to 1.7400.

Buy Eur/Usd at Dip

In a reaction to FOMC statement, Euro broke short-term bearish trend to trade as high as 1.1855 rallying from a low of 1.1685 and it is now settling at just below 1.1800 level. The market has so far been kind to me over the last two sessions as I managed to execute some good trades at price pullback. I am going to reenter (long) only if I see the price drops below 1.1760. Else do nothing and don't be tempted. The market always get you to think in the wrong direction.

Related entries:
Trade of the day: Euro

The Story of Yen

Japanese Yen continues to fell against USD dollar to a 2 year low. While the Yen slips lower and the Nikkei climbs higher, it seems that senior policy-makers in Japan are sending mixed messages related to monetary policy. How to make sense of the current situation?

Adam recounts:

Economists have turned to data on international capital flows in attempting to explain the weakness of Asian currencies. They believe rising US interest rates combined with the perceived stability of US capital markets are driving risk-averse investors, especially those in Asia, to shift capital into the US, which has generated massive demand for USD.

It is difficult to think of something that could stop the current trend of yen weakness and the Japanese officials aren't concerned about the fall in yen. There is a high possibility for traders to chase the dollar even higher as there is no clear sign on the charts for a correction soon in the usd dollar's bull run.

Hourly Watch

EUR/USD (1.2148)
Trend: Up
Current position: Neutral
Euro strikes 2-week high of 1.2161 amid mounting ECB rate hike talk. Look to sell if support fails to hold at 1.2130.

GBP/USD (1.7840)
Trend: Down
Current position: Short
Sterling hit one-month high of 1.7898 against the dollar. Stay short from 1.7835 with 25-pips stop loss.

USD/CHF (1.2728)
Trend: Down
Current position: Neutral
Will consider to long when there is an upward momentum breaking through resistance level of 1.2750.

USD/JPY (115.24)
Trend: Down
Current position: Neutral
Dollar retreats from 2-year high vs. yen. Stay neutral for now.

Short-term Outlook

EUR/USD (1.2078)
Trend: Up
Current position: Neutral
Euro eases from two-week highs of 1.2139 against dollar. Look to sell if support fails to hold at 1.2044.

GBP/USD (1.7743)
Trend: Up
Current position: Short
Sterling retreated from a one-month high of 1.7867 against the dollar. Stay short from 1.7754.

USD/CHF (1.2825)
Trend: Down
Current position: Neutral
It fell to as low as 1.2742 earlier. Look set to buy if resistance level of 1.2835 is breached.

USD/JPY (115.87)
Trend: Up
Current position: Neutral
The yen rose against the dollar after a government report showed Japan's trade surplus shrank less than expected in September. Stay neutral for now.

AUS/USD (0.7531)
Trend: Up
Current position: Short
Stay short from 0.7530.

USD/CAD (1.1716)
Trend: Down
Current position: Neutral
The loonie consolidated further on economy and interest rates outlook. Stay neutral for now.

Trend Check-up

Some new trends have emerged over the last 48 hours while I was away:
EUR/USD up support: 1.1958
GBP/USD up support: 1.7570
USD/CHF down resistance: 1.2988
USD/JPY down resistance: 115.70
USD/CAD down resistance: 1.1772

At the moment of posting, GBP/USD has already stretched further than the rest due to the stronger-than-expected retail sales data. I will be looking to execute a few more trades before the week ends.

What Comes Next?

Here is a daily chart of GBP/USD for last 10 days.

But unsure of its next move? Try a backward move - using simple logic for prediction. The sequence so far: 3 up days, 3 down days, 3 up days, hence...

Too good to be true?

My Timing Trades

Finally, a nice end to the week.

The official trades at gfsignal and collective2 for this week are as follows:
Buy usd/cad at 1.1737 close at 1.1829
Buy gbp/usd at 1.7557 close at 1.7680
Buy eur/usd at 1.2025 close at 1.2094

What a relief after a week of hard work. I've been fine tuning my strategy and now I am able to spot the opportunities more easily and have become more flexible on the timing for entering and exiting trades. My daily swing strategy is still based on the daily D1 chart, but trades are now entered using H4, H1 and M30 charts.

Setting Up USD/CAD (2)

Here is a hourly chart of USD/CAD for the last 48 hours . I've been trying to improve my timing on entering and exiting a particular market, after identifying pre-trend indications.

It seems that it could be a good practice to wait for a pull back in price/ momentum rather than entering the market straightaway.

Trade of the Day: Euro

H1 Chart
Current Price: 1.1980
(Below D1 support of 1.2005)
Trend Check: D1 Up; H4 Down; H1 Down; M30 Down

A potential LONG positon: Enter position only when seeing trend reversal at least on both M30 and H1 charts.

Updated(1) 0915 GMT: Entered at 1.1980. We have got confirmation on both M30 and H1 charts about 15 mins ago, stay long with stop loss at 1.1960, intial target of 1.2050.

Updated(2) 1345 GMT: Exit at 1.2030. Although didn't quite hit the target of 1.2050, I will be happy to close this position for a 50 pips profit for now. I will continue to monitor and buy at the next dip.