June 2013

Here's hoping you had a better trading Week than I did! Despite last Week's promise to re-enter the EUR:AUD swing short I missed the favoured re-entry level on Monday and beyond that it just kept selling off (around 400 pips in total) with no decent retraces to catch a good entry. Nonetheless on Friday it rallied like hell almost reversing the whole Week's losses, so I'd have probably ended up back where I started anyway!

One new swing trade was taken this Week in the form of a EUR:AUD Swing short. In view of the risk attached due to there being very little technical confirmation that I'd be able to pull the trade off, I decided to close it and go flat into the Weekend with a view to re-opening it next Week when further confirmation is in place. The trade delivered 120 pips profit in less than 18 hours so the result was quite satisfying. If and when this trade is re-entered I'll post details in the comments section under the relevant supporting post.

EUR:AUD has had some interesting moves over the last couple of Years, some of which were technically quite simple to catch and resulted in significant moves. The Daily chart below shows historic analysis that I applied to the chart before trading it and you can see that 4 horizontal lines and 2 vertical lines was all it took! To explain further you can see that between October 2010 and December 2011 price remained range bound in the top left of the chart. When it eventually broke down from this range I made the decision not to trade it until price retested the range. After quite a long wait the re-test came in May 2012 as defined by the first red circle. I call such set-ups "Box Trades" simply because price has retested the annotated box that previously contained price before it broke down.

USD CAD caught my interest after the FOMC announcement tonight and on inspection I was surprised to see its been trending upwards since September of last Year.  In fact you could argue its been trending up ever since July 2011 although in reality its been pretty much range bound. The area around 1.0253 has been marked on my chart as S/R for a considerable length of time and its fair to say price has been through it in both directions numerous times before but breaks above that level do seem to coincide with short bursts of strength that propel it 150 - 200 points higher relatively quickly.

Due to family circumstances I was unable to update last Week's trading over the Weekend. Nonetheless you haven't missed much as no new trades were taken. This morning I entered a GBP:NZD long with a view to posting the analysis tonight, but within a few hours the trade was showing +176 points so I just banked it. I'll continue to watch the chart with a view to trading the long side again if we see further confirmation that a correction low is in place.

Still no new swing trades unfortunately. In fact, at times I've felt like a rabbit in the headlights over the last couple of Weeks while watching huge swings take place across a number of FX pairs, sometimes responding to support and resistance, but other times completely ignoring them. It can be tough when markets go from dull uninteresting trading patterns to full on wild volatility because neither  are ideal situations for entering new swing trades, rather, they are more suited to a day trading environment.

As you can probably tell based on the mid-Week updates to the blog, my focus this Week was on day trading the volatility across Indices and this delivered some quite profitable trades. Although EUR:USD remained top of the watch list for a swing trade on the long side, I found it quite difficult to find a comfortable entry and in the event EUR:USD rallied quite hard albeit through some sudden bursts each of which lasting no more than a few hours. This made the potential swing quite difficult to catch and therefore the trade was missed. EUR:USD now lies bang on resistance so it will remain on the watch-list to see how it copes and from there I can make a decision as to whether I'll trade it, and whether it will be on the long or short side.

Here's the follow on from the DOW charts posted earlier in the Week. The 61.8% fib level from the April low to May high lies at 14,870 but you'll generally find price will pierce the fib level and ultimately you want to see the hourly candle closing above it. So to find a more realistic target you need to look to the left of the chart for areas of possible S/R and in this case there is some congestion between 14,830 and 14,855 but nothing that precisely defines support.