Some Mid Week Thinking: EUR USD, GBP USD, DOW 7th February 2012

Some Mid Week Thinking: EUR USD, GBP USD, DOW 7th February 2012

Not much volume around this Week, in fact, Mondays Stock Indices Volume was the lowest non-holiday volume for over 10 years! That makes for some quite dull price action.

Still hanging onto the GBP:CHF swing long which shows a 4 pip profit as I type this. Virtually every CHF pair produced really ugly candle’s today, fortunately with GBP:CHF being one of the least worst hit. Nonetheless I’m having doubts about this trade and spent the last few hours pondering on whether I should just give up on it or let the stop loss take it out. Ultimately a trade isn’t wrong until the stop loss says it is, but that said, I have a fairly good track record of closing dodgy looking trades just in time. Now I’ve said that I’m sure I’ve doomed this trade whatever I decide to do!

Probably need a couple more days to get further clarity on some of the watchlist so I don’t really have much going on at the moment from a swing trading perspective.

AUD:JPY broke out of it’s triangle this morning with force. Unfortunately because this was on a data spike my overnight limit order to take advantage of a breakout was achieved and the position initiated, but I suffered quite a bit of slippage and ended up long near the high’s of the day. This made the risk/reward less attractive than initially calculated and I chose to close the position for a 10 pip profit. Whether that was the right or wrong thing to do I don’t know, but I’ve got quite a few positions open at the moment so getting rid of it gave me one less trade to manage.

Throwing a few trend lines at some charts tonight and a few things stood out, nothing showing any high probability set-ups, but a few things worth looking at.

EUR:USD

I’m actually long on this at the moment based on some analysis I detailed on the ADVFN forum yesterday. However it’ll be interesting to see if price reacts from this trend line:

DOW

There’s certainly no argument that this is a rising wedge, which is often a pattern thatĀ precedesĀ a bearish outcome. I’m currently long on DOW from a trade I entered last Friday, now with stop loss at break-even, but still, this is worth watching. Although less common on the daily time frame, when DOW produces a rising wedge like this on the hourly or 4 hourly time frame where price is approaching the apex it is very common to see a throw-over followed by a sell off that takes both rising wedge trend lines out in one clean swoop. Definitely something worth being prepared for:

GBP:USD

This is another pair I’ve been keeping an eye on. Clearly I’m disappointed I never got in on this powerful rally, but Cable has been off my radar recently and I missed it. There are certainly some key levels to watch out for.

Daily broke above the 200 MA today. A break back below it within the next few trading days would have me checking out the possibility of entering short, but for now I’d say the upside risk lies in the 1.5980 area:

The 4 hourly chart shows an approximate area of support in the 1.5736 region. A retrace to that level could well be a buyable dip, whilst a break below it would certainly have me checking out the bear side:

Aside from the charts detailed here, I think the more interesting charts to keep an eye on are generally the Yen pairs and the Swiss pairs. Most of the Yen pairs look like they’ve got some further rallying ahead (I mean, even USD closed green against the Yen today), and the Swiss pairs are showing unconfirmed signs of rolling over (even NZD closed red against CHF today), but I say this with caution for now.

Hope your trading is going well. My swing trades haven’t yielded anything yet this Week and volumes and volatility are so low the day trades haven’t set any fires either, though I’ve been fortunate to have been on the right side of all the day trades so far.

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