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Monday, August 14, 2017
Wednesday, August 9, 2017
Many Traders Come and Go
Many traders come and go
But the markets will always remain
And the steps to heaven are eternal;
Follow in the footpath of a giant
And you shall ascend and find your fortune
But the markets will always remain
And the steps to heaven are eternal;
Follow in the footpath of a giant
And you shall ascend and find your fortune
Tuesday, August 8, 2017
Hedge Funds are behind the smart money pushing up the value of the EUR/USD
In the year 2014 the EUR/USD was trading at the 1.40 level and then political and economic circumstances led to hedge funds shorting the EUR/USD ruthlessly down and in driving up the value of the US Dollar brought down much of the physicals commodity markets as well.
Weekly Chart EUR/USD 2014 reminder.
In that same process international hedge funds piled into the US equities markets driving up the SP500 and the Dow to record levels.
2015-2017 were years of political chaos for Europe with Grexit, Brexit and Frexit seeming to pull apart the union at the seams and so the US Dollar and US equities were seen as a safe haven.
However 2017 marks a watershed in global markets. If economic theory proves correct in the long run then the cyclical nature of markets should kick in for both the US and European markets. On Friday the NFP data was a little robust but bearing in mind the Summer is good for employment and listening to the dovish statements of the FOMC then smart traders already know that the US cannot keep piling up stellar job growth numbers. In other words a contraction is around the corner. Over in Europe stagnation has been rife and negative interest rates seemingly did the trick to ignite the Euro markets as the same trick worked in US markets since the debacle of 2008. if that is the case then European expansion should start now and the economic theory of boom to bust appear to be correct in perspective.
Economic theory of expansion and contraction.
Most smart traders agree that the EUR/USD is undervalued as a pair. Friday's correction is normal. prices do not move up in a straight line. Expect consolidation this week at 1.17 as there is no sound economic reason for the pair to push lower. Soon enough we will be pushing for 1.19
The beginning of the Euro freight train; don't step in front of it!
Thereafter look to 1.24 and 1.30 as targets by the end of this year 2017. When you consider how hedge funds drove down the EUR/USD in 2014 on the back of economic and political uncertainty, what goes down comes back up, and this time it is the US markets which are coming under close scrutiny by hedge funds and it's beginning to look shaky, top-heavy and politically uncertain. The value currency this year is the Euro currency.
Weekly Chart EUR/USD 2014 reminder.
In that same process international hedge funds piled into the US equities markets driving up the SP500 and the Dow to record levels.
2015-2017 were years of political chaos for Europe with Grexit, Brexit and Frexit seeming to pull apart the union at the seams and so the US Dollar and US equities were seen as a safe haven.
However 2017 marks a watershed in global markets. If economic theory proves correct in the long run then the cyclical nature of markets should kick in for both the US and European markets. On Friday the NFP data was a little robust but bearing in mind the Summer is good for employment and listening to the dovish statements of the FOMC then smart traders already know that the US cannot keep piling up stellar job growth numbers. In other words a contraction is around the corner. Over in Europe stagnation has been rife and negative interest rates seemingly did the trick to ignite the Euro markets as the same trick worked in US markets since the debacle of 2008. if that is the case then European expansion should start now and the economic theory of boom to bust appear to be correct in perspective.
Economic theory of expansion and contraction.
Most smart traders agree that the EUR/USD is undervalued as a pair. Friday's correction is normal. prices do not move up in a straight line. Expect consolidation this week at 1.17 as there is no sound economic reason for the pair to push lower. Soon enough we will be pushing for 1.19
The beginning of the Euro freight train; don't step in front of it!
Thereafter look to 1.24 and 1.30 as targets by the end of this year 2017. When you consider how hedge funds drove down the EUR/USD in 2014 on the back of economic and political uncertainty, what goes down comes back up, and this time it is the US markets which are coming under close scrutiny by hedge funds and it's beginning to look shaky, top-heavy and politically uncertain. The value currency this year is the Euro currency.
Friday, January 6, 2017
A currency can move in one direction in several pairs and present multiple profit scenarios
Now, today is a very good example how traders perceived the opening strength of the Japanese Yen and then sold it off only for it to rise again and fall off as the European session overlapped with the Asian session. As usual the session started in Tokyo with the usual buzz after a few hours of inactivity. Then the wave of emotions built through the day until the point of overlap with Europe.
Since a currency pair is a comparison between the strengths of two different economies you will notice that the JPY was perceived as weakening against several different economies because of fundamental weakness in the Japanese economy and trader anxiety over Japanese bond yields. So as a group the JPY wavered against the four currencies illustrated below - CHF, EUR. GBP, USD.
The lesson to be learn is that once you recognize the shape of the candles and see them time and time again in similar formations then you may choose the relative strength of your position ie. you could enter a single position or escalate to several positions to take advantage of a forthcoming three 15 minute candle bar direction over the next 45 minutes.
For the shorts the charts today on JPY signaled two short moves. As a rule of thumb I make my move on the second candle after the short signal being a Doji or a bearish engulfing candle pattern that engulfs the two previous green candles before the large red signal.
Please study as follows and recognize the two trading windows for 20-30 pips each. The strength of the signal will determine how many positions you open.
Pattern recognition is fundamental to taking quick trades to seize 20-30 pips over a 1 hour intra-day trading horizon.
Happy trading!
Since a currency pair is a comparison between the strengths of two different economies you will notice that the JPY was perceived as weakening against several different economies because of fundamental weakness in the Japanese economy and trader anxiety over Japanese bond yields. So as a group the JPY wavered against the four currencies illustrated below - CHF, EUR. GBP, USD.
The lesson to be learn is that once you recognize the shape of the candles and see them time and time again in similar formations then you may choose the relative strength of your position ie. you could enter a single position or escalate to several positions to take advantage of a forthcoming three 15 minute candle bar direction over the next 45 minutes.
For the shorts the charts today on JPY signaled two short moves. As a rule of thumb I make my move on the second candle after the short signal being a Doji or a bearish engulfing candle pattern that engulfs the two previous green candles before the large red signal.
Please study as follows and recognize the two trading windows for 20-30 pips each. The strength of the signal will determine how many positions you open.
Pattern recognition is fundamental to taking quick trades to seize 20-30 pips over a 1 hour intra-day trading horizon.
Happy trading!
Thursday, January 5, 2017
Forex Tokyo Open 2 Profit
Again I repeat Tokyo open
3 charts EUR/USD, USD/JPY, GBP/USD
Not all the time Tokyo springs into action but on the pairs I watch regularly it's 2/3
3 charts EUR/USD, USD/JPY, GBP/USD
Not all the time Tokyo springs into action but on the pairs I watch regularly it's 2/3
Tokyo usually springs to life from local time 6.30 am. it is ideally located because come mid-day in New York forex traders just want to go to sleep since they start early to catch the Euro session. Liquidity thins and markets stall. it's the perfect window for a new direction.
The problem with waiting for key data releases is that you maybe right in determining a direction but in the first 15 minutes the volatility is so large that you get stopped out and then frustratingly you will see the prices move in the direction you anticipated after you have been stopped out!
I have found that it is better to trade the aftermath of a key report as volatility dies down. The first rule in trading is to cut your potential for losses and trading into large volatility can produce a whipsaw effect that can take your trade out even if you eventually were proven right.
Happy Trading!
Wednesday, January 4, 2017
Forex Tokyo Open 1 profit
EUR/USD
Japan open and 50 pip move.
One of the reasons I do not advocate trading key US data releases is because of the sheer quantity of players that jam into trades and the high probability of a whipsaw effect in the first 15 minute candle bar. For example, assuming that US Housing data came out as very strong and you were actually short EUR/USD prior to the data release on the morning, the usual tussle between the bears and the bulls may mean that your short may get stopped out quickly on an up move before the second fifteen minute candle plunges down. Yes, that's a great possibility and it;s very annoying to know that you may have been right with your market direction but you still got stopped out because of the huge volatility.
I prefer watching the dull, quiet, stationary market prior to Japanese market open because the potential for direction is enormous and the probabilities of large volatility whipsaw effects are much smaller.
The above chart is a good example how sleepy Tokyo wakes up and stirs to a 50 pip move.
Targeting small moves like this day in and day out is far more reliable than waiting for a big data release and hope for a large swing trading 200 pip tsunami move. With the big moves comes high risk and the possibility of a wipe-out. There is money in the daily trading ranges from Asia to Europe if you take a closer look at the behavioral charts reflected through candlesticks.
Have you ever wondered why seasoned veterans survive in the US currency futures markets? It is because they know how to scalp the small ticks. Be humble and book small profits and let your small trades accumulate in time. Be patient; this is a patience game. Don't hurry yourself into large winning trades."They stumble that run fast." If you are humble you will spot Mado windows every time for 10-20 pip quick trades an you can scale-up when you know momentum is on your side. But always trade with tight stops and if you take a knock on the chin, brush it off!
Trade with wisdom and find strength in the little, subtle changes in price action. Pattern recognition becomes your most formidable ally.
Japan open and 50 pip move.
One of the reasons I do not advocate trading key US data releases is because of the sheer quantity of players that jam into trades and the high probability of a whipsaw effect in the first 15 minute candle bar. For example, assuming that US Housing data came out as very strong and you were actually short EUR/USD prior to the data release on the morning, the usual tussle between the bears and the bulls may mean that your short may get stopped out quickly on an up move before the second fifteen minute candle plunges down. Yes, that's a great possibility and it;s very annoying to know that you may have been right with your market direction but you still got stopped out because of the huge volatility.
I prefer watching the dull, quiet, stationary market prior to Japanese market open because the potential for direction is enormous and the probabilities of large volatility whipsaw effects are much smaller.
The above chart is a good example how sleepy Tokyo wakes up and stirs to a 50 pip move.
Targeting small moves like this day in and day out is far more reliable than waiting for a big data release and hope for a large swing trading 200 pip tsunami move. With the big moves comes high risk and the possibility of a wipe-out. There is money in the daily trading ranges from Asia to Europe if you take a closer look at the behavioral charts reflected through candlesticks.
Have you ever wondered why seasoned veterans survive in the US currency futures markets? It is because they know how to scalp the small ticks. Be humble and book small profits and let your small trades accumulate in time. Be patient; this is a patience game. Don't hurry yourself into large winning trades."They stumble that run fast." If you are humble you will spot Mado windows every time for 10-20 pip quick trades an you can scale-up when you know momentum is on your side. But always trade with tight stops and if you take a knock on the chin, brush it off!
Trade with wisdom and find strength in the little, subtle changes in price action. Pattern recognition becomes your most formidable ally.
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