Watchlist...

Here are some technical setups I'm looking at. However, be mindful of all the key news announcements this week. FOMC Statement, ECB Conference and NFP are sure to provide some high volatility.

FTSE 100


I posted a few months back (http://qitrading.blogspot.co.uk/2012/06/swing-divergence-setups.html) about the swing setup provided on the S&P500 which coincided with bullish election year seasonality. There have been a few pullbacks to capitalise on this and it seems as the FTSE may follow. I'm looking for a break and re-test above the 5730 level with a target back up to 6100. Whether you are learning to trade FX, Indices, Stocks or Commodities....we are trading price action and the battle between buyers and sellers and mass psychology which enables us to trade multiple markets in the same way.

EURNZD


Each previous swing low on August 2011 and February 2012 came off the 1.272 Fib Extension of the previous wave. We are currently at the same level with price action diverging on the RSI. Target would be the 50% retracement from May 2012 swing high to current swing low, as both previous cycles of the 1.272 have gone to the 50% retracement level. I use Fibonacci extensively and it is worthwhile learning to trade by understanding cycles and cycle strength.

USDCAD


Retracement to parity and 500dsma, as well as the lower support trend channel line.

More to follow soon!

Happy trading!

Friday wrap and current trades...

News announcements were relatively thin during the beginning of the week. As stated in last week's report, all eyes would be on UK GDP and US Employment Claims as well as anything to do with Spain. After the worst ever reading of GDP figures since 2009, UK Q2 GDP -0.7% q/q, -0.8% y/y, against forecasts of -0.2%, -0.3% respectively, the Dollar continued to rally as investors flock to safe haven assets. The report highlighted the weaker figures were due to more public holidays in the period and poor weather. Whilst many analysts are now calling for a weaker GBP, especially given the now increased probability of a downgrade by Moody's and a potential future rate cut to stimulate growth, cable traded in a range for a day and a half. Many were waiting for Thursday's speech from ECB President Mario Draghi. Now that everyone has essentially lost hope with Greece, Citibank are forecasting a 90% chance of Greece exit, all eyes are on Spain and there record level of borrowing costs and more importantly just how the ECB can afford to bail out another nation. Draghi's comment '[the] ECB is ready to do whatever it takes' led a surge in risk based assets as traders took profit on the positive news announcement.


Whilst all eyes will still be on the US and QE3, the current uncertainty around Spain will more than likely be at the forefront. Most importantly, is how Draghi's comments can actually be backed up with the powers and money they have. Watch for comments from Angela Merkel, as she has not responded to Draghi's comments even though it will be 'Germany' that has to whatever it will take to save the Euro. Next week's Spanish Manufacturing PMI, GDP and Employment figures will be looked at closely, as well as the FOMC statement, ECB press conference, GBP Rate Statement and Non-Farm Payroll. Comments from central banks will cause volatility as they respond to recent horrendous data and the high commitments set from the ECB. Happy trading!


Current trades - NZDCAD and GBPAUD (order)

Watchlist...

Here's what I'm currently looking at, on a very welcome hot sunny day in London:

EURUSD - Potential buy @ 1.2000 which coincides with the 1.618 Fib Ext from June's swing low to June's swing high. We have to be mindful it is trading in a long term bearish channel which will provide long term support and resistance

AUDCHF - Price has been trading between two large ranges for the past six years. Either: Sell at 1.0760, a 15 year high; Buy on pullbacks to 1.0153 or 0.9955, target to the upper range if going long

CADCHF - Currently trading in a bearish trend channel. Either: Sell towards parity 1.000 - the upper trend channel which coincides with a horizontal resistance level and the 500dma; Buy at the previous support level 0.9432 with a target to the upper resistance trend channel

NYMEX Crude Oil - Look for sells between 92.52-91.81. Price is rallying towards a strong level of resistance which includes December 2011’s low, a 50% Fib Ret from May swing high to June swing low, a 1.618 Fib Ext from July 5 swing high to July 10 swing low and 500dma which has yet to be tested in bearish territory. This could be the beginning of an Elliott wave 4 so a potential final target would be below the swing low at 77.19 which is this year’s low so far.

Happy trading!
Learn to trade, learn to trade the market, learn to trade forex, make money forex, make money online, technical analysis, fundamental analysis, best traders

Watchlist....all about the Swissy

Price action is approaching some fairly significant levels on the majority of CHF crosses. These could provided some decent opportunities for CHF long position. Here's what I'm looking at:

USDCHF - Strong level of resistance @ the Weekly 200ema which coincides with November 2010's high.

CHFJPY - Previous level of horizontal support....looking at the moving averages, the fact it is at the bottom of the range and that seasonally a bullish period for JPY the bias is a break through that level so look for a strong reversal confirmation and weigh up the reward to risk as that is what makes a difference to being a profitable trader.

CADCHF - Strong level of resistance from 2010 highs, also at parity. It is also at the upper trend channel of the move down from 2007 highs. This level also coincides with levels on USDCAD and NYMEX Crude Oil as they have a strong inverses correlation.

AUDCHF - Strong level of resistance at 2008 and 2010 highs.

The key is reward to risk, so identify each opportunity on its own merit. If price breaks through these horizontal levels of support and resistance then we have to be adaptable and switch our positions and look for the next setup.

Friday wrap...

After disappointing NFP figures last week and a quite-tone on the FOMC statement, the markets have been fairly quiet with safe haven flows the prevalent theme. News announcements were relatively thin during the week, as investors and traders alike are cautious at the beginning of Q3. The Euro continued its downward momentum on the back of last weeks ECB rate cut and issues surrounding Spain and Italy. All eyes were focused on the unemployment rate for Australia early Thursday morning. The fact it is currently still the best location in the search of yield (due to its carry) and that it acts as a strong barometer of global economic health (due to its exports to China), traders were looking for strong sentiment on risk on or risk off in an otherwise lacklustre market. The number highlighted the issues the domestic Australian economy faces as well as the slowdown in Chinese growth. This further accelerated a risk off status and the greenback rallied across its counterparts. Moody's downgrade of Italy's bond rating to Baa2 from A3 did not help any Euro bulls in the market. EURCAD broker through its all time low and triggered many black boxes to sell which weighed on the CAD pairs.


Whilst trading has been relatively cautious this week, the momentum will most likely increase with key news announcements out next week. US manufacturing (Philly Fed Index), German ZEW, BOC rate announcement and GBP MPC minutes will be looked at closely for directional basis. However, trends don't change immediately so continue to focus on price action as a leading indicator and beware of volatility spikes during news announcements. 

Trading = Strong opinions, Weakly held....

Trading is a tough game, as we all know. The most important attribute of a successful trader is 'trade what you see, not what you think'. This is absolutely crucial but we are all human and are susceptible to getting things wrong. In trading this could result in a losing streak and the emotion turmoil that goes with it. The key is how to bounce back from it. As with anything in life, nothing is going to be easy but it is how you react to a setback or failure that truly defines you.

The markets haven't doing anything significantly in recent weeks, as we start the new quarter. Being down on my account this month is purely down to me trying to be a smart after a relatively decent winning streak. I also had strong opinions about what I though should happen and I held on to these when I should have cut them. After all it's better to lose nothing, than something.

Even after years of trading, you have to keep yourself at peak performance. As one slip up could result in many slip ups which could wipe out several months worth of profit. After all, there are more ways to lose money in this market than there are to make money, which is why it is so challenging and yet so fruitful.

No one likes to start the month losing as the rest of the month is tough trying to get back to break even. However, this is part of the job!

What is my game plan now? To wait for a theme to present itself and then to capitalise on that. I will keep you posted in the next few days on some analysis I am currently doing.

Happy trading!

Friday wrap...

The market was expected to be range based at the start of the week. Traders and investors alike waited for key news announcements from central banks released after the US public holiday. They were not disappointed as near-simultaneous easing from Europe, the UK and China fuelled volatility around the markets. The ECB cut the main refinancing rate 25bps to 0.75%, the BOE increased QE by 50bln to 375 billion and the PBOC, more surprisingly, cut their 1 year lending rate by 31 basis points to 6% from 6.31%. The ECB also cut the deposit rate to 0% which should encourage more lending on the inter-bank market to help generate more growth. Positive ADP Employment data from the US fuelled further risk off, as the US added another 176,000 jobs to the market. Whilst this news was taken positively, all eyes will be on the Non-Farm Payroll today. If this turns out to be better than expected, then the chances of QE3 diminish slightly and the Greenback will most likely rally on the announcement. The macro-economic picture does not bode well for global growth after the coordinated interest rate cuts. However, the search for yield is on and the commodity currencies had a mixed reaction to the week's news announcements. Many money managers are looking to the AUD for a safe haven due to the positive carry and an upturn in exports to China. However, the PBOC interest rate cut could be another sign (among many others) that their economy is slowing, which would have ramifications in an overheated Australian economy. EURAUD was the main victim this week as funds come out of EUR denominated assets and park them in Australia. 


Trading will be cautious up until the NFP economic number. However, given the events of this week one has to look a the macro picture of what the global economy is doing. For the time being it looks as is if safe haven flows are the name of the game but within trading we have to be adaptable and flexible. Look for price action as a leading indicator as well as the commodity pairs and the Stock market. The most important trait of a trader is to be patient and wait for the right opportunity to present itself. The beginning of the quarter may start of slowly but we have the time to wait for a prevalent theme to present itself as we are at the start of the month.

Be careful this week....

This week sees a whole raft of economic data and policy decisions from key Western economies. The US 4 July public holiday, Bank of England interest rate announcement, ECB interest rate announcement, US Non-Farm payroll and Manufacturing PMI will be watched carefully by traders to determine what the overall sentiment is and where the next trade will be.

In the last Bank of England MPC meeting it was highlighted that a further £50bln of quantitative easing will be added. Cable rallied on the back of the announcement and we could see something similar this week.

The expected rate cut from the ECB could be seen as a positive or a negative and only price action will dictate this to us.

After a disastrous ISM Manufacturing PMI number on Monday, the lowest reading since the credit crisis in 2009, the FOMC statement and Non-Farm payroll will be key to any QE3 expectations. If unemployment comes out negative then we almost certainly see another round of quantitative easing in the US.

Good luck out there!