Sep26 – Market Analysis

George’s personal trading observations

Stop Loss Management – Cable was trading as high as 6090 – 20 pips from my target – prior to the figure.  EURGBP was trading 8400 (25 pips in profit).  I moved the SL on EURGBP to break-even because price traded as low as 8393, and I had (prior to entering the trade) set 8395 as the level where I could move the stop loss.  On Cable I was deliberating whether to take the trade off.  Across the two positions I was up £2,000 (for total risk of £1,250) – should I have just closed everything – the maximum gain would have been £2,500 (so I was 80% of the way there).  However, instead I removed the target price on Cable – in case price rallied strongly.  I had deliberately stayed at the office whilst the figure was released, in order to manage the position.  Cable then dipped around 20 pips prior to the figure, and on the figure’s release it eventually traded down to 6025. 

Both the positions are still open now, with Cable trading 6040 and EURGBP 8415 – total unrealised profit is now at £900.  There is another USD figure at 3pm. And Draghi is speaking tomorrow morning at 10am (at which time I will be at the French course).

3.30pm update: EURGBP was stopped out at entry level (thus, a scratch trade) around 2.30pm.  It is still trading at that level.  Cable is trading at 6020 after hitting a low of 6006.

Patience – Something else to note:  I entered pending orders on AUDNZD and NZDJPY – currently price has not reached the levels of my pending orders.  I am scared that the market will just move without me being able to profit from my analysis.  However patiently waiting for my entries to get filled (and going skating whilst that happens) is probably much better – the correct entries will allow me to get better risk-reward ratios by giving me smaller stop loss sizes.  Patience.  This worked really well for me in regard to the most recent two trades (on EURGBP and GBPUSD). Note: As I was writing this my NZDJPY order was filled – yay, and I didn’t chase the price!

Demand/Supply analysis – as planned I also made a separate analysis using Demand/Supply for the 21 pairs.  

Market Overview

Oil, gold and equity markets fairly stable today and yesterday.  Still retracing a bit though.  GBP and USD news has come out – the UK current account figure release worked against both of my positions. 

FX Market

EUR, CHF, NZD and GBP now all at 11 points – at the expense of USD (3), JPY (1), AUD (4) and CAD (4).  The short-term momentum, as per the 4H charts, reflects the same.  Thus AUD is losing the momentum – I am no longer looking to buy AUD, and instead I am willing to sell it.

The following S1 setup convey strength/weakness:  EURJPY, NZDJPY, GBPJPY, CHFJPY, GPBUSD, NZDUSD, AUDNZD

There aren’t any S2 setups that contain strength/weakness combinations.

  • GBPJPY, EURJPY and CHFJPY – I have been watching the JPY pairs for corn-trade setups on the 4H chart.  Significant volatility on each pair – no valid setups.  Price rallied strongly overnight, then plummeted this morning and has now risen back to the overnight high.
  • NZDJPY – less volatility here, strictly speaking not a corn-trade setup with the 3pm candle, because there was doji candle after the initial bullish candle – however am satisfied to trade with the current momentum – entered pending order following the close of the 3pm candle – buying strength (11 points), selling weakness (1 point), following a retracement.  See graph above.
  • GBPUSD – still in open position (see SL Mgmt comments above)
  • NZDUSD – watched for corn-trade setup on 4H chart on close of 3pm candle (remember there is USD news at 3pm), that candle closed as a doji – thus no valid setup
  • AUDNZD – also a potential corn-trade setup here (a bearish one) on close of 3pm candle – what’s an added bonus here is that the demand zone below is a logical target area for this trade.  Following the close entered pending order entry -1.1315, stop 1.1360, target 1.1205.  Risk 0.75R.  See graph above.

Next action

Check chart again at 10pm – daily chart for GBPNZD – looking for bearish engulfing candle to sell into the demand zone.

 

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