Oct 2 – Market Analysis II

AUD/NZD position – Shortly after 2pm (7 hours after opening the trade) the position is approx 50 pips in profit – note that 50 pips was the size of the initial stop loss.  I lowered the stop loss from 1.1435 to 1.1395 – thus total risk on the trade has been reduced from £750 to £150 (50 pips to 10 pips).

Market update

ADP employment figure passed and ECB news conference is in progress.  Note it is unlikely that the NFP figure will be released this coming Friday, due to the US government shutdown.  On that basis, today’s ADP figure is likely to have had more weighting than usual.  The figure came in slightly negative and last month’s figure was revised downwards by 17k (talk about manipulation?!).

FX Analysis update

There has been no change as to which currency is strong and which currency is weak.  The only notable point is that AUD has been gaining some points, that JPY is strong on the 4H and that NZD is weak on the 4H.

Thus the pairs that we are looking to trade are the same as previously (only looking at S1 and S2 categories).

The Yen pairs – has anything changed?   Note that although AUD has been strengthening, in my view it has not strengthened sufficiently to warrant a trade in AUDJPY.

NZDJPY has been declining but has not had bullish price action.  GBPJPY is setting up bullish price action on the 4H chart, with two very nice bullish pin bars.  Check the candles again at 3pm to see how they are looking and consider going long.  EURJPY and CHFJPY are the same as GBPJPY.  Consider taking trades on these on the close of the 3pm candles.  Assess which pairs seem to have the best natural/logical target areas.  Thanks to NFP no longer being released on Friday I can now consider these trades.  But remember that Bernanke speaks at 8.30pm!!

The Dollar pairs – No clear retracement and/or bullish price action on NZDUSD.   EURUSD has broken out of its tight range today (in the last 1-2 hours) thanks to ADP and ECB.  No setup as such.  There was no STAM opportunity here.  Similar story with Cable.  The pair rallied strongly, without a STAM chance to get long.  USDCHF also declined quickly following the news without a chance to get short.  It is now approaching long-term support around 8900.  It has just penetrated through the 9000 level.

AUDNZD – am already in a trade on this one – since the 4H candle closed at 7am this morning.  [I just realised that I had made a note yesterday to look for bearish price action to trade this back into the demand zone!]

S2 setups – Nothing to report on these.  No strength/weakness combinations.

Next action

Check closure of 4H candles at 2.45-3pm for EUR, CHF and GBP against JPY.  Assess whether trade(s) are warranted, taking into account target areas and logical stops.  [Checked at 3pm – unfortunately none of the 4H candles were nice enough to justify a short-JPY trade.  4.30pm Of course now I am looking at how JPY is venturing – esp on EURJPY since that had the nicest candlestick pattern – but given that Bernanke is talking tonight, it would have been too risky in any case].

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