19th Feb – Market Analysis

The FX market, in terms of STAM rankings, looks quite similar yesterday – however the middle camp has changed a little bit – EUR and CHF both gained 1 point with NZD losing 2 points.  Thus on the whole I am looking to buy GBP, EUR and CHF and looking to sell the currencies in the weak group (CAD, AUD, JPY and USD).  I will most likely keep clear of the NZD currency in terms of STAM.

There are two key risk events today – the release of the BOE rate meeting minutes (at 9.30am) and FOMC minutes at 7pm.  This will likely be on the minds of all the FX traders today.  On the basis of the FOMC, I cannot put on STAM trades on ANY currency pair – recall my rules state that I cannot enter any STAM trade less than 36 hours prior to a FOMC announcement – technically that means I should not have shorted the USDJPY yesterday afternoon – whoops!

I also cannot enter any S3 trade less than 12 hours to the FOMC announcement.  This deadline passed at 7am (half an hour ago).  I will nevertheless scan through the charts for setups, however I will not be putting on any trades.

As yesterday, NZDUSD is the only pair with a S1 environment and a medium/weak combination.  See the analysis for that below. (it was a good exercise to go through).

I ended up doing a huge S3 review on all the FX pairs – there were quite a few setups – particular with the NZD crosses.  Very useful exercise.   None of the equity markets (nor Gold) had anything close to a STAM or S3 setup.

Oh, update on the positions I took yesterday:

Short Nikkei (S3S) – I had lowered my stop to 14,840 (-70) – price went as high as 14,825 (-55) during the Asian session and then spiked to a low of 14,660 (+110), but hit the 14,700 level several times (my target was 14,610).  When I came in this morning and saw that price had retraced 110 points I closed the position for scratch.

Short USDJPY (S2S) – Price also went against me up to a max of 15 pips, but then started trending downwards slowly throughout the Asian session.  It hit a low of 1.0204 this morning (a pivot line) and then rebounded back to 1.0220.  It is now trading 1.0212.  My stop is now at 102.23 (+7).  My target is a little lower at 101.92 (+37).

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