EUR/USD 1st JUNE NFP FRIDAY

Good morning/afternoon to you all.

Context

 The focus today will move away from the troubled Euro Zone and onto American employment. The NFP number measures new employment in the US and as the American economy drives the world economy, employment growth is an important number. The NFP number is especially important because it takes out the seasonal effect of farm workers, and is delivered early in the month, This is a day for news , and momentum traders and a day when the rest of us stay out of the market. I will cover trading the news at some stage in Trader Talk Radio but it’s not something we will cover here. If you want an invitation to the free Trader talk Radio webinar on Wednesday morning UK time please send me your email  address and I will invite you.

Yesterday's Report

Yesterday the market tested daily pivot and moved down to 2 year lows. The entries weren’t as good with the lower high not giving us a high test, or bounce of strong previous level. It was followed by a long consolidation and then price fell this morning. The direction after the pivot bounce was simple, but we also need a quality entry and I didn’t see one yesterday. It was a better day to watch than to trade.

Technical Analysis

It’s pretty simple today is NFP and we don’t short term trade. It’s also the date from where the picture gets clearer, the monthly pivot has crashed down and now sits only 300 pips, from price. On Monday the weekly pivot will also fall and if price behaves normally we will see the pivots lined up bearishly and the over extension gone. The GBP bank holidays Mon/Tues will take away the volume but we will have the perfect short set up in place, and during the week we should be able to find some great entries. This is what we have been waiting for.

The Day Ahead –

No Trading

Tip of the day

NFP is the day to review our plans, review the last month and focus on the new plan for the coming month.

News Today GMT

1:30pm USD       Non-farm employment change                 151K     


This brings to and my first full week of bloging and i am thrilled to have had over 300 hits on this page. I do hope you are enjoying the content but please let me know if you would like something added or removed. In the meantime i look forward (hopefully) to an easier trading week next week.

All the best

PLB

31 May EUR/USD

Good morning/afternoon to you all.

Context
 More bad news for the Euro yesterday as Spanish and Italian borrowing costs soared. Im not sure what the Eurozone expected after it forced private debt holders in Greece to write off 50% of their debt.  Who would now lend money to the Spanish or Italian governments who are likely to need the same type of rescue at some stage? It begs the question who actually leant the money, and I have the feeling the answer to that is only more bad news for the Eurozone. Rising cost of debt is about as bad a news as insolvent organization can get, and in my opinion the Eurozone now actually has a crisis, and it created it for itself.

Yesterday's Report
Yesterday the market having touched the area late the night before, didn’t test daily pivot but did move down most of the day as we had predicted. One of the features of this move, on our 30 minute chart, has been the cycles with lower lows, and lower highs, and the great entries this has given us each day. My preferred entry yesterday would have been at the bottom of the long tail (high test) bars pictured.

(Click on the images to enlargen them)
The up legs of the cycle is short covering or when people already in short positions buy back the position to bank profits. More on that next…

Technical Analysis
We still have our pivots lined up in perfect bearish order, but they are so over extended with Daily Pivot nearly 790 pips short of monthly pivot, and approachings its record of the last year of 830 pips. This over extension means we expect a short covering rally at some point. We have been waiting for some days now for the big money to say we have made enough here, we will buy part of our position back, and and bank some profits. We have seen this on the shorter timeframes but on the longer timeframes where the big money plays no sigh of it yet. We expect the rally to be somewhere between 38 and 62% of the move. The lack of the rally tells us big money isn’t interested in banking profits, or reducing its exposure.. mid term it sees more damage coming with numbers like 1.03 being thrown around. We will see.
I do think its very easy to tell a pollster that you will vote for austerity, but in the voting booth understanding the effect that will have on you, I could see some surprising results. If we get them short term moves will be crazy.
So this is the reason we talk about no short… It’s gone too far, and no long… the momentum is to strong. We are waiting for the short covering rally, and the lower high that will likely give us a chance to pile in short at a far better price. That’s the behavior of the pack…our job is to work out how to make some money from it.

The Day Ahead –
Tomorrow is NFP and the market normally ranges the day before, although these market condidtions aren’t normal.
 I expect a similar day to yesterday, with the possibility of a retest of DP.
A break of Daily pivot, a new high and a retest of support would interest me as I would consider it a possible start of the covering rally and look for a nice long.

More likely is a test of a resistance level and a move down, with us looking for the same kind of entries as yesterday.

Remember in these conditions we want a price action confirmation, and to wait for the entry of the day.. We are looking for chart pattern type entries, and still trading at reduced risk.

Tip of the day
Check your trading plan and see how suitable it says your strategy for trading over extended markets, if it doesn’t say don’t trade. If you don’t have a trading plan you aren’t trading, you are guessing. Always write or review your trading plans while the market is closed.

News Today GMT
1:15pm USD ADP Non-Farm Employment Change 145K 119K
1:30pm USD Prelim GDP q/q                                 1.9% 2.2%
1:30pm USD Unemployment Claims                       369K 370K
All Day EUR Irish Stability Treaty Vote



All the best
PLB

30 May EUR/USD

Good morning/afternoon to you all.

I have attached another summary of yesterdays trading tip, as the link didn’t work, I hope you find this helpful.

Context

 I guess we now understand why they are called funda (mentals) its because they are mental, and sentiment is stronger than sense. Every time we hear Greece may leave the euro, depreciate and give itself a fighting chance the Euro dips. This despite there leaving would save the European states billions of dollars of aid and help, over many years. The fact other countries enjoy the lower currency the Greeks create for them doesn’t mean it’s in the best interest of Europe to keep bailing them out. I believe the fundamental moves here are backwards. I think its hard to argue against if Greece leave the Euro long term it will rise, if Greece stays in the Euro short is the place to be for some time. That’s why I don’t trade fundaMENTALS … this is a trading trap and the long term targets are you…

Yesterday's Report – 

Yesterday as predicted we tested daily pivot, in a typical cyclic pattern for a short move, and then headed down again. We had the possibility of an S type entrance again as we got a lower high before the accelerated move.

That move short was slightly stronger than expected and broke the support level.  This left us with lower highs and lower lows.

Technical Analysis

WE still have our pivots lined up in perfect bearish order, but they are so over extended with Daily Pivot nearly 700 pips short of monthly pivot its hard to imagine a strong move short. We have one solid resistance trendline but price has some way to go before testing it.

Really we are in the classic, no short entry (Over extended) and No Long Entry (who would trade into that momentum).  Really I can’t see me trading much until Monday but if I do it will be tight price action stuff.

I expect the big money to stay on the sidelines, unless it’s a fundamental based news.

The Day Ahead –

I expect a similar day to yesterday, with the possibility of a retest of DP followed by a reversal short at some point. If I was to trade here I would want to wait for confirmed, professional  entries. When you think you can’t wait any longer, wait for one more confirmation.

My favoured entry is pictured at the bottom, i would need a rally to resistance, then a test of support, folowed by a lower high and a retest of support.

We are looking for chart pattern type entries, and still trading at reduced risk.

Tip of the day

Write a daily brief like this, I write this for me and then publish it for you. It creates clarity in me as to whether I have clarity in my views on the market.

News Today GMT

Tentative	EUR		Italian 10-y Bond Auction				5.66|2.3
3:00pm	USD		Pending Home Sales m/m			0.0%	4.1%
4:30pm	EUR		ECB President Draghi Speaks

All the best

A link which shows yesterdays trading tip

Hi,

The following link should show yesterdays trading tip for you. (Some people couldnt open yesterdays link).

Tip of the day (yesterday)

Yesterday gave us another reversal of a resistance area with price action giving us an S shaped entry. There are a number of different ways you can enter this trade

Entry A; Enter at the low of the bar that hit the reversal level… is aggressive and will give the biggest winners and the lowest success percentage. Worth some coaching from Tom Jitan if you wish to trade this type of entry.

Entry B; Enter, at the bottom of the High test bar, that makes the lower high. This is a medium risk, medium return entry and is hard to resist.

Entry C: Enter as the low is taken out giving us a lower low to go with our lower high. This is our highest probability, lowest return trade and in my view the professional entrance. Professionals wait longer for opportunities to confirm.

29th May EUR/USD

Good morning/afternoon to you all.

The EUR/USD appears to be a little tired out from the long distances it is travelled recently and seems to have decided to have a rest for a few days.  It waits for more news out of the Eurozone or Non-farm payrolls on Friday. Fortunately it is a long range and there will be space in it for those with great systems to make some profits.

we will need to watch for unexpected news likely to offer some choppy moves.

Yesterday's Report –

 The EUR/USD started Monday by gapping up, a gap which it closed this morning. The pair has tested the top of the range at 1.2615 and the bottom of the range 1.2500. We did get a trading opportunity as it bounced off the resistance of weekly pivot, put in a low, a lower high, and then took out the lower low. I have pictures of this under our tip of the day…

WE had a similar S type entry opportunity for a momentum continuation short after price broke and retested the daily pivot. Also under tip of the day.

Technical Analysis

We have our first move up in the daily pivot in six days following the second day where price action went up and then retraced. This suggests the while the momentum is still short it has stalled for now as the market awaits new reasons to move. We have no decent trendlines to work with and therefor lack our usual road maps. We still have the weekly pivot closer to the daily pivot which opens the way for new shorts, but the monthly pivot is massively over extended. If we have a look down it may be early in the week and I would expect the big money to stay on the sidelines.

I expect price to test daily pivot and stay in the range today unless we have some kind of news move.

The Day Ahead –

We are looking for chart pattern type entries, and still trading at reduced risk.

Tip of the day

http://clip2net.com/s/1YnCy‏

Yesterday gave us another reversal of a resistance area with price action giving us an S shaped entry. There are a number of different ways you can enter this trade

Entry A; Enter at the low of the bar that hit the reversal level… is aggressive and will give the biggest winners and the lowest success percentage. Worth some coaching from Tom Jitan if you wish to trade this type of entry.

Entry B; Enter, at the bottom of the High test bar, that makes the lower high. This is a medium risk, medium return entry and is hard to resist.

Entry C: Enter as the low is taken out giving us a lower low to go with our lower high. This is our highest probability, lowest return trade and in my view the professional entrance. Professionals wait longer for opportunities to confirm.

 News Today GMT 3:00pm USD       CB Consumer Confidence            69.8        69.2

All the best

PLB 

28th May EUR/USD

Good morning/afternoon to you all. I do hope the weekend has treated you well and you are ready for another week in the markets. It will be an interesting week with a pause in the selling, a bank holiday Monday, plenty of news and NFP Friday.

Context

What a messy start to what promises to be a messy week. With US and European holidays today, and Non-Farm Payrolls on Friday this is week looks like it will consolidate, with unexpected news likely to offer some choppy moves.

I don’t trade US bank holidays and trade NFP week at half risk so this will be a week where I watch my capital and trade very little. If you find yourself trading when the professionals aren’t you do need to ask yourself if you are trading for profit or trading to participate. This isn’t sport and the elite and the participant traders play in the same pond..

Yesterday's Report - The EUR/USD started Friday in a sharp move down with many predicting this to continue. The market did as we suggested and broke its daily pivot before testing our resistance area heading south. To get an entry off the daily pivot long you would have had to cut to a shorter timeframe to get a retest. For those looking for a short the reversal off resistance did give us an opportunity but I prefer to wait for price to put in a low, then a lower high, and then took out the low. At this point we have a lower low and a lower high which offered a low risk trade. We sell the first lower high.

"http://clip2net.com/s/1Y8fS"><img 

Technical Analysis

The market started with a gap up today. This leaves us with 2 open gaps above price and one below. I cant recall having seen this before and I expect the market to close one of them pretty quickly. We also have the weekly pivot moving closer to the daily pivot which opens the way for new shorts, but the monthly pivot is still showing massively over extended. If we have a look down it may be early in the week and I would expect the big money to stay on the sidelines.

Friday saw a break in the pattern of aggressive shorts followed by slow reversals which may suggest the move down will have a break.

The Day Ahead – I don’t trade US holidays but for those that do…

Price us currently putting in higher highs and higher lows and looks to be pushing up.

A long entry today would require a beak of the weekly pivot and then a retest.

A short could come off the the weekly pivot or a break and retest of the daily pivot.

Volume will be lite and price action is likely to be sideways and possibly chopy..

There are very few trend lines or Support and resistance levels available and I suggest real care. Its a day when afterwards it will make complete sense, but during the day it might require a lucky guess. I don’t guess and will be doing other things today.

http://clip2net.com/clip/m0/1338189300-clip-22kb.png" 

News Today GMT

There is no news today.

All the best

PLB 

EUR/USD 25/5

Context

In the big picture we remain bearish as the pivots are lined up perfectly monthly pivot, weekly, daily pivot, down. The balancing issue is that all are over extended. Today is Friday and I don’t trade Fridays as market volume can be low and the combined effect of intraday and intra week traders revering their positions for the weekend can cause unusual moves. If you trade Fridays I suggest that you half your risk. 

Yesterday's Report -

 http://clip2net.com/clip/m0/1337907971-clip-47kb.png

The EUR/USD started yesterday over extended with the daily pivot 600 pips away from the monthly pivot. This is extreme for the pair with 460 pips being an often used reversal area. We again had a symmetrical triangle or pennant shape which is a continuation pattern short. On our favored 30 minute chart we were presented with an unusual longer term resistance line and an very short term intraday support line. The price break short was too aggressive and without an entry for us. But for those of us who stayed around we saw two entries long off our resistance line as forecast in yesterday’s report. The first entry comes after price breaks and retests our line… the line breaks but the long tail doji next bar gives us the signal. Entry top of the bar and stop bottom, target daily Pivot. A classic S shape entry with the only concern the lack at entry of a higher high.

The second entry is the classic and great reward for those that waited.  Price having broken and cleared our resistance line puts in a higher high and then retests the line creating a higher low. Entry still top of the doji, stop at the bottom and daily pivot the target.

Technical Analysis

EUR/USD is clearly in a bearish mode with its long term support level broken. It is also now even further over extended and relevant S/R levels and trend lines are hard to find. For me price is to over extended to go short, and momentum makes going long pretty dangerous. We do continue to see aggressive moves down, and slower retracements which suggests we still have momentum short. I still expect a pause in the move today.

It’s interesting to note for future years that the over extension maybe seasonal with this year’s 600 pip Monthly to Daily pivot gap following  540 in this week in 2011, 970 in 2010 and 790 in 2009.

The Day Ahead – I don’t trade Fridays but for those that do…

http://clip2net.com/clip/m0/1337909733-clip-47kb.png"

I understand that conventional wisdom says to go short, but my preference would be to be patient and find a quality long entry if one turns up; we still have previous major support (1.2677) to retest as resistance and 2 open gaps above us. The market may make some effort in that direction as traders close out positions for the weekend.

To enter I would need a break and retest of daily pivot, or later in the day a bounce of our trendline back to daily pivot. The trendline bounce would require price to already be showing a higher high, with the bounce confirming a higher low.

Short entries need to be of our normal high quality and would only be considered after a retracement.  Today’s pivot isn’t a high enough level for me (despite being around the 382 retracement of yesterday’s move) unless we have seen another break short first. My preferred level for a short would be off yesterday’s short term resistance between 1.2597 or 1.2604.

News Today GMT

There is only orange news today.

Remember Monday is a US public holiday and another no trade day for me. It will be an unusal week with Friday being the first and NFP due. This means the last week of this month could trade like the first week of most months.

I will try and post about my entry methods to improve profitability of winning trades and reduce losing trades.

All the best

PLB 

EUR/USD 24th May

Context

In the big picture we remain bearish as uncertainty about Greek election results, and therefore its future in the Euro continues to dominate sentiment. Yesterday’s break and close below long term support leaves the Euro open to the possibility of a big fall with the next major technical level a long way off. 

Yesterday's Report

The EUR/USD started yesterday over extended with the daily pivot 480 pips away from the monthly pivot. This is extreme for the pair with 460 pips being an often used reversal area. We had a symmetrical triangle or pennant shape which is a continuation pattern short. On our favored 30 minute chart we were presented with lower lows and lower highs, and eventually a continuation bounce short as a major previous support level was tested as resistance, confirming another lower high. I opted for the intra trendline target as with the over extension I wanted to be out of the trade quickly banking a nice profit. To see the trade http://clip2net.com/clip/m0/1337826804-clip-28kb.png

A further entry short turned up but I left it as the retest of the resistance level broke my sequence of lower highs. It went on to set new lows but with the over extension I can’t trade short without my perfect set ups.

Technical Analysis

EUR/USD is clearly in a bearish mode with its long term support level broken. It is also now even further over extended. The 600 pip gap between monthly and daily pivot has only been exceeded once in the last 12 months (830 in Sept). The daily pivot was untested yesterday and its unusual, if not impossible, for that to happen on consecutive days. We have a heavy news day and the market may well wait for news to confirm a direction.

It’s interesting to note for future years that the over extension maybe seasonal with this year’s 600 pip Monthly to Daily pivot gap following  540 in this week in 2011, 970 in 2010 and 790 in 2009.

The Day Ahead

For the chart http://clip2net.com/clip/m0/1337829276-clip-46kb.png

Short entries need to be of our normal high quality with break and retest of a short term trendline on the 30 minute chart is the entry I am looking for. The break and retest is important to us as that ensures we have a lower low and lower high on entry. I will cover stop losses, targets etc  in detail in coming posts but for now, note we need tight stop losses, and an early Take profit 1 to get the trade to break even quicky in these market conditions.

My long entry would require a break and retest of the longer trendline above rice action. Daily pivot would be the first target.

News Today GMT

  9:30am EUR      German Flash Manufacturing PMI            47.1       46.2

10:00am EUR      German Ifo Business Climate                      109.4     109.9

2:30pm USD       Core Durable Goods Orders m/m             1.1%      -0.8%

2:30pm USD       Unemployment Claims                                  372K      370K

3:00pm EUR        ECB President Draghi Speaks

All the best

PLB 

Always trade on a demo account until you have proven your plan works, always have a plan, always stick to it... Trading carries risk and you should not trade money you can not afford to lose.

Recommended Sites

Here are some websites/resources I recommend:

DailyFX Forum

Forex Blogs on AshrafLaidi.com

Rob Colville Trading - market commentary and analysis