May 2 - May 7

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May 2 - May 7

Post  Levaz on Sun May 02, 2010 4:43 pm

GBPUSD short at 1.5375 SL 1.5425 TP 1.5100

We are going to change how we issue the signals. Dont worry, it just means that we are going to try and target much higher pips per trade.

As you can see above, our TP target is approx. 275 pips.

While the short term shows that the GBP is recoering against the USD, we feel that there may a slight turn around to test the bottom before it continues. Unless of course, we are at the top of a retrace against the larger downtrend, and now it is continuing down further. It is hard to say at this time, until we find out what happens when the lows are tested.

That is another reason, we place our entry very close to the last high. This is to minimize our losses in case our indicators are a bit too sensitive to the market data. We have recently (this weekend - ha ha) re-calibrated our indicators and formula to reflect current market volatility and as a result they have become a tad sensitive to market cues.

Ideally, our optimum short entry should be at 1.5283, but the stop loss setting would be the same as in the recommended trade above. which then place our potential exposure at 140 pips, which is rather large considering that the GBP has only to gain against the Euro.

So, please use your discretion in entering the trade at the lower entry point.
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Re: May 2 - May 7

Post  Levaz on Mon May 03, 2010 7:12 pm

Sadly, the GBP did not reach our entry point, it was a nice trade set up though.
Please cancel that order, as we fear that if the GBP does recover, it make take out our SL as well.

While we would have preferred to short the following pair at a much higher level, which we missed again yesterday. We are going to take a little higher risk trade in order not to miss out on a possibly good opportunity.

EURUSD short at 1.3220 SL 1.3320 TP 1.3020

The risks are that we are entering a short trade at the lower level of the established range.
However, also note that the Euro did not manage to recoup on the announcement of the bail out package. We also have resistance (previous support level) at 1.3260-1.3270.

The expected daily range for this pair is 1.3241 - 1.3111, and we expect the lower end to be seriously challenged and protected. There is an options expiry at 1.3100 - so this should be fun.

Levaz

PS Should the 1.3100 level fall, then we may either move our TP to 1.2900 if there is a strong move south or we will collect as indicated above and then re-enter at a higher level. We will keep you advised as we see the market progresses.
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Re: May 2 - May 7

Post  Levaz on Mon May 03, 2010 7:27 pm

We have another potential GBPUSD short, but this will be a duplicate of the EURUSD short. So, please adjust your entry size so as not to over-expose your accounts.

GBPUSD short at 1.5300 SL 1.5350 TP 1.5150

Lock in at least 20 - 40 pips of profit as soon as you feel comfortable (say after trade is 70 - 100 pips in profit), explanation below.

The trade contradicts our long term perspective that the GBP will rise against the USD, more from Euro weakness on the ERUGBP front rather than GBP strength. However, our indicators show us that there is a retrace occurring ( weak as it appears), but the market may want to squeeze out the weaker longs positions and also set themselves up for a better long entry point. This may be also due to the possibility of a hung parliament in the upcoming elections. We will see a firm direction once elections have taken place.

Levaz

PS Note that we have kept a very close SL level, this is to deter any influences from the GBPJPY cross, which has no current opposition as the Japanese markets are closed for Golden week.

PPS The other obvious entry point for this short is 1.5250 with the above SL & TP settings


Last edited by Levaz on Mon May 03, 2010 7:39 pm; edited 1 time in total
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Re: May 2 - May 7

Post  Levaz on Mon May 03, 2010 7:36 pm

There is a lot of interest also in the USDJPY - it is very close to the recent peaks, and our indicators show that it should break through these levels shortly.

In anticipation, and based on very strong macro-economic news coming from the US, we are going long on this pair, but only AFTER it breaks through the barrier.

USDJPY long at 95.00 SL 94.00 TP 97.75

This is the exact opposite trade of the EURUSD trade above, so you may want to watch from the sidelines. All Yen crosses are at recent highs (except Euro of course), and look like they will break these barriers. Note that there are interests that will want these barriers protected, so there is bound to be volatility.

I believe the RBA announcement of raising the interest rates will help all Yen crosses with a nice boost.

Let us see how this one pans out.

Levaz
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Re: May 2 - May 7

Post  Levaz on Tue May 04, 2010 7:07 pm

The market have moved too far for us to take a safe position. There is bound to be some retrace as soon as Japan comes back this week. There is also some indication that the conservatives may just get enough votes to form a majority government in UK. The default crisis in Europe is still giving the market jitters which is why the USD gained against all majors, except the JPY.
Incredibly, even though the RBA (Central Bank of Australia) raised their rated by 25 basis points (0.25%) the AUD/USD dropped like a rock instead of doing the expected climb higher.

As long as the market theme is risk aversion, you are relatively safe to long any USD pair (short eurusd gbpusd, audusd, nzdusd, etc., long usdchf, usdcad) and take 20 - 50 pips from reasonable points of support/resistance as the case may be.

So we have several things going on in the markets, and it is best to stay out until the dust settles.
NFP report is out this Friday, Germany has elections on the 9th and UK on the 19th. Greek debt is due, I believe, within this period too - I forget the exact date. Point to note is that the markets do not believe this "band-aid" is enough for Greece NOT to default eventually.
Another issue is that now that the Greek government has got the money, they may now be inclined to please the electorate and not keep their austerity measures just to regain their grip on power!! Meanwhile, Chancellor Merkel is more likely than not to lose her post due to this debacle.

Too much turmoil for now.

Levaz

PS be very careful with those trades and keep a tight stop loss, just in case the market decides that they have had enough and want to resume the trends against the USD.
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Re: May 2 - May 7

Post  Levaz on Wed May 05, 2010 6:56 pm

Under current market conditions, technical analysis does not carry much weight. Market is in sheer panic now, and it is obvious that the fear is spreading. Portugal is more likely to be downgraded than not. The ECB has a few days to make some very strong decisions and changes to their charter if they are to salvage the situation and buying some time to sort matters out.

That said, we have the following:

EURUSD short at 1.2850 (or at current levels if you are so apt) SL 1.2950 TP 1.2500

While I felt that there was bound to be a retrace, from the looks of the Yen crosses, which is now the safe haven along with the USD, it appears that there will be more downside first.

I would suggest that you lock in 10 - 20 pips as soon as you can and then let the trade play itself out. The euro has tried to make a come back of sorts in late afternoon trading, but it seemed to be capped at 1.2825 or thereabouts.

Levaz
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Re: May 2 - May 7

Post  Levaz on Wed May 05, 2010 8:37 pm

Just saw a BUY recommendation on dailyfx.com EURUSD at 1.2890 - so be aware as our stop is very close to this area. And I believe FXCM has a lot of followers - so "real money", as it is called, may affect our trade if it does reach that high.
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Re: May 2 - May 7

Post  Levaz on Thu May 06, 2010 7:08 pm

We hope that you guys got in on the great Euro trade from yesterday. If you still have the trade open, I would suggest that you lock in 20 - 50 pips and let it ride. Or you can close it as soon as you are happy with the profit level.

There is reason to believe that tomorrow will be intervention day. So, if you have anything to do, do it in Asian trading session. Just to bring you up to speed, the Dow Jones lost almost 1000 points between 2pm and 3pm, and then recovered about 650 pips for a total loss of 350 pips from the start.

Apparently, an error occurred in the NASDAQ exchange with a short E-mini order, the request was for USD 15 Million but was entered as USD 15 Billion. With the low liquidity due to prevailing crisis in Europe, the market bolted. This started with Procter and Gamble losing 10% on the NYSE, which raised flag, at which time, other exchanged do not have to consult NYSE to get the consolidated pricing. Apparently, NASDAQ printed a wrong price of USD 39.70 on the P&G scrip where it should have been around 56.00 and that meant that the Index fell approx. 172 points, and that just blew up within seconds. Everyone started selling everything, which then reduced the already limited liquidity in the markets, and increased spreads by almost 60 pips in currency markets. And you all know how that ended.

This is the information that we have gathered from various sources - the investigation is still on to get to the bottom of this "Event".

What is the point - Typically, during tough market conditions, as we are in currently, governments will intervene through their bigger banks to try and calm the markets. This can create additional volatility in already freaked out markets.

So be very careful with your trading. We choose to stay out of the markets, as tomorrow is NFP Friday in addition to the anticipated maneuvering by outside forces.

Levaz
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Re: May 2 - May 7

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