11-24-06
USDJPY
The USDJPY is down to 1.1570 this morning which is the bottom of the August to November range from the weekly chart.
The USDJPY has not been as weak as the USDCHF so the moving average is not that far away from the trading range.
I would not try to range trade the USDJPY. I want to see the 60 minute moving average catch up to the USDJPY before I trade this pair again.
11-24-06
USDCHF
I see an area of demand on the 240 minute charts between 1.2091 and 1.2065 that should slow the fall in the USDCHF.
I am playing the fall in the dollar with a long EURUSD and GBPUSD position. The safest place to enter a USDCHF short is 1.2221 which is a long way from here. There is a downtrend type move in the dollar over the last 36 hours, so a long trade in USDCHF is out of the question until the moving average has a chance to catch up.
11-24-06
GBPUSD
The GBPUSD is trading over 1.9300 this morning after a huge move. Move the stop loss to 1.9259 on the last contract.
11-24-06
EURUSD
I did not send out an email to everyone yesterday due to the Thanksgiving holiday. I posted a quick note on my blog to buy the pullback to 1.2943 yesterday. Here is the address for the blog so you can check it from home in the future if you wish:
http://forexsd.blogspot.com/2006/11/eurusd-11-23-06.html
There has been a huge move in the EURUSD to a high of 1.3084 this morning.
If you are long from yesterday, hold the last contract. Move the stop loss to 1.3050.
11-23-06
GBPUSD
The GBPUSD is basing between 1.9130 and 1.9150. If the GBPUSD rallies above 1.9150 and the 60 minute candle closes above 1.9150, move the stop loss on the last contract to 1.9131.
I would like to let this last contract from our entry at 1.8944 go as far as possible, so the stops are going to be wide going forward.
Have a nice Holiday,
Steve
11-23-06
EURUSD
I was planning to take today off for the holiday.
The EURUSD rallied up to the 1.2970 area. The last place that it based was at 1.2943. I would buy a pullback to 1.2943. Use a 20 pip initial stop loss. The first target is 1.2966 and the second target will be 1.2980. Move your stop loss to even after taking the first profit.
More tomorrow.
11-22-06
USDCHF
Here is a small lesson about trading using supply and demand. It is important because it distinguishes supply and demand from support and resistance. Unlike the person who trades using support and resistance, I believe that each time price visits an area of demand, the odds of
a trader looking to buy at that price are reduced. The trader who uses support like pivots or moving averages expects that support to be stronger each time the price trades there. I have heard that some traders believe that a trendline is not significant unless it is tested at least 3 times, for example. I am looking for the highest odds, lowest risk trade I can take. I will only trade the first time and possibly the second time that a price visits an area of supply or demand. If I do trade the second time it has to be a trade that is going with the short term trend. Let's look at an example.
In the email from yesterday, I mentioned trading the USDCHF long at 1.2410 and taking a partial profit near the 1.2440 area. That 1.2410 area of demand produced a small bounce up to 1.2430 the first time it was tested at around 10:00 AM Central. The second time that the USDCHF traded down to the 1.2410 area, the bounce went up to 1.2425. Each time that the USDCHF traded near the area of demand the number of willing buyers was reduced until there were only sellers left and the USDCHF traded below 1.2400. I would have only traded long at 1.2410 the first time since the short trend in the USDCHF since Friday has been down.
This morning the USDCHF is bouncing off the 1.2378 area of support. Once the last buyer buys in that area the next area of demand is near
1.2350 followed by 1.2300. I would prefer to wait until one of those areas of demand produces a bounce up to the 1.2410 area to take a short trade since the areas of demand at 1.2378 and 1.2350 have been visited once already this month.
11-22-06
USDJPY
I am listening to CNBC explain why the dollar is down this morning. I believe that the USDJPY is down because it finally came into the area of supply at 1.1822. I only wish it would have done that on Monday. If there is a retracement to the 1.1778 area, I will short it.
11-22-06
GBPUSD
The GBPUSD rally continues without any pullbacks to our trailing stop. Move the stop loss on the position to 1.8969. If the GBPUSD can rally past the 1.9026 area of supply, sell one contract and move the stop loss to 1.9020 on the last one.
11-22-06
EURUSD
It looks as if the EURUSD is going to test the 1.2900 area of supply which has stopped every rally since May, 2006. In fact, the last time the EURUSD closed above 1.2900 was in June, 2006. The range from yesterday's email was 1.2805 to 1.2830, and this morning the EURUSD has extended the range up to the 1.2865 area of supply. Along the way, the EURUSD has based near 1.2845 and 1.2825 which should be areas of breakout support to buy on pullbacks. If the EURUSD continues to rally past the 1.2865 area, 1.2865 will be another area to buy on a retracement for a move higher. At this point, I will buy a pullback to the 1.2845 area if the EURUSD retraces instead of breaking out.
11-21-06
USDJPY
The USDJPY rallied up from the 1.1758 area on Sunday, but it never quite reached the 1.1822 area to enter the short trade from yesterday's email. The high on the day was 1.1817. This will be a problem for anyone using limit orders to enter their trades. On the way higher, the USDJPY based between 1.1794 and 1.1782. This breakout area will be support on a pullback until the demand is absorbed. Since the supply at 1.1822 is so close to the demand at 1.1794, I will pass on the 1.1822 short trade for today. I will wait to short the 1.1845 area.
11-21-06
USDCHF
There was no trade entered on the USDCHF on Sunday or Monday.
The USDCHF slipped below the small area of support at 1.2430 on Monday morning and found support at 1.2402. It is basing near this area of supply at 1.2430 this evening. I will pass on trading the USDCHF until the range opens up to at least 1.2410 to 1.2485.
If you do trade that range, take a partial profit near the 1.2440 area on either a long trade from below or a short trade from above.
11-21-06
GBPUSD
On Sunday, the pullback to 1.8944 long trade was entered. The high since entry was 1.8986. It was also possible to enter this pullback trade
on Monday. Move the stop loss on the remaining position to 1.8942. and once the GBPUSD breaks past 1.8981, move the stop loss to 1.8955.
11-21-06
EURUSD
Both long trades from yesterday's email were triggered. On Sunday, the EURUSD traded down to 1.2817 and then rallied to 1.2845.
On Monday, the EURUSD pulled back to 1.2830 and again rallied to a high of 1.2851. Today, the areas of supply and demand are between 1.2805 and 1.2830. I'll pass on trading today until the range widens.
11-18-06
USDJPY
There was no trade in the email on Friday. Had we still been long, we would have use the moving average on the 15 minute chart as a trailing
stop and the last exit would have been at 1.1825. Once again, the large area of supply on the US Dollar Index daily and weekly charts is what stopped the dollar rally and forced the sell off in the dollar currencies including the USDJPY which had been the strongest.
It was not the economic data. If the sell off had been due to the release of the economic data at 7:30 AM on Friday, why did it take an hour after the release to start selling off, and why have I been able to tell you that there is a ton of supply on those charts for the last 3 emails? The areas of supply and demand are on the charts and when the price trades near an area where there are more sellers than buyers, like it did on Friday it will sell off. If you trade without knowing where these areas are, make sure you use a tight stop. Don't buy and hope.
If the USDJPY rallies from here, I'm a seller at 1.1822. My first target will be 1.1780. If it trades lower from here, the range will be 1.1758 to 1.1700 once the breakout support areas at 1.1726 and 1.1715 are absorbed. I would short the 1.1758 area the first time that the USDJPY retraces to it.
The 240 chart below shows the range in a much clearer picture.
11-18-06
USDCHF
On Friday, the area of supply I have been mentioning between 1.2500 and 1.2538 stopped the USDCHF rally in it's tracks.
Before that happened, the breakout support area at 1.2485 produced a nice bounce up to the 1.2529 level once the area of supply at 1.2500 was absorbed.
I have a problem with buying when the currency is near a large area of supply because the end result is usually what you see on the 2 charts below which is why I passed on the long trade near 1.2485 on Friday. The 240 minute chart below shows that the small breakout area between 1.2340 and 1.2332 stopped the sell off and produced a minor bounce on Friday. Once the USDCHF drops below 1.2430, it will be an area of supply with a breakdown line at 1.2430. The 1.2378 breakout support area is the next place that the USDCHF should bounce. The small range will be 1.2378 to 1.2431. You could also see another bounce up to the 1.2485 area if this small area of support at 1.2431 holds. That would be a good place to enter a short. The area of demand at 1.2431 would be the first target.
11-18-06
GBPUSD
There were no official trades in the email from Friday, but I did say you could trade the 1.8850 - 1.8901 range. Hope you did.
The areas of supply up to 1.8950 have been absorbed. There already was a breakout of the small range between 1.8944 and 1.8932 on Friday afternoon and the area of supply near 1.8966 was touched once on Friday morning. The next area of supply is between 1.8988 and 1.9026.
I will either buy the first pullback to 1.8944, or I will buy the breakout of the next range that forms up near the 1.8966 - 1.8988 supply area for a target of 1.9026.
11-19-06
EURUSD
No trades on Friday. The areas of supply between 1.2788 and 1.2840 have been absorbed and the EURUSD is basing between 1.2815 and 1.2830. The first area of supply is near 1.2865. Either the EURUSD will breakout on Sunday or Monday, or it will drift down to the 1.2814 area first.
I would trade long in either case with a first target of 1.2765 to sell one contract. Move the stop to even after the first target. If the EURUSD stalls near the 1.2865 area and falls below 1.2850, close the trade. We will buy the pullback to the 1.2830 breakout area to re-establish the long position.
