GBP/USD: Descending Triangle

A very clear descending triangle is set up on GBP/USD. A downside break here would constitute a reversal and add up to drop to 162.60ish in the vicinity of the ascending trendline underway from the March low on.

GBP/USD: Descending Triangle

Watching and waiting for materialization. The diamonds mentioned earlier are evolving into descending triangles themselves and in one case (AUD/JPY) a symmetrical triangle. This leads me to retain a bearish bias, considering a short on the typical JPY basket I trade (GBP/JPY, EUR/JPY, CAD/JPY, AUD/JPY, NZD/JPY) and GBP/USD.

Diamond Patterns on USD/JPY, EUR/JPY, CAD/JPY, NZD/JPY and AUD/JPY

Diamond patterns setting up on five of the six XXX/JPY patterns I trade with regularity (the exception in this case: GBP/JPY). Typically these resolve in a bearish reversal, and in most cases a bearish setup (H&S on USD/JPY, potential double top on the others) appeared to be in the offing already. Monitoring these closely to see how convincingly the case is built for the short side once volume upticks with Tokyo coming online.

Diamonds: EUR/JPY & NZD/JPY

Diamonds: USD/JPY & CAD/JPY

Diamond: AUD/JPY

Yesterday’s Trades Today; Today’s Trades…well….

Keeping good on this morning’s promise: the following trades were entered just prior to 2130 ET last evening, time stopped at just before 0730 this morning.

Long:

AUD/USD: .7849; TP @ .7889: +40

AUD/JPY 74.38; closed @ 74.72: +36

EUR/AUD 1.7576; closed @ 1.7601: -25

GBP/JPY 152.76; closed @ 153.27: +51

CAD/JPY 82.45; closed @ 82.71: +26

EUR/JPY: 130.75; closed @ 131.51: +76

Short:

USD/CAD 1.1338; closed @ 1.1309: +29

.

What else?

Today’s timeline:

0726: Long GBP/JPY @ 153.31.  Closed at 0853 @ 153.73: +42

0731: Long GBP/CHF @ 1.7704.  Closed at 0853 @ 1.7701: -3

0732: Short EUR/GBP @.8578. Closed at 0853 @ .8567: +11

0752: Long CAD/JPY @ 82.95.  Closed at 0853 @ 83.13: +17

0859: Long GBP/JPY @ 153.77.  Closed at 1023 @ 154.46: +69

0909: Long GBP/USD @ 1.6463.  Closed at 1023 @ 1.6447: -16

1145 Long GBP/JPY @ 154.32.  Closed at 1347 @ 155.09: +77

1251 Long EUR/JPY @ 133.07.  Closed at 1347 @ 133.32: +25

1406 Long GBP/JPY @ 155.04.  Closed at 1609 @ 154.86: -18 (time stop after 1600)

1406 Long GBP/USD @ 1.6432.  Closed at 1609 @ 1.6422: -10 (time stop after 1600)

2207 Short GBP/JPY @ 154.35.  Open.

2208 Short EUR/JPY @ 132.45  Open.

2209 Short CAD/JPY @ 84.07 Open.

Yen Crosses In Focus Overnight

GBP/JPY backstroked downstream without much hesitation all day today, meeting and exceeding the short-term targets around the 205.50 and 205.00 levels mentioned above. Extending to 204.24, it’s now hanging out in the 204.50 area, where I’ve got +200 locked in 20 pips away, which I may back up a bit at the Tokyo open to give some line. Further downside in the works for our dear Guppy? My initial signal holds during this mild pullback – now to hang on to the trade while we weather the oversold-choppy lull. Next stop 203.92, where I plan to reduce the position by half. We’ll see if Tokyo has other plans.

Elsewhere, EUR/GBP is exactly where I opened it: -2 pips on the spread, but things will be heading up. Patience pays great dividends, on this pair especially. I’m also eyeing a short entry on AUD/USD, but nothing actionable coalescing there until I see a break of .9395.

What else in SA1? A GBP/CHF short @ 206.11 opened @ 1719 ET: +5 at the moment…. Also, a 1/4 USD/JPY short taken @ 104.68 and a 1/4 AUD/JPY short taken @ 98.61, both down a few pips. Looking at CAD/JPY, as well. The “1/4″ means I have an intent to scale in, and that my present position sizing represents 1/4 of what my money management parameters allow me to commit. Modest positions I may add to, then.

Aside from some releases more of a domestic concern to the Japanese, their economic/monetary docket is passing through a dry spell. That said, I don’t expect much volatility overnight, but do maintain a tentatively bearish approach near-term on the Yen crosses mentioned. I’ll report back if that conclusion shifts positive.

In Review: Weeks 15-18

Never mind daily trading activity; I have been skipping out on logging weekly trading activity…at any level of detail. To atone for the omission and take a moment to look over how Weeks 15-18 have gone, I’ve lifted the following from my records.

Note: because of varying position sizes across trades, I’ve modified the pip totals to be expressed in 1 standard lot values (e.g. where I’ve traded 5 mini lots, I’ve halved the pip total for that trade; where I’ve traded 2 standard lots, I’ve doubled the pip total; traded 1 standard lot, left total unchanged, etc.).

USD/CHF: +197; 5 W/0 L
EUR/CHF: -16; 0 W/ 1 L
GBP/CHF: +184; 7 W/3 L
CAD/JPY: -105; 1 W/4 L
EUR/JPY: -84; 4 W/4 L
GBP/JPY: +816; 14 W/7 L
AUD/JPY: +255; 3 W/1 L
USD/JPY: +213; 9 W/0 L
EUR/AUD: -127; 2 W/4 L
EUR/GBP: +97; 2 W/0 L
EUR/USD: +487; 5 W/2 L
AUD/USD: +324; 3 W/0 L
NZD/USD: +218; 7 W/2 L
GBP/USD: +192; 3 W/0 L
EUR/CAD: +139; 3 W/0 L
USD/CAD: -235; 3 W/4 L

Even though USD/CAD and I aren’t friends at the moment, along with Week 14 with +393 pips, 12 W/7 L, April (well, the last 30 trading days, including 03/30-03/31 and 05/01-05/02) was an incredibly good month:

• 2948 pips
• 122 trades on 16 pairs: 83 Wins; 32 Losses
• Win %: 68.03%

Weeks 17 and 18 went particularly well, with close to 20% of net pips earned in the month coming from last week’s GBP/JPY trades alone. For whatever reason, EUR/AUD continues to be a problematic pair (still haven’t quite figured this out; and no, it isn’t the spread), while USD/CAD’s choppy range-bound action chewed me up bit by bit and every time I came back asking for more. Neither market price action or personal performance on CAD/JPY is 100% correlated to what’s going on w/ the USD/CAD, but the relationship there can’t be missed; except sometimes when I defy reason and do miss it.

That took a bit longer than I thought. Until London opens….

In Review: Week 14

Because pragmatic concerns (life) mean I can’t consistently cover trades taken session-by-session (that would amount to a form of slavery, anyway) or even day-by-day and I am a bit obsessive-compulsive about symmetry and completeness (e.g. “4 out of a set of 5? Throw them away” or “29 pips profit? No, it’s 30 or 20, but not 29!” or “A millimeter to the left. No, I’m not kidding; A millimeter to the left”), I’ve decided to resign from the personal expectation of blogging trades as they occur (or as soon thereafter), and relegate journaling trade details to a once-a-week routine, numbering the weeks according to the weeks of the year (i.e. this week is week 15 out of 52); but of course I reserve the right to publish them more often if I like. Ahh…yet another exacerbated neurosis quelled.

An unusually high number of trades this week. Overtrading a bit on AUD/USD in particular led to some silly losses. Noticeably absent here is the large upside move on the Yen crosses. Several good setups came about around the London open on Tuesday, but I was a bit too late to the party (middle of the night) to act on them and so I passed when I saw them in the morning here. Much to my dismay as the 198.50 trigger on GBP/JPY I missed, for example, made it just above 204 before I had a read on a sell there. All that aside, a great week.

Day 1 – Sunday, 03/30/08:
SHT AUD/USD @ .9147. Closed @ .9146: +1
SHT AUD/JPY @ 91.47. Closed @ 91.12: +35
SHT GBP/JPY @ 199.52. Closed @ 198.11: +141

Pips: +177

Day 3 – Tuesday, 04/01/08
S EUR/USD @ 157.09. Closed @ 156.58: +51
L USD/CHF @ 1.0012. Closed @ 1.0032: +20.
S EUR/CAD @ 1.6010. Stopped out @ 160.55: -45
S EUR/AUD @ 1.7163. Stopped out @ 172.09: -46
B GBP/CHF @ 199.74. Closed @ 2.0039: +65
S EUR/CAD @ 159.58. Stopped out @ 159.43: +15
S EUR/AUD @ 171.84. Stopped out @ B/E: +0

Pips: +60

Day 4 – Wednesday, 04/02/08
S USD/CAD @ 1.0166. Closed @ 1.0066 (on 4/03/08): +100
S EUR/AUD @ 1.7113. Stopped out @ 1.7177: -64
S EUR/USD @ 1.5667. Closed @ 1.5552: +115
S AUD/USD @ .9139. Stopped out @ .9171: -32
S EUR/AUD @ 1.7134. Closed @ 1.7008: +126
S GBP/USD @ 1.9817 . Stopped out @ 1.9875: -58
S AUD/USD @ .9119. Stopped out @ .9149: -30

Pips: +157

Day 5 – Thursday, 04/03/08
B GBP/USD @ 1.9941. Closed @ 199.53: +12
B EUR/USD @ 1.5658. Closed @ 1.5663: +5
S AUD/USD @ .9109. Closed @ .9127: -18

(flattened positions ahead of NFP)

Pips: -1

Day 6 – Friday, 04/04/08

NFP – no trades

Cumulative Pips for Week 15: +393

Wins: 12
Losses: 7

Win %: 63.2%

The Weekend, Trades

This past weekend featured a non-restful trip out-of-town for which I was somewhat unwillingly co-opted, which incidentally compounded with several preceding similarly event-filled weekends.

Common features to each:

• 1) driving hundreds of miles,
• 2) spending $40 a tank a weekend to drive those miles,
• 3) staying as a guest at the home of another (i.e. living out of a suitcase, again, and again)
• 4) an increasingly paranoid sense that some mischievous – malevolent? – unseen intelligence is conspiring with family members to systematically nullify any period exceeding 30 seconds for which I am heretofore under no obligation to do anything whatever, for which there is always recourse to some vague, unassailable reason in the shadow of which I can only acquiesce.

As an addendum to no. 3, further note the ubiquitous (yes, in all places) presence of cat hair lilting about breezily through the air where we stayed this past weekend – lilting breezily, that is, except for those pieces that alighted on and weaved themselves inextricably through the bristles of my (lapse of higher brain function) mistakenly exposed toothbrush. Ask me if I made that mistake only once. For some context, this is a house featuring only two cats, but a) not a few plush real cat doppelgangers (the appearance of a real cat without the overflowing litter box or added cost is the presumed benefit) stationed on furniture (or nestled together in front of the fireplace!) in different rooms, b) cat blankets, pillows, portraits, refrigerator magnets, statues and other assorted cat-worshipping artifacts, c) two cups (not one – no, each cat will have its own satellite hydration station) of water on either side of an upstairs bathroom sink (nearby lay several pair of cat earrings) for leisurely lapping in addition to the bowl/dispenser in the kitchen and d) air quality characterized by a proportion of dander to breathable oxygen on a level of 900,000 parts per million, in turn yielding the equivalent of a feline skin cell-induced sinus infection each morning.

A long-haired cat at home apparently does nothing to adjust the tolerance level required, probably because, while greatly loved, our cat remains on the cat side of a wide biological gulf created by God via speciation that I refuse to span by according our cat the place – especially on the bathroom sink – reserved for a human. Too much anthropomorphisis-happy Hello, Kitty is what’s wrong with this world today.

I could go on, but tales of weekend travails with cat-loving in-laws quickly get long in the tooth. Tonight I woke up (spontaneously – it seems the old circadian rhythm is dedicated even when my conscious mind is not) for the Frankfurt open to see how a few pairs I was monitoring were faring, put on a – rare trade – on Fiber and a correlated Swissie trade. Here are those trades with the others I’ve taken since Friday morning:

Friday:
L GBP/USD @ 1.9999. Stopped out @ 1.9950: -49

Sunday (closed Monday morning):
SHT AUD/USD @ .9147. Closed @ .9146: +1
SHT AUD/JPY @ 91.47. Closed @ 91.12: +35
SHT GBP/JPY @ 199.52. Closed @ 198.11: +141

Tuesday Frankfurt/London:
SHT EUR/USD @ 157.09. Closed @ 156.58: +51
L USD/CHF @ 1.0012. Closed @ 1.0032: +20.

03/26/08: Tokyo

As it turns out, I was onto something with my trades earlier. I wept bitterly at my desk today watching the decline on USD/CHF to .99. To make up for it, I poured five boxes worth of Swiss Miss hot chocolate packets into the garbage can at work today to deprive (why else?) the manufacturers – who are undoubtedly blonde-headed skipping yodelers – the opportunity to satisfy their customers. Now who got the better of whom, I ask? Yep, that’s me: always taking it to the next level with true, unabashed intensity.

I returned again today to the question of why I don’t trade EUR/USD or USD/CHF together whenever I get a signal for either, even if there is no trade called on the other. The inverse correlation is more rigid at some times than others, but where an average coefficient of -.5 or better prevails – which is much more often than not – probability works in favor of trade matches. Doesn’t this duplicate (assume identical distances) the number of pips lost when a trade is stopped out? Yes: so, win percentage is – predictably – important.

Took a short on Cable before I left the house earlier giving myself a bit too much poetic license with the charts and too little recognition of the gnawing skepticism (fundamentals-inspired) that went along with it. Selective listening sunk me -72 pips from 1.9941 to 2.0014 before stopping out.

Tonight:

1848 EDT: SHT AUD/JPY @ 91.23
2014 EDT: Stopped @ 90.78 for +45

1907 EDT: SHT GBP/JPY @ 198.82
2015 EDT: Stopped @ 198.22 for +60.