Russell 2000: Harbinger of Armageddon

Hmmm. Pretty sure I published this, but it isn’t posted. Trades at bottom are closed in profit at this point….

Yes, one of the four horsemen depicted in Revelation goes by the name of Russell.

Been a few. Think I’ll get up in the middle of the night to check in on my trades, go out under the Perseids meteor shower.

Meanwhile, thought I’d throw this up:

Ominous, no? The worst-case scenario would disappoint more than a few people. Likely? I think not…BUT…. Back to the horizontal line is more than enough to shake out the weak hands.

Short GBP/JPY @ 158.26, EUR/JPY @ 135.72, CAD/JPY @ 86.81, Long USD/CAD @ 1.1017.

More later.

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

Overnight Trades for 07/17/2009 Closed

Something of a mixed bag last night what with the lackluster price action, but positive nonetheless.

Per the usual, all trades time stopped in the vicinity of the NY session open.

2333 Short GBP/JPY @ 153.50; closed 0705 @ 152.68: +82

2334 Short CAD/JPY @ 83.79; closed 0705 @ 83.94: -15

2336 Short EUR/USD @ 1.4122; closed 0705 @ 140.92: +30

2357 Short EUR/JPY @ 132.13; closed 0705 @ 132.17: -4

Note: I just realized WP did (does) not switch over to EDT automatically, so all posts to this point since the seasonal switch-over occurred an hour later than indicated.  I don’t think the change in settings now applies retroactively.

Shorts for the Evening

Entering Short:

GBP/JPY @ 153.50

CAD/JPY @ 83.7

EUR/USD @ 1.4122

The gist of the technical justification for the short side on EUR/USD is in the post just previous.

G/J and C/J are exhibiting Descending Triangles at the top what I’m – currently – interpreting as a corrective throwback on a larger TF.  Looking at E/J, also….

More on why later.  Collapsing now.

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.

Overnight Trades for 07/14/2009 Closed

Entries for these trades were listed over at Twitter in the middle of the night.  Here’s how things shook out:

Short:

EUR/GBP @ .8594; closed at .8576

EUR/AUD @ 1.7777; closed at 1.7686 (entry not given on Twitter; entered in two legs at 0406, 0417 ET)

Long:

GBP/JPY @ 151.04; closed at 152.04

CAD/JPY @ 80.68; closed at 81.38

AUD/JPY @ 72.87; TP @ 73.87 at 0752 ET

AUD/USD @ .7837; TP @ .7887 at 0716 ET

GBP/CHF @ 1.7629; closed at 1.7676

GBP/USD @ 1.6243; closed at 1.6326

EUR/JPY @ 130.26; closed at 130.37 (lost ground here while asleep on ZEW disappointment)
Except as noted, I closed all trades just after NY open at 0807 ET.   Will reevaluate and reenter, probably after US equity session opens.

The Week in Review

“Week In Review” – I remember having very good intentions about this at the beginning of the year. My adherence to that commitment has been…minimal. So, in the spirit of all those reviews I did not blog in the past, here we go:

07.05.09 – 07.10.09

A few statistics:

• Trades: 100 trades; 50 round trips (round number not by design)
• Pairs traded (in order of frequency): GBP/JPY, EUR/JPY, GBP/USD, CAD/JPY, GBP/CHF, EUR/GBP, EUR/USD
• Win ratio: 37/50; or 74%
• Max. drawdown occurrence: 3.4%: caused by 3 simultaneous trades that stopped out as a basket with adverse GBP exposure (GBP/JPY, GBP/USD, GBP/CHF)
• Net return on equity: 23.1%

Stream-of-consciousness reflection:

Unreality? I’d like to succumb to the idea that too much went right too easily for the week to be much more than fluke. But these weeks do happen, and I can’t pin all or most of what goes well on happenstance and the stars aligning. When just about everything goes off well and you’ve been trading for years, not weeks or months, you know whether it was you or not: this week it would be a lie to say it was not me. Most trades went into profit without looking back, and losses were cut on those that didn’t with a dispassionate acquiescence rather than lots of torturous back-and-forth. Diet, sleep, contentment at home and a feeling of accomplishment in other areas is very helpful.

Maturity. It’s easy to speak of maturation as a trader in a great week. But, I don’t mean adherence to methodology, trading without emotional dissonance, etc. What I do mean: accepted losses without regret. Willingness to take profits without giving in to my nagging compulsion to achieve round numbers (I’ll take 98 pips off the table rather than waiting against my good analytical judgment for 100 pips). Patiently trust the legitimacy of my own analysis, waiting for the market to come to my orders rather than rushing out to meet it. These are behaviors and attitudes with which I struggle. Positive momentum early on can derail or reinforce: in this case, it was the latter. Now, if I can learn to reiterate those psychological habits every week, rather than almost randomly, that would constitute significant progress.

Singularity of analysis? I have deep respect for a handful of trader-bloggers and analysts online. TLT comes to mind, especially after his recent interview. Actually, no: the interview has nothing to do with it (just a plug); but his intelligence, holistic approach to the markets and level of organization do. However, our trading styles are very dissimilar. Then, Kathy Lien comes to mind as a trader-analyst: very insightful and trades (actually trades!) well as a result of it.

I find them (just two examples) helpful to read because they do what I do but nothing like the way that I do it. Ideas and analysis that are too close only muddy the waters; but where ideas and analysis are in the same universe, I find they edify. And that’s good, because I’ve always worked best where there’s camaraderie and autonomy in equal measure. So, I ignore just about everything that goes on around me (this goes back to that primary v. secondary source distinction I made here).

Off to enjoy what remains of the weekend outside with my family. Check me out on Twitter in the meantime….

Ascending Broadening Wedge(s)

Sounds like lifting a slice of pizza toward your mouth crust first. Right?

JPY crosses pulled off a significant correction last night, temporarily mitigating downward momentum by negating 100% of the price activity featured in the previous 24 hours. Europe brought about a resumption of the downtrend, peeling back the correction by retracing those moves significantly (50% USD/JPY, CAD/JPY; 76.4% GBP/JPY, EUR/JPY).

The correction and subsequent retracement have created ascending broadening wedges on both GBP/JPY and EUR/JPY:

GBP/JPY: Ascending Broadening Wedge

EUR/JPY: Ascending Broadening Wedge

This type of wedge sets up the expectation of a downside breakout: when a break through the lower ascending trendline has occurred, particularly following a partial rise (an upward oscillation in price that does not tag the upward ascending trendline as previous touches have), the probability of a legitimate breakout is highly probable. While not the most uniform, EUR/JPY’s chart with the 0500 candle’s movement up failing followed by a return to the lower trendline is a good example.

I am short EUR/JPY from the break. Other JPY crosses are under review. My concern in each of these cases is the awkward expectation of a breakout around typical levels of fibonacci support, particularly 76.4% and with local horizontal support pegged close beneath. In short, the support posed at these levels enhances the probability of failure, clouding the picture a bit.

EUR/USD looks poised for further downside as well, but with a 50 bp cut assumed as the ECB rate decision approaches tomorrow, EUR may firm up later today. As it stands, I’d expect a return to 130 or below in the interim.

Jimmy Eat World: Clarity

Because I’m sitting on my hands positionless after hitting buy limits on GBP/JPY, EUR/JPY and CAD/JPY yesterday morning, how about a non-trading-related smackerel (that’s from my daughter’s Winnie the Pooh book)?

Jimmy Eat World will be embarking on a 10 city tour to commemorate the 10th anniversary of the release of Clarity. Released in early 1999 when the band lived and moved in relative pre-In the Middle obscurity, Clarity’s dynamic and driven emo-core-inflected pop undoubtedly stands as the band’s creative high-water mark.

Definitely in my top…oh, 25 albums. Don’t ask what the other 24 are.

That’s “emo”, by the way, without all the mascara, pubescent scenesters/tresses, emaciated upper-middle class crying man-children roving about with effeminate posture smoking solely to give their hands something to do; and none of those cookie-cutter carmelized, castrati-inspired multi-tracked harmonies on every stinking chorus. Middle-era indie-emo, if you will. Whatever that means. I’m no music gestapo, however, so that taxonomy may be incorrect; which matters not.

JEW departed significantly from the sound of Clarity only to break out with mainstream success on their next album (eponymously-titled, fair but mediocre by comparison). The noteworthy thing about this tour, though, is that whatever else is played, they will be performing Clarity straight through en toto from slow-burning opener Table for Glasses to the epic 16-minute dream-pop closer Goodbye Sky Harbor.

Here’s the second track off the album, Lucky Denver Mint (cheesy video with sub-par sound, but more than makes up for that with some ultimate frisbee):

You can listen to snippets on iTunes or any of an array of sites like this. Ticket pre-sale begins today. May have to make it up Chicago way for this, even if that means being on Lake Michigan in February.