Was That It?

That was short-lived, at least as I traded it.

GBP/JPY took profit at 0337 ET @ 160.63: +100

EUR/JPY took profit at 0443 ET @ 136.29: +101

Took USD/CAD off for +11, EUR/USD for -4.

Currently appraisal of bias is still short on these pairs, with USD/CAD holding out (momentarily) at 1.0650.  Was that it for the correction?  If that’s right, what follows below will seem oddly chosen, and I’ll be looking short yet again.

Two current trades:

• Took a long on a piercing pattern (not such a good example, in retrospect) around the 1.6956 261.8% fib extension I’ve been trading around on GBP/USD at 1.5982.  Got in there at the close of the 0400 candle, but think that was a premature given the range over the past 3 hours.  Not liking my choice:

GBP/USD: Piercing Pattern, or Just a Range? Meh.

• and a long on a corrective bull flag for EUR/USD at 1.4411 that has yet to break out…likewise a bit premature on the entry.

EUR/USD: Corrective Flag, or Topping Formation?

Those trades are in progress for the moment.  Check out my Twitter (also on the sidebar ->) for more timely updates and analysis as things unfold!

Time For A Breath?

…My thinking.  $SPX has tagged and closed above 1k (yippee for now), but is in the thick of a small, formidable range bounded to the upside ~1014 (38.2% fib retracement from top to bottom).  That may mean nothing: if not, the way up is tall and thin with little to bump one’s head on until 1122 (50% retracement).  Upside resistance there on the equity side resonates with what I think are the terminal fibonacci extensions to be tagged on this move up for EUR/USD, GBP/USD and GBP/JPY: three of a small handful of pairs I monitor to evaluate sentiment.  I may be all wrong (and I’m guarding convictions with fairly tight stops), but I see some backflow out of EUR and GBP overnight, into the morning.  CPCEPI and Consumption out at 0830ET could catalyze or nullify that projections.

Trades for overnight:

USD/CAD: Long 1.0663, Stop 1.0570, TP 1.0763

GBP/JPY: Short 161.63, Stop 162.40, TP 160.64

EUR/USD: Short 1.4403, Stop 144.73, TP 1.4303

EUR/JPY Short 137.30, Stop 137.92, TP 136.29

08/03/09 Overnight Trades: GBP/USD

Last night’s long trades on GBP/JPY, GBP/USD, EUR/JPY, EUR/USD and short on USD/CAD went over well.  Each trade was based on anticipation of attaining a fibonacci extension level, building on last Friday’s substantial movement.  No time to outline each trade, but here’s a snippet, going over the GBP/USD trade.

First, a simple trade I outlined over the weekend, didn’t take for obvious reasons (entry was on 07/19), but on which the trade I did take last night was built:

And last night’s trade.  Basic 1-2-3 pattern: a measured move up, even if it’s a pretty ugly one.  Given that I wasn’t starting this until the beginning of this month, I was a little late to the party.

Picking the low on 07/29 at 1.6338 as Point 1, the swing high early the next morning at 1.6526 and then the low shortly thereafter at 164.56, the original trigger for this trade would’ve been either:

• a close above the corrective trendline at 1000 ET on 07/30 at 1.6492, which subsequently spun its wheels until, the second and more conservative entry point at
• on the close above the range of the first fibonacci study in the 0000 ET 07/31 candle at 1.6542.

With neither of those applying by Sunday night, I entered a couple pips above the 161.8% extension of the green study from the previous chart (the top dashed green line @ 1.6735) at 1.6737. Breaking above the congestion at 1.6760 (the 161.8% extension of the second green study on this chart) confirmed the entry. I then time stopped the trade to take profit this morning at 1.6868 for +131.

If one were to draw a retracement over the congestion from 1200 ET 07/31 to 0000 ET 08/03, they’d find price retraced 78.6%, from which an extension could be drawn that pegs the 161.8% level for each in the 168.50 area. The next area of interest is the 261.8% of these and the latter green study on the above chart, all falling at 1.6937-1.6954.

The trade itself is noteworthy because of the hesitancy I would otherwise have over taking an entry after a parabolic rise like the one that occurred on 07/31.

EUR/USD: Breakdown?

Enticing, Eh?  Short from 1.4235 on the pair I swore to hate.

We’ll see how this plays out: watchful for a bear trap, curl around to break above 1.43 as the alternate, adverse scenario.  Stop hanging out above 1.4280….

EUR/USD: Symmetrical Triangle

This is a symmetrical triangle perched at the top of the larger symmetrical triangle I talked over here. Featuring a downward tilt and located at the top of a region dense with upside resistance, I think probability lies with a downside break. In fact, there was a breakout on the 0800 ET 1H candle, but that has peeled back into the pattern. A great example of why setting stops to straddle a triangle breakout isn’t an infallible or even effective tactic.

EUR/USD: Triangles within Triangles

And speaking of the all pervasive H&S, there may be one in the making with the left shoulder and now head mid-yesterday already put in…neckline would be the lower ascending trendline of the larger yellow triangle.

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.

Why I Hate EUR/USD, and Where I Think It’s Going

That’s a little on the melodramatic side.  But, I do stay away from EUR/USD.

It is the most often-analyzed and highly traded pair by volume, making technically pure comprehension of its chart more difficult.  Fundamentals are interesting for their own sake, but I care little for them day-to-day and they are never decisive for a trade aside from avoiding event risk.  EUR/USD is covered heavily by pundits, analyst bloggers, talking heads on Bloomberg TV and CNBC.  I like to stay mostly clear of that ick but don’t find my way around it entirely, so the excessively-discussed and regrettably sullied EUR/USD suffers from neglect by association.

And usually I don’t like EUR/USD’s price action, probably because it doesn’t seem to have the technical insularity of some other pairs.  This is my own subjective perception, also reflecting an appetite for greater short-term volatility than EUR/USD typically experiences.  Through experience, I’ve found I have better fortune elsewhere, so I rarely lend much scrutiny to it.

Lately I’ve been following the pair, though, tracking the symmetrical triangle evolving from the beginning of June, denoted with red and green diagonal lines here.  The triangle has very good uniformity and clarity; touches are nicely spaced and the distance to the apex suggests a breakout is approaching.

EUR/USD Daily: Symmetrical Triangle

The second chart has a lot of things going on (trend line saturation point!).  The yellow horizontal lines resembling a trident are an Andrew’s Pitchfork.  Notice how price is support by the lower fork line, while the rally stops short of touching (or breaching) the median line at 1.4162.  In Pitchfork (PF) theory that usually (over-simplification, but not by much) presages a fall, which in this case would probably extend back to 1.3915, which coincides with the 50% fibonacci fan extending from the February low ~124.50 (above) and the lower ascending trend line of the triangle itself.

The upside has two major immediate barriers: 1) the .786% retracement at for the 06/03-06/15 range of 143.38 to 137.48 @ ~141.90, tagged on 07/01.  Next, 2) the top of that range itself: 143.38 .  I’m not looking for a return to these levels until another low has been put in, at least.

One other, contrary item I see is the craggy yet conspicuous inverse H&S: left shoulder at 07/06 at 138.77, head 07/08 at 138.33, and right shoulder at 138.78 on 07/10.  The neckline is drawn in white, to which you’ll find a return move in the early morning hours today.  If that pattern doesn’t fail, it targets ~142.50 as an initial price objective, which is the level of the left and right shoulder of the H&S top set in early June.

EUR/USD 3H: Pitchfork, FibRet, Inverse H&S?

Maybe, just maybe, I can persuade myself to take a position….

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….

Blogroll: Begin With the End in Mind

New on the Trading Blogroll you’ll find the candid, insightful musings and market observations of Bgin2end, a budding entrepreneur of the more traditional variety-cum-forex trader.

Recently begun on the tortuous path of active trading, Michael (as he’s otherwise known) journals not only his trades (which appear limited to EUR/USD at this stage) as he moves in and out of them but the small psychological setbacks and victories attendant to those decisions. Sharp but not overtly (overly?) analytical (search my previous posts for examples of the latter…erm, quality), emotionally transparent but not hyper-introspective, Begin With the End in Mind regularly logs steps – forward and back – along the nascent journey of an aspiring trader who I think shows the honesty, intelligence, capacity for critical self-examination and raw perseverance necessary to trading successfully.

He also share my predilection toward half-rapturously watching Rocky training montages, which, in sum, makes him among the best, most cultured and generally magnanimous people I’ve ever come across.