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.

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!

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.

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.

The Dropsonde Trade

At some indeterminate point in the past after attaining some experience, common sense and a desire for balance, I made up my mind to a) limit my screen time, b) acknowledge and accept there are moves in the market I will not catch, and c) there are sensible and insensible times during the trading day to enter trades.  These three decisions go together because the desire to the widest swath of pips possible (which B addresses), usually involves entering trades at both sensible and insensible times (C), which means screen time is really limited only by the weekend.

Good resolutions: better trades, less time spent staring aimlessly at glacial chart movement, less trading due to reasons other than high probability, edge-leveraged opportunities (like boredom).  Occasionally, I dip my toe in those insensible times referred to in C to check in on them.  Somehow the erratic, barely perceptible level of movement isn’t apparent just by observing the chart in this process: no, I (needless, let me stress) send in a dropsonde trade, or two (or four) for some empirical corroboration of what my eyes are telling me.

Today was one such day: and true to form, more often than not I regret what comes about and find myself thinking over the eternal verities that are A, B, and C above.

I threw these out on Twitter, but:

USD/CAD, GBP/JPY, EUR/JPY, GBP/USD, opened ~ 1830 ET today.  In profit (about 2%) for a period, but with the time elapsed over a short drive that advantage was erased, leaving me -12, -21, -30, -5 when I closed the trades manually a bit ago, marveling at my own intransigence and lack of reflexivity.

And this is why I need no scheduled reminder of my own fallibility as a trader after an amazing run-up: I know I’ll lunge off into a silly frivolity that is more-or-less inconsequential, but serves no purpose and violates lessons I’ve already learned.

The Dollar Bottom

With the exception of very shallow improvement against two comdolls (AUD/USD and USD/CAD), probably because of resilience induced by commodity prices, the dollar has rallied across the board for three weeks now. Every market speculator and their grandmother knows it, too (and to think only a few years back we were without 24 hour financial news). Except for some uber-economically-savvy Europeans who derive an elitist attitude from the appreciation of their currency (need I remind the Germans of the Papiermark?), everyone’s pretty excitable over change in course, now clocking in around 700 pips on the EUR/USD. The question on everyone’s mind (and if you’re on CNBC, emitting from your make-up-dabbed maw every 47 seconds, amidst babble about corporate earnings due at the time and the FOMC’s last rate decision): how far will it go?

If Trichet and Co. go dovish or we get into talk of rate cuts and a rate cuts themselves, this corrective move could really dig in its heels. This is definitely a time to practice vigilance over anything emitting from the ECB in the way of speeches, etc.

Now: the daily chart puts this moving in a falling wedge from April 15 or so; is a continuation pattern evolving? A downward move of similar duration (well, thus far) that occurred back in November/December that from 1.49 to 1.43 comes to mind as a precedent. We know what happened with that dollar rally (splat), but the ECB was operating under different assumptions (US-EU economic decoupling then, perhaps not so much now) then. So, while I see a continuation pattern the making here, I’m not as sold on it now as I was then.

Any other reasons? A couple near-term that are coming about tonight: The 50% fibonnaci fan from 144.15 to the recent high above 160, currently at 153.17 is being toyed with; but still, broken. Pair that with a break of the fib support @ 153.65 from early March (revisited on 05/01, but broken on 05/06) and you’ve got a significant breach. Can it hold? That’s what we’ll find out, beginning with Frankfurt’s open in 11 minutes.

Except I’m going to bed, so enjoy the fireworks without me.

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….