CORRECTION TRADE IS FOR USD/CAD
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GreenForexTrading.com
ForeX-tra Gr€€n
Hello Everyone,
In this email I am going to give you my view on the market for the Asian/London sessions in the market for today, spanning Thursday the 19th to Friday the 20th of August 2010.
There was no swing trade for yesterday’s Asian-London-U.S. session.
In light of the earlier rant this week on placing hard stops vs. applying mental stops for trading, the prior can also be said of placing exit prices to take profits. Unarguably, this is by far the better problem to have. Last Monday’s Newsletter Daily Trade in the GBP/USD missed the exit price by 3 PIPS before cratering (hope you got out with 58 PIPS instead of the expected 61. In a position trade in the Live ForeX Trading Room an exit price was missed by 1 solitary PIP before drawing down 20 PIPS and rebounding to hit the defined target and potentially frustrating those with a 20 PIP trailing stop. That was the difference between a 57 PIP profit and a 37 PIP profit. This brings me to my point of the day. HARD STOPS and EXITS PLACED WITH A BROKER SHOULD NOT BE USED BY THOSE WHO SUBSCRIBE TO THIS NEWSLETTER (unless otherwise specified by me), or for any of your personal trades. Hard stops (exits sometimes) with a broker should only be used to trade through a report affecting the currency pair that you are trading or if you must leave your monitor (to prevent you from blowing up your account), otherwise, ALL OTHER STOPS/EXITS SHOULD BE MENTAL. With over 800 subscribers in thin summer trade/Asian market conditions, just ½ that number of order entries can be seen by brokers as ripe for hunting, pooling and picking. If, for whatever reason you cannot watch the trade and must use a hard stop and/or exit with a broker, I recommend adding 5-10 PIPS to the STOP or EXIT Price. Keep in mind that this might change the risk vs. reward profile of the potential trade that you intend to undertake and you will have to weigh the viability of the trade with these new limits should you chose to use them. This is why it is explained on the website.
We are still looking for short term continuation buying in the USD into the 84-85 area were we will look to scale in positions for another reversal heading into September. The key support/resistance and weekly retrace levels in the USDX are 83.38, 84.4 and 85.4 (38.2%, 50% and 61.8% Fibonacci retraces of the prior 88.71-80.08 decline), and the 83.4 resistance level is in play with the 50-day moving average just overhead at 84.0 and an indecision bar just underneath, another leg up to these levels looks due. This can be seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
The declining action in the USD can also be confirmed against the advancing action in the EUR as mirror images of each other and the EUR looks poised to start another leg down, perhaps just undercutting the 50-day moving average to the 125 to 126 area. I expect this decline to be shallow and brief. The EUR chart can be seen here http://www.stockcharts.com/charts/gallery.html?$XEU. It is interesting to note on a relative strength basis that the EUR advance has occurred mostly on a decline of the dollar as a weighting of currencies is examined and can be shown by comparing the fact that the EUR still has not reached its 200-day M.A. before reversing while the USD had tested its 200-day moving average. This expressed weakness in the EUR will be the basis for another “Monster Trade” initiation in the future.
The JPY broke above the 200-day moving average; after bouncing hard at the lower 50-day moving average and went ballistic for a while being the anti-dollar and now looks to be in a consolidation with a long bias as the 50-day/200-day M.A. are now aligned and are now confirming an uptrend, as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.
The GBP is hanging on a cliff, as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP, and is at the 200-day MA and would be expected to bounce here if not for the expected strength of the USD and weakness of the EUR. The fundamental outlook still shows more gain for this currency. But with current USD strength, timing becomes important and remains probably the most resilient currency against USD.
Traders should be aware of key daily and weekly retracement levels, especially given the thin summer trade
The “Monster Trade” initiation. Still waiting for the EUR/USD to top out for a rebound as we will gauge sentiment as the USD flirts with recent retrace and key levels so look for this in upcoming newsletters of what we will scale into. Live Trading Room members will get first crack at these entries with more precise defined levels to minimize risk.
The is swing trade for today’s Asian-London-U.S. session is to SELL the USD/CAD @ 1.0420 with a STOP @ 1.0447 and a TARGET of 1.0347 for 70 PIPS. Beware the fake breakout and remember, the CAD CPI is due out and HARD STOPS should be used if the report is to be traded through.
That's it for today. Remember that I trade in the Live Forex Trading Room between 1am-6am Eastern Time. I will be hosting my regular 3-4 hour session and assessing and exploiting PIP opportunities as they arise.
Enjoy trading and good luck everyone!
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