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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 Tuesday the 24th to Wednesday the 25th of August 2010.
The swing trade for yesterday’s Asian-London-U.S. session to BUY the EUR/USD in the 1.2600-1.2610 area with a STOP @ 1.2574 and a TARGET of 1.2678 gave over 70 PIPS depending on how the trade was managed.
For those subscribers in the Live Forex Trading Room, audio broadcasts are now given for detailed rational and description/expectations for the day’s trading. Just right-click on Mr. Green’s name icon (with the microphone) and click the “Listen To This Users Voice Chat Broadcast” tab. It will start at 1:30 AM EST, technology willing. Note: So far it seems Firefox works best instead of Internet Explorer; something to keep in consideration when logging in.
Well today the weak U.S. economic data is not prompting a flight-to-the-dollar safety, it is causing dollar selling, because it’s becoming crystal clear to those still not drunk from last night’s sangria, that blatant, flagrant, unrestrained money printing in the form of QE II (Quantitative Easing II) is now a done deal. No more baby steps or holding the balance sheet steady. There is no excuse for the U.S. Fed to have an unclear picture of the U.S. economy’s direction anymore…it is going in the crapper. People now realize the only tool the U.S. authorities/FED have left at its disposal is to “print money like no tomorrow”; and although we are still looking at short term continuation buying in the USD into the 84-85 area were we would look to scale in positions for another reversal heading into September, achieving that final level could be in doubt. 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 now in play with an indecision candlestick bar at the 50-day moving average; expect chop here. The start of another leg-up in the USD still looks likely taking it through the 83.4 area as consolidations (the 82-83 range in the USDX) often appear in the middle of the move and then a quick move to the 84-85 area is expected before the Labor Day Weekend in 7 trading days. In addition, the USDX has broken out of the declining trend channel (from the June 7th high of 88.71 to the August 5th low of 80.08). This can be seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
The advancing action in the USD can also be confirmed against the declining action in the EUR as mirror images of each other and the EUR has started another leg down, undercutting the 50-day moving average and now look to the 124 to 126 area as the next targets. The EUR chart can be seen here http://www.stockcharts.com/charts/gallery.html?$XEU. It is interesting to note that on a relative strength basis, just like the prior EUR advance that 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 did not reached its 200-day M.A. before reversing while the USD had tested its 200-day moving average), the EUR broke its 50-day M.A. to the downside while the USD has yet to break through its 50-day M.A. 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 continues with a pop above the recent consolidation range and the long bias continues as the 50-day/200-day M.A. are aligned and confirming an uptrend, as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.
The GBP is still hanging on the 200/50 day moving average cliff, as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP, and the expected bounce is looking less likely given thin summer trade and the developing 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, and now a move to the 153 area is now expected in the short term but expect decent chop as that level is reached should you decide to trade it.
The main report that could factor in today’s trading session is the US Durable Goods Orders to be released at 8:30am EST, Wed. Aug. 25, 2010.Traders should be aware of key daily and weekly retracement levels, especially given the thin summer trade.
The “Monster Trade” initiation. 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.
About Scaling In
Scaling in simply means breaking up the initial entry position into multiple parts and deploying them at selected intervals, instead of firing the entire trade magazine all at once. The only reason we might resort to scaling is if we have good reason to believe our expected support zone may have become obsolete.
We usually take an initial position in our expected support zone with a fairly tight stop. Obviously if we get stopped, we were early to the trade. Early is just another word for “wrong.” If stopped, we reassess and adapt to the new market reality. If we were not early, and our position shows us that we are right, then we add to that position once the trade has managed to “prove” itself by advancing out of the support zone box, raising our trailing/trading stop in the process. The two or more portions make up a full position. When we speak of scaling, it means we have become willing to break up the trade entry into two or more parts, with the first part at the very top of the expected support box and the second part within it. Rarely will we ever take a new position outside our expected support box.
There is no swing trade for today’s Asian-London-U.S. session.
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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