$ £ € ¥
GreenForexTrading.com
ForeX forX-tra Gr€€n
Hi everyone,
In this e-mail I am going to give you my review for the month past and view on the market for the month of August, the week ahead and today, Sunday the 1st of August 2010.
REVIEW: July was a month of choppy trade with a few opportunities. Overall, sentiment is continuing to turn on the US dollar. The last week of July ended in a whimper as expected GDP weakness, while weak was greeted with a yawn giving the USD marginally lower. It was a USD breakdown month as forecast and coincided with some dismal U.S. data releases in the US market while other key currencies remained loosely range-bound or played correlation catch-up. The primary trend is expected to be down for the U.S. Dollar and Japanese Yen in the intermediate term leaving these denominated pairs as buys for the interim as a fast break move (now a continuation) is possible in the USD, but given the extent of the decline so far with the USDX at key weekly 50% retrace level at 81.5 traders should be aware of fast counter-move possibilities, especially given the thin summer trade.
MONTH OF AUGUST: Going forward sentiment has definitely turned on the U.S. Dollar …with a bit of chop in this range as key reports left a lot to be desired. The USD’s closed under our key pivot of 85.0 after a very weak bounce is now near the bottom of the range near 81.5, as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD. The all sell the USD signal would be in force if not for the expected retrace expected first. A small retrace to test prior support now turned resistance in the 81.5 area is possible but a real collapse is expected if weakness persists. At the moment as stocks were unloaded globally and low interest rate currencies such as the USD and JPY were thought to be repatriated but that appears to have had a negligible effect. A low risk entry, perhaps at the top of the range at 83.5-84.5 area is worthy of looking at. Either way, volatility gets another boost and we should continue to initiate core positions on any USD strength to play its eventual weakness.
The U.S. data continues to be abysmal from a strong currency standpoint. In summary, the weekly chart is set up for a strong retracement to 1.2784, with the Euro holding a test of a minor interim retracement levels so far. The EUR pairs are expected to be overall weaker than the corresponding correlated GBP pairs. The topping action in the USD can also be confirmed against the bottoming action in the EUR as mirror images of each other and the EUR chart can be seen here http://www.stockcharts.com/charts/gallery.html?$XEU. We will play both ways with no bias for now; anticipating trades back to defined retracement levels. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
The JPY broke above the 200-day moving average; after bouncing hard at the lower 50-day moving average and went ballistic being the anti-dollar but merely retraced and went ballistic and now look for consolidation with a short term neutral to sell bias as price or the 50-day/200-day M.A. bullish cross area catches up to each other and garner further longer term support for the JPY, as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.
The GBP as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP, is expected to consolidate after clearing the 200-day MA and the “Monster Trade” below is still in effect with new entry prices even though it was originally called it in the 1.49 area and recommended it in the 1.54 area.
The “Monster Trade” initiation. With GBP sentiment catch-up expected and the USD flirting with recent new lows while a key 0.382 retrace earlier last week did not occur leads to this trade. I recommend scale in BUYS (0.1 contract at a time) on weakness in the GBP/USD, now in the 1.5600 to 1.5650 range with looser stops than usual, around 1.5550 (so explains the very small position size). The target areas are the longer term weekly retracements in the 1.6200 to 1.7000 areas. NOTE: All position trade stops are HARD stops, NOT mental stops. Remember, hard stops for overnight positions, mental stops for day trades.
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.
Why the “Monster Trade”?
In terms of GDP driving sentiment, this may very well be the best quarter "for some time" from UK; however, GDP is released quarterly, and with two more releases out of UK for the 2nd quarter, the focus will be on the optimism after which the next prelim. GDP release will be in October for the 3rd quarter. So, from now until then there is pretty much enough time to see GBP soar against USD. Expect to see the GBP/USD between the 1.62 and 1.70 levels in the next few months, as both negative outlooks in U.S. and the rest Europe should push demand higher. With little else to go to, this rational in the GBP pairs will be the basis for another “Monster Trade” initiation.
WEEK AHEAD:
I have no forecasts for the week ahead as some pair moves have been limit up through resistance and are ripe for a retest of the prior breakout levels, and so continuation moves are more risky unless pullbacks occur. Other currencies look to be capitalizing on USD weakness but they could easily reverse from key hourly, daily and weekly resistance levels. There will be quite a few reports to navigate this week and with more than two weeks of consecutive losses on the USD, market is definitely looking at this week's U.S. non-farm payroll data on Friday for direction. With major releases from USD, EUR, GBP, CAD, and AUD all scheduled for the week, the directional bias for the weekly trend is hard to determine and many cross-currents are expected. In many cases we will remain on the sidelines for the time being unless some well defined technical set-ups are apparent. Either way, it should be a volatile week with opportunities that we hope to take advantage of in the Trading Room as events become clearer. Chop is expected as always and scalp trades might continue to be preferred as sentiment/reaction is gauged. Again, a fast break move (now a continuation) is possible in the USD, but given the extent of the decline so far with the USDX at key weekly 50% retrace level at 81.5, traders should be aware of fast counter-move possibilities, especially given the thin summer trade.
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!
Trade with Mr. GREEN for $49$ for a 1 week trial.
For those who join with this special, the service costs only $179$/month after the trial expires, unless you cancel the membership.
Trades are issued in real time, including exact entries, exits and detailed explanations. The service costs $179 per month. So go to GreenForexTrading.com now and take advantage of this offer.
Mr. Green
Risk Warning! Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Past performance is not indicative of future results. The high degree of leverage can work against you as well as for you. Before deciding to invest in foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and therefore you should not invest money that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent financial advisor if you have any doubts. All information posted on this website is of our opinion and the opinion of our visitors, and may not reflect current situations and occurrences. Please, use your own good judgment and seek advice from a qualified consultant, before believing and accepting and acting upon any information posted here or on this website.
No comments:
Post a Comment