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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 Wednesday the 22nd to Thursday the 23rd of September 2010.
ALERT!!! FOR THOSE IN THE LIVE TRADING ROOM...THE TRADING ROOM WILL OPEN LATER THAN USUAL DUE TO A RASH OF MINOR REPORTS AND THIN ASIAN TRADE THAT IS EXPECTED TO JUST ADD CHOP AND WILL BE AVOIDED IN FAVOR OF THE MORE LIQUID LONDON AND THE U.S. SESSION. THE LATER HOURS WILL BE TRADED FOR TODAY’S SESSION AT 4AM TO 11AM EST TODAY ONLY!
The swing trade for yesterday’s Asian-London-U.S. session to BUY the GBP/USD @ 1.5620 for a TARGET of 1.5725 was filled in the middle of the London session and tagged 1.5707 before reversing being good for up to 80 PIPS depending on how the trade was managed.
ALERT!!! A DOLLAR COLLAPSE IS NOW EXPECTED OVER THE NEXT 2-3 MONTHS...ULTIMATE USDX TARGET IS 71 BY NOVEMBER. The currency markets have broken hard with serious continued USDX selling in response to the FOMC announcing no change to their interest rate policy as expected. They expect “inflation to remain subdued for some time” (what a joke!) and pledged to keep rates low for an extended period. While they didn’t quite announce a new round of quantitative easing (flagrant money printing), they hinted at it pretty strongly and will likely announce a clear program at their next meeting. It's been my position for a while that the U.S. government monetary policy would eventually create a currency crisis in the world’s reserve currency. There were three conditions that had to be met before I was willing to call the beginning of the end. The first condition was for the dollar (USDX) to move below 81.5. That was the warning shot that problems were developing and confirmed by a head and shoulder top on the daily charts. The second and third conditions were a move below long term support (80) and a failed intermediate cycle and accelerating into a 4 year cycle low due in the October - November time frame (Note: there is another multi-year cycle low due in the spring of next year...but that is another story). The drop below 80 this morning has now completed the final two conditions.
Adding to the potential volatile moves is the continuing of Asian Bank Holiday's this week that will very likely affect Forex order flows between 17:00 and 23:00 ET each day. The path of least resistance this week no looks to be down for the USDX with support and resistance levels at the open and close of each regional market providing entry/exit points. This is an environment to add to the “Monster Trade” given below.
The “Monster Trade” initiations. I recommended Scaling In BUYS (0.1-0.2 contract at a time) on weakness in the EUR/USD in the 1.315 to 1.333 range but now a deeper pullback is no longer expected with the first “Monster Trade” target of 1.333 HIT. Some PIPS could be taken off the table here or moving up stops so that the longer term weekly retracements in the 1.351 and 1.388 areas can be aimed for. Expect increased volatility, but positions can still be added at this point all the way down to 1.3040. 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.
One more reference to the Dollar – it is clawing its way back above critical support near the 80 level on the USDX chart. Dollar bulls know that a weak close below that level spells a lot more pain to their trading accounts and therefore they will attempt to hold the greenback near this level if possible. If they can do that, we will probably see a short bounce here although without any change in the fundamentals, it is difficult to make a case for anything more than a dead cat bounce. The confirmed trend of the market for USD is down. With the USD’s closed under our another key pivot of 80.0 and now chopping at 79.9 we will look to load up scale in fashion for continuation USDX selling on any possible USDX strength although the strength should be marginal and short lived at this point in time and for the next couple of weeks going forward. We expected more of a Head and Shoulder neckline underside retest, however, a collapse could now ensue without an underside retest, and we must be positioned for that possibility. The USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD. The EUR pairs were expected to be overall weaker than the corresponding correlated GBP pairs however there appears to be rotation of relative strength between the two currencies from day to day. The EUR after having stalled right at its declining 50-day moving average blew right through it this morning leading to an accelerated move to a “Monster Trade” target area, as seen in the chart that can be seen here http://www.stockcharts.com/charts/gallery.html?$XEU. In summary, the weekly chart gave a strong retracement to 1.300 with 1.333, 1.351 and 1.388 expected in short order and loading up is recommended as given in the “Monster Trade”. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
While a long bias still exists for the JPY, with intervention in the cards and a break of the daily rising trend-line, be wary of the wash and rinse instead of a fast move in either direction that would normally be expected before the turn. Given that this week is also an Asian Bank holiday week (more on that below). Traders should heed my recommendation to avoid the JPY pairs for the time being. This is seen on the chart given here at http://www.stockcharts.com/charts/gallery.html?$XJY.
Last week the GBP/USD saw a nice support level formed at the 1.5300 level, and reached a key weekly pivot at 1.572 it makes sense to continue to look long on weakness back in the 1.557 - 1.562 levels for the next expected target of 1.600. The GBP as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP, has broken up near the 50 and 200-day moving averages and a longer term PPO buy signal has been triggered.
NOTE: There are few key reports this week and combined with Japanese and Chinese Autumn Festival Bank Holidays for most of the week to Thursday Sept. 23 and so expect low liquidity and irregular volatility. Banks facilitate the majority of foreign exchange volume. When they are closed the market is less liquid and speculators become a more dominant market influence. This can lead to both abnormally low and abnormally high volatility; so if any trades are taken, position size should be lighter than usual. Also note below this week the reports that could factor in some trading sessions going forward. They are:
1. Thurs. Sept. 23, 2010 (3:00-4:00am EST) EU Manufacturing and Service PMI Reports.
2. Fri. Sept. 24, 2010 (8:30am EST) US Core Durable Goods Orders.
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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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.
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