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GreenForexTrading.com
ForeX forX-tra Gr€€n
Hi everyone,
In this e-mail I am going to give you my view on the markets for Monday the 14th to Tuesday the 15th of March 2011.
The swing trade for yesterday’s Asian-London-U.S. session to BUY the EUR/USD @ 1.3895 came within 10 PIPS and technically did not fill at the 0.382 fib level but a secondary gap was filled and we went long in the Live Forex Trading Room and some good PIPS were had.
The “Monster” Trade. IS STOPPED OUT. The AUD/USD now at 0.995 and a deeper retrace is still possible. Whatever the fundamentals are, always watch the technicals; and right now the technicals no longer look bullish to say the least. A deeper retracement to 0.95 looks possible if 0.990 is broken. 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.
The BIG OUTSIDE RANGE BAR to end last week was very bullish and negated with today’s follow through to the downside in the AUD as seen here, http://www.stockcharts.com/charts/gallery.html?$XAD.
Last week we got a real washout of U.S. Dollar denominated longs on Thursday, briefly scaring those USDX shorts. The USDX pivot support and rising monthly trend-line support did break with the expected chop back and forth as follow-through weakness on a small weekly bearish engulfment pattern from late last month was confirmed.
Hope for dollar bulls is between slim and none and “slim” just left town! The USDX looked on the verge of collapse as the last failed rally attempt attests. We are in the muidst of another one as I write. The broken 50% retracement at 78.5 which is now also the declining 50-day moving average and a monthly rising trend-line now broken (at 77), and was expected as that was the third attack at that line (1st July 2008; 2nd Dec. 2009 and 3rd Oct.-Nov. 2010) and also confirming the three times a bounce and then a failure rule. With each subsequent bounce becoming smaller and smaller in the USDX, a fast move to 75 should be in the cards followed by a collapse to as low as 72. The USDX is in a zone of weekly support at 75.5-76.5. Finally, in the broader context, the monthly chart shows that the rising trend line that forms the bottom of a reverse pennant formation is now at 76.5. A decisive breakdown from that pennant to below 75.5 would have serious implications regarding the potential downside. I expect ALL these numbers to become toast…this week. This week, I will be looking for aggressive continuation entries into U.S. Dollar denominated longs on any USDX strength early this week for both scalp and longer term positions. Witness a weekly PPO SELL signal in alignment with a new daily SELL. So look to go long and get more aggressive on longs of U.S. Dollar denominated pairs on any weakness (USDX strength) into some retracement zones anytime this week, and expect any USDX rally to be short-lived as the USDX is looking pretty sick now and has started a rollover pattern on the daily time frame, as seen in the USD daily and weekly chart here http://www.stockcharts.com/charts/gallery.html?$USD.
The EUR is the inverse of the USDX and with the backdrop of a PPO that now has triggered a daily BUY signal (almost another SELL) against a weekly BUY signal extended from the 50-day moving average, and the bounce here looks to continue and now look for some bottom action on lesser time frames to enter and go long. Now look for 1.41, and with retrace to 1.375 to 1.385 completed, we can look for chop again in the 1.40 area before 1.425, 1.45 and 1.50 can be seen in short order, as can be expected on future dollar weakness as seen in the chart here, http://www.stockcharts.com/charts/gallery.html?$XEU. Place your trades accordingly. All charts courtesy of www.stockcharts.com.
The GBP has seen some serious choppy swings and a reversal upon reversal bar on the daily and we have been avoiding this on of late but still watching it with a long bias as it becomes less stretched on the long side, now looks in good BUY area at the 50-day moving average. A PPO daily SELL that needs to turn up against the backdrop of a weekly BUY signal makes cable choppy as of late. All these cross-currents still make cable a cautious play, as seen here, http://www.stockcharts.com/charts/gallery.html?$XBP.
The JPY caught the “safe-haven” BID. Again, go figure, but intervention has been mentioned. No recommendations on JPY that can be played as seen on the chart given here http://www.stockcharts.com/charts/gallery.html?$XJY.
This weeks’ activities and reports of consequence are:
1. Tues. Mar. 15, 2011 - (5:00am EST) EUR German ZEW Economic Sentiment and (1:15pm) US Fed Funds Rate and FOMC Statement.
2. Wed. Mar. 16, 2011 - (2:00am - 4:30am EST) UK BOE Gov. King Speaks and Claimant Count Change and (7:30am EST) US Building Permits and PPI.
3. Thurs. Mar. 17, 2011 - (3:30am EST) CHF Libor Rate and SNB Monetary Policy Assessment; (7:30am EST) US CPI and Unemployment Claims and (9:00am EST) US Philly Fed Manufacturing Index.
4. Fri. Mar. 18, 2011 - (6:00am EST) CAD CPI.
The swing trade for today’s Asian-London-U.S. session is to BUY the EUR/USD @ 1.3850 with a STOP @ 1.3820 and a TARGET of 1.3950 for over 70PIPS.
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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