I'm Ba-ack!

I apologize for being incommunicado of late. Late last week I was out of town, and by the beginning of this week, I was suffering in the throes of some maniacal flu/cold-like illness. I'm just now recovering and regaining enough strength to resume my job, which is informing you of the magic, the misery, and the mystery of Forex.

My last trade on 4/18 didn't go as planned. My buy order got triggered, but price fell, hit my stop 20 pips later, then reversed field like soon-to-be-NFL #1 Draft pick Reggie Bush on his way to paydirt.



It appears that in my absence the Cable has been flirting with, but falling back under the 100% fib retracement of January's high. I don't know what fundamentals were in play from late last week to now, and to be honest I really don't feel like researching to find out.

What's jumping off tomorrow? Looks like US Initial Claims and US Help Wanted Index. Also important is Fed-Head "Big" Ben Bernanke testifying at 10 am. I'm still hoping to take advantage of the Sterling's reluctance to break completely through the 1.7920 - 1.7940 range. I'm putting a sell order in at 1.7914, T/P at 1.7884, at a stop-the-bleeding at 1.7944.

Until next time...

Friday 4/14, Monday 4/17 Recap

Well, there isn't much to recap from Friday, as the markets were closed. I had a feeling they would be, but had a limit buy order in anyway, an order that got filled Friday morning. I did 2 things I intended not to do: trade on a day when the market was closed and let a position stay open through the weekend. Anyway, it worked out well, as the position closed at my T/P of 20 pips on Monday morning.

The GBP/USD pair made a serious bullish break on Monday, spurred in part, according to 4Cast by

1. TICS data for February - for whether there is "sufficient" foreign capital to finance the US deficit
   
2. tomorrow's Fed FOMC For March 27-28 - the first meeting under new Chairman Ben Bernanke - for signals as when Fed will pause - 4.75% or 5.00%
   
3. Wednesday's US CPI for March for indications of inflation
   
4. Thursday April 20 Summit between Chinese Pres Hu Jintao and US Pres George Bush
   

The pair first tested the 50.0 Fib before finally breaking through, and then extending up through the 61.8 Fib. With a 1.7448 high, the Sterling hasn't seen this level of price since late January. The pair is also looking to be breaking out of a yearlong consolidation. Of course, we'll need confirmation of this, but 4Cast says the Cable has exceeded its 200 DMA.

I'm not sure what kind of long-term support the Cable will have at the 61.8 Fib, but it does have support at the 1.7625 - 1.7500 range, which marked the high for the range the pair traded in since late January. This week will be busy with fundamental data, starting with tomorrow's Building Permits, Housing Starts, and PPI at 8:30 EST. Also, tomorrow afternoon at 2:00 EST the FOMC Meeting Minutes from the March 28 meeting will be released.

I'm going bullish tomorrow, hoping to capitalize on any "afterglow" good feelings early by buying at 1.7720 and looking to take profit at 1.7740, slightly lower than Monday's high. The S/L will be at 1.7700. Hopefully this will get me out of the market before the news hits.

Recap From Last Week:

4 Trades, 3 Winners, +40 pips

Recap Since Inception (4/1/06):

8 Trades, 4 Winners -9.5 pips

Another Winner!

I claimed my 20 pip target, but again, I left another 20 pips on the table. It seems I need to really do some research into where I decided to set profit targets. It could also be of benefit to probe for signs of additional trades, as in the case of today's action, price reversed at S1 - it's possible to ride the wave back down, too. That would have been good for another 40 pips.

Better not get too greedy too soon, however.

Today's US Data must have briefly sent the Sterling below the 38.2 Fib, but it recovered and is currently hanging out just above it at 1.7519. Tomorrow is Good Friday, which means there could be a lack of volume, so I'm going to be conservative. There doesn't seem to be a great deal of data coming out, so I'm going to buy now, take profit at 1.7539, and stop bleeding at 1.7499. Now that I think about it, that's what I did for the previous 2 successful trades. No need to switch it up now.

Thursday's Action:
1 Trade, +20 pips

Finally, A Winner!

I think I was on a 3 trade losing streak until today. I actually could have taken this trade to all the way to R2 and slightly beyond. In fact, I left close to 40 pips on the table. Clearly I could learn to set the profit targets better, but I'll stick to my conservative approach for the time being.

The Sterling fell on below expected US Trade Surplus in February of $65.7 B, which is down from January's $68.59 B. It found support at the pivot point and and since settled under the 38.2 Fib retracement.

There's a plethora of US data being released tomorrow:
US Retail Sales Ex Autos (Mar) 13:30
US Retail Sales (Mar) 13:30
US Import Prices (Mar) 13:30
US Export Price (Mar) 13:30
US Initial Claims (8th Apr) 13:30
US Univ of Mich Sent.(P) (Apr) 14:45
US Business Inventories (Feb) 15:00

With this in mind, I expect the market to sit tight, be a bit range bound... could be a good time for harvesting pips. My trade will hopefully be triggered and closed by the time the news comes out. I'm buying near the 38.2 Fib retracement at 1.7520, with at T/P at 1.7540 and a stop-the-bleeding at 1.7500.

Tuesday Recap

My trade may have been a good idea, but again failed in the execution.

On the European open the Sterling went from 1.7460 to around 1.7395. Unfortunately, my sell order was triggered at 1.7410, and since my T/P was at 1.7380 (S1 and Monday's low), it was never reached. Good idea, bad timing, it seems.

On the whole GBP/USD had a bullish day, even reaching and exceeding (at least for now), the 1.7500 level. Its very near the 1.7516 38.2 Fib retracement of January's high, and should it reach and exceed that level, I'm buying. The entry is 1.7522 (R1 for Tuesday's pivot point), T/P is 1.7542, S/L is 1.7502.



Tuesday's Totals: -20 pips

Weekly Recap

Friday's big news, the US non-farm payrolls, came in higher than expected at 211,000 I believe. This sent the Cable plummeting from around 1.7500 to a low near 1.7400 for the day. I didn't make any moves on Friday, so I missed all of the action. Perhaps next time I will avail myself of the opportunity to make some profit.

I finished last week down 50 pips. I'm hoping I can erase the deficit this week.

On to Monday's action...

There really wasn't much going on. The Cable spent most of the day between 1.7420 and 1.7470, briefly falling to 1.7380 near the end of the European session but returning to above 1.7420 before the end of the American session. Terribly uneventful stuff with no fundamentals to muck up the situation. Also probably a good time to get in some good trades, I'm beginning to believe.

As best I can discern, there shouldn't be any weighty fundamental news coming out tomorrow. Given the Cable's recent bearish performance, and 4Cast's short-term bearish prognosis, I plan on selling the GBP/USD pair when price if it hits 1.7410, just below today's pivot point. I'll take profit at 1.7380, Monday's low and S1 based on Monday's data. I'll stop the bleeding at 1.7430.

Back from a Brief Repose

Wednesday's trade didn't go quite as planned.

I felt good about the trade, seeing the positive momentum generated by the Cable after Tuesday. My buy limit order got triggered just past the 50.0 Fib retracement of January's high, near 1.7600. It got as high as 1.7616 before reversing on weaker than expected Industrial Production and Service PMI numbers. Hmmm... the same data that I had no idea what it was. Anyhow, my trade got stopped out in the reaction to the data.



The Cable then settled around the 38.6 Fib retracement - a position that has provided support in the past. Around 1000 EST ISM Non-manufacturing data came out stronger than expected, pushing the Cable a bit lower. It hovered around the 1.7500 level near the pivot point from Tuesday before rising above the 38.6 Fib retracement and middling out between the 38.6 Fib and 50.0 Fib. Early Thursday, price bounced off the 38.6 and made a dash for 50.0 before bumping its head on the 50.0 Fib. It fell lower to 1.7500 and has been confined between 1.7490 and 1.7530 since.



What have we learned? For one, be aware of fundamental data's presence and how it can screw up your carefully planned trades. With the possibility that the data can go for or against your trade, should even bother having an open trade when fundamental data is to be released? Should you just sit and wait until news is released, then follow the movement of price? I guess these are questions each trader individually has to answer.

We've also learned that the 38.6 Fib is support for the GBP/USD pair, while 50.0 Fib is almost ironclad resistance. When price is hanging out between the two, the opportunity to harvest pips is very good.

Big news tomorrow: US Unemployment and Non-Farm payrolls. Market expects 4.7% on unemployment and 190,000 on Non-Farm Payrolls. I'm going to try trading in the wake of news tomorrow. Data will be released at 8:30 EST, so before I happily march off to work, I'll watch CNBC, see what the numbers are, then I'll ride the wave. Stop losses and take profits will be based on the Fib numbers. Wish me luck!

After 1 trade
Score (in Pips)
Market 25, Young Pip 0

Good and Bad News

Of course, the good news first:



My buy limit order was filled around 3:15 EST at 1.7405 and by 3:30 EST I'd gotten my 25 pips profit target. The Cable continued to climb into the 1.7455 range 4Cast predicted, which marked R1 from Monday's pivot data. It hung out in the 1.7440 to 1.7470 range from 4:00 EST to about 8:00 EST. It seems that Monday's bullish momentum carried the Cable higher on the European open, at least to R1. By 8:00 EST, American traders came to work, probably saw the overnight upward movement, and decided the Cable should go higher. So they bought, sending the Cable clear through R2, and through the 38.2 Fib retracement of January's high.

Here's where the bad news comes in:



Seeing the price fall around 8:30 EST, I made like Nostradamus and tried to call the top of the rally. I sold at 1.7513, right near the 38.2 Fib retracement. This was stupid for several reasons I will now enumerate:

1. First and foremost, I traded against the trend. This is a serious no-no boys and girls!
   
2. Given that the Cable had already exceeded the 38.2 Fib, its more likely to act as support, pushing price higher.
   
3. When there's no fundamental data to move the markets, technicals will rule the day. There was absolutely no reason for a fallback given Monday's rally and the upward trend already established for the day.
   
4. I could have at least looked for some confirmation before selling.
   

While this trade ended badly with a 30 pip loss, at least I used our good friend the stop limit, and those 30 pips bought me much needed knowledge and wisdom.

Looking ahead to tomorrow, there's a little fundamental data coming out on the USD. At 10:00 EST, ISM Index and Services comes out. I'm not entirely sure what it is, let alone its importance. Guess we'll see. There's also some data from the UK out in the wee hours, about 4:30 EST.

From a technical perspective, the Cable is nearing the 50.0 Fib retracement, a level that has provided resistance on 2 prior occasions. However, the folks at 4Cast seem slightly bullish, and the pair will close for Tuesday above the yearly upper trendline. Could this be support for the big move I see happening soon?

Either way, given the rally thus far this week, I'm looking for the trend to continue. I'm putting a buy limit order at 1.7600, stop loss at 1.7575, near Tuesday's high. Take profit is at 1.7625.

2 Trades Today

Market 30, Young Pip 25

All Quiet on the GBP/USD Front

While there was a 100+ pips worth of action on fundamentals Monday, Tuesday is shaping up to be a quiet day. There will be very little fundamental data to move the market. I would think (in my rookie state) that when there are no fundamental monkey wrenches to be thrown in to the market, technical trading plans should rule the day. But seeing Monday's news-driven meteoric rise, I'm not sure if the upward vibes will continue into Tuesday.

4Cast sees the Cable being "boxed in between ... 1.7495 and 1.7275" for the short-term. They also see the "Next bounce resistance is at 1.7430/55." Despite my hesistation, I'll bite. I'm putting a limit order in to buy at Monday's high of 1.7405, and a take profit at 1.7430. I'll keep the stop loss 20 pips down at 1.7385. I'll check in tomorrow morning and reevaluate.

In somewhat unrelated long term news, on a yearly perspective, the GBP/USD pair is consolidating. It also looks like a descending triangle, perhaps auguring a reversal of the long-term pattern.



Until next time...

This Trade Should Have Worked!

Remember my last bright idea about buying when the GBP/USD hit support at 1.7269? Well, it worked! Well, it should have worked. After my buy got triggered, the Cable fell to 1.7250 before finally reversing and going my way. Unfortunately, I got stopped out at 1.7250.

"That's not possible!", you say. "Your stop loss was at 1.7249!"

My point precisely. Is OANDA cheating me by triggering my stop 0.0001 before I told it to? Is this some sort of nefarious plot? Are the Forex stars aligning to my detriment?

I'm not sure. I intend to post a question on the OANDA forums to see if anyone else has had this problem.

Anyway, after my stop loss was triggered, the cable went berserk after lower than expected US ISM data at 10 AM EST. I could have picked up 20 pips and then some. So crumbles the Forex cookie. I'll be back for more.

Score (in pips):
After 1 Trade:
Market 20, Young Pip 0

Probably Not A Good Idea

Don't try this at home, kids.

Well, if it goes wrong, at least its not REAL money!

I'm not sure if this qualifies as a trading opportunity, but I'm doing it anyway.

The only currency pair I currently mess with is the GBP/USD. I hear that its best to focus on one pair, become one with it, learn its intricacies, its idiosyncracies, blah blah blah.

So anyway, I'm looking at the 1-2 day outlook for the cable. Its looking to continue to range, but tend to slip lower than its current 1.7325. I see support at the 1.7269 level, which also happens to coincide with S3 based on March 31 pivot point data. So, I'm putting a limit order to buy the cable at 1.7269. Profit target is 20 pips (1.7289), stop loss is -20 pips (1.7249). Wish me luck, boys and girls!