The Market Can Do Funny Things Sometimes

We had some very strange movement in the majors today. On one hand we had the Euro make a nice rally against the Dollar. Now the Swissy which normally has a strong negative correlation would go in the opposite direction, but instead, the pair just stayed put. The Cable followed in the Swissy’s footsteps and did the exact same thing. Then we have the Yen which lost to the Dollar. So the dollar lost to the Euro, gained against the Yen, but stayed right where it is against the Sterling and Swiss Franc. Talk about needing some kind of catalyst to get these markets to make up there mind! Let’s look at what the charts have to say…

Chart Analysis:

EUR/USD

The Euro once again broke past 3000 but the question is will it stay above it this time? On 2 previous occasions the pair has shot up past 3000 giving hints that it was going to rally but then proceeded to drop right back below it. Right now the pair is hitting resistance at its 200 SMA on the 4hr chart and the stochastics are in overbought territory. On the daily chart, the Euro has broken past its 50 EMA but is facing resistance at its 38% Fib line which is currently at 3030. Daily stochastics has been see-sawing but it’s currently trending up and shows more room for buying pressure. I think if the Euro can break past its 38% Fib line, then it will most likely hit 3050 and may even reach the 50% Fib line which is right around 3080. The ECB is making an interest rate decision tomorrow so we could see some volatile movement.

GBP/USD

Ok so I was totally wrong in my Cable analysis yesterday, but the pair usually does move in the direction of the trend if the previous daily candle has had a large body in which the price closes near its high or low. Unfortunately for me, it didn’t work out and my trade got stopped out yesterday. The Cable has been hovering around 9700 all day so I’m thinking that traders are waiting for the interest rate decision that the BOE is going to make tomorrow before making any moves. 4hr stochastics are overbought and are now trending down while daily stochastics are still trending up and are not in overbought territory yet. My feeling is that the pair will fall to its 38% Fib line and then shoot back up but we could see huge spikes tomorrow with the interest rate decision. I’m going to hold off on trading this pair for now.

USD/CHF

The Swissy pretty much stayed flat today and is still treading on many support areas. It’s right at its 200 SMA on the 4hr chart and its right at 2400. To top it off, the 100 SMA and 50 EMA on the daily chart are sitting just below 2400 which could make it hard for the pair to penetrate. 4hr stochastics are trending up after just leaving oversold territory while daily stochastics are still trending down and is just now reaching oversold territory. We may see the Swissy make another run towards its 50 EMA and 100 SMA on the daily chart before the pair begins to move back up. The pair could bounce back to 2450 or if for some reason it happens to break below its 50 EMA and 100 SMA, then it will most likely head towards its 200 SMA. I’m going to recycle my trade from yesterday because I think it’s a pretty safe trade. I’m going to short below the 50 EMA and set a target for the 200 SMA which is right around 2350. My stop will be above the 100 SMA.

Trade Idea:

Short at 2370; Stop Loss= 2390; Target= 2350

USD/JPY

After gaining on the Dollar for the past couple of days, the Yen resumed the butt kicking it was getting from the Dollar. Now the pair is testing resistance at its 50 EMA on the 4hr chart. 4hr stochastics are in overbought territory while the daily stochastics have crossed up after just nipping the oversold territory. As far as technicals go, we’re seeing mixed signals right now. I think the next movement is going to come from the G7 meeting, and that movement could be very volatile.

  • Riddla

    hey BP,

    Your technical review of the majors coupled with the trade ideas is great. thanks BP!!

    But I have a couple of questions:

    How do you decide which trades to take? i.e. you dont always give trade ideas on all pairs even though the commentry may contain possible opportunities . is this because you only go for the high probability/safe trading ideas..

    If so,, how do you decide what a high prob/safe trade is? e.g. would you aviod trades exposed to high event risk (fundamentals) and/or conflicting technical indicators.

    Also i was wondering how you decide upon your entry levels in the given trade ideas? as im trying to learn and develop my own style would it be a good idea if i tried to find entries in the 15 min (ie.. breaks of support/resistence/fib levels) chart based on analysis of 4hr/daily chart as you do above.

    your advice would be greatly apreciated.
    thanks

  • Riddla

    hey BP,

    Your technical review of the majors coupled with the trade ideas is great. thanks BP!!

    But I have a couple of questions:

    How do you decide which trades to take? i.e. you dont always give trade ideas on all pairs even though the commentry may contain possible opportunities . is this because you only go for the high probability/safe trading ideas..

    If so,, how do you decide what a high prob/safe trade is? e.g. would you aviod trades exposed to high event risk (fundamentals) and/or conflicting technical indicators.

    Also i was wondering how you decide upon your entry levels in the given trade ideas? as im trying to learn and develop my own style would it be a good idea if i tried to find entries in the 15 min (ie.. breaks of support/resistence/fib levels) chart based on analysis of 4hr/daily chart as you do above.

    your advice would be greatly apreciated.
    thanks

  • bigpippin

    I most definitely only do trades where I think the odds are very much in my favor. If I lose, I lose, but I want to give myself the best possible chance to win. I like to use “if/then” statements when finding my entries. For example, “if” the EUR/USD can break the 50 EMA, “then” it will most likely go to the 100 SMA. I like watching for breaks of support or resistance and targeting other support or resistance levels. That’s my main plan of attack. I also like divergences.

  • bigpippin

    I most definitely only do trades where I think the odds are very much in my favor. If I lose, I lose, but I want to give myself the best possible chance to win. I like to use “if/then” statements when finding my entries. For example, “if” the EUR/USD can break the 50 EMA, “then” it will most likely go to the 100 SMA. I like watching for breaks of support or resistance and targeting other support or resistance levels. That’s my main plan of attack. I also like divergences.