Thursday, May 12, 2011
Trend for 12th of May 2011
New lows in eur/usd and gbp/usd. As you may understand both pairs are in a short term downtrend and the best strategy is shorting rallies in both forex pairs. Today there were no opportunities for this kind of trading method as there were no big rallies. Of course, if you take micro trends which are pretty good for scalping there were some opportunities. The good thing is that you can take the rules for long term trend trading and apply them to short term swings as well as micro daily trends.
One of the best opportunities were in usd/cad pair today. So, we assume that dollar is strengthening and buying dollar is the strategy for now, because we see new highs in it. What I like to do is to see where the pair or a security faced resistance, broke it and then I wait for the security to come back to the place of previous resistance (now support) form 123 pattern at the level (look at one minute chart below) and when the pattern is broken I go up. That’s what happened in usd/cad today. Very good example of micro trend trading! Something similar happened in gbp/usd, but usd/cad was much better.
Commodities continue going down and I am not doing anything with them at the moment. Most probably they will not turn back this week, but we should not forget that we have some important macroeconomic data coming out tomorrow: German Gross Domestic (Euro zone), Euro-Zone Gross Domestic Product (Euro zone), Consumer Price Index (from USA), Michigan Confidence (from USA). These can have some impact for the financial markets. So, do not be overloaded when the news come out. Better watch how markets react to the data.
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