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Thursday, June 16, 2011

Trend for 16th of June 2011

Hi everyone. Today was an average day in all markets, which I analyze. Nothing interesting in oil and metals! Currencies were a little bit more interesting. Most of them saw counter trend moves today, which can be attributed to news that was released from Europe and to some extent from Switzerland. Let us see how news affected some currency pairs and try to predict some moves in forex market in the nearest future. 

Moderate impact from Switzerland news

News from Switzerland (Swiss National Bank Rate Decision) did not create a lot of movements in Swiss Franc pairs. Maybe this is due to the fact that Franc was pretty strong recently and data that met expectations was not able to convince market participants to push the currency in one direction. The most interesting was price action in gbp/chf pair. As pound have been moving up against Swissie for a few days, it had better chances and more space to return back to where it came from. It was possible to trade the move down in a few ways. The first one was simply to place a sell stop below Asian session low of 1.3780 and go down when the level was broken. It was a riskier possibility as the level was broken two hours before news came. 

In that situation you would have to take a smaller position (just for the sake of reducing risk). Another way to trade the event was to wait a little longer and place a sell stop a few minutes before the news came below 1.3738 level (most recent low after the breakout of Asian session). You would have gained less, but you have also risked less. I know that news trading is pretty risky, but you cannot expect to earn good money without risking. Making money in financial markets and risking are two sides of the same coin. So, if you don’t think you want this kind of occupation, it is better not to start analyzing the charts. 

Nice daily trend in eur/cad pair

Another piece of news, this time from Europe (Euro-Zone Consumer Price Index) created bigger moves, but they were not something spectacular. If you remember follow the leader principle, you had to choose a possible leader in the upcoming move. In my opinion the best choice was eur/cad. The pair was much oversold recently and this meant that if news from Europe came out more or less positive, the pair would jump up most. That’s exactly what happened.  

The place for entering long order was a few pips above 1.3880 level. News came and the level was broken. The pair lingered for some time, even fell a little, but then momentum picked up and eur/cad moved up around 80 pips. A logical place for exit was near yesterdays’ resistance point that was established during counter trend rally (at 1.3950). That would be about 65 pips of profit. Not very much, but not very little too. Trading other pairs would not have been so profitable. 

Tomorrow is pretty empty in terms of economic news releases, so there could be nice technical moves. One idea, which is not connected to tomorrow anyhow is that I see pretty bearish picture in aud/jpy pair on daily chart. Other yen pairs also show the same thing for me. So, maybe we are going to see something interesting with yen next week or in the nearest future. 

See you tomorrow.

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Trading financial markets carries a high level of risk, and may not be suitable for all investors. All information on the blog is of educational nature and cannot be considered as advice, recommendation or signals to trade in any financial markets.