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Wednesday, June 22, 2011

Trend for 22nd of June 2011

Pound, Euro and precious metals

We have just moved into American session and there probably will be a lot of action today, but since I will not be able to write a post in the evening I will look through what happened in the markets today by trying to pinpoint the most tradable events and maybe drop a few thoughts on what is ahead of us in terms of daily trend in the market. Today I will look through British pound, Euro and give you a few ideas on precious metals: gold and silver. Let me start from the cable. 

British pound is lying unconscious after the news release

I hope you can see in your charts what happened to pound pairs today. Pound has experienced knock out across the board. What happened? Well, I guess you should know by now, the news from UK (GBP Bank of England Minutes) was released. I did not search what they decided, commented or outlined. I never do. I play these kind of events technically. Always. Why? My opinion on fundamental events might be very subjective and the market may react differently from my expectations. So, I decided to follow the market long time ago and not to bother myself with deep fundamental analysis. It works for me and I believe it works for other technical analysts as well. 

So, the game had to be played the same way as I always do. By placing sell and buy stops (below the most recent low (short orders) and above the most recent highs (long orders)). If we take gbp/usd as an example, a place to put your sell stop was at 1.6185 level (using 1 minute chart). The market started moving down a few minutes before the release, jumped up a little and when news came it collapsed again. The above mentioned level was perfect for your entry. The exit as always had to be around even number at 1.6100. Nice trade, isn’t it? gbp/usd is at support now. 

EUR/USD in a short term uptrend

EUR/USD has been in an uptrend recently, so we are playing it only from the long site (having in mind that there is no news coming for the pair any time soon). As you can see the pair is going up in waves (peaks and valleys) and you need an idea how to buy at the valley and sell at the peak. I have a very simple idea for you. Look for reversal patterns around European session near the valleys. 123 pattern is a ‘must know’ if you want to trade in the direction of a trend and add to a position while going with a move. Today you had two possibilities to do that. One was around 5:00 GMT when 123 pattern was finished and a breakout occurred, the second one was around 11:00 GMT when another 123 pattern occurred near previous low and the pair went up again. Look at the chart to see better what I mean. 

Trend in precious metals is still up

Silver and gold could be traded in a very similar fashion as eur/usd. If you look at compare the charts for these three securities you will see that they are very similar. All of them are going up in waves. So, you had to apply the same rules for trading silver and gold as you applied for trading eur/usd. I still hold to the position that these precious metals will go up. There is some mess going on regarding trading metals in US and it could be that trading futures in these commodities will be banned soon, but that should not keep you from owning real silver and gold. 

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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.