Trend for 30th of April 2011

Markets are closed today, so there isn’t much I can say about price action in financial markets. I decided to give you a few ideas on how to trade in a trend. There are very many ways how to do it depending on what kind of trader you are. Let’s assume that you are an average technical trader who does not understand much about fundamentals. I do not think it is a problem, because you can have a lot of knowledge on the subject and the knowledge might be absolutely wrong (it wouldn’t work in the markets). That’s why I prefer technical analysis. I do not need to bother about reasons and predictions for this move or that. I simply follow the direction in the market. 

So, by following direction in the market you simply wait for pullbacks (in an uptrend) and buy at support. Support can be a rising trendline or a horizontal trendline which joins two points where the price retraced but failed to go lower. When the price comes to the level you wait for 123 pattern (watch my video below) and then jump back into a trend trade. 

Alternatively, after a pullback a security can form a short term range and stay there for a while. You can take a long position when the price breaks the upper part of the range and the up trend resumes. Buying at the support also works there, but you will probably have to show some patience waiting for some time till the security starts making new highs. So, you might take a few positions and close one when the security reaches the upper part of the range. In my opinion it is always better to buy at support and not a breakout of resistance, because you enter the market at much more favorable rates and when somebody is buying a break you already have some nice profit in your account. 

Watch my video below

Read my previous post:

Canadian dollar news trend

Disclaimer

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.

Trend for 29th of April 2011

Most securities have been in small ranges today, so I cannot say much regarding daily trends in most of them. However, as always there are some exceptions to the rule. Today the exception was Canadian dollar pairs. If you looked at your economic calendar today you saw that there was very important data scheduled to come from Canada at 12.30 GMT (Gross Domestic Product (MoM) (FEB)). Gross Domestic Product is always among the data that creates big daily trends in securities. When I saw that the data is from Canada I was pretty sure that there will be a move after news is released. Why?

I cannot say exactly why, but I noticed a tendency: when economic news of high importance is released from Canada there are big moves in the market 80 percent of the time. Somehow markets are very susceptible to data from the country. So, there was a move and if you have been reading my post you know how you could have traded it. Today Canadian dollar pairs made some move a few minutes before the release and then retraced. So, had you waited till the last minute and only then placed a buy stop order (in eur/cad or usd/cad) you would have evaded this pre-news movements, which sometimes go in the opposite direction when news is actually released.

In eur/cad your buy stop order had to be at 1.4125 with a stop loss at 1.4113. You would have closed half of your position at around 1.4150 and the second one would be at breakeven now. I hope to comment more about this trading method during the weekend, so if you don’t understand it now, do not be worried. There is still some data from US (Michigan Confidence) which can have an impact on currencies, but I am not going to trade it. No more trades for today. I will write a short post tomorrow. See you on my blog. 

Read my previous post:

Silver continues going up

Disclaimer

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.

Trend for 28th of April 2011

As I predicted yesterday Federal Open Market Committee Rate Decision created big daily trends in various financial markets. The rates were left unchanged, but the news itself and Bernanke’s comments about US economy sent US dollar down in all currency pairs. Even yen regained its bullish tone and strengthened against the greenback. So, we can state now that US dollar continues its’ downtrend and nobody knows when it is going to end. I have recently read Jim Rogers (famous investor in commodities) statements that this could be the end of US dollar. Maybe, I am not sure about that, but it looks that at the moment US economic problems are too big to solve.

So, you can look at eur/usd and gbp/usd charts to see how the news moved these currency pairs and understand how you could have profited from the move. As always you had to operate with buy stop orders, placing them above the most recent highs just before news hit the market. Then you had to simply sit and wait before exiting or leaving your position for a bigger profit. We have another important piece of news from US today, which is Gross Domestic Product (Annualized) (1Q A). I believe we can expect pretty nice daily trends upon the release of the news. So, be careful around the time it is released as it can have big impact on the financial markets. 

I was very happy to see silver going through the upper part of the range, which I told you about yesterday. Again, the same type of strategy could be used to trade the breakout. Placing a buy stop order above the resistance before the news release would have allowed you to get the entire daily trend in silver. And the profit would have been pretty cool. 

Read my previous post:

Market’s reaction to Federal Open Market Committee Rate Decision

Disclaimer

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.

Trend for 27th of April 2011

Another nice day for day trend traders! Data from Great Britain caused British pound to appreciate among all currency pairs. A news trader would have made really nice cash in the event. My favorite pound pairs: gbp/usd and gbp/jpy rallied tremendously. You needed some technical knowledge how to place orders today before news hit the market. If we take gbp/usd the most logical place for a buy stop order would have been at 1.6485 level. You could easily exit at 1.6555 level with 70 pips of profit. I will talk about exiting market in my future posts this week. 

The same can be said about gbp/jpy. Had you put your buy stop order at 134.70 you would have exited at 136.00 level with one hundred and thirty pips of profit. Even though the news came from Great Britain, a lot of currency pairs were influenced by it, especially Japanese yen pairs. Japanese yen has been in some minor uptrend recently, but it looks that the trend has reversed. Yen was the biggest loser of the day. 

Silver move down stalled and the commodity is ranging between 44.58 (low) and 46.25 high. One could attempt tiny longs above the resistance. I know that there is also a possibility to go down, but this is purely day trading and since silver is in a long term uptrend I do not want to do it. I’d better wait for opportunities to buy the commodity. We have yet to see what will be market’s reaction to Federal Open Market Committee Rate Decision, which comes at 16:30 GMT. Reaction can come later in the day or tomorrow, but I believe that market will move after the news is released. So, be aware of this market release and look for opportunities to trade it in the direction of the market. 

Read my previous post:

Silver reversal

Disclaimer

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.