Today Building Permits  and Housing Starts Was a great oportunity to short EURUSD and GBPUSD what I did. Another thought I came across today is that there is another factor of succesful trading. Even if I can predict market moves in front of their occurances trigered by news events I still need to estimate how far or how long will move last. I think that more important factor is how long.

My major strategy says that there's not many news that can hnoestly move the market. Most of moves are fak and are about to be shadowed by correcting ove to prerelease level.

My first impression about chart is that this week might be more active under bad news than under good. EURJPY n my opiion will eperience the strongest pressure, net in line to decrease will be EURUSD followed by GBPUSD. USDJPY remains big question for me. I think It would rise the most of all four followed pairs under calm market condition.

Today Price action on German Prelim GDP q/q made me think, was that huge move predictable. No matter what direction, I just wonder was that possible to predict a size of move.

My general idea so far is that if there's no reason for price to change, it must bounce back. Price of EU was pumped up by risk appetite, so it must take some opposite movement to close all those positions. In other hand there was already couple of days since EU rocketed up, so there is a chance that part of profits is already taken and some sell pressure released slowly enough to keep price in place.

Recently however I started to consider, whether it is possible to predict big move on a news even if it's not exactly clear what is current market sentiment. 

Today Core CPI is tradable. 
I would be more happy to short EURUSD especially if it retrace to at least 1.3590. If it will not, I would predict short with possible bounce back up to that level [maybe even a bit lower - to monthly pivot level @ 1.3577].

Whatever happened yesterday I find my yesterday preview highly tradable. Today I will watch closely GBPUSD pair. It's very tempting to short it on today's US news, but it's not as straight away trade as one from yesterday. If there was retracement to 1.52 before US PPI I will certainly short this pair, but I will protect my shorts with proper Stop Loss. In other hand I wait for GU to cross yesterdays low @ 1.5080 to see the plunge I'm waiting for since couple of days.

Three steps back

Today a bit of personal reflection.
As a result of my prediction proved right [I spoted nice oportunity for short trade on UK Inflation Report in previous post] I refused to use my brain anymore which is quite shameful. After nice trade I have opened another position during Retail Sales news. I have stated today morning that there's no point in trading UJ which I did, and after that I placed EURJPY order and wider my Stop Loss.

What happen next is exactly what should happen to someone who as a result of overestimation ignores his own judgemets on what one should ad what one should not to do.
I'm ashamed ad gracefull that I finished my day a bit above zero [but loses huts a lot ;)]

Today I see nice oportuty to short GBPUSD during Inflation Report as it aproaches quite significant resistant @ 1.5373.
At the same time EURUSD s approachig its resistat point @ 1.3738 and USDJPY is nearly on the bottom of daily channel - 95.62.

I wouldn't trade UJ up, but all other pairs are very promising.

My recent GBPUSD prediction absolutely missed reality. GU decreasd on interest rate, but on friday recoveret strongly. Daily chart however does not look hat bad. You ca easily notice that mentioned pair was moving within some reasonable range, what keeps my expectation of 400 pips retrcement still valid. Whn writing this post strenghtening JPY caused 100 pips fall on EU ad UJ what is not really surising simply because I did not expected anything for those pairs.

For now I can't see anything from charts what will keeps me away from trading. In general I wouldnt expect big suprises on daily chart, so rapid moves should be mostly shadowed by moves back.

PS.
I have just created new wbsite: fx-lines.blgspot.com which provide some key S/R levels, fibs worth of attention and weekly and monthly pivot points. If you'd like to campare it with your thoughts jus visit http://fx-lines.blogspot.com.

Apart of market reality I think that recent price action is driven by psychology. My new idea is that there is a bunch of traders that just become less aware of reality because of reality did not gave any sign of its existance. Financial crisis did not change at all. What have happend was couple of consecutive US better than expected data. Those releases did not convince anyone that market does better and better. Those data might have reduced level of traders attention.
As a result I would look for GBPUSD long after UK interest rate release at 0.5% [preferrably after some spike down]. But for longer timeframe I see nice setup for dramatic plunge of this pair [400 points within two days, preferably triggered by some bad news].

Price action on ADP Non-Farm Employment Change [came out much better than expected] gave me some clear view on what's going on.
Firstly there was quite a big spike up that broke 1.3340 on EU as I said. EU, EJ and UJ pairs apricieated strongly, however retracement on Euro pairs was same quick as quick was jump up [around one hour]. USDJPY did not retreace this way, but UJ plunged during asian session, so news spike can be understeanded as a return to yesterday price.

Overall price action brought me to thought that there's not too much pressure in currencies pot. Price is quite free to go either up or down [hower I would be much happier to open long positions on good news or pullbacks]. So for today I don't see reason for sharp moves, what's more I'm expecting Thursday and Friday to be rather quiet days.

For today ADP Non-Farm Employment Change I would trade EURUSD. Both directions are quite similary possible, however if I traded short trade I would close quite quickly.
If news won't deviate far from expectations I would trade long [with expectation of crossing 1.3340], if its much higher than expected, I would short EURUSD [with possible bounce from 1.3220].

After today I see some possibility of change for my tradeplan, however it's still too early to judge anything.

FRIDAY COMMENTARY:
As I predicted US ISM Manufacturing PMI was good trigger to release pressure accumulated by risk appetite for last few days. In spite of a bit better number EU GU ad UJ fell in first 30 minutes [what confirmed my theory] and rest of a day didn't brought new highs for any pair

WHAT NEXT?:
Now I expect to hear analysts talking about EU returning to its channel and about double top on GU. I wouldn't be surprised if both those pairs decreased on Monday or Tuesday, but I would wait with judgement if it's downtrend or did they just retrace.

My idea for now is to wait for nice short setups for those pairs. 1.3175 area for EU [50% fib] seems to be good to place Take Profit order. I'm not sure about GU. In spite of nice uptrend it was quite choppy, so maybe jump in and out would be better tactic, but it's not for me.

MONDAY NEWS:
For Monday there is Pending Home Sales released and again I would be much more happy to trade worse than expected news[EU and UJ], especially if price wouldn't decrease too much during European session.

TODAY CHART:
(Time of US news release is market with yellow vertical line)

1.05.2009

Yesterday's US news come within acceptable range, however just after release GU and EU pairs drop strongly. For me it seem as some pressure release happened, what keeps me in uncertainty about nearest market direction.

For today US news I would be happy to trade EU short if news will be worse than expected for USD [as good news increased EU value, opposite should happen with bad news].
I think there is still a bit of short pressure in EURUSD, however it may be not enough to press EU down on good US news.

Perfect trade would be bounce down on bad US news if price appreciated till 2:30 pm. I would expect about 50 pips.

If news are better than expected, it would be good for 30 pips up, but more I would find risky.

GDP came wors than expected, what holded me away from trading. release brought decrease of price on EU GU and EJ pairs, but soon they just turn out to be little corrective moves.

stability of USDJPY just ensured me in my opinion about best stratgy for FOMC release, that was bet o volatility by buing options both directions.

Now on daily charts you can easily spot breakouts of top channel trendlines. They may be sigals of trend change on my favourite pairs, but to say so I need to wait for retracement first.

For now I have no plain strategy what to do next, but certainly sooner or later I will point out what hints am I looking for in price action or market data to predict next market movement.

Now it's good to stay away as both directions of move are equally possible.

 

As I mentioned yesterday I find it quite hard to predict, whether EURUSD will keep it's channel, or does it establish a new uptrend.

In spite of uncertainty there is some opportunity in front, which comes with FOMC statement with interest rate. Whatever will happen There must be some high volatility action either up or down.

My strategy for today will be definitely bet on that volatility, however as I'm not sure about direction, it's gonna be some option trading [I will buy some cheap put and call option short before release just to sell both when price will show 50 points spike, hopefully to obtain 1:2 Risk-Reward ratio. However If at the time of my transaction price will be testing top channel line [coincident with pivot S2 point] I see a big chance that keep with my option till the end of a day may be even more profitable.


There is also quarterly GDP release that may bring some nice price action. Personally I would be more interested in long position on good news than in short on bed.

First entry, just to show you my general idea is about recent EURUSD price action. Of course everyone can be smart now as it already happen :)

Here's some picture of last month:

There is nice channel that could have been easily spotted on a daily chart, bears were in the air, however there was one "but" there was no reason for price to go down on Monday 27.04 - where vertical line is placed (or maybe there was?).

Unexpected move [20:00 on a 30M chart] brought me to thought, that the one who sold all that euros may need his money back, so today I felt strong tension to not take short anymore, but rather wait for spike. As you can see I was kept in uncertainty till beginning of American session but finally proven to be right :)

To be honest it was even better then I expected, note that 5pm on this chart was the time when US consumer confidence (nearly 10 points better than expected) was released - this move is for me reason to give up 1.29 target and stay away from market.

Hope that it's clear what am I trying to snip. Any comments or questions, just ad in comments.