My Favorite Forex Trading Setups For The Current Markets

FX markets yawned over the FOMC non-event today. We did see a little action in the overnight session, and likely to enjoy greater gains before the close of trading arrives on Friday evening.

EUR/USD (+$10 per pip)

Euros hit their buy signal at the pivot as instructed in yesterday's FX section here. Long near 2350 rose better than +60 pips before coming back in towards entry = par. Worst case scenario on this trade was breakeven... no harm done if not scalped off for +50 pips or so in the overnight arena.

I see no trade setups of interest here following the FOMC results. Once the sideways congestion breaks, we'll be able to measure price action for next tradable setup to emerge.

GBP/USD (+$10 per pip)

British Pound also hit its suggested entry point near 7835 and rose to 7915 for +80 pips potential gain before settling back again. Depending on hours traded = watched in live action, worst case scenario was exit at entry for par. Overseas FX traders during normal waking hours had a chance to book several hundred bucks per contract profits.

No visible trade setups until late tonight at the earliest... possibly until tomorrow morning for me.

USD/CHF (+$9 per pip)

Swiss Franc did not hit overnight sell signals... nor are there any potential entry points of interest before deadline of publication here.

USD/JPY (+$9 per pip)

The Yen is merely forming an overall wedge pattern that should break in the next session or two. Until then, I would not be caught muddling in the middle of that mess long or short.

{Price levels posted in charts above are compiled from a number of different measurements. Over the course of time we will see these varying levels magnetize = repel price action consistently}

Choked Up
As discussed in here last night, we strangled the GBPUSD and USDCHF in our educational forum minutes ahead of Fed news break. The GBP long from 7860 and CHF short from 2590 has been sitting right there ever since, to the exact pip as I tap these words into existence right now.

Trailed stops on each are pulled to -20 pips from entry and holding, so they have a fair bit of breathing room to either work well or cause nil harm. With no surprise from the Fed toward financial markets, no over-reaction and no exaggerated price moves to profit from occurred. Eventually the Fed will break protocol, and FX markets will tank / soar 200+ pips inside of an hour posthaste.

Email Of The Day
Each day I'll answer one (or two) emails from TM readers in this section. Today's question is one of the most common we hear: "Is it easier to trade eminis or FX markets?"

Neither is what I'd call easy, lest everyone would do it as you've no doubt heard a nauseating number of times already. There are similarities and differences between the two. I'd say the biggest difference is volatility, dynamics and trending potential. The FX is a whole lot more of all three than stocks have dreamt of since year 2002 ended.

Currency markets trend nicely when they do, which can also be sideways rolls thru a big range for several months at a time. Stock index markets, especially the ES and NQ have been beaten down into miniscule daily ranges thru the past two years. So many players (large and small) are trying to scalp out meager gains that it becomes a perpetual cycle: tighter intraday ranges, smaller potential profits.

FX markets commonly make $1,000 to $1,500 per contract swings inside 24hr periods. When was the last time you saw ES or NQ do that? I mean each one alone, but you can lump both together most days and not reach $1,500 potential combined.

So what does this mean? Simply that there is more potential profits per trade inside FX markets than emini markets, all else set aside. That in itself does not make FX markets easier to trade, but they are in a sense more forgiving of trader mistakes. When the ES chops sideways inside a 6pt total range for 6.5 market hours, it is tougher (impossible) to pull +$500 per contract from there than it is a +80 pip move in the GBP/USD... which is a very common occurrence.

I trade both markets with equal aplomb, but if forced to choose between one or the other, at this point in time I'd have to go with FX markets solely do to dynamics here versus decades-low volatility there. I like both currencies and stock indexes, but more money flows into the FX accounts for traders adept at working both in equal fashion.

Trade To Win
Austin P
www.CoiledMarkets.com

Austin Passamonte is a full-time professional trader who specializes in E-mini stock index futures, equity options and commodity markets.
Mr. Passamonte's trading approach uses proprietary chart patterns found on an intraday basis. Austin trades privately in the Finger Lakes region of New York.