This long entry may trigger today
Dave Floyd is a professional FX and stock trader
based in Bend, OR and the President of Aspen Trading Group. Dave’s approach to
FX combines technical and fundamental analysis that results in trades that fall
into the swing trading time frame of several hours to several days. To learn
more about how Dave trades,
click here.
It looks as though
DXC is poised to regain an upward bias
after Friday’s successful rally. GBP/USD
appears to be the one pair that we track that could buck the overall DXC
strength – hence, if DXC were to weaken we would be watching GBP/USD for long
entries. You will note that EUR/GBP (weekly set-up mentioned yesterday) has
moved lower on the heels of the firm pound.
NZD/USD – poised to break intra-day bull trend-line (240-min chart) at .7020. A
successful breach of this level will expose a move towards .6980.
Monday’s 24-Hour FX Targets
————————————-
Notes/How To for The 24-Hour FX Targets
Today’s FX traders are now demanding a more
systematic approach, and this new feature will nail those desires right on the
head. With our 24-hour forecasts you have specific entry prices, stop-loss and
price targets.Â
Entries:Â
entry prices are meant to be taken at the time of posting by simply placing an
order to buy or sell at the market. Targets will typically be posted by 5 AM
PDT.
Stop-Loss:Â we
suggest that all traders place a stop-loss equivalent to ½ of the value of the
projected gain in pips. For instance, if the price target for the EUR/USD is
1.2200, and it is trading at 1.2100 at the time (100 pip gain) of the forecast,
we would suggest setting a 50 pip stop loss (1.2050).Â
We also discuss a basic trailing stop strategy at
the end of this article.
Exits:Â
traders should take profits when the ‘Target Price’ is achieved.  If, by 5 AM
PDT the following day, the stop-loss or target price has not been achieved,
simply close the trade at market.
Let’s look at an few example as a way to
illustrate how this will work. Below is a screenshot from Thursday October
20th, it is exactly the same format that will be posted here each Monday and
Wednesday.
The far right column, 24-Hour Targets, is simply
our estimate of where the pair will trade towards during the next 24-hours. A
‘N.A’. simply indicates we do not have a price target.
The ‘Current Bias’ column will only show a
bias for the pairs that are highlighted ‘blue’ as these are pairs that we also
recommend on a discretionary basis.
At 5 AM on 10/20/05 GBP/USD opened at
1.7665. The price target, as noted above, is 1.7735 – a 70 pip gain if
achieved. The initial stop-loss would be 35 pips, or 1.7630.Â
GBP/USD went on to achieve both targets.
Naturally, not all of the forecasts will play
out, and like most systematic approaches, the number of iterations will increase
your success. Pairs like USD/JPY and EUR/USD did not achieve
their targets and were stopped out, resulting in a loss of 65 pips, while AUD/USD,
USD/CAD and USD/NOK easily offset the 65 pip loss with solid
gains.
Trailing Stops:
Traders may also look to employ a trailing stop
strategy to protect gains. We suggest using a trailing stop equivalent to 1/4
the value of the targeted gains. So, in the example of the GBP/USD above, the
target is for a gain of 70 pips, therefore a trailing stop of 17 pips might be a
prudent approach.
Ultimately the decision is yours. Other
traders/clients simply use our forecast(s) as a guide and then identify their
own entry points based on their trading methodology.
As always, feel free to send me your comments and
questions.