Are You Missing Out On The Best Market To Trade?
FX markets have been trading like a dream for
weeks on end. Persistent, sideways congestion & buzz inside stock markets these
days do not
translate over in the currency world. E-mini futures are quite tradable to be
sure, but FX markets
are extremely so by dynamic comparison.
EUR/USD (+$10
per pip)
Euros gave their latest buy signals near 2320,
the latest overnight Sunday before spiking up nearly +70 pips before settling
back to the daily pivot point magnet. Next valid long signal I’d consider before
FOMC event would be long right there at the pivot, further event-trade
instructions in section below.
GBP/USD (+$10
per pip)
British Pound gave similar buy signals near
7730 before overnight news sent price action ballistic… nearly +170 pips from
entry signals. Prestaged orders on this one worked for +$1,500 per FX contract
while we slept. Dynamic market action does not get much better than this!
Next viable buy signal is 7835 in the overnight
session, then we prepare our pre-news strategy ahead of the FOMC event.
USD/CHF (+$9
per pip)
Swiss Franc signaled sell orders near 2655
again on Sunday before trading 60+ pips in favor of the entry from there.
Likewise, next viable sell signal in the CHF would be right back there near 2655
again.
USD/JPY (+$9
per pip)
The Yen has rolled its way upward since
Thursday overnight lows. It pulled back to roughly 62% of the upward swing to
Monday morning lows before heading upward again. A similar pull back to 111.90
area would be the final long trade signal I’d consider. That said, I am not
trading the Yen until FOMC event arrives as detailed below.
{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}
Strangle The Fed
We have a high-odds method of trading
econ news price reaction AFTER its release, and we often use a defined pre-news strategy
as well.
Basically, on any chosen major pair we wait until 8:28am EST and place
buy orders +20 pips above trading price and sell orders -20 pips below resting
price. If strangling the GBP in front of a big news event, assume it trades 7800 level a minute
or two ahead of news. A buy order at 7820 and sell order at 7780 is our chosen momentum
play.
Of course the idea here is to catch a moon-shot
rally or immediate price collapse on either side of the trade without enduring any
whipsaws. If the news is surprising, we usually see trades going +80 pips to
+120 pips within minutes of info release. When data comes out benign,
price action can indeed chop sideways to take out both positions before making any
subsequent move from there.
No Guarantees
This overall tactic is pretty much the reason why many FX broker-dealers quit
guaranteeing price fills just in front of econ news. Traders would lay
on these type of strangle positions and create tons of volatility in the melee`
to follow. To be honest, I’ve not experienced any type of slippage on order
fills in FX markets regardless. In January 2004 I did have a 30yr bond futures
trade slip -’40 ticks away from my stop into a employment report explosion, but
that’s another story. Even currency futures have usually filled on such
strangles within a few ticks of intended. Just so you know that there are no
guarantees when trying to catch a rocket ship launched off employment news =
drivel.
Last Friday ahead of the Non-Farm Payroll
report, we posted strangle orders on the GBPUSD and USDCHF inside CMLive-HotComm
educational forum. Soon after the news broke, both positions were closed out on
trailed stops for +50 pips per contract each. That’s +$500 in the GBP and +$450
in the CHF, per contract each. As an example, trading just five of each symbol
would have offered a quick +$4,750.00 gain on the 10-lot, well before stock
markets opened for business.
In my particular case, I set the trade, poured another cup of coffee
and
turned on the Outdoor Channel. News broke at 8:30am as planned, trades went our
way in the room and I was left to enjoy the balance of Friday without much
else to worry about. The strangle tactic worked well last Friday, it works at
least half the time over the course of time, and it has a very good chance of
working ahead of the FOMC event tomorrow.
Summation
FX traders have had tons and tons of opportunity to book solid profits the
past several weeks. We may see a late summer slowdown soon, but currency markets
are likely to remain hot overall for months and years to come. Good news for
those of us who know how to play within them :>)
Trade To Win
Austin P
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.