Do you trade pullbacks? If so, watch this entry
DXC:
After a few years in the FX markets you tend to not be too
surprised when
certain things happen, i.e. prices move in a different direction that you
thought, but I must say that the move overnight in DXC does come as a surprise.Â
The inability to hold onto the 88.30 and 88.16 level is troubling from a
technical standpoint. With the exception of the 50-day ema at 87.92, DXC is
looking a bit ragged.
The 60-min chart now is indicating a possible beginning of wave 4 that would
likely conclude in the 88.16-30 region before moving lower in a wave 5 pattern
towards 87.77.
GBP/USD:
With current DXC weakness, the oversold-sideways action from the last several
days has now given way to a potential long trade. Up until now, even though we
were keen on looking to go long, a long trade was more of a coin toss given DXC
strength. This has now changed as prices have broken out of the consolidation
area and are now back above the 50-day ema at 1.8060. Based on our
interpretation of the 60-min chart, we see a potential long entry on any
pull-backs toward the 1.8050-65 level, although this level (zone) might be
adjusted higher as prices play out. Targets seen at 1.8150 & 1.8200
AUD/USD:
A successful test of the 50-day ema at .7636, while solid technically, still
leaves AUD/USD unclear in terms of price patterns. For now we simply see no
compelling trade set-ups and would advise looking elsewhere for trades.
NZD/USD:
While we were stopped out at break-even on the remainder of our short last
night, it appears that NZD/USD still has the potential to turn lower again,
although DXC will need to do an about face for this to play out. A bear
trend-line on the 60-min chart is still containing upside price action at the
.7011 level while the 50-day ema at .7000 is providing support. We will
continue to monitor this pair for a possible short, especially if .6985 were to
give way.
USD/NOK:
Failure at the 50 and 200-day ema points to potentially lower levels. We are
keen on USD/NOK as a short and will be keeping a close eye on the price action
for possible entries. Trend-line support on the 240-min chart at 6.3726 has
been breached but based on our read of the charts, we are more likely to wait
for a pull-back towards the 6.3720-6.3800 area before initiating shorts. Based
on this scenario, we see 6.3450 as the near-term target.
Closed Trade:
We went short NZD/USD at .6993 (on the 19th) with an original price target of
.6955, which once traded, we closed half and then adjusted the stop loss to
break-even. The trade worked out, however, we did not feel that prices
would bounce back after the FOMC, but as you know, they did.
What is key about the trade and worth noting though, is that despite the
60-min stochastics being oversold the 240-min stochastics were ‘freshly’ crossed
lower – this gave us an indication that lower prices would be possible despite
an oversold condition on the 60-min chart.
Obviously this did not work out, but it is worth noting since more times than
not, this technical scenario will yield lower prices for the remainder of the
trade that is still open.
For those in the Denver area, I will be speaking at the
Denver Trading Group on
Saturday.
As always, feel free to send me your comments and questions.
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.