FX markets are where all the action is
FX markets have been active all week,
with plenty of opportunity for profits all the way. Friday’s employment report
has potential to spike or surge the currencies if data is surprising. Whether
change in interest rate policy comes sooner or later, it is coming. That in
itself will keep the FX markets moving a bit more than usual, with potential for
some huge trend moves to come in 2006.
Trend View:
GBP/USD (+$10 per pip)
British Pound has been tapping 7600 resistance
we wrote about in here last week. A push upward into a maze of resistance near
7925 would be a high-odds trend trade short. Could be going long above 7600 or
short below 7500 soon instead. Then too, we have the employment report strangle
play ahead of us on Friday as well.
USDCAD (+$9 per pip)
Canadian Dollar has been rather spiky this
week, posting a potential double-bottom low on two hammer candles in the past
four weeks. Clustered layers of resistance up near 1765 could cap the correction
and resume downtrend of USD value versus the Loonie. Pretty little coins, those
loonies & toonies.
USDCHF (+$8 per pip)
Swiss Franc is resting on moderate support right now, and if the 120min trade
charts turn bullish we will be taking long trades in harmony with overall trend.
However, a drop to 2645 is just as likely. That would setup a high-odds long
trade entry from down there with potential of a few hundred pips upside.
Considering I passed up a sell signal at 3100 on Tuesday, we see how quickly a
400-pip move can erupt at any time in the FX world.
EUR/JPY (+$9 per pip)
EuroYen is a pull back trend buy near 138 and
well below near 136+ if the pull back continues. I would guess we’ll get buy
signals near current levels tonight or on Sunday ~ Monday, but anything is
possible.
{Price levels noted by arrows in charts above
are compiled from a number of market measurements. Over the course of time we
will see these varying levels magnetize = repel price action consistently}
mini-FX
Currency FX traders who prefer to play modestly also have the option
to use mini-FX contracts, 1/10th the size of standard FX contracts. That allows
any retail trader to scale their own dollar management to any level desired.
Mini-FX account traders can opt to play 1/2 size lot in two different symbols
for diversity of risk on only one full-size contract leverage.
Modest account size traders can trade 1/10th,
1/5th, 1/2 or whatever 1/10th of full-size contract leverage they desire.
Flexibility to adjust stop-loss width in balance with static dollars risked.
These accounts are commonly referred to as
“Base 10” or “1/10th” accounts. Regardless the label, it is a perfect choice for
new FX traders and those with account size best suited for these mini contracts.
Summation
Currency markets continue to be where the action is. That could
include some rapid potential profits on Friday if employment report is a
surprise. Standard play for econ reports is to strangle the selected FX symbol (USD
related, of course) with buy and sell orders roughly 20 pips either side of
price action going into the report. A surge move either way often results in
+100 pips or better gain. A whipsaw that takes out both stops leaves the trader
net flat with -40 pip loss.
Could see some overnight posturing ahead of
Friday’s news, could see a quick burst in the morning hours after econ news.
After that, price action is probable to drift toward any directional push into
the early afternoon as volume dries and FX players depart for the week.
This holiday week was very trader friendly…
we expect much more of the same to come!
Trade To Win
Austin P
(Live Online Workshop: FX Trading From A to Z detailed
here)
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.