If you like trends, trade these markets
FX markets were active on Thursday,
spurred by various overseas (from U.S.) catalysts that aren’t really important
to know. Astute FX traders need be aware of G-7 meetings, various interest rate
decision points and economic reports that may influence interest rates. That
said, everything necessary to know is always in the charts.
While the FX universe has a number of major
pairs and numerous secondary symbols to trade, I personally confine 90% of my
action inside just two: the GBPUSD and EURJPY. These symbols are loosely
correlated, as opposed to trading GBP and EUR or CHF which is essentially the
same trade.
GBPUSD tends to make the widest swings = trend
moves compared to all others. GBPJPY is comparable, but -10 pip bid/ask spread
makes this one akin to trading two GBPUSD contracts per one GBPJPY. The USDJPY
pair is too sideways buzzy-fuzzy for my taste… while the EURJPY is just right.
For the most part we’ll profile GBPUSD and
EURJPY symbols in this forum, with occasional guest spots for other currency
pairs. When FX markets are sideways, all pairs are muted. When FX markets are
directional, most pairs offer high-odds trade setups for success.
{Price levels posted in charts below are
compiled from a number of market measurements. Over the course of time we will
see these varying levels magnetize = repel price action consistently}
GBP/USD (+$10 per pip)
British Pound launched upwards off its daily
pivot point support while offering long trade signals near 7340 in the process.
Secondary or continuation buy signals near 7420 came after the first trade
sequence exceeded +100 pips. The entire sequence was good for +200 pips
intraday, taken in one or two chunks accordingly.
EUR/JPY (+$9 per pip)
Euro-Yen was muted in range compared to GBP (as
usual) but still offered decent intraday potential gains to the upside that may
continue further thru the night.
Trend View
GBP/USD (+$10 per pip)
British Pound has been trending lower in its
weekly chart all year, with one major bounce this summer. A lift back to 7600
magnet is probable, and we could easily see 7950 while overall downtrend remains
intact.
Long-term trend is down, near-term trend is up.
EUR/JPY (+$9 per pip)
Euro-Yen has walked its trend chart upward
since August. A pull back to the ascending trendline or even 138.50 level (both
are moving targets right now) would do nothing to change the existing uptrend
bias.
Long-term trend is up, near-term trend is also
up.
Summation
Currency market have been swinging wild and/or trending nicely for
quite some time now. While stock index markets struggle to keep the same
direction going two sessions in a row, the currencies offer trend traders solid
profit potential. With a new year just ahead and interest rates in the U.S. up
in the air, I expect 2006 to be one of the better periods in history to actively
trade currency markets. We’ll cover much more on all aspects of that in this
section to come… stay tuned!
Trade To Win
Austin P
(Weekend Outlook trend-view section…
open access)
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.