My Favorite Forex Trading Setups For The Current Markets
FX markets yawned over the FOMC
non-event today. We did see a little action in the overnight session, and likely
to enjoy greater gains before the close of trading arrives on Friday evening.
EUR/USD (+$10
per pip)
Euros hit their buy signal at the pivot as
instructed in yesterday’s FX section here. Long near 2350 rose better than +60
pips before coming back in towards entry = par. Worst case scenario on this
trade was breakeven… no harm done if not scalped off for +50 pips or so in the
overnight arena.
I see no trade setups of interest here
following the FOMC results. Once the sideways congestion breaks, we’ll be able
to measure price action for next tradable setup to emerge.
GBP/USD (+$10
per pip)
British Pound also hit its suggested entry
point near 7835 and rose to 7915 for +80 pips potential gain before settling
back again. Depending on hours traded = watched in live action, worst case
scenario was exit at entry for par. Overseas FX traders during normal waking
hours had a chance to book several hundred bucks per contract profits.
No visible trade setups until late tonight at
the earliest… possibly until tomorrow morning for me.
USD/CHF (+$9
per pip)
Swiss Franc did not hit overnight sell
signals… nor are there any potential entry points of interest before deadline
of publication here.
USD/JPY (+$9
per pip)
The Yen is merely forming an overall wedge
pattern that should break in the next session or two. Until then, I would not be
caught muddling in the middle of that mess long or short.
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{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}
Choked Up
As discussed in here last night, we
strangled the GBPUSD and USDCHF in our educational forum minutes ahead of Fed
news break. The GBP long from 7860 and CHF short from 2590 has been sitting
right there ever since, to the exact pip as I tap these words into existence
right now.
Trailed stops on each are pulled to -20 pips
from entry and holding, so they have a fair bit of breathing room to either work
well or cause nil harm. With no surprise from the Fed toward financial markets,
no over-reaction and no exaggerated price moves to profit from occurred.
Eventually the Fed will break protocol, and FX markets will tank / soar 200+
pips inside of an hour posthaste.
Email Of The Day
Each day I’ll answer one (or two) emails from TM readers in this
section. Today’s question is one of the most common we hear: “Is it easier to
trade eminis or FX markets?”
Neither is what I’d call easy, lest everyone
would do it as you’ve no doubt heard a nauseating number of times already. There
are similarities and differences between the two. I’d say the biggest difference
is volatility, dynamics and trending potential. The FX is a whole lot more of
all three than stocks have dreamt of since year 2002 ended.
Currency markets trend nicely when they do,
which can also be sideways rolls thru a big range for several months at a time.
Stock index markets, especially the ES and NQ have been beaten down into
miniscule daily ranges thru the past two years. So many players (large and
small) are trying to scalp out meager gains that it becomes a perpetual cycle:
tighter intraday ranges, smaller potential profits.
FX markets commonly make $1,000 to $1,500 per
contract swings inside 24hr periods. When was the last time you saw ES or NQ do
that? I mean each one alone, but you can lump both together most days and not
reach $1,500 potential combined.
So what does this mean? Simply that there is
more potential profits per trade inside FX markets than emini markets, all else
set aside. That in itself does not make FX markets easier to trade, but they are
in a sense more forgiving of trader mistakes. When the ES chops sideways inside
a 6pt total range for 6.5 market hours, it is tougher (impossible) to pull +$500
per contract from there than it is a +80 pip move in the GBP/USD… which is a
very common occurrence.
I trade both markets with equal aplomb, but if
forced to choose between one or the other, at this point in time I’d have to go
with FX markets solely do to dynamics here versus decades-low volatility there.
I like both currencies and stock indexes, but more money flows into the FX
accounts for traders adept at working both in equal fashion.
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.