Wednesday’s Forex Setups

  • January 4, 2006
  • Dave Floyd


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. To learn
more about how Dave trades,

click here.

 

Here Are Some FX Set-Ups I am Watching

-  EUR/USD has just pushed through a key resistance level at
1.2085. If EUR/USD were to manage a New York close above this level it will
expose a move higher still towards 1.2155 & 1.2190.

-  EUR/CHF, the 1.5485 level is potentially providing some
degree of support – thus far that has been the case, and EUR/CHF has managed to
grind up towards 1.5512.

We are cautiously bullish on this cross and would look for it to trade towards
1.5575-1.5600 in the days to come. A daily close below 1.5475 would negate this
outlook.

Wednesday’s 24-Hour FX Targets

 


 

Notes/How To for The 24-Hour FX Targets

Today’s FX traders are now demanding a more systematic
approach, and this new feature will nail those desires right on the head.  With
our 24-hour forecasts you have specific entry prices, stop-loss and price
targets. 

Entries:  entry prices are meant
to be taken at the time of posting by simply placing an order to buy or sell at
the market.  Targets will typically be posted by 5 AM PDT.

Stop-Loss:  we suggest that all
traders place a stop-loss equivalent to ½ of the value of the projected gain in
pips.  For instance, if the price target for the EUR/USD is 1.2200, and it is
trading at 1.2100 at the time (100 pip gain) of the forecast, we would suggest
setting a 50 pip stop loss (1.2050). 

We also discuss a basic trailing stop strategy at the end of
this article.

Exits:  traders should take
profits when the ‘Target Price’ is achieved.  If, by 5 AM PDT the following day,
the stop-loss or target price has not been achieved, simply close the trade at
market.

Let’s look at an few example as a way to illustrate how this
will work.  Below is a screenshot from Thursday October 20th, it is exactly the
same format that will be posted here each Monday and Wednesday.

 


 


GBP/USD went on to achieve both targets.

Naturally, not all of the forecasts will play out, and like
most systematic approaches, the number of iterations will increase your
success.  Pairs like USD/JPY and EUR/USD did not achieve their
targets and were stopped out, resulting in a loss of 65 pips, while AUD/USD,
USD/CAD and USD/NOK easily offset the 65 pip loss with solid
gains.

 


Trailing Stops:

Traders may also look to employ a trailing stop strategy to
protect gains.  We suggest using a trailing stop equivalent to 1/4 the value of
the targeted gains.  So, in the example of the GBP/USD above, the target is for
a gain of 70 pips, therefore a trailing stop of 17 pips might be a prudent
approach.

Ultimately the decision is yours.  Other traders/clients
simply use our forecast(s) as a guide and then identify their own entry points
based on their trading methodology.

As always, feel free to send me your comments and questions.

Dave

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