How do you like them apples?

I said that the 100.75 to the 101.25 range was a good time to buy. The Aud/Jpy is playing well off of the support as the trend continues from prior. If you got in mid point you should be up about 240 pips as of today. Not too shabby for a few minutes of reading.

Now with the USD/CAD. I have been pro Canadian for months now and the pull back has played out well. We talked about selling off on August 1st, price was near 1.0600 but I didn't get any graphs posted. Now we have had a good move and a pull back. I think 1.05 is a good resistance and shorting point. 1.0630 is the next resistance level with some wiggle room to watch out for. We may see some consolidation and slowing near 1.0400 and again near 1.0350. If we can clear these levels, the 1.02 and even parity is possible. This graph is a 4 hour chart.



Gbp/Nzd is close.

Pivot Points and the Gbp/Nzd

I found a pivot point calculator as a widget I could install. What I like about pivots is the ability to take discretion out of support and resistance. Here pivots are calculated using the high, low and close of a specific time period. I have punched in the high, low and close of last week on the Gbp/Nzd. As you can see the values are:
Pivot 2.6638, R1 2.7037, and S1 2.6413 , where R1 = Resistance and S1 = Support.

Looking at these values and dropping down to the shorter term daily or 8 hour chart, you can start to see how these values apply to the chart pricing. The prices will not hit exactly the key points but if you have trouble defining support and resistance levels, give pivots a try.

At the bottom of this page you can input any values from any pair. It works well on monthly candles, weekly candles, daily candles and intra-day candles. The basic premise is to expect the price to be bullish above the pivot to the resistance levels above the pivot. The other side of the equation is to be bearish below the pivot and use the values below the pivot as potential support levels.

As those who have followed the blog know, I like to buy at support levels and sell at resistance levels. As i look at the GBP/NZD, I generally use my own support and resistance levels but looking at the pivot points they match very close to some of the key levels I am watching. It would have been great to sell of the 2.7037 level and a close below the 2.6638 level could be an indication of bearish sentiment to the next level.

The key with these levels, in my opinion, is use closed or completed time frames for the values to start the calculation and then remember to control your risk by selling off of resistance levels and buying up support levels. Add some of your own discretion and some fibs and I think you have a decent trading plan.

I CANT BELIEVE IT DIDN'T POST

I typed all of this up an hour and half ago and hit post and then went into a meeting. Unfortunately, it didn't post. In the end I was right about the fed decision but the volatility could have given you some sort of a mean shake if you took the chance on the trade. The Aud/Jpy has benefited from the recent moves as well as the USD/CAD.

There is surprising amount of buzz about the Fed interest rate decision today. I have looked at the CBOT fed fund futures and it appears we have a rate cut priced in toward November or December. My first response based on what the futures show would be, we could hear dovish comments from the fed. My next response is, the fed is stuck between a rock and a hard place. We are finally seeing some slowing in the economy and the real estate market is being further hammered as well as a significant credit crunch. By lower rates that would definitely stimulate the economy and some spending but it could also spurn stagflation. Stagflation occurs when inflation is going up while economic growth is not. That is what we have setting up now. Commodities are still high, sure we have seen some pull back but it is still in a growth market. The best choice from the fed would be to leave things alone. Ben Bernanke has shown he is willing to stand his ground on

In case you missed them

The Aud/Jpy has pulled back again and all the prior analysis still stands. The buying range as I see it is somewhere between 100.75 and 101.25. We are at the top of this range but I don't know how deep into this area the price will go.

Usd/Cad has given a pull back and I like the idea of selling it.

Gbp/Nzd... not as convinced. It is stalling out at 2.6540 and has been within 50 pips either direction for the past 16 hours. 100 pips is a large "stuck area" for most pairs but not for this pair. That is hardly a shadow worth noting when the pair can move 600 pips or more in one day.

More on these developing events...

Follow up on the Aud/Jpy

Yesterday I commented I like the Aud/Jpy when the price was near 101.30. Right now it is at 102.36, do I still like it? Not as much frankly. We have slowed just outside of the past 3 day highs which also match up to our Fibonacci retrament levels. If I am going to be comfortable with a position I want to get in closer to a bounce or support or after we break above this short term level with a bounce above the level. I wouldn't be surprised if we blast right through and make the previous trade very profitable but I certainly not looking to add a position here. Not yet anyway.

Now if we can get that upward mobility, 105 is certainly not out of reach and possibly back to the 107 level as we discussed a couple of days ago. Potential bounce levels? 102, 101.40, 102.70

Usd/Cad Short, Aud/Jpy Long?

Both of these are looking good. Short term we could see a little pull back on the Aud/Jpy to keep our risk in check. Usd/Cad is looking good to me. I will post with graphs later.

Aud/Jpy Trade

In the comments from of yesterday's post, I mentioned the idea of not chasing the trade. Let it come back to you. So here it is back to us. To gather further insight to the trade set up, first look at John's posting at Forex Factory on the AUD/USD. Half of the trade I am looking at is tied up in the strength of the AUD.

Next let's look at the long term view of the AUD/JPY. The pair is still trading in the channel that goes back to Feb/March time frame. It is testing the channel support, approaching the 100% fib retracement level and the 38% fib fan "supports" the trade for the same time frame (groan... I can't believe Blake went for the cheap pun). All of these favor the setup of a long position. From the risk and reward stand point, a 100 pip stop could allow you to trade the pair back to 107.50 level. Risk 100 pips gain 650. Mmm tasty. But the upside trend line is moving higher as time goes on so the target could becom 110.00 now we have a 900 pip target for the same 100 pips stop...yummier.

I have talked a lot about giving yourself more room to trade than you think is necessary. What about a stop in the 97.50 level. We now risk 350 pips for the same 650 or 1000 pips. Though the risk to reward isn't as appealing, I think the view of taking bigger stops will make you more right more of the time. It only takes one more winning trade in 8 trades to make up for the additional exposure.

To be more conservative and time the trade, let's drop down into an intraday view. Waiting for a move to break the 102.50 level for confirmation of the break of the fib fan and getting back into the fib retracement from prior would be a good idea. BUT, WE SHOULD BE MUCH MORE WORRIED ABOUT THE LOWS AND NOT THE HIGHS. If we are going for a long or bullish trade then we concern ourselves with the lows or support levels. If those support levels are broken then our trade is over. The reverse is true in down trends. If we bounce off of the 101 level then we have a higher low and continuation of our trend. I will then use a fib fan and the 61% line to draw a support line off of the bottom of those two lows. The fib fan will give me a quick controlled out of the trade as well as a target for the next high. After we see a bounce I will post again.

Added insight

Adding to my encouragement for you to look at GLD, and the AUD/JPY, take a look at the video and blog on the Profiting with Forex home page and today's blog title Watching Stocks to Trade the JPY. Add that to the Aud/Usd analysis and put all the pieces together.

I am not kidding, take a stand, make a comment, show you have an opinion. No one is wrong, some of us will just be "righter" than others.

No time for graphs

See if you can see what I am seeing. I like the idea of a buy on the Aud/Jpy near 100.70-101.30.

Look at the long term trends, look at fib levels, look at gold... then post in the comments and let's talk about this one. What is the appropriate stop level? What would you expect long term? Is the pull back over? Is it time for a trade? Am I a few sandwiches short of a picnic?

This and more in the next blog post.

Stopped out?

Were you stopped out? We have experienced a shadow up to 2.5738 which, depending on if you gave your trade any room from the 2.5700 resistance, you could still be in the trade but, more likely than not, you were stopped out.

Now What???

It's payback time of course. That's right get mad, show the Gbp/Nzd who is boss. Throw your money at it and see if it bleeds... oh wait, that's your blood...hmmm... scratch what I just said.

I am still bearish on the pair but now I have to wait for a good risk to reward again before I take the trade.

Is it here at the 2.5650 level? Only time will tell. Exactly 2 hours and 3 minutes to see if the close price takes me outside of my fib fan level and the resistance level. If not, I am good to watch for another entry. If it is closer higher, I like 2.5800 as a possible new short.

As fortune would have it, I am still in the trade and it got within 12 pips of stopping me out. If we close higher I will exit the trade with some profits and watch for the new entry.

If you got stopped out, cry me a river and wipe your eyes with dollar bills. You made about $140 per mini contract for a couple days of reading my blog.

Happy trading

You have two choices

To quote Morpheus from the matrix, "This is your last chance. After this, there is no turning back. You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes."

So here are your choices, the trade is profitable and you can walk away with 170 pips or you can tighten your stop and risk 100 pips of your trade to see how deep the rabbit hole goes.

I see a short term resistance level right where we are at and the next suppor level is our low we were at earlier today with a potential move closer to 2.5300. So even treating the trade as a new trade we are close to a 3 to 1 risk/reward ratio. A potentially good trade set up... or is it.

If you forget why we got in the trade and what were were looking at prior you can see the Gbp/Nzd short, original blog posting here.

Fixed Link

If one of my links doesn't work, please put it in the comments and I can fix it. Here is the link to the special report that probably didn't work for you you yesterday.

Click here for the special report page with the protective puts article.

For you options fans

The options addict link to the right is a great site for options traders. I personally stick to the forex in about 85% of my trading. If you want a fun site and good in site into the options world, consider Jeff Kohler's option addict blog.

Holding steady.

Dropping the stop loss to 2.5700. A close above 2.5600 will push me to a close or a break below 2.5450 will get me to stick to this trade for days and weeks to come.

Tightening one more time tonight

It's running nicely and I am using a fibonacci fan for the recent run and one from the last week and I am adjusting to where they cross roughly and where you can see my cross hairs. Stop tightened to 2.5800. I know this isn't a big adjustment but the previous stop tightening was temporary until I could further analyse the trade. I didn't like risking over 500 pips from the current price. I will be adjusting it again as soon as we get a 4 hour bullish candle.

Article on Protective Puts

Are you interested in hedging your long term trading strategies in the FOREX? My friend, John Jagerson, wrote an article on protective puts.

You can get to this free special report by clicking the link here or by going to the link on the right side of this page and then going to the special reports section of the PFX Global site.

If the links in the web page don't work for you , you may need to copy and paste the URL here.

http://www.pfxglobal.com/index.php?option=com_content&task=view&id=48&Itemid=96

Tightening the stop

I am not expecting to get out of this trade quite yet but I want to be protected from a big surprise. I am tightening my stop to 2.5830. This will lock in about 50 pips but remember the amount of profits locked in has nothing to do with where I am moving my stop loss to. I am moving the stop loss based on seeing the break out, going to the trending resistance line at the point of the break out and making it a tight stop to the candle just before the break out occurred. We will update this later after we see where this plays out over the next day or two.

Never Never Never let them see you sweat

Were you sweating before the weekend. Looking at the 8 hour chart you can see a range of 180 pips in the 8 morning hours. watching your potential or initial gains go from $100 down to a loss and then back to profitable in that short time period can make you nervous and make you sweat. Remember your initial analysis. The arrow is roughly where most of us got into the trade. The "small" intra-day moves don't matter in the big picture of your trade. If you are going to take a stand, stand your ground. Things are looking about where I would want it to be or expect it to be at this point. Have a good weekend.

Kiwi video at the bottom of the page

For a 3 minute break check out the video at the bottom of the page.

mmmm Golden Kiwis

The Gbp/Nzd trade continues to test both upside and downside in the short term. I will feel much more confident of a big profitable trade if we can get a solid close below the 2.5700 area. Gold is on a move and has done so strongly finding support and breaking the downward resistance trend line. This could be a bonus to the Gbp/Nzd trade as well as the Aud/Jpy, Nzd/Jpy, Aud/Chf, Aud/Usd or just gold. There is still room to move to the top side.

Any other Gold traders out there besides me???