Having looked at all the markets this morning, no real trade opportunities jumped out at me. However I ended up taking two trades just to kick things off, in hindsight this was probably not the best idea as it is rarely wise to force a trade. But in the interest of kicking off this account the two trades I took was as follows:
Trade 1: ALSI long @51816 with a stop-loss @51440 (Open)
In keeping with the 2% risk profile I took 0.3 contracts giving me a total risk of 376 x 0.3 = 112.8 (ZAR). Technical reason for taking the trade is the potential breakout of the symmetrical wedge visible on the Daily, with a positive close outside the wedge on the 4Hr. We are also in an uptrend being above the Ichimoku cloud both on the Daily as well as 4Hr. I am also seeing hidden bullish divergence on the 1Hr for both RSI and MFI. If the breakout confirms we will have a technical target at around 52850. This equates to a potential profit of 1034pts giving us a Risk:Reward of 1:2.75. Risks to the trade is that we have a Gap close of Daily @51734 with a potential Gap down tomorrow. Trade 2: Brent Cruse short @71.59 with a stop-loss @72.50 (Closed)
I saw a potential opportunity to short Brent Crude on the close of a very bearish 4Hr candle. Having clearly rejected the 100EMA on Daily and also a key 4Hr level, I decided to take a short trade hoping to catch a ride on the current downtrend expecting it to continue lower towards the 200MA on Daily (around 70), which also coincides with a major level of support. This would have given us a risk:reward of 1:1.75. Unfortunately almost immediately after entering the trade, price immediately rebounded back to the open of the 4Hr candle stopping us out. Although unfortunate we accept the loss and move on to the next trade. I will continue to keep an eye on Brent as I suspect the down trend is likely to continue. Loss with some slippage amounted to 2.38%.
So just to give an update on the ALSI trade;
Again unfortunately things did not go our way with Tencent falling close to 5% overnight during the Asia session. With Naspers having close to a 20% weighting in the ALSI and a 30% stake in Tencent, this meant we had a massive gap down on open. This meant we got stopped out @51204 a nasty 236pts below our stop loss level. This equates to a 3.6% knock to the account. In hindsight I realize that trading on a 4Hr time frame we need to better factor in overnight risk factors such as what we experienced here. I have actually become very accustomed to 24Hr markets that would have triggered my stop at the predefined level overnight should the markets start to fall. Going forward I will be trading smaller positions in order to allow wider stops. Going forward: Looking at the 4Hr, it seems we had a fake breakout of the symmetrical triangle, with a rising wedge break to the downside visible on the 1Hr. I have thus changed my view and will now be looking for a short entry.
Trade 3: ALSI short @51586 with a stop-loss @51800 (Pending Order)
In keeping with the short view I am looking to enter @51586 which will serve as both the daily gap close and re-test of the rising wedge breakout. The stop is placed @51800 as this level will hint at another go at the 4Hr symmetrical triangle breakout. The stop is 235pts away so in order to try and limit the loss to 2% of the current account balance we will be taking 0.4 contracts meaning risk should be 235 * 0.4 = 94 (ZAR)
Just to give everyone an update, our ALSI short was not triggered today and it has hence expired. Depending on how the expiration of pending orders are set, they will either remain open until cancelled (GTC) or expire if set to only be valid for a day. I have chosen the latter and will re-evaluate tomorrow. As things currently stand I'm taking a neutral stance and will wait for price to give further indication of it's direction.
I am carefully keeping an eye on Brent Crude as I suspect that if a strong bullish 4Hr candle takes out the 73.30 level we might just see a new move up. Yesterday's daily candle clearly shows rejection of the lows.
Based on the Weekly I am starting to suspect that we will see the EUR/USD and GBP/USD pairs finding support around it's current levels with both pairs having major support levels coming into play. EUR/US also have the 200MA coming up on weekly with both pairs showing signs of Bullish Divergence. I will be keeping a close eye on them tomorrow hoping to possibly catch an early entry.
I am also keeping a close eye on USD/JPY as we are on a key level, but will need some more time to make a call. USD/CAD seems to be lining up for a potential short but I will have to wait until tomorrow morning to confirm.
So at this stage the market hasn't presented us with any new 4Hr signals and thus we haven't taken any new trades. I have also decided that going forward I will primarily be trading the trend trading strategy I posted about here:
The strategy makes it easy to spot and verify the development of new market trends and will allow us the opportunity to get on board with minimal risk. What is also nice about this strategy is that it only requires me to quickly flip through the different markets I am watching roughly once every 4Hr's (as this is our preferred time frame) freeing up my time considerably.
One of the setups that is close to a potential trigger using our new strategy, is a possible short on the USD/JPY. Although at this stage we need slightly more confirmation. Hopefully by tomorrow morning we will have our trigger event.
With a new week comes new opportunities, so since my last post I haven't taken any trades, but the USD/JPY setup I was watching did actually end up producing a very nice short opportunity on Friday. Unfortunately this happened during the early morning hours when I was asleep. So at this stage I will be looking for a pullback to maybe get on board.
Other opportunities I am watching includes:
Long opportunity on the ALSI after a retest of the 4Hr 200MA. Cup and handle formation also visible on the 1Hr that serves as conformation.
The DOW appears a little stretched at this stage and might present a good short opportunity for those looking for a swing trade. Strong bearish divergence is present on both the Daily and 4Hr.
The DAX is potentially setting up for a long but I suspect we will first see a pullback to the breakout level around 12250.
The FTSE has had a nice run over the last week but I suspect it might be running out of fuel around 7625. This level is a confluence of both strong horizontal resistance as well as the upper Bollinger and 42MA on the 4Hr. There is also strong bearish divergence present. Possible short target could be the 200MA level on Daily around 7500.
Other than bearish divergence the SP500 is looking long and strong. A small pullback to around 2850 is possible after which the trend will likely continue.
Brent Crude could be affording us a nice short opportunity soon, but I will have to wait for a close below Kijun-Sen on 4Hr to enter. Momentum at this stage is still up but I suspect we will see some resistance around the previous swing high around the 72.67 level.
EUR/USD is just about ready for a long entry as it has completed the re-test of the inverse head and shoulders pattern. The target should it play out will be at 1.1530 giving us about 130pts if we enter at 1.1400. We will use the 4Hr Kijun-Sen as the stop, providing us with a risk to reward ratio of 130/30 = 4.3:1
AUD/USD in sticking with our new strategy a long opportunity exists on the 4Hr if looking to take a long
up to the 200MA. I would first like to see a solid close above the 200MA on the hourly as there are some worrying bearish divergence present.
EUR/CHF we are also looking at a possible long opportunity but as with the AUD/USD I would first like to see a strong close above the 200MA on the hourly.
Trade 3: EUR/USD long @1.1423 with a stop-loss @1.1374 (Open)
So as expected we saw a successful retest of the inverted head and shoulders with price quickly bouncing back after the retest level was reached. I thus decided to take the long position using Kijun-Sen on 4Hr as the stop-loss and horizontal resistance @ 1.1531 as take-profit level. Risk is limited to 2% of the portfolio.
Just a quick update on our EUR/USD long trade:
As we can see from the below screenshot taken on the Hourly, the re-test of the inverted head and shoulders neckline was swiftly followed through with bullish price action. Our target can be seen above at 1.153 as this is both the head and shoulders target as well as overhead resistance. Hopefully we reach our target without much hesitation, although a retest here of the 200MA on the hourly is a possibility.
Good Morning
So we were fortunate enough that our EUR/USD long trade reached it's target during the night. This adds a nice 4.3% profit to our portfolio. We have now hit a major 4Hr level of resistance and would need to see how price will behave, before considering other trades on this pair. Here is the same 1Hr view from Yesterday and we can already see how price is retracing towards Tenkan-Sen.
Here is a brief overview of what I see on the markets today:
ALSI still in consolidation mode. Definitely not a great market to trade at the moment.
DOW is still pushing the upper boundaries but starting to look like it's about to run out of steam. Still providing a possible short opportunity for swing traders. A strong close below kijun-sen on the hourly would be telling.
DAX still poised for a long setup but would still like to see a pullback to tenkan-sen
FTSE as expected the index did indeed run out of steam at 7623 and a close below kijun-sen on the 4hr wold be bearish. Target would be the 200MA on Daily
Brent Crude has continued to test resistance @72.67, so far it is still holding. If we have a strong bearish candle on the 4Hr this will be a good short trigger. For now we will wait.
EUR/USD and GBP/USD both had a nice run, but a pullback towards tenkan-sen on 4hr is now likely. If we bounce from there we will look for another long opportunity.
AUD/USD Yesterday I mentioned that a strong hourly close above the 200MA would be bullish, we ended up getting our bullish close and the market have been running hard since. Unfortunately I missed that candle as I wasn't monitoring the 1Hr. This is a good example where alerts might be very useful!
USD/JPY this pair has been trending down in a massive falling wedge pattern that are clearly visible on the 4Hr and Daily. We have once again touched the bottom channel and are likely going to bounce back to the upper level @110.60. So for swing traders this would be a nice long opportunity.
GBP/JPY similar story to USD/JPY except we actually had a quick rendezvous below the wedge. This often times happen and are either followed-up by a violent move back to the top of the wedge or further down should the bottom of the wedge turn resistance. Definitely something I will keep an eye on today.
USD/CAD from a daily/weekly perspective this pair is slowly starting to trend upward, from a 4Hr perspective however, I think we need to do some re-testing of lower levels. We will be carefully monitoring this pair and hopefully get an early ticket long once it turns bullish.
EUR/CHF unlike the AUD/USD that saw a strong bullish close of the hourly 200MA yesterday, this pair was much less optimistic in it's approach. As things currently stand we have a re-test of the hourly 200MA but I would first like to see a strong bullish candle being printed above the hourly before I would consider going long.
USD/CHF this pair is currently at a major level of support and in the past has had buyers lining up. I will be watching the price action very carefully here and give an update if I see opportunity.
Trade 4: EUR/CHF long @1.1401 with a stop-loss @1.1351 (Open)
Based on our previous observation we got our strong bullish close of the 200MA almost 2 hours ago already. Unfortunately I wasn't in front of the monitor so got in a bit late. I still see decent opportunity here as the inverse head and shoulders target and next level of resistance is still 60pts away @1.1461. This still gives us a positive risk:reward ratio of 60:49 or 1:1.22
Starting with an update to our EUR/CHF long trade;
Shortly after our entry, price had a nice little bullish run even breaking out of the upper channel. Unfortunately price quickly receded back into it's current channel and has now gone on to retest the bottom of the channel (5min Inv HnS Target). But as long as price remain in the current channel I remain bullish. If we get an hourly close below 1.1370 I will consider an early exit as this will signal further downside.
Onto other markets:
ALSI broke out of the smaller symmetrical triangle with a strong bullish candle, possibly heading for the top of the larger symmetrical triangle @51600
DOW as expected hit resistance and sellers stepped in. Unless it regains it's position above tenkan-sen on the 4Hr further downside can be expected.
DAX we got our pullback to below tenkan-sen. Resistance still looming @12488 so need to keep an eye on that.
FTSE closed below kijun-sen and my outlook is now bearish. I will be looking for short opportunities on the 1Hr.
Brent Crude has breached resistance @72.67, and a re-test will now be on the table. We will let the outcome of the re-test inform our bias.
USD/ZAR experienced a nice cooling of period and is now consolidating within the Ichimoku cloud. I suspect we will see another push towards 14.65.
EUR/USD and GBP/USD are both looking bullish, however I am still looking for a pullback towards tenkan-sen on 4hr. If we bounce we will look for long entries.
AUD/USD is now catching it's breath after a nice run. Bias is still bullish and a bullish close of the cloud would be a good long trigger.
USD/JPY ran hard after it's bounce of the bottom of the wedge structure stopping just short of the 110.60 level @110.52. I still think 110.60 is on the table here, but would like to see confirmation from a bullish candle close above 110.47.
GBP/JPY managed to climb back into the wedge structure and is now trying to find it's feet. If we can get a close above 142.60 I think 145 would be on the table.
USD/CAD is still consolidating. I am still looking for a bullish correction, but would wait for more bullish action to confirm such a move.
USD/CHF Still waiting for buyers to step in. Will continue to monitor price action to see where this is headed.
Trade 4: Brent Crude short @74.07 with a stop-loss @74.53 (Open)
Took a sneaky short on Brent Crude as I am expecting a pull back to at least 73.23. My reasoning is the large bearish pinbar printed on the last hourly candle (notice the long tail) as well as the fact that we haven't retested the last swing high as yet. I am only risking 1% on this trade with a Risk:Reward of 1:1.8
Update on the Brent Crude trade: for some likely fundamental reason all hell broke loose about 2 hours after we entered our trade and price shot the lights out and stopped us out in the process. Luckily I only took 1% risk on the trade. Brent Crude has now actually turned rather bullish and it would not be strange to see 75.50
Update on EUR/CHF trade: we saw another test of the channel bottom followed by another bounce. Hopefully the pair will catch a break tonight. At this stage though I am concerned that price is consolidating into what is starting to look like a rising wedge. So to further manage risk I will be tightening the stop-loss to just below the last swing low on the 4Hr @ 1.1366 (This will reduce our risk to 1.5%).
FTSE: very nice retest of the diagonal breakout on hourly with a nice bullish hammer reversal printed on the retest level. Seriously considering a long position here.
USD/JPY: As expected the pair managed to reach the 10.60 level in spectacular fashion. Seems we backed the wrong horse with our last trade :) The pair is still trading within a larger falling wedge pattern and a bullish break above the hourly 200MA would be a possible long trigger.
GBP/JPY: Also looking real bullish with the hourly close above 142.60. Will be looking for long opportunities within the hour.
USD/CHF: looks like buyers have finally stepped in with a possible tweezer bottom being printed on the 4Hr as I type. The pair is not out of the woods yet although things might be turning here. Will see what the next 4Hr candle brings.
Trade 5: FTSE long @75.84 with a stop-loss @75.65 (Open)
I have decided to go ahead and take a long position on the FTSE due to the re-test seemingly holding so far. Stop-loss is slightly below the previous swing low and the target is at the next major overhead resistance @7620. The Risk:Reward is 1:1.8 and I will risk 2% (taking into account we don't have a massive gap down tomorrow).
I am slightly concerned that we might have a gap down tomorrow stopping us out and will consider a wider stop if things turn ugly. So far we are holding above support and will hopefully see a bounce followed by a gap up tomorrow. This one can really go either way
Update: Things did indeed start turning ugly for our FTSE trade but I decided to leave the stop loss as is. We ended up getting a smaller than expected gap down followed by some more bearish PA which soon stopped us out. Loss was contained at exactly 2%. Going forward it seems the FTSE has slightly recovered but is now starting to range sideways.
Our EUR/CHF trade is still holding onto dear life with yet another retest of bottom support during the night. At this stage we have not yet bounced and may be a sign that bullish momentum is failing. I have already tightened the stop-loss so will just have to see how this ends.
At this point it is easy to get discouraged at results seeing we have had 3 out of 4 losses so far with our open trade struggling to stay above water. However, if you have traded for any amount of years you would know that losing streaks are absolutely normal and to be expected. The important thing is to keep your head high, learn from your mistakes and keep up your trading disciplines sharp.
So what are the markets doing today:
ALSI: It would appear we have broken out of the smaller symmetrical triangle and have now come in for the re-test. If the retest hold we should have 52388 on the table. If the re-test fails we should see the 51300 level retested.
DOW: Struggling with what seems to be a potential double top in place, but too early to tell. Price is currently testing major support @25700 . I this level breaks we will see price move lower towards the 25600 level. If it holds we will bounce to around 25800, where it would once again be decision time as we will then have a flat top triangle in place.
DAX: Is ranging now, resistance still up above @12488. For now we watch.
Brent Crude has had an exceptional bullish run and are now headed for a re-test of the 74.60 level. My view is that it will likely hold but I suppose we will just have to wait and see.
USD/ZAR after a brief sell-off last night the pair has recovered most of the losses and is once again back in the cloud.
EUR/USD: Met resistance at the 4Hr 200MA and saw a pullback to below tenkan-sen. I tink we will likely retest the 1.1530 level at which point we will likely see trend continuation. I would be watching for long opportunities.
GBP/USD: Also saw a pullback to below tenkan-sen with a possible retest @1.2830 on the table here. Will also be looking at possible trend continuation.
AUD/USD: We had a massive gap down last night followed by a large bearish candle on the 4Hr that closed right on major support @0.7239. If this level hold we might see a bounce abck to the 200MA on 4Hr.
USD/JPY: Looks like there is no stopping this pair, although a re-test of the wedge breakout @110.60 is possible.
GBP/JPY: Currently consolidating, will wait to see which way we break.
USD/CAD: We saw a fake break below diagonal support followed by a gap up and large bullish candle on 4Hr. I would like to see a bullish break above the 1.3037 for more upside. If we cannot break through this level view would be bearish.
USD/CHF: Saw some buying activity but definitely need more convincing as the trend is still down.