Hi, I was whining last week that my Euro/Gbp had only gone 70 pips, but by staying in it went a further 120 last week.
I show in the video how I scaled out (took half of the profit) and moved the stop and left the balance to run.
I did all this before last weeks ECB monetary policy statement and press conference, which as you saw, was a bit of a wild ride.
I explained at the beginning of the week how price would probably drift until the event and it did.
It only ranged less than 40 pips.
Then the press conference started and the price started to move up, before reversing and dropping 60 pips.
The Cad also drifted until the worse than expected Canadian rate statement and subsequent press conference. I showed in the live session how you could set a trap above and below the price and I will be looking at a similar strategy this week with the Gbp.
This week sees the Bank of England reporting and this has the potential to be a much wilder ride.
No one really expected any surprises with the ECB, but with the Uk the situation is very different. At the start of the month outgoing Governor of the BoE, Mark Carney, warned of potential interest rate cuts, followed by 2 or 3 other voting members. As a result, the Gbp stalled and pulled back and most experts expected a rate reduction to be “nailed on” this week.
However last week there was much better news from the UK and now the guessing game is 50/50.
Last week the Euro went nowhere before the news and then did make a move, this week could be much wilder with the Gbp. I will show you in Tuesdays live training session one way to trade this.
The Forex Week Ahead
Usually, the FOMC statement is a big event of the month with the potential for some wild swings. The thinking this week is that this may well not be the case. No one is expecting a rate cut or rise, but as ever be careful. Markets don’t like surprises and its a great time of the week for market makers to suck unsuspecting rookies into an adrenalin-fuelled trade 🙂
GBP/$: I said last week that “There is a possible 500 pip triangle break developing on the daily and weekly charts.” it did break out and pulled back on the daily, but I will wait until the press conference. To get an explosive move, we need a catalyst. This is potentially it!
The issue with this kind of announcement is that there are multiple potential outcomes and therefore trying to predict them in advance is gambling not trading.
For example, they may cut rates (negative), but then again that might already be factored in…. but then say that they don’t expect to do so again this year (positive).
Alternatively, they may not cut rates (positive) but then make negative comments to the effect that they still might next month (negative). Either way, best advice is to let the news come out, wait for any crazy moves to settle down and even wait for London to open the next day.
What I DO before the event is to look for major levels where the price is probably going to run out of steam if it goes on a run. If you remember, I explained before the Uk election result that if price spiked on the news of a Boris victory, I expected it to run out of steam at 1.3500- it went almost 500 pips and then stopped at? 1.3512 – this was not rocket science! It was probability based on a combination of technical and fundamental analysis (my knowledge of the Uk economy).
Gbp/$: If it stays where it is now and then drops lower after the news I will be looking for price to slow down at 1.2810 for a potential long. If they DO cut the rates be careful as it could crash straight through here as soon as the data is released, in which case wait for the dust to settle and wait for London to open the following day.
If it breaks and closes above the triangle, resistance line I will wait for a pullback to long. After a news-driven surge sanity usually prevails, I don’t believe that fundamentals support the idea of the Gbp going on a big run up now. As ever make a plan for every “what if” scenario.
Euro/$: Went nowhere before the news last week. 1.1000 should be hard to break. So swing traders will be looking to long there. Personally I prefer to trade the trend so 1.1100 is the first place to consider a short and 1.1170 for sure if it bounces higher. If it breaks and closes below 1.1000 I will be looking to swing trade long at 1.0900 (half stake as its counter-trend). Technically I prefer the Chf at the moment
Chf: I usually use it for confirmation with Euro/$ trades, but this has been fairly predictable of late bouncing off the whole numbers. I will place a forward order at 0.9770 and if that fails I will short again at 0.9870, both have multiple reasons why price will probably bounce there. (if you are new these pairs are correlated – if the Euro is going up the Chf is going down most of the time and vice versa, explained here: https://www.forexmentorpro.com/members-area/currency-correlations/
Euro/Gbp: The best technical & fundamental set up of the month so far, which I started to flag at the start of January. Is now 160 pips in profit. I explained in advance why 0.8590 was HUGE & I showed in the live session a few weeks ago how I entered it and intended to manage it. I have now closed half of the position and moved the stop to lock in another 80 pips. I show in the video how I am managing this and looking to add to the position if bounces back up to 0.8500
Aud: There is red flag Aussie employment news on Thursday. My bias is still short although there has been quite a bit of better than expected Aud news this month. If it shoots up on news I will definitely short at 0.7000 for multiple reasons.” Intraday watch 6900 for clues to short too. It stopped again last week at 0.6825 which was my target for the previous short. Swing traders will be looking for a long here and I will watch at the open. If it drops then I need it to clearly close below 0.6800 on a daily candle before considering an M2 short lower down.
Nzd: My bias is still short. If it moves higher I will still only short it. This pair tends to stop at whole number so 0.6700 & 0.6800 I will look for price to slow down. If it keeps going I will place a forward order to short at 0.6900
If it falls from the current position I need it to break and close on a daily below 0.6500 then do an M2 pullback to short. Swing traders will be interested to long between 0.6500/6550. I don’t swing that often 🙂 but I am tempted with this one too, its certainly worth watching as there is a 9-year-old trend line in the area. I will split a long in two, one entry at 0.6520 and the other at 0.6650- all explained in the video
If it drops like a stone after news then 0.6200 is where it will “probably stop” ergo a counter-trend long.
Be careful with the Yens. There is a similar pattern on most pairs and price is at a major support area/make your mind up. if it pops they will probably all drop and vice versa. Only be in one Yen trade at a time, or reduce your risk accordingly. If one loses they will all lose
$/Yen: Hopefully I kept you out of a losing long last week when I explained “I am “out of sync” with the Yens at the moment. This one has broken a major area of 110.00 but only by a handful of pips. It has also broken a weekly trend line so technically it’s now time to take an M2 pullback long BUT I am not convinced right now. There is a good chance that it will “fake out” and promptly drop back down. I am going to watch and wait over the next few days and I will update you in Tuesday’s live session. If it sets off without me I will wait for it to come back to me. Do not chase it. See the video for my reasoning.
I am half interested to long at the open, but will probably wait until London opens. If it drops I will be looking to long at 108.00 for multiple reasons.
Cad/Yen: Same as last week “Of the Yens I look at, this one interests me most; If it continues higher then the more conservative option is to look for a short at 85.00 for multiple reasons. If it drops then 83.00 is where I will long it¨
Aud/Nzd: I prefer to short and 1.0500 is the first place but the stop concerns me. 1.0600 is a better option but seems unlikely now, although it could spike there after news. If it keeps dropping then Pierre will be looking for a counter-trend long at 1.0300.
Aud/Cad: Still interested to short at 0.9100 its a big area again.
Aud/yen: There is a potential head and shoulders big move brewing here and it is sat on the neckline and daily trend line. If it breaks and closes below 74.00 then I will look to short on a pullback but for now I am not sure, so leaving alone.
Euro/Yen: Missed this one by a few pips 10 days ago too 🙁 I said “It is holding above 120.00 which is major support and resistance. I am tempted to long there. If it drops, that is the place for me and this time I will scale in and catch the **** thing!
New members, please note: If I am looking to take a trade long, for example, 1.5000, I place my order 10 pips above & 10 pips below for a short. This is because price often does not quite reach a major line and you need to allow for spreads.
We are NOT a “tipping service” our aim is to teach you how to trade for yourself.
For more up to the minute, updates do not forget to drop by the forum in Pierre’s corner.
Watch the video for more detailed explanations of this week’s detailed analysis and trade plan.
Click on the square button bottom right to watch in full-screen mode
Please note in the video I explain do NOT leave forward orders open over the weekend. Open orders I usually close unless they are at least 80 pips in profit with stops to entry. Any event over the weekend can cause big spikes and jumped stops.