Long Term Trading - Set and Forget

On a purely fundamental note, Draghi's better than expected statements about the Eurozone have boosted the Euro against most of the other currencies. All eyes have been focused on him though, and at the same time the UK has been improving faster and more quietly. The 4 hour chart on the EUR/GBP shows strong rejection at .8600.

The trade: Short EUR/GBP @ .8500, SL .8650. TP Open

Wow! I haven't seen anything like this in a long time.

We are bouncing around the 50% retracement levels on the EUR/USD and GBP/USD big down moves of this year. For the EUR/USD, it's 1.3231. For the GBP/USD it's 1.5605.

This pessimism in the US Dollar and optimism in everything else is an overreaction. I'm shorting now at these levels. Stops are beyond the 62.8 level. Small lots as usual. Risk only 4% of account if stopped.

The trades:
Short EUR/USD @ 1.3235. SL 1.3390.
Short GBP/USD @ 1.5607. SL 1.5790. 1/2 a normal position.


Closed trades:
EUR/USD: stopped at 1.3180. Loss amount: 6.83%
GBP/USD: stopped at 1.5490. Loss amount: 5%

Cumulative since start of journal:
Total Loss: -11.83% (GREAT START!)

Not to worry Falcon232 you will get it back on your next trade. Your analysis is top notch. Today's extent of $ weakness wrongfooted a lot of traders...

Olu

Thanks, Olu. I appreciate the encouragement. I am a strong believer in long-term dollar strength, but predicting when the trend resumes is not easy.

End-of-Week Commentary:

NZD/USD: A trendline drawn on the weekly shows that we may be approaching a reversal point in this pair. In addition, support is provided by the 200 SMA at .7790. I will be more confident in this long if a strong reversal pattern develops. Until then, I am maintaining my single position that filled at .7880.


GBP/USD: Fundamentally, we've reached the point in the UK where good news is expected every time a report comes out (just like the dollar about 2 weeks ago). Tuesday and Wednesday will provide opportunities for disappointment which, when considered with the somewhat strong jobs report today, will remind traders that the US is still ahead of the UK when it comes to economic improvement.

EUR/USD: The bottom line is that today's jobs report proves that the US is improving steadily, putting to rest the scares that developed earlier in the week with one lousy report after another. When the dollar stops getting slammed by people liquidating their USD/JPY trades, we can get back on an even playing field against the Euro. The dollar can't compete with the Euro when there's a record breaking number of Yen long trades occurring. It's like trying to run a marathon at high altitude. The good news is that we have a mean looking candle on the USD/JPY daily, and in addition, the Nikkei may have a good session or two following a 1% daily gain in the Dow. It seems like 13,000 is a number that Nikkei is attracted to. When the Nikkei has a good day, so will the USD/JPY. Once the currency gets under control and the uptrend resumes, the EUR/USD will plummet.

Changes to position:
NZD/USD: None. Hold the long from .7880
EUR/GBP: None. Hold the short from .8500
EUR/USD: None. Hold the short from 1.3235
GBP/USD: None. Hold the short from 1.5607

You are shorting GBP/USD from 1.5607, this is good news for me, what are you aiming for? What is your goal or TP at? I will buy you a steak if you are correct, what everyone likes the steak, no.

Open for now, but aiming for 1.5325/1.5200 support levels on this trade.

Beginning-of-Week Commentary:

On a day without much news (except for Bullard's predictable comments about maintaining QE), we've seen the USD/JPY recover a bit from the selloff of last week. The Nikkei had a 5% day, which may add weight to my view of 13,000 as a pretty strong support. If the Nikkei has bottomed, the USD/JPY selloff has probably bottomed as well. The 95.00 area seems to be a level that will present us with plenty of buyers and would be very tough to break and hold below. When the USD/JPY recovers, the dollar will also resume its uptrend against the other majors.

GBP/USD: The 50% of the move from 1.6178 to 1.4831 is at 1.5600, and has served as resistance on the retrace. Support is at the 200 day SMA at 1.5512. A break of this support will take us to 1.5420, the 38% Fib. A break above 1.5600 would really surprise me- there will be plenty of sellers there. Currently, we're short from 1.5607.

EUR/USD: 1.3230 is the 50% of the move from 1.3710 to 1.2744, and will be the level to watch (we are at that number as I write this entry). The 200 weekly moving average at 1.3298, as well as the 62% retrace of the move at 1.3338 will be levels full of sellers.

NZD/USD: There will be a lot of resistance in this pair around .8000. I opened my long position at .7880 and will only add to this position if a clear reversal pattern develops on the daily or 4-hr.

Changes to position:
NZD/USD: None. Hold the long from .7880
EUR/GBP: None. Hold the short from .8500
EUR/USD: None. Hold the short from 1.3235
GBP/USD: None. Hold the short from 1.5607

Mid-Week Analysis:
EUR/USD: The 61.8 level of the great down move of '13 is at 1.3343, which should provide solid resistance. This number-61.8- has been key in the daily chart on this currency for years. There was a 61.8 correction for the following moves:
July-November '08, with the move resuming almost back to the November '08 price.
June-October '10, with a 62.8 expansion beyond the October '10 price.
March-October '11, with a 100 expansion beyond the October '11 price.

If history is repeated, expect a bounce off 61.8 and a resumption of the downtrend. I will open a 1/2 position with a tighter-stop than normal.

NZD/USD: The RBNZ's statement will help determine the medium-term direction in this currency, and whether the weekly trend line from my previous post will hold. The 200 moving averages are sitting just below .7800 and the weekly trend line from my previous post is just below that level. A break of .7700 could indicate the trend line is no longer valid, should the price hold below.

Changes to position:
NZD/USD: None. Hold the long from .7880
EUR/GBP: None. Hold the short from .8500
EUR/USD: Hold the short from 1.3235. Add a 1/2 short position at market (1.3332), SL 1.3420, TP Open
GBP/USD: None. Hold the short from 1.5607

End-of-Week Commentary:

EUR/USD: We're still sitting below the 61.8 retrace of 1.3343, in spite of bad consumer confidence data. The longer that we stay under this price, the stronger my view will be that this will be a top to the rally in this currency.

NZD/USD: Our buy from .7880 is looking good, with much help from weekly trendline support (see post #24) as well as 200 moving average support. I am adjusting my TP on this trade, so that half will close just under 50 SMA resistance just above .8200, and the other half will go for the ride up to the top trendline (since the 50 SMA has been rather easy to pass through in this uptrend).


Changes to position (changes are in purple):
NZD/USD: Hold the long from .7880. Move SL to .7880. TP 50% of position at .8200. TP 50% of position at .8500.
EUR/GBP: None. Hold the short from .8500. SL .8650. TP .8410.
EUR/USD: Hold the short from 1.3235 and 1.3332. SL 1.3420. TP 50% of position at 1.3250. TP 50% of position at 1.3120.
GBP/USD: Hold the short from 1.5607. SL 1.5790. TP 50% of position at 1.5520. TP 50% of position at 1.5450.

Mid-Week Commentary

Finally headed back to reality from an extremely overpriced Euro and Sterling. Is this the resumption of the $ bull run? Not sure, but I'm entering new $ longs.

Changes to position (changes are in purple):
EUR/GBP: None. Hold the short from .8500. SL .8650. TP .8410.
EUR/USD: Hold the short from 1.3235 and 1.3332. SL 1.3420. TP 25% of position at 1.3200. TP 75% of position at 1.3120.

New orders:
coming soon

Closed trades:
GBP/USD: short from 1.5607. TP 50% of position at 1.5520 filled. TP 50% of position at 1.5450 filled.
NZD/USD: long from .7880. Stopped at break-even.

Overall profit:
-10.50%

New orders:
GBP/USD: Sell at 1.5485. SL 1.5685. TP Open.

EUR/JPY: Sell at 128.25. SL 1.2925. TP 1.2625.


NZD/USD: Buy at .7890. SL .7740. TP . 8090.

Start-of-Week Commentary:

Looks like all of those $ shorts have finally given way so that we can resume our longs. I'm getting in here with a very small position, and will add more should the position retrace.

The trade:
EUR/USD: Quarter of a normal position. Sell at market (1.3100). SL 1.3280. TP 1.2920.

Changes to position (changes are in purple):
EUR/GBP: None. Hold the short from .8500. SL .8650. TP .8410.
GBP/USD: None. Hold the short from 1.5485. SL 1.5685. TP Open.

Closed trades:
EUR/USD: TP 25% of position at 1.3200 filled. TP 75% of position at 1.3120 filled/
EUR/JPY: SL 1.2925

NZD/USD: SL .7740

Overall profit:
-9.60% (I will add trade explorer at some point in the near future)

Trade:
EUR/NZD: Sell at 1.6900. SL 1.7125. TP Open.

My main goal over the next two weeks (which I've written in a sharpie on a post-it note and stuck to my wall) is to buy very small lots of USD/JPY as it drops towards 94, which I believe will happen as the US and Nikkei have a rough week. As I've said before, the Nikkei at 13,000 seems like it has found a good support, but the Dow may drop to support just below 14,000 before resuming its way up. So between now and then, I'm buying very small positions of USD/JPY.

I am selling EUR/USD with the same strategy. My hope is that most traders will wait until this currency tries for 1.32 one last time where I will place several sell orders.

I think we've finally reached the point where $ longs have regained the momentum.

Have a great trading day!

I decided to post my trade explorer due to the several requests, as well as the fact that it would be very time consuming to fact-check all of my trades. My commentaries from this point forward may not necessarily include a mention of all trades in which I am currently active.

Monday commentary later this morning. Have a great trading day.

Monday Commentary:

Still a $ long here, but a 370 pip gain on the EUR/USD in the last 2 weeks is enough for me to think it's about time to take a breather. 1.3000 will provide psychological support. I'll keep small shorts here.

I like the NZD/USD long at this point. The weekly trend line is still intact, and is further supported by the 200 SMA of .7773. I placed 2 long positions in this area. I also placed a EUR/NZD short around 1.68, in case the euro rises short term against the dollar this week. This pair can drop in order to keep the trend in place for the kiwi-dollar.



I welcome any questions/comments whether positive or negative. I'm thankful for the comments requesting trade explorer. I am finding it much more simple to use the message board without posting trade profits.

Tuesday Commentary:

I'm going to maintain my small EUR/USD and GBP/USD shorts in light of the upcoming ADP report Wednesday and ECB conference Thursday. I wouldn't be surprised to see a lower than expected number on ADP, followed by a climb in the EUR/USD above 1.3050 towards the 50 SMA, only to have it either spike back down or come down Thursday after the ECB.

EUR/USD: Once 1.2970 clears, we're headed to 1.2796.

GBP/USD: If 1.5195 holds, we're headed to 1.5000.

EUR/GBP: I think holding this short is a good idea at this point. Even though the GBP has a lot of room to move down versus the dollar, the ECB could really affect this pair on Thurs.

Wednesday Commentary:

I'm hanging on to my GBP/USD short and will add a EUR/USD short if the price goes back up to 1.3050.

I'm also keeping open this EUR/NZD short, and look to ride it down to the 200 SMA on the daily below 1.65.



I was wrong about the jobs numbers, but was right in that the EUR/USD seemed unmoved and gained 50 pips. I expect dovish comments tomorrow to bring this pair down to test 1.2970 again. If not, significant resistance will await at 1.31 with moving averages and a 38 fib level from the down move earlier this year. Great selling opportunity there!

Thursday Commentary:

GBP/USD: Was quite surprised to see the retrace on the GBP/USD yesterday, so I put a limit sell at 1.5300, which of course was 18 pips too high. I think it's safe to say we're headed to the May low at 1.5000.

USD/JPY: In the long term picture, we retraced 38% on the big move of this year, and it's nice to see us resting on the 50 day SMA as support. I'm bullish here and expect another test of 103.

The EUR/NZD trade has been working out nicely. I'll hold until hopefully we make it to 1.65.

Update:

EUR/NZD: The trade closed for a profit of 260 pips. Will it go lower? I think so, but don't want to risk it. I'll ride the NZD/USD, as I am becoming more confident that the bounce off the weekly trend line and the 200 SMA of .7774 is a bullish sign.


USD/JPY: Convincing bounce off the 50 daily SMA. 103 here we come.

EUR/USD: 1.2840 should be the next level of support. Better than expected jobs numbers will get us there tomorrow.