Forex Blog by Lloyd

1.30pm Trichet speaks: Thanks, Mr. 'Strong Vigilance'. My positions went from bad to worse.

4.00pm A Reversal: Not sure what happened. A big reverse move gave me a chance to trim some running losses. Still have a mountain to climb though to make it a positive week with current open positions. Anyway, +53 pips so far this week.

Markets	Trend	Breakout Level	Comment
USD/CAD	Neutral	1.1065	Long trade still open (News)
USD/JPY	Up	117.35	-
USD/CHF	Up	1.2285	Long trade + 30 pips
GBP/USD	Down	1.9040	Short trade still open
EUR/USD	Down	1.2820	-
spot GOLD	Up	616.4	Strong up trend
DOW cash	Down	11373	Breakeven trade
CRUDE OIL	Down	70.18	One long -19 One short +22

Technorati Tags: Trader_LLoyd

11.30am Bucking the short-term trend: Due to this, I had drawdown of -64 and -49 for my overnight GBP/USD and USD/CAD trades. Need to rectify this - I have to avoid opening new trades after 7 pm. At this moment, we have trend reversals for USD/CHF and EUR/USD.

4.00pm No help from the revised GDP data: The greenback continued to show mixed trading against other major currencies. Bucking the trend seriously hurts my GBP/USD position. Finally, a trend reversal for USD/CAD - a sign of relief?

Markets	Trend	Breakout Level	Comment
USD/CAD	Up	1.1104	Holding a long Back in trend
USD/JPY	Up	116.84	-
USD/CHF	Up	1.2293	Long entered
GBP/USD	Up	1.8995	Still holding a short Rises to 20-day high (strong data)
EUR/USD	Down	1.2820	-
spot GOLD	Up	616.4	-
DOW cash	Up	11370	-
CRUDE OIL	Down	69.84	Missed the downside move again

Technorati Tags: Trader_LLoyd

7.00pm Fed minute:

At August meeting, many Fed members saw rate decision as a close call. Federal Reserve Board Chairman Ben Bernanke and his colleagues on the Federal Open Market Committee thought the decision to keep interest rates unchanged was a close call at their most recent meeting, but decided that it would be better to have more information about the economy before deciding whether or not to continue making money more expensive.

Federal Reserve policy-makers halted their rate-raising campaign for the first time in two years, expressing concern that they didn't want to push up rates too much and hurt the economy. [via AFX news]

Reaction: Dollar retreats, Dow rebounds - Opportunities to re-enter some markets

8.00pm Watchlist updated: Trend reversal for USD/CAD, USD/JPY, USD/CHF and EUR/USD

9.00pm Final update: Trend reversal for DOW

Markets	Trend	Breakout Level	Comment
USD/CAD	Down	1.1075	Still holding a long position, damn!
USD/JPY	Down	116.53	Avoid - big candle stick
USD/CHF	Down	1.2281	Avoid - big candle stick
GBP/USD	Down	1.8978	Short trade +52 pips Another short re-entered
EUR/USD	Up	1.2835	Avoid - big candle stick
spot GOLD	Down	612.8	Links: 1
DOW cash	Up	11370	Short trade +14 points
CRUDE OIL	Down	70.46	Missed a big move

Technorati Tags: Trader_LLoyd

A simple setup for today. See chart below.

It was a tricky week. I made two bad GBP trades this week: GBP/USD (-61) and GBP/JPY (-74). Just managed to salvage a positive week with a defensive play on Friday - by staying in tune with the down trend and taking profit once ahead. I believe the momentum on the downside will continue next week for GBP/USD.

A classic buy the rumor, sell the news day. I was long on GBP/USD before the release of US economic reports. And I got confused and angry with how the market responded to these data. As the day progress, my anger and greed finally took over my rational mind and clouded my technical judgement. If I did what I did this morning - following the same exit strategy in taking profits: +32 (USD/CHF) and +26 (USD/CAD) - I should be able to escape with a small gain on this position too instead of staring at a 61 pips loss. What a lesson!

So far -3 on the day, believe it or not, still even steven for the week! What a waste of efforts! Hope I can make tomorrow a positive one....

Link: "The Biggest Slump in US Housing in the Last 40 Years" ... or 53 Years?

This is indeed the biggest housing slump in the last four or five decades: every housing indictor is in free fall, including now housing prices. By itself this slump is enough to trigger a US recession: its effects on real residential investment, wealth and consumption, and employment will be more severe than the tech bust that triggered the 2001 recession. And on top of the housing bust, US consumers are facing oil above $70, the delayed effects of rising Fed Fund and long term rates, falling real wages, negative savings, high debt ratios and higher and higher debt servicing ratios. This is the tipping point for the US consumer and the effects will be ugly. Expect the great recession of 2007 to be much nastier, deeper and more protracted than the 2001 recession.

And the housing bust is not going to be only a US phenomenon. Housing bubbles festered in many other economies including many European ones. Thus, the combination of high oil prices, delayed effects of rising interest rates and slump of housing that is now leading to a US recession is a phenomenon that is common to many other economies, including several European ones. So, expect the same deadly combinations of three ugly bears (slumping housing, high oil prices and rising interest rates) to hammer Goldilocks and sharply hurt Europe and other economies in the world.

A good analysis of doom?

It could easily be the worst trade of the month.

Short GBP/JPY at 219.53
Stopped out at 220.27 (-74)

I should not have entered this unfamiliar market while there were plenty of clear opportunities out there at that time. I should have taken my loss at -50 instead of being stopped out at near the high of the day. Lack of thorough thinking when entering the position.

Meanwhile, my revenge trade:

Short GBP/USD at 1.8892
Closed 1.8863 (+29)

This put me at a loss of -45 pips for today, and only +3 pips so far for the week.

I quite like the idea of stop hunting. -via Forex Project

Trading signals for this morning so far:

8am
Short USD/CHF @ 1.2254: avoided
Long GBP/USD @ 1.8943: avoided

11am
Long USD/CHF @ 1.2284: now waiting for price pullback to reenter

On my short list: GBP/USD and GBP/JPY

Neutral stance: USD/JPY and USD/CAD

Technorati Tags: Trader_LLoyd

As anticipated, we are getting the delayed reaction in selling the dollar this morning due to a weaker than expected University of Michigan Consumer Confidence report from last Friday. As a result, my two losing positions were being turned around and made a profit of +17 pips for USD/CAD and +30 pips for USD/JPY.

I am disappointed in a way that these two positions failed to rally as much as the pound, swiss francs or euro. Anyway, it is a good start to the week. I am now waiting for confirmation to buy back the dollar. USD/JPY is the first currency pair to show signs of resilience but I am still suspicious about the move. I am going to wait a little longer before making the next move....

Technorati Tags: Trader_LLoyd, forex, dollar

Not a good end to the week considering that I still have two opened losing positions:

Short USD/CAD at 1.1215 (currently -39) Oops...no wonder
Short USD/JPY at 115.83 (currently -1)

I was quite surprised that the dollar was able to shrug off the weaker than expected University of Michigan Consumer Confidence report. I am expecting some real actions as soon as the market reopens tonight.

Yesterday, I missed my opportunities to trade.

Late in the day today (around 4pm), I noticed some serious actions in buying the dollar even before the release of Philadelphia Fed report at 5pm. The trading signals appeared on my screen and I took them without hesitation. I immediately opened two long USD positions:

Long USD/JPY at 115.56
Long USD/CHF at 1.2270

Less than 3 hours later, both positions were closed at 115.97 and 1.2324 for +41 and +54 pips. The Philly number indeed helped to support the dollar.

I could have easily netted extra pips +15 and + 12 if I followed my new set of exit rules. Anyway, I have done enough for today.

I got a little confused over the direction of the forex market this morning. The first signal to buy the dollar appeared at 8am for GBP/USD, USD/JPY and USD/CAD. Then I saw a dollar-short signal at 9am for USD/CHF and back to long USD for EUR/USD at 12pm. FYI, I didn't take any of the signals and chose to remain on the sideline.

By 1 pm (just before the release of the US report at 1.30pm) , there was a signal reversal on the USD/CAD which clearly alarmed me to short the dollar. I didn't have much confidence on the position but there was a chance for me to reenter a short USD/CHF position at 1.2356. Yes 1.2356! And I kept on pondering...

I didn't take it in the end... and I missed the rally.

The Fed is definitely done.

A good start to the week. On Monday, a small scalp on GBP/USD position yielded +16. Two more trades for today gave the following results:

Short USD/CAD 1.1287
Closed 1.1233 (+54)
Held for 6 hours
Comment: I entered this position at price pullback but it went higher after that. A buy signal appeared but I decided to hold it and the drawdown was 33 pips. My stop loss used was 60. Technically, I should have exited with a loss of 15 pips. The position was eventually rescued by a rather tame inflation report.

Short USD/JPY 116.51
Closed 115.94 (+57)
Held for 3 hours
Comment: A drawdown of 20 pips. Quick turnaround and again rode on the inflation report.

I think I am doing quite well here and please keep it coming!

On Friday, one late gbp/usd trade that produced +52 pips alone has pushed the total weekly gain to +174 pips.

11/8 Short GBP/USD 1.8959
11/8 Closed 1.8907 (+52)
Held for 2 hours

A trade that nearly went wrong with -54 drawdown at one point. My stop loss was set at 60 points away from the opened level. I should have exited with -12 pips loss this morning when I still have the chance. It really pains me if the trade was indeed stopped out.

9/8 Long USD/JPY 115.24
10/8 Closed 115.49 (+25)

A mid-week update. It is a tough market condition out there. Nevertheless, I made three trades so far:

7/8 Long USD/CHF 1.2238
8/8 Closed 1.2242 (+4)
Held for 15 hours
Comment: At one stage, there was over +30 pips on the table!

8/8 Long USD/CAD 1.1207
9/8 Closed 1.1247 (+40)
Held for 16 hours

8/8 Long USD/JPY 115.14
8/8 Closed 115.67 (+53)
Held for less than 3 hours

From now on, I will not hesitate to take any easy profits that presented to me.

UK JUNE INDUSTRIAL PRODUCTION DOWN 0.1 PCT FROM MAY; CONSENSUS 0.2 PCT RISE

UK JUNE MANUFACTURING OUTPUT UP 0.1 PCT FROM MAY; CONSENSUS 0.2 PCT RISE

Below are the results for this week. Trade breakdown as follows:

Long USD/CAD 1.1303 1.1308 (+5)
Long USD/CAD 1.1315 1.1358 (+43)
Short GBP/USD 1.8638 18690 (-52) Ouch!
Long USD/CHF 1.2273 1.2325 (+52)
Long USD/CHF 1.2303 1.2325 (+22)
Long USD/JPY 114.77 115.05 (+28)

The entry for above positions was based on H1 signal breakout and most of the positions were held for more than few hours at least.

Update: My last position of the week was a long usd/cad position opened this morning at 1.1257 which was later exited at 1.1336 for a quick +79 pips. This gives a total profit of +177 for the week.

Long USD/CAD 1.1257 1.1336 (+79)
















Have a nice weekend!