The ShadowTraderPro F/X Trader is your daily companion to the foreign exchange markets. Each issue contains a look at an emerging currency trade setup from a technical perspective, along with selected news on the four major pairs and a full economic calendar specifically tailored to the Forex trader. The report also contains potential F/X trade setups which are listed with defined entry, defined target and defined stop. Subscribers receive email confirmations and updates on these trades so that they can follow along.
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Dollars & Sense
Good Afternoon, Forex Traders. We experienced a little more volatility on the intraday charts than anticipated. As stated yesterday, the EUR/USD and the USD/JPY were not moving in the same fashion that triggered our trade and the tighter stops were appropriate. It would be easy to look at both of our trades in hindsight and assume the stops were too tight. Though a looser stop would have allowed us to hit our USD/JPY target, price action wasn't behaving as it was when the stop was tightened. Arguably we had even odds of the trade rising as falling and it was a calculated risk based on time, trend and support and resistance levels.
The EUR/USD support and ran all the way down to 1.3147 before retracing to 1.3309 a range of 163 pips in under 12 hours. The price has dropped again to roughly were we sat yesterday at this time. The fact that no strong directional move has played out as of now adds contentment to the decision to tighten the stop. As can be seen in the image, the pair is in the middle of the consolidation and has formed an inverted head and shoulders pattern. A break of the neckline will likely see the pair run up to resistance(see EUR/USD below). A failure to break the neckline will likely see support retested. It appears there are equally good odds of a run up to resistance or a drop to support. We will watch for a break of resistance or a break of support before getting into our next trade. A break above resistance or below support will likely see the pair run 300 pips or more. See FX Trader Live Calls.
The USD/JPY stopped us out, as we know, and has consolidated in the middle of the bullish channel. A break above short term resistance will likely see the pair reach the recent high if not the top of the channel. We will place an entry order at 100.78. Our stop will be trailed along the tighter support trend line until a support level higher than 100.59 is established. The initial target will be the high of the past week at 101.44. (below).
The GBP/USD consolidated as expected. The next 24 hours will likely give some clarity of the direction move this pair could make. If the channel maintains then we may sell resistance and/or buy support and scalp the channel. If the pair breaks out, we will look for a run up to weekly highs or the low of 1.4400 or lower. Patience on this one will help solidify the next trade.. (see GBP/USD below).
Major Pair Scoop
(Reuters) - Federal Reserve policy-makers agreed at their March 17-18 meeting that "substantial additional purchases" of a range of longer-term assets was appropriate to deal with a steep drop in economic activity across all sectors, minutes of the meeting showed on Wednesday.
"Credit conditions remained very tight, and financial markets remained fragile and unsettled, with pressures on financial institutions generally intensifying this year," the central bank said in the minutes. "Overall, participants expressed concern about downside risks to an outlook for activity that was already weak."
The Fed said staff for the Federal Open Market Committee lowered projections for U.S. real gross domestic product in the second half of 2009 and 2010, but the minutes did not offer any revised figures.
Reflecting steep job losses across nearly all sectors and contracting industrial production, the Fed said the revisions showed real GDP flattening out gradually over the second half of 2009 and then expanding "slowly next year as the stresses in financial markets ease, the effects of fiscal stimulus take hold, inventory adjustments are worked through and the correction in housing activity comes to an end."
At the conclusion of the March 17-18 meeting, the Fed announced plans to buy up to $300 billion of longer-term U.S. Treasury securities and an additional $850 billion of agency mortgage debt to ease a deepening U.S. recession.
F/X Economic Calendar
Up and coming economic data relative to f/x markets that may move markets this week.
| Date | Time (GMT) | Currency | Description | Importance | Forecast | Previous |
|
4/9/2009 |
1:00 AM |
AUD |
AUD
Consumer Inflation Expectation (APR) |
medium |
|
0.022 |
|
4/9/2009 |
1:30 AM |
AUD |
Employment
Change (MAR) |
high |
-25.0K |
1.8K |
|
4/9/2009 |
1:30 AM |
AUD |
Unemployment
Rate (MAR) |
medium |
0.054 |
0.052 |
|
4/9/2009 |
5:45 AM |
CHF |
Unemployment
Rate (MoM) (MAR) |
medium |
0.035 |
0.034 |
|
4/9/2009 |
5:45 AM |
CHF |
Unemployment
Rate s.a. (YoY) (MAR) |
medium |
0.033 |
0.031 |
|
4/9/2009 |
6:00 AM |
EUR |
German
Consumer Price Index (YoY) (MAR F) |
medium |
0.005 |
0.01 |
|
4/9/2009 |
6:00 AM |
EUR |
German
Consumer Price Index - EU Harmonised (YoY) (MAR F) |
medium |
0.004 |
0.004 |
|
4/9/2009 |
8:30 AM |
GBP |
Producer
Price Index Output n.s.a. (YoY)
(MAR) |
medium |
0.021 |
0.031 |
|
4/9/2009 |
8:30 AM |
GBP |
Producer
Price Index Output Core n.s.a. (YoY)
(MAR) |
medium |
0.031 |
0.037 |
|
4/9/2009 |
8:30 AM |
GBP |
Visible
Trade Balance (FEB) |
medium |
-£7.600B |
-£7.745B |
|
4/10/2009 |
all day |
|
GOOD FRIDAY -- Equity Markets Closed |
medium |
|
|
F/X Trader Live Calls
Note: As currency markets are open around the clock, some action in plays can and will occur outside of U.S. trading hours. Please note that emails are only sent to clients between the hours of 9:00am EST to 5:00pm EST, Monday through Friday. Any trade action happening outside of these hours will be confirmed in an email the following morning.
Long Ideas
| Symbol | Trigger Price |
Stop Price | Target Price |
Notes |
|---|---|---|---|---|
| EUR/USD | 1.3395 | 1.3315 | 1.3695 | Break above resistance and the wedge for the second time will provide us a tight stop and a 300 pip target. |
| USD/JPY | 100.78 | 100.08 | 101.44 | Break above resistance sets up a trade that may look like a tight risk to reward ratio but we will manage and trail the stop immediately after entry. |
| Symbol | Trigger Price |
Stop Price | Target Price |
Notes |
|---|---|---|---|---|
| EUR/USD | 1.3130 | 1.3205 | 1.2835 | A break below trend and horizontal support will provide us with a tight stop and a 300 pip target. |
F/X Trader Portfolio
| pair | dir | size | date entered |
entry price |
date closed |
exit price |
target | stop | status | mark to market |
p&l pips |
p&l capital |
capital commit |
OPEN POSITIONS - week of 04/06 - 04/10 |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| none | |||||||||||||
 |
|||||||||||||
| CLOSED POSITIONS - week of 04/06 - 04/10 | |||||||||||||
| GBP/USD | short | 1 | 04/06/09 | 1.4780 | 04/07/09 | 1.4651 | n/a | n/a | closed | n/a | 129 | $129 | $148 |
| |
Modified profit target hit, exiting trade with profits. | ||||||||||||
| EUR/USD | short | 1 | 04/07/09 | 1.3333 | 04/08/09 | 1.3300 | n/a | n/a | closed | n/a | 33 | $33 | $133 |
| |
Tightened stop hit with volatility. Exited with 33 pip gain. | ||||||||||||
| USD/JPY | short | 1 | 04/07/09 | 100.59 | 04/08/09 | 100.75 | n/a | n/a | closed | n/a | (16) | ($16) | $100 |
| |
Tightened stop hit, exiting trade for a 16 pip loss. | ||||||||||||
Click here for F/X Trader Performance - 2008