Happy Trading New Year! (and some trading room ideas)

Hello Traders! Long time, indeed. The summer is over, and the Fall is in full swing. This means that the Trading New Year has finally arrived! Well, not really but this time of the year always feels like a brand new environment. All the big boys are back, major pieces of economic data always have the markets moving, and in many ways this time of the year sets the momentum both psychologically and fundamentally from now until the Spring. Things can always change, but the addition of major participants coming back into the market place this time of year is undeniable in its influence. It's a great time to get focused, sharpen your strategies, and create some new and positive goals for your own trading.

On that note, I have been contacted throughout the summer and as recently as yesterday about the possibility of opening a trading room. There are really positives and negatives when it comes to trading rooms, but I most definitely know that with a great group of similarly motivated and focused traders, a lot of good things can happen for everyone. I have an interest in creating a forum for all of us to collaborate, but I need more feedback from YOU! What type of trading, what type of lessons, what type of strategies, and on and on. If we are going to do this, we must do it right, and keep the group fairly small. Something like this can be done for less than $50/month, and I am willing to go as far as to say that if you can prove to me beyond a reasonable doubt that you have not profited from being involved with the trading room, you don't pay a monthly subscription fee. I don't think anyone out there does that, but who cares, we can be the first. I always wondered why this wasn't offered by trading rooms, and it became clear as time went on; they aren't making money either! Anyways, let me know what you guys think and we can proceed from there, no rush.

I will slowly be adding to my updates as the days go by, so be on the look out. This weeks opportunities were numerous, no matter what pair you traded and I expect next week to be more of the same. The markets are in transition mode with previous trends shifting to new ones, and signs of this are showing in everything from equities to bonds to currency.

I can be reached at Nigel4sher@gmail.com

Happy Trading!

FX Trends...

Hello Traders-

Nice action this Sunday PM. We are definitely seeing the process of topping patterns playing out, some of which have already begun to break significantly since their "top". All of this is relative, of course, so keep in mind your time frame, strategy, and risk parameters. The $GBPJPY is down close to 700 pips since its local top on Monday of last week, but if you are a short term guy, the trade could be over or close to over for you if. If you are a trend follower, you could just be getting a nice signal for a much longer term trade. However, whipsaw has been the characteristic of currency pairs over the last 6 months, even while trending longer term, so keep in mind that none of this ever happens in a straight line. We must respect the retraces, reversals, and continuing changes in trend. Still, it is possible that the action from last week into tonight could be signaling something larger as we are seeing these types of movements all over the board from the FX market, to the commodity market, and as well in the equity markets. I covered my shorts from last week on $GBPUSD and the $AUDUSD, and I am looking for some sort of healthy retrace before jumping back into anything. Things have been so volatile that staying on the sidelines is a very powerful tool at the moment. Cathing a nice trend, however, is also a very powerful tool for your account balance. I will be back with any setups I see, but for now I am flat and just waiting. If we see some retrace of the US equity markets last week, and some retrace in the major FX market pairs, I will consider getting short again on several of these, but if we continue down it is going to be dangerous to hop in, no chasing allowed. Hopefully I will be back with some updates later!

Happy Trading...

T Sized Pip: Losing Trader, Exhibit "F"

Losing Traders and Losing Attitudes,

Hello Traders!

I hope everyone had a great weekend getting rested, refreshed, and relaxed. Or as Ben Lichtenstein over at Trader's Audio would say, "Get Rrrrrrrrrrrrrrrrrrrrrrr'd"....But, I digress...

I do not have too many FX updates as of right now, but I am sure I will as the night progresses. I want to take the time to focus on a small anecdote and trading lesson during this post, so please bear with me as this is not usually the topic of discussion. But, before I do, I briefly want to give my impressions of the FX market in general. Clearly, we are most definitely caught in a heavy storm of consolidation, attempted breakouts, attempted breakdowns, and general whipsaw trading. Central banks and governments are seemingly just as confused, trying to figure out what to do going forward as it is becoming more and more evident that U.S. stimulus and U.S/Worlwide 'recovery' is fleeting. Overall, I will focus on a completely different topic in today's post, simply because these are not the type of conditions we want to put risk capital to work in. Yet many traders do, and they complain when things go wrong. To explore today's lesson on Losing Traders and Losing attitudes, we will focus on the exhibit of one lonely trader/hater who feels the need to try and spoil good things for the majority in the hopes of spoils for the limited. If you are a trader like that, then you most likely are already in the market and do not understand why.

More specifically, if you are known as 'T Sized Pip', AKA, a lonely trader ostracized to the financial/trading wastelands by their lack of wit, lack of intelligence, and most definitely lack of any trading skill, you may want to just go ahead and throw all your chips on the table right now. This type of trader is located somewhere between the 6th and 8th stage of the graph above, just FYI. That's what 'traders' of that caliber do, they shoot in the dark similarly to how they live their lives. We all know that trading results are simply an off shoot of our general life experience. Who knows....After all, you CAN actually hit the dart board if you are BLIND, just as T Sized Pip does 1/10 trades, but you simply can't do this with any mathematically predictive and or probabilistic expectation going forward. These types of traders are what we call "Boom and Busters", swinging big, missing big. Yet, when they DO hit it big the result is even more damaging, making them feel/act emboldened, falsely confident, and dangerously (to their own account) compulsive in any and all trading activity that follows this rare, but majorly successful trade. Now, all of you must be wondering, WTF??? LOL. Where did this come from, and what does it have to do with trading? There is this wonderful little thing called "zero-sum", reflecting the true nature of many trading markets in which for every winner their is a loser. For every credit to an account, there exits a debit to another account. We are in a constant mental battle to out think, out perceive, and out trade our opponents, yet the reality is that 90-80% of all participants loose in the end, leaving only a small proportion of participants with a great deal of the money. This is where our lonely, sad, and confused little soul-of-a-trader "T Sized Pips" comes into the discussion. He/She felt the needed to express comments regarding proper editing, which is never a bad idea, but I guess he/she cannot figure out how to communicate with other living human beings. SO, my apologies to any of the readers who have taken offense to a lack of proper editing at times, this is my fault due to my occupation as a 24/7 Forex/Futures trader causing a massive lack of sleep, and I will definitely do my best to remedy this problem going forward! : ) As for "T Sized Pips", R.I.P in cemetery of losing traders....You will all realized after being involved with trading long enough that those who go needless (usually jealously/ego driven) attacks are also those same traders with no money in their account, no idea of what it takes to win, and definitely a great deal of frustration. All "T Sized Pips" needs to do is look through the archives of this blog to understand that success takes time and is a daily occupation, it is not an event or a status. He/she greatly misses the overall point of trading, which is not to win, but to make money. Winning and loosing has nothing to do with trading, but until he/she figures that out, they will continue to waste away. Lastly, this is also another reason that my blog is not heavily advertised, and I do not offer subscription services or trading alerts. That type of activity simply brings more stress, and why would you need to do that if you are in fact making money doing what you do? That is my question, and as you can see my answer is clear in that I do not offer any of those things. I pay myself, and so should all of you! : )

In conclusion, while this post has not been focused on actual trading, I think it still serves to create a great lesson about the "Boom and Bust" trading cycle, and how important it is a professional trader to keep your eye on YOUR PRIZE, not on other's.....Winning Traders have Winning Attitudes, sounds 'pie in the sky-ish', but its true. We have wasted enough time on people like this, but the lessons we can learn from this type of 'hater' are numerous. When you trade zero-sum, you are potentially trading against somebody like "T Sized Pips" because sadly over 80% of the participants out there are just like this person, losers. Find the loser, and you become the winner.

Hey, but its all in a day's work trying to do what I do. Go ahead and hate, its just part of being successful and it's nothing new to deal with. (and sorry to bore any of you who couldn't care less!) : )

I will be back tonight with updates/setups as they materialize!

Happy Trading....

6/26 Waiting, waiting, and more waiting

Hello Traders!

Just waiting for the consolidation/whipsaw that has overtaken the FX market to subside a bit. I will be back tonight with updates as they develop!

Sunday Night FX... 6/21

Hello Traders, hope the weekend was enjoyable. Sunday night FX trading is always fun, and usually has some good action. Hopefully we have some nice opportunities. The chart above shows the classically formed Citigroup Head and Shoulders pattern that we saw as C began to top out and reverse. This is exactly what we want to see with the Euro. The $EURUSD formation is also very clear and visible, but the bulls will not give up easily...

I have waited a few days to post any $EUR/USD Head and Shoulders updates, as we are only seeing consolidation and a bit of whipsaw trading across clearly drawn support/resistance areas. It is my opinion that there are a great many bulls trapped long, and nervous. I still see this pattern breaking downward and continuing as described in earlier posts, not to mention that we have continued to see more bearish signals continuing into tonight's action. It will be very interesting to see where the London Session takes the market, as well as the U.S.

I will post charts as necessary, and updates for setups that I see taking place.

Good Luck!

6/18 Free Live Forex Trading Webinar!! Going Live NOW, Come Join US!

Is this $EUR/USD H+S going to break or what! Come and find out what we think.

Live Free Forex Trading Webinar! Come join me and my trading buddy DaytraderAnna. She is really a great trader. We will trade, cover charts, talk strategy, and just shoot the breeze...

https://www.gotomeeting.com/join/760998434

2. Use your microphone and speakers (VoIP) - a headset is recommended. Or, call in using your telephone.

Dial 217-287-4112
Access Code: 760-998-434
Audio PIN: Shown after joining the meeting

Meeting ID: 760-998-434

EUR/USD Head and Shoulders Update 5...

Hello Traders-

Very nice development for our $EUR/USD Head and Shoulders last night. This puppy is steadily increasing strength and pattern recognition from the large time frame traders. This is exactly what we want to see. The attached chart shows what we have been looking for, and have seen on smaller time frames, but we now have a clear illustration on the Daily Chart....

Yesterday's daily candle closed just below the neckline, and while we may whipsaw back and forth within this area for a while, the potential for the next leg down has been fully confirmed, and all we need to do now is enter, set the stop, and walk away. I am personally putting several positions on for the $EUR/USD, some with stops just above the neckline, and others with stops above the top of the right shoulder. These patterns have a very high percentage of reliability, but they also come with a very high level of volatility centered around the neckline area. This can be attributed to the dense confluence of emotion/psychology driven reactions to price, previous enty, previous exit, holding, waiting, anticipating, front-running, chasing, you name it, its all there. However, the key is the daily bar closing under the key level, no matter whether there is retrace or not before it officially breaks. So....Long story short, you are now free to enter on the Daily Chart signal, stops at the very least should go above the illustrated neckline. Like I said above, I will have some stops very near the top of neckline, and some actually above the right shoulder. Either way, set them, and forget them.....

Happy Trading....

6/15 EUR/USD Head and Shoulders Update

Hello Traders!

Just wanted to throw a quick update your way with regard to our ongoing EUR/USD Head and Shoulders situation. I hope some of you made some coin on the way down, it was a nice ride so far if you have been scalping. I should clarify because I know that I have mentioned very stearn reminders about not front-running and there being no need to get in front of such a large pattern. If you are a scalper, and you are comfortable hopping in and out of things, honoring stops, and generally being 'quick on your toes', then BY ALL MEANS go ahead and trade with the trend. In this case that would be down, and in particular I would probably wait for a nice right shoulder to be formed before really getting any major scalping going. That said....

For those of you doing a longer term style of trading, or maybe just some swing trading, well formed Head and Shoulders patterns offer a great reward with low risk, hence the warning to not front run. There is no need, especially if you are longer term (when I say LONGER, I mean holding your trades a bit longer than a day-trader, not 'investing'.) trader, because these types of patterns produce very nice returns after confirmation, assuming they continue as expected.

I have backed our chart out to a 4-hour chart, and wow, what a beauty. It is also viewable on the daily, which is great. The current status of this setup is on HIGH ALERT. We received a VERY nice confirmation of the pattern signal this AM/late last night, depending on where you live. The neckline, which I have illustrated with a horizontal trendline in the included chart, shows you exactly where you want to get in and also place your stop. The neckline is traditionally seen as the confirmation point for the Head and Shoulders pattern, and after what is usually a healthy retrace to 'test' the broken area, the pattern development ensues and it is off to the races. This, of course, is assuming everything works out out way! We always have to remember that nothing is promised, that's why we use stops! : ) We are currently sitting a bit above the neckline, and we area actually allowed a FULL 100% retrace of the neckline and right shoulder, from a technical perspective, so keep that in mind. If you are down, keep your stops where you feel comfortable, but do not believe that all is lost. This is a confirmed pattern, and therefore a major retrace is needed to blow it up. Until then, the trend is down, and the target is still the target. I will be looking to ADD TO MY SHORT upon a secondary break of the neckline, and I will then put my stop above the neckline. I will repeat this process as many times as is needed, until all the late longs and pained longs give in. If, however, we get a FULL 100% retrace of the right shoulder, you must respect the technical significance and alter course...... Good Luck and please feel free to contact me with questions!

Happy Trading....

6/14 EUR/USD Head and Shoulders Update...

Hello Traders-

Well, well, well....this puppy is coming along nicely. The updated chart says it all, we have come a little more than 100 pips since the last post. Very nice progress. The 'right shoulder' is forming quickly, but had a very nice basis on which to do so mostly because of the choppy action within the 'right shoulder' from last Thursday and Friday. We like to see that, as we do not want thinly formed shoulders, only to end up having a potential fantastic setup evaporate, or worse yet, end up causing an unnecessary loss due to trying to front-running the confirmation of the overall pattern. This by the way is a NO-NO. I will say this again because I find it to be very important; DO NOT FRONT RUN HEAD AND SHOULDERS CONFIRMATION. At somepoint, your head will be handed to you and nobody wants to have that happen. Interestingly enough, the head of this pattern had a very nice mini-H+S pattern, as well as the right shoulder. Both played out nicely, and since H+S patterns are considered reversal patterns, we definitely like to see the psychology and emotion clearly being played out in same micro-structure that applies to and adheres to the OVERALL structure of the larger pattern at hand. I hope that makes sense, its a big convoluted. Please contact me if not, and I can explain further. The important aspects right now are watching the GBP/JPY, EUR/JPY, and of course the EUR/USD for signs that stops are being run, longs are exiting the market, new shorts are adding, and even newer shorts are coming to play as well. This will all end up with hopefully a clear confirmation of a neckline break, and then we need a test of that area to continue the larger move the is predicted by the overall pattern. I am looking at something like +375-400 pips from the neckline as a target. Cant be exact, but somewhere in that range would not surprise me. I also must mention that patience is of the essence because even if this pattern confirms, it can take some time to reach the overall target. Remember, most losing traders deal with their position for approximately 72 hours if they are not pure day traders, and with time contraction and time cycles, it can take a bit for the market to form properly. But as Jesse Livermoore used to say (not an exact quote), "I made my money from patience, not from trading"-

Good Luck and feel free to write me with questions!

Hello Traders! EUR/USD Head and Shoulders

Aloha Traders, been "a few" since we last spoke. I like to trade a whole lot less during tough and choppy consolidation periods as we have had over the past couple of weeks in the FX and equity markets, so I have not seen much worthy of posting about until tonight. We have a very nice and very clear potential Head and Shoulders pattern developing on the EUR/USD pair. As with all setups, potentials, and trades, WAIT FOR CONFIRMATION. There is no need to front run, and in this case, there is a lot of meat on the bone so please do not take the chance of having your head handed to you just because you don't want to 'miss out'. You will not miss out if you are patient. In this case, that means wait for the BREAK of the neckline detailed in the chart above. The idea here is that we want to wait until the spike lows from each individual peak are broken. The peaks are the shoulders and the head, the spike lows extend away from the peaks to create the neckline. The beautiful aspect of the confirmed Head and Shoulders pattern is that it is highly reliable, especially after the neckline has broken, been tested, and then failed. At that point trade entry is recommended with a stop on the other side of the neckline..... Good Luck!

$GBPJPY, $EURJPY

Hello Traders

Awaiting signals for these two bad-boys.  Should be some nice action later into the session....

Updates should be forthcoming when they materialize....

Happy Trading!

5/19/09 - 2nd Trade Setup - EUR/JPY

Hello Traders-

Here is another chart setup I have been working on. I have included potential targets, 1 and 2, for profit stops or bid to cover orders after going short.  These are rough estimates, and of course, drilling down for every last pip is not recommended.  We always want to keep in mind that most FOREX professionals cover short and sell longs INTO NEW HIGHS. This is a bit different from most markets, where new highs and lows are usually pilled into.  I think this EUR/JPY setup has just as much potential as the GBP/USD chart, but it really looks as though this channel is forming a nice bearish channel that could continue downward for days or even weeks.  The GBP/USD is a fantastic exhaustion setup, and could very well turn bearish with regard to ascension/descension, but right now the more bearish of the two appears to be this EUR/JPY setup.

Good luck and feel free to ask any questions!

Happy Trading!

5/19/09 GBP/USD TRADE SETUP

Hello Traders!

Been a few days, action has been slow or choppy, with little follow through to the upside of downside. In general, we have seen JPY pairs trending upwards over the past couple of days, meeting significant chart resistance today.  It will be very interesting to see where the break goes, up or down, but for now it looks as though the USD pairs are setting up a little bit more clearly, and with more potential so I am going to focus on a GBP/USD trade setup that I am looking at.  The chart here will give you a good idea of what I am thinking with regard to support/resistance, entries and exits.  I outlined a previous channel rejection from several weeks ago, in which we got a very nice protracted downward move resulting in 450-600 pips from the point of rejection.  These types of setups are fantastic for traders that wish to use a small position with a bit more generous stop in the hopes that a nice move will produce very acceptable profits due to the size of the move.  I am personally going to get short the GBP/USD tonight, and set my stop about 25 pips ABOVE the top channel boundary that is outlined on the chart.  My profit target order will be located just above the bottom channel boundary, no need to drill for every last pip. That is the way to loose a lot of money, and previously profitable trades.

So, keep an eye out for significant movement on Publish Postthis GBP/USD setup.  Things right now appear to have rejected off of the top boundary, but it will be difficult to know whether or not there is serious follow through potential until after Europe opens tonight. I will be back with updates along the way! Good luck, looks like a nice setup!

German GDP

Hello Traders-

This article is worth reading, for sure. Just wanted to post some information on the German GDP story. It ended up benig the shapest decline in GDP for Germany EVER.  Not good, to say the least. Bulls and investors committing to the markets really need to hope this German data does not portend bad things for the US coming in Q2, Q3, Q4 GDP.  Time will tell.

http://online.wsj.com/article/SB124236774127723161.html

Great trading tonight on the EUR/JPY and GBP/JPY ( I imagine all pairs)...I had a chart all ready to post for the EUR/JPY sloppy head and shoulders setup, but it broke as I was posting so I had to man the controls!  Be back soon!

Happy Trading

FREE TRADING CLASS UPDATE...

Hello Traders-

I just wanted to let everyone know, as it is 11pm HST, that we unfortunately will not be having the class until tomorrow afternoon. The co-moderator who I trade with is not feeling well : (  Such is the life of professional traders, burning the candle at both ends because we "never want to miss that move", lol.  Tomorrow is on for sure, however, and I hope everyone attends!  I will be sending out a Tweet via Twitter to inform everyone of the link needed to access the free class, and I will also post it here on the blog.  Happy Trading and of course, I will be back if important trades develop between now and then.

Happy Trading! 

FREE REAL-TIME TRADING CLASS!

Hello Traders-

I will hosting a FREE live trading class tonight (tomorrow AM for most of the Mainland, Europe traders), and we will be focusing on short term trading strategies, executions, and trade management. Stop placements, how to judge order flow, trading psychology. All that good stuff!

I will send out a notice via Twitter for this webinar, but we are planning to host this between 11pm and 2am HST, which is 4am-6am EST. Definitely late/early for the US guys, but Europe should be fine. We can host a bit later too if people need time to wake up.

Please email me if interested, or just watch for the link to come up on Twitter around that time.

Happy Trading!

EUR/JPY Head and Shoulders...

Hello Traders

Well, we are on a roll here.  The potential EUR/JPY Head and Shoulders confirmed, and executed itself perfectly.  We may not have seen the entire move, however, as we did not see a move all the way down to the 131 level, but within 45 pips or so. We may still yet see some more downside action for the EUR/JPY and GBP/JPY. The US markets continue to be weak, and upon a sell-off, these currency pairs will show weakness as well.

Back later with more updates.

I hope a few of you nailed that trade!

Happy Trading...

GBP/JPY Update, EUR/JPY Head and Shoulders?

Hello Traders!

Okay....Very, very, very nice trade we had. I have been stopped out on ALL of my shorts for the GBP/JPY pair. I feel as though we may have found some local resistance at the lower boundary of the channel we broke earlier, but I am going to withhold judgement until it becomes clear. Making the same money twice is always super nice, but we don't want to assume and get greedy. No need to front run it.

On another note, here is a chart of the EUR/JPY pair. It appears to have set up a nice Head and Shoulders pattern that has a confirming target around 131.00. I will not take this trade until we break the neckline and hold this level (around 132ish).

Just wanted to post a quick update on the earlier trade and the chart.  I will post more if I  see something, and definitely if I see the Head and Shoulders developing into something of value.

Happy Trading!

GBP/JPY Update (Fib #'s, large trend channel)

Hello Traders!

Well, well, well... I really hope some of you capitalized on the trade setup I posted last night, we had a very nice break, and it has continued its trend into today, and hopefully will do so tonight/tomorrow as well.  I would LOVE TO HEAR from any of you that made some money on that trade. Since the breakdown has continued, we want to be looking for substantial retraces for new short entries. The top boundary of that retrace should be your stop.  The EUR/JPY is continuing a similar pattern as well, and is breaking down as well, yet not as furiously as the GBP/JPY pair.  We also saw some weakness across the board in US trading, and the nightly futures continue to trend down, with the Dow Futures being -40 as of 10pm EST.

I will be posting more setups tonight as they come....I am currently looking for retraces in the GBP/JPY for re-entry from the short side. I honestly would not be surprised at all if this move gets legs and makes it all the way back to the original breakout level around 140.

00.  Putting Fibo retracements on the move from April 28th-May 10th (micro Bull move in overall Bull move from January, we are trying to catch the break-down), we see a 4hr chart double top around the 150.00 area, as well as the current break down landing exactly on the 38.2% rectracement level.  This has caused a slight bounce, and may be the counter-trend retracement we are looking for so we can get short again.  We need to break this level to move towards a likely 50%, but if the 50% goes, we can begin looking for an extended move that may get all the way back to the 100% retracement level around 140.00. Lastly, we see the larger (4hr chart) trend channel STILL VALID on the chart above.  A breakdown of the lower boundary of this channel, which is a much larger timeframe trend (more big time frame traders watching), will definitely put this pair in a position to meet the aforementioned targets, namely the 100% retrace of the entire two week move upward. Look for the break of AROUND 146.00ish for a confirming signal that more downside pressure is coming. Although you can get short on the retrace from last night's move, I personally will not be adding more to a short position until the lower channel breaks. It is entirely possible that Bulls come into defend the larger channel, so we must be vigilant.  I have posted a chart to display what I have described here.

Happy Trading!

GBP/JPY Real-Time Trading Setup (Bounce or Break?)

Hello Traders-

I am working on a system of posting live open positions, live approaching trade setups, and live trade potentials. 

This is the first in the series of live approaching setups.  We are currently experiencing an attempted break of a local channel on the GBP/JPY. I LOVE channel setups for both long and short trades because they offer a unique opportunity to catch large moves with little risk involved.  Your stops should always be appropriate and tuned for your own account and trading style, but in general you can use the channel boundaries as good gauges for stop placement and knowing "when you are right, and when you are wrong".  The upper and lower channel boundaries provide a confluence of aspects for many traders involved in the markets, so lots of action takes place upon them. When they break with a surge of price and volume, we achieve the second confirming signal that needs to be in place for a solid trade, the first being the physical chart setup.  This current setup definitely experienced a nice surge in volume when the lower boundary of the channel was tested for the third time locally (within a few hours or days). I am not sure why, but breaks downs and breakouts usually fall on a third attempt, it could just be me, but watch for this pattern as there are a large degree of setups that break on a third attempt and do so on high volume.

My bias is neither way on this trade, but I would be more confident in a break down if it were to occur.  The channel boundary can be used as a stop for a long trade (bounce on the boundary) or a short trade (break of the boundary). I personally use something like a 15-40 pip stop, depending on size and obvious support/resistance.

Happy Trading

Sunday PM FOREX 5/10/09

Happy Mother's Day to all those Mom Traders (and Hello to the rest of you)

I am looking over the charts right now, I will put some posts up later tonight about potential trades and setups. I currently am short GBP/JPY and GBP/USD for a scalp trade. I got short off the open, made some nice 'pipage' already, but I think we could a bit more in store. These long toothed trades over the last two weeks are extremely overbought, so I think some reversal type action is definitely in store tonight and this week. I will be back later tonight (when Europe opens) to post some active trade charts, and other potential setups that have developed or appear to be setting up nice patterns for us to take advantage of. Feel free to Tweet me at "Hawaiitrader" on Twitter.

Happy Trading!

GBP/USD

Hello Traders

Here is a 1hour chart of the GBP/USD pair. The Bank of England decided to leave their key interest rates unchanged, targeting .50%, and in response to this decision, this pair made a quick move up last night, but was quickly brought back in at the crucial monthly resistance around 151.50.  We have seen multiple assaults on this level, but with no luck.  Sooner or later, something will give, and from what I am seeing in the charts I believe we will get some nice downside action into the end of this week and the beginning of the next.  I have drawn two independent channels on this chart, the first and smaller being the parabolic bull channel that formed after the BOE rate decision, and the second and much bigger channel being the general trading range between support and resistance zones.  Over night, however, we broke down out of the first channel, and things appear to be headed towards the lower boundary of the second channel.  We also saw an increase in volume at the 'roll-over' point, so it's a great idea to keep an eye on this on.  I am currently short the EUR/JPY, which has a similar setup, and I have a resting order to short the GBP/USD at the first sign of continued weakness...

Please write me if you have any questions about potential trades and setups.

Happy Trading!

GBP/JPY Target 3?

Hello Traders-

Chart for GBP/JPY, showing targets taken out and the third and final target that has yet to be attained.  Tonight, so far so good. We really have to break the 147.50 area firmly to get down there.

GBP/JPY Hits 2nd Target, Lets go for 3!

Hello Traders-

Just a quick updated GBP/JPY chart showing the 2nd target achievment, now we should be looking for setups taking us to the 3rd target.  Watch for strong retraces, on lighter volume, and when they sputter out at resistance (possibly 1st target "area"), look to get short with an appropriate stop (30-40pips).  I see the 3rd target coming tonight, or tomorrow. Definitely this week, as long as the newly forming down trend continues to set its pace.

Good luck!

GBP/USD 4hr Chart

Hello Traders-

Here is a 4 hour chart of the GBP/USD going back about a year.  I am posting this not only to detail the reasons for my current short position, but to provide a great example of longer term price/volume divergence.  As well, we can take from this chart the idea that as traders, we cannot ignore everything, and only focus on one aspect such as technicals, but we must take into account all the many pieces of information that are out there to be analyzed.  This does not mean that you need to enter/exit trades based upon all of these other things, but just keep them in mind, because I assure you there are plenty of other traders looking at things you may believe to be unimportant, just as you are following many things that other traders are missing.  I am pounding the importance of PRICE/VOLUME RELATIONSHIPS.  VOLUME CONFIRMS PRICE, PRICE CONFIRMS MASS OPINION.  Okay, it's not simply black and white, but to the degree that two pieces of data can help, there are no others in my opinion that do a better job of showing you the true picture of a trade's internal capabilities than PRICE AND VOLUME.

Here we have a very obvious divergence between the direction of prices (upward) and the strength of volume (decreasing) that began almost exactly as this pair bottomed at the beginning of the year.  We also want to look at the time compression relationships, so do not just hop on a trade because you see a divergence, but overall, the existence of a price/volume divergence can help put you on the correct side of the market.

European Economy Shrinks 4%

Hello Traders....

Important information here...    http://news.theage.com.au/breaking-news-business/european-economy-to-shrink-4--eu-20090505-asuu.html

GBP/JPY Targets...

Hello Traders-

This is what I am seeing for our GBP/JPY trade, progress was made last night in the general topping process that will need to play out before we achieve any lasting downside pressure. So far, so good. Still sitting outside the local channel break, with a test of the boundary failing to recover. Target #1 was achieved last night, I am hoping for Target #2 later tonight or tomorrow morning. If we do get some significant downward pressure as traders come back on line from the European regions (Asia still on holiday), we could see Target #3 before the weekend. If not, we will most likely wait until next week. I will be posting an update for EUR/JPY later today as well.  Currently, I am short GBP/JPY, EUR/JPY, and I just put a short out on GBP/USD, there appears to be a double top forming near the strong 150.65 resistance. More on this later....

Happy Trading!

EUR/JPY, GBP/JPY Sunday Night Update 2..

Hello Traders:

Well, well, well...That chart we looked at for the EUR/JPY finally broke down, loosing the lower channel boundary. We will see tests of this channel, no doubt, and we MUST respect any movements back into the channel, as there will undoubtedly be many late longs and early shorts that combine to whipsaw, pushing the market higher, then lower, and so on and so forth until a new trend takes hold.  The chart posted above shows the break down of the channel, and I want to point out that this is really a great type of trade entry to take,  as long as you can safely manage the trade in case it reverses on you unexpectedly. When you are confronted with obvious divergences, especially as we saw here between PRICE and VOLUME, there is always a trade to be had sooner or later. One just needs to be patient and vigilant. We got lucky that this one broke relatively soon after I posted, but sometimes it can take quite a while, and be very frustrating, even to the point that you give up trying to enter right at the moment that it decides to break. Discipline.  I have included profit targets ON the chart show above. Again, these are simply areas that I see price taking a breather at once the trend changes. It is possible that we retrace 50% of the move off of the local low from a week ago when the trend initially changed, and still continue higher. Always be careful, but these targets should be accurate if this price continues downward. I would use the channel boundary as a HARD STOP. Please trade wisely and carefully, process your own research as well. : )

I will follow with more posts on Monday, still watching the EUR/JPY, GBP/JPY, and USD/JPY for weakness, potential signs of topping, and singals that a trend change is in order or in process. 

Happy Trading!

EUR/JPY- Volume and Price DIVERGECE....

Hello Traders-

Just wanted to post a quick chart of the 4 hour timeframe for the EUR/JPY pair. There is quite and obvious divergence between the direction of prices, and the conviction of volume supporting these prices.  When divergences occur, there is no gaurantee as to the "who, what, when, where, and how" of the particular moment when something gives, but the one gaurantee in situations such as the one illustrated in the above chart is that something WIL GIVE.  It's simply a fact, and as traders we need to define these situations, observe them, have a plan of action, and then execute your actions according to your prescribed plan, hopefully taking some profit in the end....

I will keep an eye on this, and you should too. When that 'something' gives, there will be money to be made.   The change creates the necessary imbalance between buyers, sellers, emotions and realities that we look for in charts to tell us that a 'high probability setup' is in the making, or fresh for the taking. Also, we always want to use appropriate stops when attempting to catch a divergence break, there can be multiple attempt/headfakes. We can and will always be able to get back in to catch the break, so there is no need to feel as though we must front-run it to ensure a profit.  There's no need to front-run anything, there's always another trade.  

Sunday Night FX Update

Hello Traders-

........And the march continues from the bottom left of the chart to the upper right of the chart, lol.  We are seeing a trend shift in all currency pairs over the past week, but we are also reaching strong resistance and strong support with regard to those newly minted moves.  I would expect a pull-back in Japanese Yen pairs, and Dollar pairs, but we are going to need a hefty reversal for the trend to shift once again, so right now I would just be looking to add to profitable trades on pull-backs to the nearest bottom trendline of the moves started early last week, and if any significant moves take place with the potential to break trend, I will put up a post with a chart.

Right now I am still looking for potential signs of weakness/reversal with regard to EUR/JPY, GBP/JPY, USD/JPY, and GBP/USD.  

Here are some basic sketch support and resistance numbers for pairs that I follow, as well as a few others.  Courtesy of FXpath.com.  

EUR/USD - Support 1.3100 / Resistance 1.3385

USD/JPY - Support 96.00 / Resistance 99.75

GBP/USD - Support 1.4700 / Resistance 1.5065

USD/CHF - Support 1.1270/ Resistance 1.1600

I hope everyone has a wonderful Sunday PM session and a great trading week. Don't forget to email me if you have any trading questions, and also for any information on the new Trade Coach/Trade Mentor services I am now offering. Take your trading to the next level, and do it affordably! 

Hawaiitrader (twitter= Hawaiitrader)

US GDP, Fed, End of the Month Pumps, Trade Ideas

Aloha Everyone-

Hope everyone had a great U.S session. I am preparing for the European Session, and have a few small shorts working in the Asian Session. EUR/JPY, took a few small shorts just because the run-up was so big. Usually window dressing for the end of the month, and there could also have been a great deal of covering on the JPY pairs due the weakness as of late.

U.S GDP came in at 6.1% contraction for Q1, which makes over 6% contraction for two quarters in a row, not good.  We will see where things come in during the Fall, I think that is going to be the most important factor when it comes to judging the true potential/progress of U.S recovery.  On this power-data day, we also had the Federal Reserve acting as expected, keeping key interest rates targeted for the 0.0%-0.25% area.  The Chairman of the Federal Reserve, BenBernanke, has some serious issues coming ahead, Treasury yields continue to climb in the face of Quantitative Easing (purchasing Treasuries by the U.S, and POMO cash printing)

I see the major movements of most currency pairs over the last two days as simply end of the month pumping. If you are caught short, I truly expect you will have an opportunity to get out on the JPY pairs and USD pairs.  It will be interesting to see where things move to in May, as on Wall Street, we traditionally get the "sell in may, and go away" effect.  Tradition, however, has taken a back seat during the last two years for good reason. Should be an interesting couple of weeks.  I am looking to nibble on short side trades in the EUR/JPY, GBP/JPY, GBP/USD andUSD/JPY over the next couple of days to weeks. I will post when I get into these trades and the setups I am seeing!  Please feel free to email with any questions.... Also, If anyone is interested in one-on-one coaching for FOREX or Futures, I am open and willing to do some coaching this summer. My rates are not posted because they are negotiable, and I do not wish to ever gouge traders for wanting to learn, like SO MANY other people do. I had the blessing of being given affordable coaching, and it has been a true beacon.  
Aloha and Happy Trading!

UPDATE: GBP/JPY 4HR Channel, "Throw-Overs and Throw-Unders"

Hello Traders-

This is an updated version of the GBP/JPY chart I posted yesterday, recommending a short trade on the breakdown of the channel.  Congratulations to any of you who took that trade, it was a great one, but also needed to be exited rather quickly as we approached the 'bottoming area'. This chart shows two very classic versions of inverse scenarios.  On the top label you will see the price action showing what is know as a "Thow-Over" and on to bottom label you will see what is known as a "Throw-Under".  As is the case with strong channels, fair price balance has a tendency to revert to the mean and recover the boundaries of a channel after they have been broken.  When channels do breakdown without a recovery, the profit potential is huge, but the risk is high wit regard to timing your entry.  Normally, I trade a lot of channel and trendline brakes, so I have developed a fairly healthy sense for when they are in fact breaking for good, throwing down/over, or simply coming back to "kiss the channel" and say goodnight.  The third effect is one in the same with the first, breaking for good.  Most times (unless huge news hits) prices will break channel boundaries with a SOLID candle that is supported by HIGH volume when the move is legit.  At that point I look for a quick turn around and a "kiss and goodnight", which is a complicated way of saying that the broken down price turns back up to quickly test the boundary, and if that fails, you have a tremendous trade opportunity.  Your stop is simply the channel boundary, and your trade can easily turn into a nice runner....

Happy Trading!

Price and Volume, Lessons in "Divergence"

Hello Traders-

I just wanted to post a very nice example of one of the key pieces of information I am always looking for on the charts/markets I trade. This is a 30min chart of the EUR/JPY pair, showing a very nice example of the price/volume relationship explained in this post. Enjoy!

The example put forth in this chart is known as a "divergence", simply implying that conflicting information is being produced in opposition to what would either normally be expected, or required to confirm a signal to buy, sell, or hold.  I do not look for "confluence" or agreement in my signals, I look for "divergence" as this is a sign of imbalance, traders being on the wrong side, or simply something that has become long in the tooth and the trend is reaching a point of exhaustion.  When combined, Volume and Price can tell an incredibly powerful story with regard to true strength and or validity of a price move.  When we see Volume, we are seeing a valuable gauge for measuring participation in the market. How valid is the move taking place?  Can we expect this trend to continue because we see a strong move in price backed by a strong move in volume, or can we expect this move to be short-lived or simply a 'head-fake' due to a thin market?  We know when there is a strong agreement between prices and volume, the trend has support and strength. A trend like this must be respected, not ignored.  When we have rising prices and rising volume, the move upward in price is confirmed, and we can make further decisions based upon this information.  When prices are moving down, and volume is moving up, we also know that this move is powerful and has support for further movement.  The key "divergence" we are looking for is when the price and volume DO NOT AGREE.  That is a key sign that something in the market is not right, and most likely it is not sustainable either.  When we see falling prices WITH falling volume, we know that less and less participation is taking place as the prices fall. People are withdrawing, and waiting.  When we see prices moving up WITH falling volume, we similarly know that the movement up is not supported by the majority of market participants.  Find volume trends and corresponding price trends, and you will also find that your entry/exit points become much more accurate.  Of course, we cannot ignore everything else as we know that prices can be affected by all sorts of unknowns, but as traders, volume and price relationships are one of the most powerful signals we can use to determine when to get it, when to get out, when to hold, when to sit out, and so on and so forth.  Happy Trading!

GBP/JPY 4 hour chart with TCCI

I hope some of you were able to take the break-down of this GBP/JPY setup I posted earlier in the day. The trade at the break of this channel netted a nice 3 digit gain in pips,  +155, with another 30-40 left on the table...I am going to start posting more and more FOREX charts with the setups I am seeing and taking.  Please feel free to send me an email with questions and or ideas for things I should cover.  Since the true pain began in this financial crisis, I have shifted trading styles and markets to adjust to the current environment. As traders, we are constantly faced with changing environments, but the normal pace of such changes has taken a fairly drastic increase in pace. When the information we use to make decisions in our day to day trading becomes impossible to gauge due to abnormal circumstances (as in the case of the ongoing government tampering in the financial markets) it's always a good idea to evaluate your trading styles, strategies, methods, and markets.  Even during times when things are constant, doing this type of system evaluation on a yearly or even monthly basis is a good idea. Our edge is our weapon, and without a sharp and properly wielded edge, trading becomes an entirely different ball of wax.  Stay sharp, and your edge will too. 

There Comes A Time.......

Well, well, well, Ladies and Gentleman.....

April 5th 2009 was a Sunday, and a beautiful one at that on the Island of Maui.  I finally got the courage, and took the plunge!  Best part is that my long-time partner in crime SAID YES!

I know we try to stick to PURELY FINANCE and TRADING related topics on the blog, but it is a momentous occasion, and I wanted to share it with everyone. After-all it's Good Friday, and there's no trading to be had.

I will be back this weekend with some market coverage, trading analysis, and FOREX ideas for next week!

Regards and Aloha....

Nigel (HawaiiTrader)

2009! New Year, New Trades. Get Pumped up!

Aloha Traders-


Happy New Year and Happy New Trading Year. Clean the slate, and freshen up, get ready for a great year. Although we can't erase our P/L breakdown, we can learn from and improve upon those things that were both positive and negative during our trading year. For those of you following, I would REALLY APPRECIATE ANY feedback in regards to topics, questions, and or comments/critique you might have to improve the blog and the information you can pull from it. Feel free to send these to nigel4sher@gmail.com. This will help to keep things current and focused, with a goal of vast improvement both on the site and in every one's trading. A trading room could even possibly be something that could work out, we'll see.

Regards
Nigel/Hawaiitrader