$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)