I thought I would post my trades as I take them. This my first trade since becoming active in the forum, no doubt the way i will present them will change any ideas really apreciated. I am looking to build a trading team so I am keen to talk about these ideas and hopefully improve my trading
Trade 1 Long EURNZD.
Like most of my trades this was taken on the 4 hour chart (short term swing) after a pullback. The pullback in this case was a little shallow, less than the 38% I look for. Stop loss had to go in at 100 pips to cover the swing low meaning that first target is 300 pips. A high target butnot unreasonable for this pair.
Technical analysis. The pair broke out of a downward channel on March the 3rd having been in the channel since August 2015. I have marked the top of this breakout as wave 1 of a 5 wave advance, after a small pullback stochastics and RSI have become favourable to enter a long trade, the trade was opened when it closed above my ema cluster.
Fundamentals: I keep my own surprise index which has been falling for the NZD and suffered from particularly bad trade data this morning, this poor data is likely to keep the RBNZ in wait and see mode. The value of the NZD has always been its high credit rating and high returns, both of these seem to be at risk likely reducing the intrinsic value of the kiwi. On the contrary the surprise index for europe is looking very good and todays election result releaves much of the political concerns that have been keeping a lid on the euro.
I have attached an image of the trade any comments appreciated
Trade 2 Short Dow Jones Industrial
I have been looking to sell the US and European stock markets since last summer, I have had very little chance to do it. The price action since the FOMC announcement yesterday gives credence to my view that a correction is playing out, probably of minor degree with it likely that new highs will be achieved however I do believe that the entire bull market is in its final stages and will be looking to sell the markets aggressively when the possibility arrives.
Technicals: technicals here are quite clear, if you agree that the wave pattern is corrective then a break of trend line is a clear trade trigger, falling RSI, Momentum and Stochastics help the bearish call and the break below my ema cluster is an important part of my trading plan.
Fundamentals: The rise on yesterdays FOMC makes little sense, the FOMC did exactly as expected and did not change their projections. Rate rises are rarely good for stocks and if the FED are now in regular rate hike mode stocks will find it harder to make headway. When the FED start to seriously discuss reducing their balance sheet it is likley to have a significant effect on stocks. Finally I do not buy the Trump rally, I can see no evidence yet of the new administrations ability to deliver on its promises nor i am I clear exactly what those promises are.
Pair appears to be moving in a fairly large range,shown as a red and a green line on the chart. GBP is super volatile of late so trade has to be half size to give a reasonable risk. Technicals are good and, to be honest, most opportunities to short the GBP have been profitable of late. RBNZ are due this week and I expect they will become less dovish in line with most other central banks
I return to this trade with a slightly better wave count. A clear abc reversal pattern for wave 2 followed by a break higher which passes my cluster and provides good stochastics. The previous trade was succesful but did not make the progress I might have hoped for.
RBNZ is due 8pm GMT Wednesday evening which might be a good time to exit this trade however the RBA minutes released this morning, which are often correlated did not move the currency in a positive way. I may wait and watch the press conference making a decision as i go. Of course it may not make it that far.
After some pretty poor price action I looked at this trade again and developed an alternative wave pattern. A tringle could be forming for wave 2 and the current up move may only be wave d as shown on the image below. If it is only wave d the pair should find resistance at the orange line ( around 1.543) if wave 3 is getting started the pair should move through this resistance in an impulsive manner. I will watch carefully to see what happens. The good news is that both of these counts call for higher prices in the short term
With trade 4 now significantly in the money (+130 pips) the bullish alternative appears to be playing out. I thought i would post a trade plan before it happens.
Technicals on the chart are quite strong, the wave pattern implies that the trade is finding a wave 2 bottom giving the possibility of a wave 3 impulsive rise. The orange horizontal line on the chart is my trigger line and I will be looking for a 4 hour close above this line, the line itself will complete a 1-2-3 reversal pattern, usually quite reliable in this type of situation. Although not shown on this chart, RSI and stochastics are also favourable.
Fundamentals: The growing strength of the Euro backed up by its ongoing positive economic data and sentiment indicators imply that their will be ongoing demand for euro based assets which alligns with my "money view" of economics. Of course the risk here is the current wave of risk aversion which could but an end to any Yen short position, I will monitor the equity markets closely. Equities are pulling back in what I think is a minor wave 4 correction, it is likely to remain choppy over coming days but full blown risk aversion is a small probability.
Current positions Long EURNZD (+130), Long GBPAUD (+110)
Watching Long EURJPY, short AUDUSD
If you read my posts you might notice the change of charts, I am mobile today trading by the pool (benefits of being a full time trader) so away from my desk top machine.