SaigonFX's Daily Short-term Momentum Strength Scores

Trading Systems
61

Here are the short-term momentum strength scores for September 4, 2012 taken at 2:30 GMT:

AUD – 7
NZD – 6
USD – 5
JPY – 4
GBP – 2
CHF – 0
CAD – 0
EUR – 0

For about a week now, the AUD and NZD have been suggesting that a big rally is on the way, and yet price has had difficulty climbing more than about 1% to the upside. When the rally does happen, I suspect that it will be more marked in the crossrates (especially against CAD, EUR, and CHF) than in AUDUSD and NZDUSD, simply due to the fact that the USD is likely to be supported as equities fall over the next couple of months (at least as I expect they will!).

Today’s most polarized pairs are EURAUD and AUDCAD. This is the second consecutive day for AUDCAD to issue a strongly bullish signal. On August 28 I entered a long trade in this pair at 1.0266, but was stopped out at 1.0091. Today’s momentum results, however, allow me to set this trade up again and re-enter on the long side at the current price of 1.0092. Here are my specs on today’s AUDCAD long trade:

Initial entry at current price of 1.0092
Stop: .9920
Limit: 1.0265

I’ll be adding leverage at 1.0034 and .9977 if price gets that low.

With EURAUD, I am not eager to enter today on the short side as I had originally targeted 1.300 on this pair during the bottoming process of late July. I’d like to see price climb at least to 1.27 before considering a short in this pair.

Here is a summary of my current open positions:

Short EURJPY from a net level of 98.37, currently at -52 pips
Short CHFJPY from a net level of 81.97, currently at -37 pips
Long AUDJPY from a net level of 80.66, currently at -40 pips
Long AUDCAD from 1.0093, currently unchanged

62

Here are the short-term momentum strength scores for September 5, 2012 taken at 11:45 GMT:

EUR – 7
AUD – 6
CHF – 5
NZD – 4
GBP – 3
CAD – 2
JPY – 1
USD – 0

Today’s results are notable for the short-term signs of coming EUR and CHF strength, which seemed of very low probability over the past week. The strength in these currencies will likely be of short duration, as the longer-term charts are decidedly bearish for the euro and swissie. I can’t really see the eurusd climbing much above 1.27 and the usdchf dropping below .9400 in the coming week.

We’ve yet to see a meaningful rally in AUD or NZD, but I still think these currencies will rally at least 2% nominally before heading further south.

Here is a summary of my current open positions:

Short EURJPY from a net level of 98.37, currently at -38 pips
Short CHFJPY from a net level of 81.97, currently -6 pips
Long AUDJPY from a net level of 80.66, currently -88 pips
Long AUDCAD from 1.0093, currently at -1 pip

63

Here are the short-term momentum strength scores for September 7, 2012 taken at 6:00 GMT:

JPY – 7
USD – 6
CHF – 4
CAD – 3
GBP – 3
EUR – 2
AUD – 1
NZD – 0

It looks now like the first leg (what I expect will be an A-B-C or three-wave movement) of the rallies in AUD and NZD is nearly complete, and I expect these currencies start falling over the next few trading sessions. JPY and USD should lead the pack next week and perform especially well against the AUD and NZD.

As such, I have just closed my long trade in AUDJPY at the current price of 81.50. This is a little shy of my initial limit of 81.65 but as the momentum is now decidedly bearish in this pair, I’d like to get out of the way of the decline I anticipate. By adding leverage as price dropped from my initial entry point of 80.85, I was able to achieve a net long position from 80.66, thus producing a gain of 84 pips in 8 days for a 2.7% return on equity (2% was risked).

Today’s most polarized pair is NZDJPY (with bearish bias). However, I am not taking a trade in this pair as the Elliott wave count I have for this pair and the 2H to 4H momentum are pointing to a new high above 64.75 before a substantial decline is likely. As this pair runs out of steam on the upside, I will be ready to enter a short trade if warranted.

Here is a summary of my current open trades:

Short EURJPY from a net level of 99.08, currently at -79 pips
Short CHFJPY from a net level of 82.35, currently at -37 pips
Long AUDCAD from 1.0093, currently at +43 pips

I expect that if/when the JPY strength predicted by today’s results kicks in, my shorts in eurjpy and chfjpy will turn profitable. The slow melt-up in price in these pairs over the last few weeks has allowed me to build a moderately-sized short position in each pair.

64

Here are the short-term momentum strength readings for September 10, 2012 taken at 3:00 GMT:

USD – 7
JPY – 6
GBP - 5
CAD – 3
CHF – 2
AUD – 2
EUR – 1
NZD – 0

Today’s readings suggest that the USD is likely to find substantial support after continuing to fall a further 1 to 1.5%. I expect the JPY to find support before the dollar, especially against EUR and CHF. The rallies I was expecting in NZD and AUD are starting to look mature and I expect the downtrend to be back in effect for these currencies by early next week. Still, I won’t be surprised if they spend this week trudging higher.

The NZDUSD is today’s most polarized pair, with a bearish bias. Based on wave structure and momentum on the 1H to 4H charts, I expect price to challenge resistance in the .8188 to .8220 range. Should price make a new high above .8220, there will be some excellent opportunities for shorting in between .8220 and .8500. The recent advance looks impulsive enough that I will delay taking a short position in this pair until at least Monday next week.

As with Friday’s results, another highly polarized pair is NZDJPY, with bearish bias. Based on wave structure and longer-term momentum, I see this pair rising to between 64.16 and 64.70 before making a substantial decline of at least 2%. This is another situation on my daily ‘watch list.’

Here is a summary of my current open trades:

Short EURJPY from a net level of 99.29, currently at -76 pips
Short CHFJPY from a net level of 82.35, currently at -40 pips
Long AUDCAD from 1.0093, currently at +45 pips

65

Here are the short-term momentum strength scores for September 12, 2012 taken at 2:00 GMT:

USD – 7
GBP – 5
CAD - 4
AUD – 3
JPY – 2
EUR – 1
NZD – 0
CHF – 0

Today’s most polarized pair is USDCHF, with bullish bias. However, the wave structure off the July 24 high looks impulsive and I won’t be surprised if price tests the strong support at .9000 before offering a good opportunity to go long.

NZDUSD is also highly polarized, and here I like both the higher-timeframe momentum and the wave count, both of which point to the downside. Here are the specs on the NZDUSD long trade I’ve entered today:

Entered at current price of .8202
Stop at .8407
Limit at .7950 (.382 retracement measured from the May low to the August high)

I’ll be adding leverage at .8270 and .8339 if price reaches those levels.

Here is a summary of my current open trades:

Short EURJPY from a net level of 99.29, currently at -96 pips
Short CHFJPY from a net level of 82.35, currently at -63 pips
Long AUDCAD from 1.0093, currently at +87 pips

66

Here are the short-term momentum strength scores for September 13, 2012 taken at 1:00 GMT:

USD – 7
CAD – 6
GBP - 3
JPY – 2
EUR – 2
CHF - 2
NZD – 0
AUD - 0

Today’s results confirm the idea, stated also in yesterday’s results, that the USD is on the cusp of a major advance of at least 2%. Normally these major market moves begin within 5 days of triggering a signal in this method of momentum analysis. Therefore, I expect the USD rally to begin by Tuesday at the latest.

When it begins, I expect the AUD and NZD to be the biggest losers. Today’s results, as yesterday’s, reveal NZDUSD as a pair ripe for shorting.

Also, AUDUSD should see a significant decline when the USD begins to rally. The past couple of months have shown me that price travels against me an average of 1.24% before turning in the predicted direction. Therefore, with a signal to short AUDUSD triggered today at 1.0475, I have placed an entry order to make an initial short trade in this pair at 1.0550, or about 0.6% above the current price. I am betting that this strategy of delayed entry will both get me a better net shorting level as well as reduce the risk of being stopped out. If and when my short is triggered, the stop will be 1.0814 and the initial limit will be 1.0110.

The rally in AUD has allowed my long trade in AUDCAD (entered on 27 August) to complete. I closed this trade manually today, based on lagging momentum, at 1.0216 for a profit of 123 pips (4.0% was added to equity).

Here is a summary of my current open trades:

Short EURJPY from a net level of .9961, currently at -84 pips
Short CHFJPY from a net level of .8273, currently at -23 pips
Short NZDUSD from .8202, currently at -10 pips

67

Here are the short-term momentum strength scores for September 17, 2012:

JPY – 7
USD – 5
CHF – 3
CAD- 3
GBP – 3
AUD - 2
EUR – 2
NZD – 0

Today’s results suggest that the yen should start to rally in the next week and relieve its currently oversold position, particularly against NZD, EUR, and AUD. The yen’s weakness late last week caused 2 of my trades (shorts in EURJPY and CHFJPY) to be stopped out at 1.0075 and 83.30, respectively for a 2% equity loss in each trade. These trades were held for about a month, but price could never correct even 35% of the advance from the yen’s August 10 low.

AUDUSD met my entry order price of 1.0550. My stop in this trade is 1.0814 and I’ve revised the limit to 1.0435. I’ll be adding leverage at 1.0638 and 1.0726 if price reaches those levels.

Whereas last week the USD was looking primed for a bullish breakout, the FOMC meeting has reduced the dollar’s bullish momentum and I can easily see the USD falling another 3-4% from present levels before a substantial rally occurs. Nonetheless I do expect a brief rally of 0.5 to 1% in the dollar early this week, notable especially against the EUR, AUD, and NZD.

Here are my current open positions:

Short NZDUSD from a net level of .8299, currently at +12 pips
Short AUDUSD from 1.0550, currently at +12 pips

68

Here are the short-term momentum strength scores taken on September 18, 2012 at 2:30 GMT:

JPY – 6
AUD- 6
CAD – 5
NZD – 3
EUR – 2
USD – 2
GBP – 1
CHF – 0

The past couple days of bullish readings in AUD have allowed me to close my AUDUSD short trade at 1.0435 for a profit of 115 pips in 2 days (2.9% added to equity).

Today’s most polarized pairs are AUDCHF (bullish bias) and CHFJPY (bearish bias).

Of these two pairs, I prefer to trade AUDCHF as it is showing bullish momentum divergences out to the 8H chart, whereas CHFJPY is only bearish out to the 2H chart. I can see some further upside action in CHFJPY to around 86, but it’s much harder for me to envision AUDCHF falling below .9600.

In Elliott Wave terms, AUDCHF shows a clear five waves down from the August 2 high and now I expect a correction of at least 38%. This allows me to set my limit somewhat conservatively at .9872 in this pair. Here are my trade specs on the long trade I’ve entered today in AUDCHF:

Entered long today at current price of .9675
Stop = .9433
Limit = .9872
Second long entry at .9595 if prices gets that low
Third long entry at .9513 if price gets that low

I expect this trade to complete by the end of next week.

I took a hard loss in CHFJPY last week and while the lower emotions urge me to get back in this pair on the short side and make back what I lost in this pair from mid-August to mid-September, my trading rules say to wait for price to rise to at least 85.40 before assessing the wisdom of a new short trade.

Here is a summary of my current open positions:

Short NZDUSD from a net level of .8299, currently at +22 pips
Long AUDCHF from .9675, just entered, unchanged

69

Here are the short-term momentum strength scores for September 20, 2012 taken at 3:15 GMT:

CAD – 6
EUR – 5
AUD – 4
USD – 3
NZD – 2
GBP – 1
JPY – 1
CHF – 0

Today’s most polarized pair is CADCHF. Momentum in this pair is looking bullish all the way out to the 8H chart. Additionally, I am counting a clean five waves down from the August 16 high. I now expect a retracement of at least 38%. My limit is initially set at .9630, just under resistance from the late July / early August topping process.

Here are the specs on the long trade I have entered in CADCHF today:

Initial entry at current price of .9520
limit .9630
stop .9282
I’ll be adding leverage at .9441 and .9361 if price gets that low.
As always, I’m risking a total of 2% of equity even if all 3 entries are triggered.

Here is a summary of my current open trades:

Short NZDUSD from a net level of .8299, currently at +37 pips
Long AUDCHF from .9675, currently at +12 pips
Long CADCHF from .9520, just entered, unchanged

70

I like your CAD/CHF set up but I actually like to play it but I feel like the cad strength could become quickly dampened with oil futures getting Potentially ready to swing back to the downside as well as the boost it may be receiving from temporary U.S. Dollar strengthening today. Love your scorings though I’ve been following daily thanks for posting!

71

Here are the short-term momentum strength readings for September 21, 2012 taken at 13:00 GMT:

EUR – 7
CHF – 5
CAD – 4
GBP – 4
USD – 3
AUD – 2
JPY – 1
NZD – 0

Today’s most polarized pair is EURNZD (with bullish bias). However, the higher timeframes are suggesting that the upside action will be limited to around 1.5728-1.5760, and generally I like to trade slightly larger moves than this. On the 2H to the 8H charts, I see action in this pair mostly sideways over the next 3 months, so I don’t currently foresee trading this pair any time soon.

I expect equities to spike and reverse somewhere between here and Dow 14,000. This should send the USD higher, especially against JPY, CAD, and AUD.

Two pairs I have my eyes on are GBPCAD and NZDJPY. GBPCAD is displaying bearish momentum divergences on timeframes from 15M out to 4H, while NZDJPY is looking bearish from the 15M all the way out to the Daily chart. Should price for either of these pairs rise 1% from current levels (1.6025 for GBPCAD and 65.83 for NZDJPY), I’ll be assessing the Elliott wave picture to determine if there is a good entry point. When these pairs are ready to fall, I anticipate they will move at least 250 pips.

Here is a summary of my current open trades:

Short NZDUSD from a net level of .8299, currently at -29 pips
Long AUDCHF from .9675, currently at +90 pips
Long CADCHF from .9520, currently at +19 pips

72

My apologies for not posting the Monday or Tuesday readings here. The day job has been more time-consuming than usual and sleep, a rare commodity for me. Nonetheless my trade positioning hasn’t changed since late last week. Update is below.

Here are the short-term momentum readings for September 26, 2012 taken at 6:30 GMT:

NZD – 5
EUR – 5
CHF – 4
CAD – 4
AUD – 1
USD – 1
GBP – 1
JPY – 0

Today’s most polarized pair is NZDJPY (with bullish bias). While I think there is a technical argument, based on the wave structure of the decline since September 19, for a new high above 65.75, the 4H and 8H charts on this pair look pretty bearish to me, so I think there will be higher-probability trades to take in the coming days than this potential long trade in NZDJPY. Traders with a higher risk tolerance than me could probably get away with longs in this pair up to 64.50, but I’ll pass.

Right now I consider most pairs to be in correction mode – or in corrections inside bigger corrections – and as a result, the market looks ‘muddled’ to me from a swing trading perspective. Usually these conditions persist for a week or two before a slew of tradeable opportunities appears, and then the challenge becomes choosing which one or two of those opportunities have the least risk and highest profit potential.

Here is a summary of my current open positions:

Short NZDUSD from a net level of .8299, currently at +103 pips
Long AUDCHF from .9675, currently at +40 pips
Long CADCHF from .9520, currently at +45 pips

73

Here are the short-term momentum strength scores for October 1, 2012 taken at 3:30 GMT:

CAD – 5
GBP – 4
EUR – 3
CHF – 3
AUD – 3
USD - 3
JPY – 2
NZD – 1

Today’s results are again a bit muddled in a market that seems like it is near, but not quite at, a major turning point. The most polarized pair is NZDCAD (with bearish bias). I don’t quite like this trade at the current price of .8144; however, should price make a new high above .8186, I think shorts will be quite attractive. Why don’t I find it attractive at today’s price? Because the past several months of trading this system have shown me that when I get momentum readings like today’s, suggesting a bearish reversal, price usually travels around 1% higher before changing direction. Therefore, I am going to play this one patiently and for now, I have simply set an initial short entry order at .8195 with a limit at .8038 and a stop at .8400. I will be making additional short entries at .8263 and .8332 if price gets that high.

Today I closed my long trade in AUDCHF at .9743. This pair failed to meet my target price of .9872, but my trade still earned a profit of 68 pips (1.2% added to equity). I think this pair is going to re-test the September lows around .9650 and if we get a bullish bounce at that level, I may re-enter on the long side. The Elliott wave structure from September 7 still suggests this pair is near a medium-term bottom and should see .9900 within the next 8 weeks.

There were 3 reasons I closed the AUDCHF trade early:

  1. I have noticed this year that most of my winning trades complete within 10 calendar days, whereas most of my losing trades complete in 15 to 30 days. I’ve therefore developed a “12-day guideline” which says that if a trade stays open for more than 12 days, I ought to consider closing it at whatever the current price may be. The AUDCHF long was opened on Sept. 19, so I figure it was about time to close it and keep the option of re-entering a long trade on the table for later.
  2. From Sept. 27, I could see five waves down on the 15M chart, and this normally suggests further significant downside. Generally I would expect to see the market fall at least 75 pips from the current level in this circumstance.
  3. Momentum on the 1H chart was turning form neutral to bearish, and that has long been a sign to me to get out of a trade if I am long.

The confluence of these 3 factors made it a pretty easy decision to exit the trade earlier than I had hoped. By contrast, my long trade in CADCHF is still open since hourly momentum is still looking bullish, and I can see no bearish Elliott Wave count that would urge me to exit this trade at the moment. I am still targeting .9630 in this pair.

I am also short NZDUSD at the moment. I really won’t be surprised if this pair makes a slight new high above .8350, but would regard that as an opportunity to add to the short at a better price. Should price exceed .8500, however, I would have to close the position for a loss as that could signal further upside to .8800 or perhaps higher.

Here is a summary of my current open positions:

Short NZDUSD from a net level of .8299, currently at +25 pips
Long CADCHF from .9520, currently at +55 pips

74

Here are the short-term momentum strength scores for October 2, 2012 taken at 15:00 GMT:

JPY – 6
GBP – 6
CAD – 4
AUD – 4
USD – 3
CHF – 1
NZD – 1
EUR – 1

Today’s most polarized pairs are EURGBP (with bearish bias) and EURJPY (with bearish bias). In EURGBP, the 2H and 4H charts are looking quite bullish and therefore I’m not interested in a trade here. EURJPY is also looking quite bullish from the 1H chart on, and so I’ll pass on this signal too.

This market still looks muddled to me but I suspect we are within 5 trading days of seeing a major turning point in many pairs. My NZDCAD short entry came within 10 pips of triggering today and I think this will be a good entry point if price can inch up just a bit higher.

Here is a summary of my current open positions:

Short NZDUSD from a net level of .8299, currently at -16 pips
Long CADCHF from .9520, currently at -12 pips

75

Here are the short-term momentum strength scores for October 3, 2012 taken at 16:00 GMT:

AUD – 7
JPY – 6
NZD – 5
CAD – 4
GBP – 2
USD – 1
CHF – 1
EUR – 0

Today’s most polarized pair is EURAUD (with bearish bias). This pair is still looking somewhat bullish in the 2H and 4H charts, and I think it is likely to see an extended topping processing over the next month. If this transpires, there should be lots of opportunities to get short between the current price of 1.2629 and 1.30. Therefore, I am in no hurry to enter a trade in this pair though it is at the top of my ‘wait and see’ list.

My long trade in CADCHF is looking quite attractive now; aggressive traders could probably even add leverage at this point and target .9630, though I think even .9730 is completely achievable. In my own rather conservative trading system, I won’t be adding leverage until and only if price reaches .9441.

The market seems to be clearing now and I expect that whereas this week my system generated a few near-buy signals, next week will have a number of signals that are immediately tradeable.

Here are my current open positions:

Short NZDUSD from a net level of .8299, currently at +100 pips
Long CADCHF from .9520, currently at -10 pips

76

Here are the short-term momentum strength readings for the weekend of October 7, 2012:

CAD – 5
USD – 5
AUD – 4
JPY – 4
CHF – 3
EUR - 1
NZD - 1
GBP – 1

Today’s most polarized pair is GBPCAD (with bearish bias). This pair, on the 4H chart, has seemed to have formed a head and shoulders pattern and is looking bearish out to the 8H chart. In fact, I’ve been eagerly looking at this pair for a couple of weeks, trying to find a good entry point for a short trade. Given the nearly 1.5% drop since Sept. 27, however, I do not see the start of Monday trading as an optimal entry point. I would view a pullback to 1.5815 as an acceptable entry point, however.

This weekend’s results, like those of the last couple of weeks generally, have been muddled and have failed to produce strong trading signals under my trading system. The fact that this period of market indecision has carried on for so long suggests to me that when the market’s direction has been resolved, it will be in a major and decisive way. Equities, to me, look close to a top for the period since the 2008 crash and if we see a major top in equities I think it’s a pretty safe bet that many currency pairs will also change direction and make big moves.

Here is a summary of my current open positions:

Short NZDUSD from a net level of .8299, currently at +124 pips.
Long CADCHF from .9520, currently at -29 pips.

77

Here are the short-term momentum strength scores for October 9, 2012 taken at 9:00 GMT:

GBP – 7
USD – 4
CAD – 3
EUR – 3
AUD – 3
CHF – 2
JPY – 2
NZD – 1

Today’s most polarized pair is GBPNZD (with bullish bias). Very short-term traders could take long trades to 1.9575 with a high statistical probability of success. However, I look for larger price swings of around 2% and therefore today’s reading does not particularly interest me.

I have revised my limit on the CADCHF long to .9620, given the extent of the drop from Sept. 29 to Oct. 4 and moving Fibonacci retracements accordingly. This trade seems close to completing.

My other open trade, a short on NZDUSD, is one that I think could see a short-term bullish move to .8300 or thereabouts, but which I think has an excellent chance of hitting my target price of .7950 over the next month given the near five-wave drop since Sept. 27. My stop in this pair is .8407; above that price, I could see a challenge of the August 2011 high around .8850.

A summary of my current open trades:

Short NZDUSD from a net level of .8299, currently at +101 pips.
Long CADCHF from .9520, currently at +69 pips.

78

Here are the short-term momentum strength results for October 12, 2012 taken at 4:30 GMT:

NZD – 6
CAD – 5
AUD – 4
EUR – 4
GBP – 3
USD – 2
CHF – 2
JPY – 1

Today’s most polarized pair is NZDJPY (with bullish bias). Based on momentum readings and Elliott wave count, I see NZDJPY preparing now to make a run on 66.00. However, I believe the entire move since May has been corrective in nature and so longer-term, I looking for a retracement down to the 58-61 area. There is simply too much risk at today’s price for me to take a long trade today. Should price enter the 66-70 range, however, I could be interested in going short.

My CADCHF long trade closed at the target price of .9620 on October 9. Total profit was 100 pips in 20 days (the trade was opened on Sept. 19). This trade added 2.3% to my equity.

I have also just closed by NZDUSD short trade today at .8192, for a profit of 107 pips. This trade added 1.7% to my equity. There were two main reasons I closed this trade. First, I opened it exactly a month ago, on September 12. Most of my successful trades complete within a couple of weeks, whereas historically with my trading system, if I allow a trade to go on for a month or more, it often travels out of profitable territory and I end up with a big loss. Second, the momentum in this pair is looking bullish to me out to the 4H chart. Under these conditions, I would expect a strong rally now which will challenge September’s high near .8359.

I now have no open trades in the forex market.

Since July 17, this thread has produced a total of 17 trades – 10 winners and 7 losers, for a net profit of 6.5% when risking 2% of equity on each trade. Once the 20th trade has completed, I will post a summary of these trades.

These past 3 months have allowed me to tweak my system, particularly with regard to market entry and exit conditions. I am hopeful that the next 3 months will produce better results with these modifications than the period since mid-July, though I’m certainly happy to have made a profit instead of a loss.

I’m surprised that the market hasn’t caused my trading system to issue more actionable signals over the past couple weeks. However, all such situations are eventually resolved by price action and so I’ll stay patient and attempt to apply my system as methodically as possible.

79

As an addendum, I would add that I think we’ve seen a major top in equities when the Dow Industrials hit 13,665 last week. From here I expect the market to challenge the Flash Crash low around 9500 over the next 6 months. If this is in fact a top in equities, it should also see big trend changes in currency prices.

81

Same view, buy probably need to wait after US election.

By the way, are you going to release your PDF education document which you have mentioned in your previous posts ?