A slow week

This past week was very slow. Not many crazy moves, many bounces.

Let's start with E/J, which established a range.



E/U had an up week. It has formed a channel, which is still holding. Due to low volumes, the moves were quite predictable.



I don't trade U/J by itself, because it doesn't move enough. However, it needs to be watched when one is trading E/J and G/J because of the correlations.



We also had interesting developments on G/J. First a double top, then a trendline break, which stopped at 134.00 and retraced exactly to the broken trendline. This established a new downward trend, which was retested on the third touch of the new trendline.



U/CAD is in a strong downtrend now. And even despite that, it created a triple bottom, where two longs would have made 50+ pips each. Also two shorts from the trendline and finally the support gave away. What they will do now, no one knows.



And finally, E/G in an uptrend supported by a rising trendline. Two nice longs and one short off the massive resistance. The trendline will be broken, most likely, so look for shorts as that happens.



I took this week easy. The World Cup is taking place in South Africa and I'm rooting for Slovakia/USA of course :) I think I learned one important thing though.

Trading is a like workout. There are days when everything is too heavy to even look at in the gym and there are days when I break my personal records easily. In trading, there are days when I make trading decisions very quickly and am spot on. Then there are days when I open a trade, watch it without reacting and eventually stop out. You can imagine how the "passive" days go. It seems to me that it is necessary to watch trades like a hawk and be flexible.

For example, if I am in trade and am at -7 pips, I start paying more attention to correlated instruments. If those with positive correlations keep going my way, I keep holding. However, if they stall and start reversing, I start consider closing my position for a small loss. Vice versa for inverse correlations. An example would be G/U and E/G. Let's say USD is weak and I go long on the pound. Now let's say the price stalls, E/G starts going higher and U/CAD starts going higher. Since G/U and E/G are inversely correlated, an upmove in E/G suggests a weak pound and a drop in G/U. Same thing for U/CAD. G/U and U/CAD are also inversely correlated and a rally in the latter suggests a strong greenback, hence a selloff in G/U.

It is important to be able to react to such developments. It is easy to see them, but to close at a loss is something what us, as human beings, do not like doing. Closing at a loss hurts when the trader is someone who is used to be right and to whom people listen when he speaks. However, being always right in trading is statistically close to impossible.

I will not be trading until the second week of July, since I am traveling to Germany tomorrow.

Tyler

PS. Here's my trading setup:

Two good days

I didn't post anything yesterday so today's post will contain trades from both days.

First, U/CAD bouncing a lot:



G/U perfect bounce at previous support which became resistance, then two bounces in the channel.



After the massive selloff on Friday, E/U established a range and had a nice bounce.



E/G broke out of the channel today, then bounced after being overbought on RSI and touching the 0.8333 level.



I want to point out one more thing I wrote about last week. I said that the best trades look scary and here's an example. On Sunday night, I shorted U/CAD, which at the moment looked like this:



Holding until today would have yielded 188 pips (see the first image in this post for current U/CAD chart).

Quick pips

U/CAD still in range for +20:



E/G is retracing yesterday's break. I'm planning on shorting when it touches the channel/resistance line.

Where is the trend?

Today's volatility was ridiculous. Yesterday was a holiday in the US, so the big boys decided to go nuts today. First, let's look at E/U.



Support broken, stops triggered, then a bounce. No continuation whatsoever. On the upside, stops taken out above the highs, then a fall.

U/CAD was the only pair that traded well today. Multiple bounces and tons of pips.



G/J pretty good too, if you got into the first long around 4am EST, congratulations!



E/J was very difficult. First a violent break of the support, then retracement to it. Shorting would have been stopped out. Second short at highs pretty solid though.



And finally, E/G broke the flag (channel) to the downside very violently. Pound was very strong today (some huge short covering as reported by forexlive.com). I bought it at the low where it stalled around 8am.