14 Apr This Week’s Swing Trading Round-Up and GBP:USD; 14th April 2013
Despite spending most of the Week in bed with the Flu, a couple of set-ups did trigger entries whilst one of my most anticipated set-ups slipped me by.
As you’ll know from previous posts, SPX has achieved the top of the multi-year megaphone pattern. On its own a megaphone top pattern is not reliable, and there isn’t anything else really supporting it (fundamentals aside of course), but in my efforts to be a hero I took the trade anyway entering short at 1596. On the basis that a pattern shown on the Monthly chart is likely to offer a multitude of opportunities for entries, I covered half the position 24 hours later for 14 points which isn’t a bad profit for an SPX trade over such a short period and couldn’t be ignored. The plan is to keep entering the trade at this perceived resistance, taking profits when they become available but leaving half the trade to run at all times until the set-up either pays off, or fails and proves the set-up wrong.
NZD:CHF rallied hard throughout most of the Week until Thursday when it really looked like it had gone too far too quickly, so despite not yet reaching my upside target of 0.8210 I chose to close the trade due to the blow-off top look of the Hourly price pattern. So far NZD:CHF has sold off hard since exiting that position confirming the decision was correct at least in the short term. That trade delivered a 109 point profit but it remains on the watch list for a potential re-entry.
GBP:USD has been one of my favourite set-ups of late for a short entry at major resistance which you’ll already know about if you’ve been following. Here’s the latest chart as a reminder:
When the high was printed on Thursday I actually had the mouse over the sell button but eventually chose not to enter the trade. OK so it’s 65 points lower now proving the trade would have been profitable at least in the short term, but gut feeling suggested this isn’t ready to reverse hard just yet particularly because of that tiny positive MACD divergence on the Daily time frame that occurred right at the lows. Even though such MACD divergences can be meaningless, I always take note of them because in my experience they mean business more often than not. Of course, I’ll continue to monitor the situation because eventually a worthy trade will come out of this.
Finally, A few people have asked why I’ve not made any mention to the huge moves taking place in Yen pairs over the last few Weeks. My opinion on Yen pairs is to either trade them very cautiously or stay out altogether. Since BOJ’s huge QE announcement Japanese bond Markets have been incredibly volatile having hit circuit-breakers on most of the sessions of last week. Some of this volatility can very quickly spread to the currency itself. On top of that you’ve got the U.S Treasury reminding BOJ of the G7 / G20 agreement which states nations must “Refrain from competitive devaluation”.
That could force BOJ to review the bold QE they recently announced which of course would reverse the Yen very quickly indeed. That’s the move you’d want to be trading because it would be in the direction of the long term trend, until then though, best to stay away or control risk very carefully.
I hope your trading is going well and I hope you’ve enjoyed this sunny Weekend, even though I spent it recovering from Flu!