resistance Tag

I've started the Year with a tough bout of man-flu which again has kept me from spending anything other than brief moments at the trading screen. As much as I strive to post trade entries live I just couldn't manage it on the blog for the current and only open trade although if you read my ADVFN forum I did manage a brief post there at the trade inception. The trade in question is a EUR:AUD swing short from resistance opened during the evening of 7th January from 1.5269. The initial target was the 1.5000 area marked by the previous swing high on the Daily chart which could become support for the current correction but since entering the moving averages have risen possibly suggesting price wont go as low as I initially hoped.

You may recall my recent choice to take a risky trade in AUD:NZD whilst waiting for a EUR:GBP set-up to fully play out. Obviously I could have entered both trades but on the basis that the EUR:GBP set-up didn't look quite ready for entry, and the AUD:NZD despite being far riskier did, I just went with the latter. Unfortunately for me, the EUR:GBP short would have been an instant winner, whilst the AUD:NZD one is yet to show a profit of any kind! In fact I widened the stop slightly on the AUD:NZD long on the basis that my original stop placement didn't leave enough breathing space. At present the AUD:NZD position is showing a loss of approximately 140 pips whilst the EUR:GBP trade, had I taken it, would now be showing +180 pips!

You may have spotted there was no trading round-up over the Weekend just gone. This was simply due to the fact no new trades have been taken and the suggested swing trades I had lined up either didn't provide what I was looking for on smaller time frames to enter, or, I missed the entries and decided to let them go. There are a couple of swing set-ups I'd like to focus on over the next couple of days and I'll post further details ahead of entries if they start going to plan.

After a refreshing 3 Week break from the Markets I'm now back and scanning through the charts of which some have surprised me, the strength in the Pound in particular. Last Week I entered a DAX long for which I've only now got the opportunity to talk about. This trade is based on the Monthly chart and I've never before taken a trade on such a large time frame. Furthermore I had to stop myself being influenced by other Indices because none of them support the type of strength I'm seeing on the DAX even as far as to say my system is still short from May on the FTSE Daily chart.

Having closed the previous EUR:AUD swing short for a quick profit the time has come to take another look whilst price continues to struggle against Daily resistance. The MACD negative divergence has now confirmed itself and price breaks above the 1.4270 level appear to attract selling pressure. I was so close to entering short last night but at that time price was above 1.4270 and looking lively so the decision was made to wait until today. Price did drift lower overnight and my entry wasn't at the best possible levels but it turned out to be good enough.

EUR:AUD has had some interesting moves over the last couple of Years, some of which were technically quite simple to catch and resulted in significant moves. The Daily chart below shows historic analysis that I applied to the chart before trading it and you can see that 4 horizontal lines and 2 vertical lines was all it took! To explain further you can see that between October 2010 and December 2011 price remained range bound in the top left of the chart. When it eventually broke down from this range I made the decision not to trade it until price retested the range. After quite a long wait the re-test came in May 2012 as defined by the first red circle. I call such set-ups "Box Trades" simply because price has retested the annotated box that previously contained price before it broke down.

Still no new swing trades unfortunately. In fact, at times I've felt like a rabbit in the headlights over the last couple of Weeks while watching huge swings take place across a number of FX pairs, sometimes responding to support and resistance, but other times completely ignoring them. It can be tough when markets go from dull uninteresting trading patterns to full on wild volatility because neither  are ideal situations for entering new swing trades, rather, they are more suited to a day trading environment.