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Hello friends!  Things are changing and colossal pips are to be had in the weeks and months and years to come.  Do not miss out, follow my forex trading blog at www.piptrain.com and follow me on Twitter at www.twitter.com/piptrain.  See you there..

Tiny ranges = mucho pips

So today I snagged +50 pips on EURUSD long, and was lucky to get out before the subsequent fall of more than 100 pips.  Meanwhile my GBPJPY short went nowhere and I finally decided to close it with a minor loss of -14.  But now I have returned to check the charts before bedtime and look at most currency pairs are in tight ranges.  Tomorrow should be good pippin!  The 4hour AUDUSD chart shows all the major moving averages all bunched together within 50 pips.  This pair has been in a retracement down for the past weeks, it could be ready to start heading back up.  I certainly would like to buy it cheap!  USDJPY is also in a similar situation, ready to break out of this range.  Also EURUSD has been hovering near 1.58 for 4 days now, today an attempt at the high, almost made a double top before plummeting back down, and now I am seeing some divergence on the higher time frames for continued short bias.  So I am making notes on my trade cheat sheet with the break out levels that I will look for tomorrow to trade.  Since AUDUSD bounced off the 50% retracement at .9000 some days ago, I could probably buy this pair now, but I will wait for a break of the hourly 200ema.  On the EURUSD I have noted an inside candle on the weekly chart, so break of last week high should be good for continued buying.  Potential for shorts to start too, so I have noted a daily close below the 5ema and I will sell instead.   Also, with the start of the new month, I have noted all the new monthly pivot points.  The USDJPY weekly and monthly pivots are within 30 pips of each other, and price is working to break above it right now.  as soon as yesterday’s high at 100.17 is broken, I will be buying this pair up.

This little trick really worked today

Remember when I blogged about inside candles some months ago?  Well, I have been testing the inside candle trade but on the 1 hour chart, with quite good results.  Here is a great example of the this trade from today:  Check the hourly chart on the GBPJPY.  At 10am edt a small inside hourly candle formed after a very large up candle.  This candle closed outside the hourly bollinger band.  Now, what I like to do is then switch to the 5 and 15min charts and watch for price to break the bottom of that small hourly candle, this was at 201.10.  Sure enough just a couple 5min candles and price begins to come down.  So I entered a sell trade at 201.08.  I also noted that the 50 ema on the 15min was pretty far down below where price was, about 100 pips away.  I made this 50 ema my target.  I was surprised at how quickly price started to fall, and it helped that the dow was coming down at the same time during this New York session.  I was able to take profit at the 50ema for about 100 pips, just in about 30 minutes time!  So far in my testing, this hourly inside candle trade works about 80% of the time, which is pretty good.  Typically I will set the stop above the high of the inside candle, just in case price goes against the trade.   It is important when trading this way to be aware of the hourly trend vs. the daily trend.  For example today, the hourly trend was up but the daily trend is down.  So I was thinking that there were more sellers waiting to sell the rallies, in order to trade with the daily trend. 

Big extreme moves

Pretty interesting moves in the currency markets the past two weeks.  EURUSD has been shooting up the past two weeks and hit another all time high at 1.5900.  USDJPY also made new lows, along with USDCHF.  So today, with the big Fed rate cut decision we really saw some big retracement today, with USD strength (for a change).  So after a huge fundamental news announcement like this, I really have to sit back and reevaluate the market and conditions.  Big reversal time or is this merely retracements??  Commodities too came down in price today: oil and gold.  So now I may step aside for a day or two or just take smaller intraday trend trades and be quick about taking profits until I see a clear picture again of trend.  Its perfectly fine to stand aside and wait for the market and charts to tell me which way to trade. 

Commodities are UP! Trade them in forex..

Did you know that you can trade commodities in the forex market?  Gold is at all time highs near $1000 per ounce.  The australian dollar follows gold prices quite nicely (AUDUSD).  Check how this pair has been trending up along with gold prices.  Now, since gold hit $1000, it may pull back now, it is hard to say if it will continue on this trend.  But, since I like trading trending currency pairs, I am watching this pair closely.  The daily chart looks like it is ready to break up past its recent high at 0.9496, since it retraced to the 50% just a few days ago and has staged a nice rally back up.  If AUDUSD breaks this high and retests it and continues up, then I will keep buying this pair. 

Trade the news or wait and watch?

Today was fun trading.  This week I have been listening to the live trade calls at www.forexrazor.com just to test out their service.  This trader strictly trades the news, meaning, he waits for important economic data to be released and if the data deviates from the expectation he immediately will place a trade depending on the price action.  Pheww!!  It is fast and furious this type of trading, and usually is just going for about 10-20 pips.  Unfortunately his method today lost him a few pips on GBPUSD because the price action immediately after the USD ISM news release at 10am EST was so volatile.  I prefer to WAIT an entire 5 minute candle to close before making any trades after heavy news data releases like this.  The great thing about news trading is you can visit www.forexfactory.com to see the current list of news events scheduled and then next to it they give you the importance or expected volatility associated with it.  So today, for example, the US ISM non-manufacturing data shows RED for “very volatile”.  I personally like to trade JPY pairs for news trading, they move alot.  So precisely at 10:05am, at the 5min candle close, I entered a Long GBPJPY trade at 206.10 and took profit of 95 pips in about 15 minutes.  Not bad!!  after 3 candles of retracing, price started to continue up again, also following the US stock market index, the Dow.  So I reentered another Long GBPJPY at 206.80 with a target now at the hourly 200ema.  Another 80 pips in my pocket in 40 minutes.  Now here is another good trading idea that works often:  If price rockets up to hit the hourly 200ema and stalls, it will likely retrace.  So I entered a Short trade on the GBPJPY at 207.30 for 50 pips profit.  I probably could have gotten more on the Short by entering quicker at the hourly 200ema, but no big deal.  That was +225 pips today!  Today was all about news momentum and then retrace, pretty typical currency moves.  It helps to wait those 5 minutes after a new release to see the price action, then dive in.  Safer that way!

End of the week, end of the month

What an amazing end to February in the forex market!  The past two weeks have been challenging, with most currency pairs in choppy and ranging movements.  But the past three days several currencies have broken out of their ranges and ended in record territory.  I like to check out the monthly end charts to see the big picture.  With US dollar weakness, all pairs with the dollar are really trending now.  The EURUSD has ended the week and the month with a tall candle and not much wick.  I will expect this pair to continue trending up, so any dips I will be buying.  The new monthly pivot point will be around 1.4955 which is very very close to the previous high that was just blown through at 1.4966.  So for the month of March, we could see a retrace to this area and then a bounce to resume rocketing.  But the past three days have been so strong, it may not look back for several weeks.  How high can this pair go?  I am predicting 1.6000 could come soon (summer?) by using fibonacci extensions, I will continue to monitor potential targets while riding it up up and up.  Meanwhile USDJPY has crashed through major support and now looks to the next low at 101.75.  Wow!!  Lets see if it gets there..The new monthly pivot point for this pair is 105.45, so I will be looking for a breach or resistance at this level for continued downmovement.  That’s the big picture for March:  keep selling USD..�

Monday Monday…get your demo on! (trade contest)

Mondays can be tricky trading.  I bagged some good pips early today on GBPJPY longs.  I had a clue about buying this once price broke Friday’s high and just kept going up.  Friday was a tight range day, making a nice inside daily candle.  I love those!  Now I am looking toward tomorrow…check out both EURUSD and GBPUSD are inside daily candles.  So I am watching for a break of support or resistance on both pairs.  That pesky USDJPY surprised me today and ended the day higher than I was expecting.  So I am eagerly watching what it will do next.  The past 9 daily candles have been hitting resistance creating a trendline down that is now holding around 108.20.  A break and close above this trendline and I will be long this pair.  But I am curiously watching this one, something still smells bearish..

Hey, if you are feeling good about profiting in this crazy market and want to prove it, check out the demo trading contest at www.fxstreet.com.  This contest starts March 2, 2008.  The winner will be awarded a $100,000 managed account to trade, get paid by a bank to trade other people’s money!

Look for breakout when in a tight range: USDJPY

Check out the tight range that USDJPY has been in the past 6 daily candles.  Whenever I see a tight range like this I set some sms alarms so that my cell phone will alert me when the range breaks out.  Because, whenever this range breaks it will be a large move, probably on all yen pairs.  On the daily chart, USDJPY has been hitting the resistance at 108.60 which is the 31% retracement of the Jan08 move down.  Support has been holding at 107.50.  So whenever either of these prices give way, look out!  www.alertfx.com is where I set up sms alarms for my cell.  Good trading!

Candles and price action

Price action is king in forex.  Chart indicators are nice but what price is doing right now gives the best clues as to what she will do next.  I am a big proponent of candlestick analysis and chart patterns, these patterns can help traders be ready for the next trade set up if they can recognize them.  The sections on candlesticks and chart patterns in www.babypips.com are super great for learning how these help the trader.  I especially like to check out the daily chart at the end of each day to see how the daily candlestick closes.  This can give me an advantage, a bias, for tomorrow.  For example, check out the close of the GBPUSD for today.  The past 5 daily candlesticks were all up candles, and then today’s candle was a bearish engulfing, the body of the candle engulfs the entire candle of the previous day.  Since this bearish candle occurred after hitting the 61.8% retracement of Jan31 down move, I see a good chance that this pair will be heading back down next week.  But, today’s candle closed right on the 38.2% of that down move, so there is still potential for upside. Our EURUSD has reached the 50% retracement of its Jan31 move down at 1.4693 and closed below this price.  I do not see a candlestick or chart pattern pop out at me on the daily chart, but Monday price action should tell us whether this 50% area will hold for further down side or not.  These two pairs, GBPUSD and EURUSD, often move in the same direction so it might be a good clue for down for these two, both hitting significant retracement levels.  Good trading!�