The following is our strategy formulated on Monday for the week’s trading. We meet and discuss everyday to update these positions/potential positions. The attached video contains the updated material. Agian please note these are not trading tips but simply suggestions for practice purposes.
With the UK general election behind us and the ‘goldilocks’ NFP numbers not giving us any predictive help, we were facing another week of big news especially in the GBP. The following strategy for trading the week was once again based on my blog posted Monday, Shaken and stirred It does seem to get increasingly difficult to select trading pairs in the environment we are in , we cannot predict too far out so a month forward is about the maximum. It has for us, focused us a little more on four hour time-frames whilst we continue to watch the big picture. Our view is to trade every position as a half (of 1%) and to aim for 1/2 risk reward. The key we believe is to stay conservative where entry levels are concerned to make allowance for the volatility swings we have been seeing.
This was the plan for the week;
Oil on Monday, had broken back below the trendline. Of course we have no idea where it would go next, and the USD was showing some mild strength out of the gate. This is what daily oil looked like on Sunday;
Monitoring this and the USDX is obviously necessary to trade this pair. Added to this the data wasn’t all good last week (see main report). Our approach with this one was to buy the bottom of the four hour range at 1.1950 on a buy limit with a stop at 1.1880. There was news to watch including the vital retail US sales so we removed the limit order and are currently re-assessing.
The support is 1.1924- 1.1990 and at the potential entry level we have a 200 EMA and a daily trend-line.
We alo have a sell limit on the daily range in place from last week at 1.2370 with a stop loss at 1.2440. Both half positions. We have analysed this one in the attached video.
We were watching 120.72 for break or rejection. It rejected off the trend-line. This was too aggressive for our strategy as a four hour entry for a long at 119.80 with a small stop. We prefer to wait for the conservative level with a break above 120.70
Another ‘watch’ level at 189.13. It fell from this level and we took a small short position. It looked like an attractive short, however, having said that not only was the election result good for the pound in the short term it also had a strong services PMI last week that could give it a boost . The service sector is a large part of UK GDP. Also this week data showed average earnings were advancing albeit slowly. This is updated in the video
Subject to the same reflections (!) 1.5546 was a big level and we were watching the 200 EMA for a break and hold on a daily chart above or of course a rejection. This was a good place to short but the whole plan was news vulnerable and their is plenty of it this week. For next week we will be looking for a short enrty if it appears the election ignited rally starts to falter. Mixed signals require care!
Back on the radar this week for a potential short at 0.8020. We had placed a sell limit with a stop at 0.8090 but removed , this is explained in the video.
There are weak fundamentals for the Aussie and a real sense that Mr. Stevens needs a weaker AUD to aid any recovery posed by the failing mining industry and the Chinese economic challenges. However currently sentiment has been strangely bullish. Please post comments and questions below and we will answer them!
Hope you are having a great week… stay safe