Orange lines= Fibonacci levels
Green lines= Channel lines
Purple line= 72EMA
Vertical white lines= 24hrs period seperator
The low of Monday is where the hammer candle is on 4h chart. Price loss volume on its way up. On the second attemp on tuesday, there where cluster of resistant lines stopped the bull, falling back down to the 61.8 fibo.
It was a choppy market for the past 2 days. No gains and no loss on both manage accounts. For a short term trade, the 2 fibo should be the levels to watch, break of the 50 fibo is a uptrend and assertive downtrend if it breaks below 61.8 fibo.
For the fundamental side. Subprime mortgage concerns is still there, the ailing Bear Sterns top wallstreet rival refuse to give aid, according to bloomberg yesterday. China stocks decline for 2 consecutive days. The expectations of US Fed holding their interest rate this week might push the dollar lower. Risk aversion to safer bonds continues. All this support the carrys unwind view.
Erratic & Choppy 48hrs
6.25 analysis
6/25 10:30am EST- This is a EUR/CHF 4hr chart. Price drop lower to the 61.8 fibo and make a stop there. Looking at the chart, a hammer candle is about to form (2nd candle from the right), Stoch and CCI just crossed above buy signal levels. And not to mention the strong 61.8 fibo support. It is also a support level of a long term trendline drawn from March 5 lowest low connect to June 6 lowest low. So there is a 99% good change of a reverse.
This might be a good resersal point. Still no specific TP (target profit) set for this trade, but the original plan of price breaching above friday's highest high is a long term bullish bias is still considered.
I personally not gonna open a position though it's a good entry point, since I still have 9% margin positions opened previously and a long hedge position at the 50 fibo.
Pay attention to the current candle, only 1 hour left before it close. If it closed above/higher than the previous candle close, a hammer candle or inverted pinbar will be confirmed. Go for a long hedge position. Make an independent judgement, trade at your own risk. Use this blog only as a guide, not a recommendation to trade.
Personal notes
My personal notes to Norman a.k.a. gr8collector. You know buddy, it's hard to explain to a person with deaf ear or pretending to be blind. I have already explained the situation. Please don't throw punches on every opportunities you can get and cause extreme damage and prejudice to me out of sheer hatred and spite.
It's hard for someone with such a deep alliance to his own trading strategy (more like a religion!) to even consider alternative views. Perhaps they think they are being unfaithful if they do.
And with regards to the "mental stop loss" on my directional trading. We all know that MT4 platform is code programmed. It is easy for a retail broker to set some algorithm to let the price repel from a TP and attract to SL. That theory has been discussed a lot in some forum sites. And it is also the reason why some EA coder code their EAs to hide stop loss from the brokers. Though there's no concrete evidence to that theory (kaya nga theory), its pays to be vigilant. ....and its not 80% risked on a single position, check back the statement.
I'm not saying you're wrong and I'm right. We are just looking at the same object in a different angle. Your way of trading might be good for a specific period but not all the time, so are mine.
Contagion of Thoughts
The sentiment of carrys unwinding is still building up as of this moment. This has been the topic of all the information sites that I know of.
The Bear Sterns situation That I mentioned last friday, the undervalued Yen, expectations of another rate hike from BOJ, SNB pushes the repo higher last week. All this scares the shit out of me. This is the time I wish I'm not in the market.
What caught my attention is the rise of the bonds price last friday. This indicates that big players are pulling their funds out of the equities and diverting to a more safe investment-bonds. This kind of risk-avert move if continued will cause the carrys to unwind.
Carry trades will inevitably be a very important market focus for this week. Traders will need to be on high alert for comments from G8 finance officials.
Though EUR/CHF is at oversold zone right now, we might see some corrections later. Breaching above friday's highest high of 1.6638 means safe to hedge long. Bounce of the middle channel(pls. refer to the previous post chart) or 38.2 fibo means a continuation of the bear moves.
To focus away from EUR/CHF. Part of my analysis shows a good sign of going long for EUR/USD pair. A hammer candle has just formed on the weekly chart. This is not a recommendation to trade, it is just my observation. Trade it at your own risk.
A recap of today's move. End of 2nd week trade
This is the continues chart (zoom in) I posted earlier. Remember those significant levels I've said earlier? Price roam all of it in a span of 16 hours.
Here's what I did. When the price touched the upper channel and the Stoch, CCI indis crossed down; I open a short (sell) hedge. At 4am EST, there were 2 EUR news announcements followed by ECB President Trichet dovish speech. Both news was negative bias to the Euro, German Ifo Business Climate Index came out 107.0 with expectations of 108.4 and the German Ifo Business Expectations Index came out 102.8 from 104.8 expectations. The news gave eur/chf a whipsaw then fall straight down to the 38.2 fibo. Then afterward drop to the lower channel... made a small correction back to the 38.2 fibo before continues its down move to the 50 fibo. The bear lost steam from there 'til market close of the week. I closed the positions on the third bounce of the lower channel.
To make it short. It was another perfect call.
PMTFC end the week with a total of $3420 equity, and $7357 for TN's account. I know the results this week is not something to hoot and holler, but it is better to end the week with small profits than small lose.
Here are the reasons of the small gained:
- If eur/chf is trending downward, I will only trade with small margin. It is because short hedge position/s is risky with a uptrending carry trade pairs.
- The Fed is pressuring the Chinese government to slow down their fast rising currency. If the yuan makes an impulsive drop, we will see a snowball effect to the global market, just like last Feb-Mar. Related topic here> forex factory
- There is also the subprime mortgage problem going on in the States. Like what happened last February. More of the story here> CNBC
- More of current negative news of EUR. Related topic here> bloomberg
- Japan's possible of a .25bp rate increase, which will tighten the interest rate gaps of major pairs. Related topic here> forex factory
All this will affect the carrys. You can read the CNBC news article yesterday, here CNBC
6.22
Friday 22:45 EST- Pay attention to the pitch fork (3 green lines)or the channel, 23.6, 38.2 and the 50 fibo levels.
Price is on consolidation right now, wedge triangle will be sight if you zoom in the chart, Breach of 23.6 fibo, we will see 50 fibo level or lower channel soon. On the 4hr chart, we see a down trend is forming. On 1hr chart, hanging man candle formed 3 days ago.
Overall, it is a pretty good indication of a down move. Not an intraday trade, it might take days... .I'll report some updates later.
Carry Trades at boiling point
Carry trades have continued to soar higher over the past week. There may still be room for the upside, but the overall dangers are now running at extreme levels.
The overall liquidity conditions are tightening. As central banks raise interest rates, it will gradually slow global liquidity growth. Global lending standards being gradually tightened will cause an important impact on currency market.
There are now very clear warning signs that carry trades are being caught up in the craze for wider asset-price inflation. It shows a sign that markets are ignoring the fundamentals and gaining ground simply because they have been rising.
As credit conditions tighten, there will be an outflow of longer-term capital which will leave asset prices increasingly dependent on more unstable flows to maintain current levels. High-yield currencies and carry trades will also be even more reliant on unstable flows to make further progress.
Given these conditions, there is now an increasing threat that only a small shock will trigger a huge adjustment in global markets and a rapid reversal in carry trades. One possible trigger reminds the collapse of a prominent hedge fund.
So use your margin accordingly when you long a hedge position. EUR/CHF is on a possible reversal righ now and GBP/JPY is at its extreme.
6.20
6/20 10:10am EST- 24hrs since my last post. Lets see what happened.
A good call. Price bounce exactly at the (purple) upper channel. But I made 2 mistakes, exit too early (at blue ATR) and re-enter a long hedge again. I should have stick to my original plan. Anyway, we'll just have to let that trade to earn triple swap later and hope price will turn back to that level soon.
Next move... buy at 32.8 or 50% of fibo.
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6.19
6/19 10am EST- Here's another perfect setup for a long (buy) hedge on 1hr chart. We have 2 channels, the green and purple channel. Price touched 23.6 fibo with confluence of purple lower channel and 72EMA, pin bar formed. Stoch crossed up and CCI just crossed above -100 level. A good indication of price reversal.
But since long term bias is still bearish, and it is just a retrancement of the 23.6 fibo, we might just gonna see a small reversal here. So, I used only 2% margin for this trade. Exit will probably in the middle of the previous swing and upper purple channel. If price didn't reach those level and continues its bearish move; I'll enter a position (long) again at 38.2 of 50 fibo.
6.18
EUR/CHF just range 20 pips up and down the whole day (typical monday). At 2pm EST, it breakout to the upside, but since indicators shows not much room for an upside move, I took the profit off the table and will just wait for the next dip. The positions I liquidate was the ones that I took one hour before the market close last week.
Gear up soldiers!
Essential tools on how to avoid typical pitfalls and start making more money in your forex trading.
Trade pairs, not currencies - Like any relationship, you have to know both sides. Success or failure in forex trading depends upon being right about both currencies and how they impact one another, not just one.
Knowledge is Power - When starting out trading forex online, it is essential that you understand the basics of this market if you want to make the most of your investments.
Unambitious trading - Many new traders will place very tight orders in order to take very small profits. This is not a sustainable approach because although you may be profitable in the short run (if you are lucky), you risk losing in the longer term as you have to recover the difference between the bid and the ask price before you can make any profit and this is much more difficult when you make small trades than when you make larger ones.
Over cautious trading - Like the trader who tries to take small incremental profits all the time, the trader who places tight stop losses with a retail forex broker is doomed. As we stated above, you have to give your position a fair chance to demonstrate its ability to produce. If you don't place reasonable stop losses that allow your trade to do so, you will always end up undercutting yourself and losing a small piece of your deposit with every trade.
Independence - If you are new to forex, you will either decide to trade your own money or to have a account manager trade it for you. So far, so good. But your risk of losing increases exponentially if you interfere with what your account manager is doing on your behalf (as his strategy might require a long gestation period).
Tiny margins - Margin trading is one of the biggest advantages in trading forex as it allows you to trade amounts far larger than the total of your deposits. However, it can also be dangerous to novice traders as it can appeal to the greed factor that destroys many forex traders. The best guideline is to increase your leverage in line with your experience and success.
No strategy - The aim of making money is not a trading strategy. A strategy is your map for how you plan to make money. Your strategy details the approach you are going to take, which currencies you are going to trade and how you will manage your risk. Without a strategy, you may become one of the 90% of new traders that lose their money.
Trading Off-Peak Hours - Professional FX traders, option traders, and hedge funds posses a huge advantage over small retail traders during off-peak hours (between 2200 CET and 1000 CET) as they can hedge their positions and move them around when there is far small trade volume is going through (meaning their risk is smaller).The best advice for trading during off peak hours is simple - don't.
The only way is up/down - When the market is on its way up, the market is on its way up. When the market is going down, the market is going down. That's it. There are many systems which analyse past trends, but none that can accurately predict the future. But if you acknowledge to yourself that all that is happening at any time is that the market is simply moving, you'll be amazed at how hard it is to blame anyone else.
Trade on the news - Most of the really big market moves occur around news time. Trading volume is high and the moves are significant; this means there is no better time to trade than when news is released. This is when the big players adjust their positions and prices change resulting in a serious currency flow.
Relieve stress - Stress is a natural part of trading; get used to it.
Don't trade too short-term - If you are aiming to make less than 20 pips profit, don't undertake the trade. The spread you are trading on will make the odds against you far too high.
Tops and Bottoms - There are no real "bargains" in trading foreign exchange. Trade in the direction the price is going in and you're results will be almost guaranteed to improve.
Ignoring the technicals- Understanding whether the market is over-extended long or short is a key indicator of price action. Spikes occur in the market when it is moving all one way.
Emotional Trading - Without that all-important strategy, you're trades essentially are thoughts only and thoughts are emotions and a very poor foundation for trading. When most of us are upset and emotional, we don't tend to make the wisest decisions. Don't let your emotions sway you.
Confidence - Confidence comes from successful trading. If you lose money early in your trading career it's very difficult to regain it; the trick is not to go off half-cocked; learn the business before you trade. Remember, knowledge is power.
Take it like a man - If you decide to ride a loss, you are simply displaying stupidity and cowardice. It takes guts to accept your loss and wait for tomorrow to try again. Sticking to a bad position ruins lots of traders - permanently. Try to remember that the market often behaves illogically, so don't get commit to any one trade; it's just a trade. One good trade will not make you a trading success; it's ongoing regular performance over months and years that makes a good trader.
Stick to the strategy - When you make money on a well thought-out strategic trade, don't go and lose half of it next time on a fancy; stick to your strategy and invest profits on the next trade that matches your long-term goals.
Trade today - Most successful day traders are highly focused on what's happening in the short-term, not what may happen over the next month. If you're trading with 40 to 60-point stops focus on what's happening today as the market will probably move too quickly to consider the long-term future. However,the long-term trends are not unimportant; they will not always help you though if you're trading intraday.
Get to know one cross at a time - Each currency pair is unique, and has a unique way of moving in the marketplace. The forces which cause the pair to move up and down are individual to each cross, so study them and learn from your experience and apply your learning to one cross at a time.
Trading for Wrong Reasons - Don't trade if you are bored, unsure or reacting on a whim. The reason that you are bored in the first place is probably because there is no trade to make in the first place. If you are unsure, it's probably because you can't see the trade to make, so don't make one.
Zen Trading- Even when you have taken a position in the markets, you should try and think as you would if you hadn't taken one. This level of detachment is essential if you want to retain your clarity of mind and avoid succumbing to emotional impulses and therefore increasing the likelihood of incurring losses. To achieve this, you need to cultivate a calm and relaxed outlook. Trade in brief periods of no more than a few hours at a time and accept that once the trade has been made, it's out of your hands.
Short-term Moving Average Crossovers - This is one of the most dangerous trade scenarios for non professional traders. When the short-term moving average crosses the longer-term moving average it only means that the average price in the short run is equal to the average price in the longer run. This is neither a bullish nor bearish indication, so don't fall into the trap of believing it is one.
Stochastic - Another dangerous scenario. When it first signals an exhausted condition that's when the big spike in the "exhausted" currency cross tends to occur. My advice is to buy on the first sign of an overbought cross and then sell on the first sign of an oversold one. This approach means that you'll be with the trend and have successfully identified a positive move that still has some way to go. So if percentage K and percentage D are both crossing 80, then buy! (This is the same on sell side, where you sell at 20).
Wrong Broker - A lot of FOREX brokers are in business only to make money from your. Read forums, blogs and chats around the net to get an unbiased opinion before you choose your broker.
Too bullish - Trading statistics show that 90% of most traders will fail at some point. Being too bullish about your trading aptitude can be fatal to your long-term success. You can always learn more about trading the markets, even if you are currently successful in your trades. Stay modest, and keep your eyes open for new ideas and bad habits you might be falling in to.
Interpret forex news yourself - Learn to read the source documents of forex news and events - don't rely on the interpretations of news media.
Where is the Holy Grail?
It's weekend anyway, so loosen up, seat back and read some useful insight. I came across this article from marketwise.com. It mirrors my view over trading and its such a waste if not shared to fellow traders and aspiring traders.
Where Is the Holy Grail?
It seems as if I've been seeing the same infomercials about trading over and over again. I'm a sucker for a good sales pitch. According to the infomercials, anyone can trade. It's just a matter of looking at a series of red and green lights or joining the right coaching group, right? Perhaps trading is easier than I thought. Maybe I'm making a big deal over nothing. I don't think so. I've interviewed many traders and talked to seasoned traders with proven track records, and none of them said it was easy. Sure, anyone can make a few winning trades and take home profits, but that is not the issue. The issue for many traders is making enough profits to come out ahead without feeding their account. The issue for many traders is how to do it for a living. And if you do achieve initial success, how far can you go without blowing out? Unfortunately, there is so much misinformation out there that it's hard to know who to believe, and the funny thing is that everyone accuses everyone else of putting out misinformation about trading. I've seen it all: Some trading experts say that you don't need to control your emotions, while other experts say that you do. Other experts have the ultimate system or indicator that will ensure tremendous wealth. All these experts seem to claim that they have the Holy Grail.
I don't think any expert holds the universal secret of success that is true for every trader, and that will ensure all traders become profitable. Why not? Every person who approaches the field of trading has his or her unique qualities. Trading advice that may apply to some people may not apply to others. There is only one way that you can determine if a piece of trading wisdom is right for you. You have to assess where you stand on your assets and talents, develop a realistic plan for success, and try out a few different methods. Whether you are trying to become an athlete or sell the most raffle tickets for a PTA event, you will never know what you can do until you make a commitment to succeed and try hard. There is no substitute for experience.
People are different. They have different backgrounds, experiences, and resources. One trader may have a trust fund that allows him to live comfortably and trade as a sideline. He may make $100,000 a year off the trust fund and need only $60,000 a year to meet basic living expenses. A second trader may work the night shift as a security guard and make $45,000 a year, diligently trading each morning to try to make an extra $20,000. If the trust-fund trader loses $40,000, all he has to do is live lean for a year. He can afford to lose $40,000, so it is not very stressful. He doesn't need to worry. He can handle the worst-case scenario. If the security guard loses $40,000, though, it is potentially a financial disaster. The pressure is on. He may actually need to achieve success as a trader to get out of trouble. This very basic difference in terms of financial resources can make a huge difference from a psychological viewpoint. Your life story matters, and people have very differing life stories.
People do not only differ in financial background, but in terms of personality. Some people are more emotional than others. They may have low self-esteem and take setbacks hard. I have seen some trading experts claim that controlling emotions is not important. It may not be the only issue a trader must face, but if you are the kind of person who has trouble handling your emotions, then it is a big deal for you. There is a sort of macho, competitive trading crowd out there who makes it seem like "you either have it or you don't." They imply that if you don't have the right kind of personality, then you can't make it in the trading business. It may be difficult but it is not impossible. I've met seasoned, professional traders who have trouble controlling their emotions occasionally, so it is misleading to make generalizations about traders. Some people have trouble with their emotions and some people do not. If it is a problem for you, it is vital to identify it, work on changing it or figure out a trading style that works around it. Again, only you can decide what works for you.
Some people may have a knack for trading. Perhaps they like math and problem solving and love to find new trading strategies. Other people may execute trades with aplomb. At one time, scalping was profitable, and most scalpers traded as if they were playing video games. They were quick with a mouse and could accumulate profits after a series of trades. Again, it takes time of find a niche, and when you find what is right for you, you can build skills and confidence to know when your approach works and what you can do. That isn't to say that anyone can do anything. But what you can do is know where you stand, and do the best with what you have. For some people, trading may be restricted to long term investing. If their trading capital is minimal, they may never make enough to trade for a living. But they can still trade and supplement their income from their day job. They can still have fun studying the markets and feel satisfied with the money they do make. Others may develop a track record for years and be able to gain the education and experience they need to trade for an institution. The only way to find out, though, is to make a plan, get the necessary training, make a commitment and gain as much experience as necessary. Don't let anyone tell you what you can and cannot do. Don't compare yourself to others. Find what works for you and develop the mental edge you need to win.
A3 Union another best investment vehicle
I stamp upon A3 Union logo at PGX site a few weeks back. Curious about it, I browse through their website and decided to test the water.
I wasn't so serious about it 'til I met up with one of their representative here in our country. Went home and done further DD with the investment firm. Indeed, they are for real. Not any ordinary HYIP.
I know my trading could yeild far more greater return than investing with them, but diversifying my portfolio won't cause any harm. I have been getting the profits I made from them to add to my forex account.
Recently, they attach a scanned version of issued contract certificate for each investment. The valid certificate is chopped and signed personally. If you are interested to invest, click their red logo on the side bar of this page or this one
Remember! just like any other investment, don't invest what you can't afford to lose.
Here's my latest contract.
End of first week
I'm back! Here's the explaination as promise.
The 2 white lines is the channel, red & blue lines are the daily ATR, purple line is the 72EMA. Ignore the vertical red line and the orange.
At 6am EST, the EUR/CHF price touched the lower channel line, the lower ATR is too strong for price to penetrate that's why the bar closed above it. Looking at the Stoch and CCI indicators, both giving a bull signal. Price went near the 72Ema which is another strong support. So, I entered a long hedge position exactly when it touch the lower channel at 1.6565.
Look what happen after 8 hours....
I closed a position when price reached the upper ATR (Blue), and closed another one at the upper channel (white), which is also May 20 highest high level (strong resistance). Stoch and CCI now is showing a possible bear move, we can go for a short (sell) hedge with this set up, but the market is about to close in 3 hours, its risky to leave a short position open over the weekend.
The situation now with PMTFC and TN account is both have 1 set of sell hedge position open, which was opened a few days back. To cover up the deduction of swap from those sell positions, I'll open a long hedge position 1 hour before the market close of the week, double the used margin of sell positions for the long hedge.
True North account end the week with $303 profits. Total of $7303.
While PMTFC account end with $49 profits. Total of $3386.73.
Happy weekend everyone!
6.14.07 Part II
The last chart I have posted is a 4hr chart, this one is the 1hr chart. Just as I thought, price nearly touch the 23.6 fibo twice and bounce exactly at the middle band.
If you have a open long hedge positions, you can close it now (10:30am EST), price just touched the daily ATR and a trendline, Stoch shows overbought, CCI too high and ADX shows bull losing momentum.
TN account closed with $51 profits.
PMTFC account close with $14 profits.
For now I will wait for a dip and enter with same size margin of the closed positions. Probably at the previous resistance (red) trendline which now became a support level or lower to 1.6550 where the middle band is right now with confluence with a lower trendline. We'll see....
Analysis for 6.14.07
June 14 (3am EST)- 4hr chart. Eur/Chf price has just breach down from a long term trendline (red line, this is also the same trendline I discussed over PMT forum a few weeks back).
Since price just broke a trendline and came down from upper bolinger band, Stoch just crossed downward, and RSI and CCI also passed the upper level down. There is a possibility that price would reach 1.6533 which is in the middle of the band and 23.6% of fibo. If the bear momentum is too strong, it can also reach 1.6513 which is where the lower band and 38.2% of fibo and a short term trendline meet. Those are the retracement level that need to focus on. You can risk a "small" percentage of your margin on each of those levels for a buy hedge.
As for the update of my trades. Fot both account, Price just hovered between the buy and sell positions all through out the day. I don't have any plans on taking up another trade positions since I already used up 9% margin for TN acct and 5% used margin for PMTFC acct. I know I still have 10% reserve margin left to use for PMTFC, but my concern is the China economy. Chinese from students, maids, laborers to retirees has gone ga-ga to their local stocks over the pass few weeks and the said actions appreciated the yuan by a bit more than 8 pct since July 2005. This causes foreign exchange rate imbalancement. Sooner or later china bubble will burst, increasing risk of this renewed boom-bust cycle, would be quite harmful for the world economy. This will have a snowball effect to Dow Jones down to the carry trades if it happens. It pays to be prudent, trade with smaller margin 'til dust has settled down.
Euro Hovers around 100-day MA
From forexnews.com:
The euro trades just above its 100-day moving average against the dollar, now situated at 1.3330. We anticipate support for the pair in this region and look for a bounce toward 1.3450 and subsequently 1.3550. Later in the session, Eurozone economic data will see April industrial production, forecasted to jump to 4.4% on an annualized basis from 3.7% previously and slip to 0.2% from a month earlier at 0.4%.
The Eurozone economy continues to strengthen, with growth already outpacing that of the US -- providing the ECB with further cushion to tighten policy to contain inflation. ECB officials have oft-repeated the need for heightened vigilance in monitoring pricing pressures, raising expectations for additional rate hikes from the Bank. We anticipate at least one more rate hike in Q4, lifting the ECB’s benchmark lending rate to 4.25%.
For the sterling situation:
The consumer price index for May is forecasted to ease off last month’s reading of 2.8% to 2.6% on an annualized basis. The monthly CPI reading is seen unchanged at 0.3%. The retail price index is also forecasted to drift lower to 4.3% versus 4.5% a year earlier and slip to 0.4% from 0.5% in the previous month. The RPI-x data are also expected to decline, down to 3.3% compared with 3.6% in the previous year and at 0.4% from 0.5%. Lastly, the UK April trade deficit is seen largely unchanged at 7.0 billion sterling compared with March at 7.04 billion sterling.
We expect the sterling to edge higher over the coming weeks given sentiment for further policy tightening from the Bank of England, with at least one more rate hike seen likely. Our near-term forecast is for cable to revisit the key 2-level, and further out, retesting the April high of 2.0131.
With this being said. I'm pretty much confident that PMTFC will get out of the $20 floating loss soon. No sell hedge positions for now, will wait for indicators to say so.
Bored
EUR/USD just only ranged 32 pips yesterday and USD/CHF ranged 48 pips. A very low volatility day.
Unfortunately, PMTFC trade didn't went as planned. It EUR/CHF price just dropped to 32% of fibo, did not reach my exit target of 50% fib level. So, I used to plan B approach instead (Go long 4% margin if candle closed above the upper trendline). The gain swap from long hedge positions offset the deducted swap rate of short hedge positions.
What I'm gonna do is stick to the plan. If EUR/CHF dip lower to the entry price of short positions, I'll close the short for profit and wait for the right entry to get it for the second long (buy) hedge position. It is experiencing a small correction right now after hitting a higher timeframe trendline.
Short Term bearish and bullish bias is still intact for long term.
As for the True North (TN) account which started 1 week earlier than PMTFC's. I closed it with only $50 profit. And wait for the next entry.
PMTFC first trade
On the chart I posted earlier. If you drew a trendline from its highest high (head) down to the right shoulder, you will see a resistance line stretching down to 1.6515. The Stoch and CCI is now curved down showing a possible bear move. Using 1% of margin, I took a short (sell) hedge position when price bounce off that trendline down back to 1.6506.
This might just be a short term trade. 1.6478 is a good exit point. It is the 50% fibo of previous swing and lower trendline is in-line with it. But then again, the exit will depends mainly on what indicators tells us...
If price went against the initial sell hedge and candle close above the upper trendline. I will open a long (buy) hedge position with 3 or 4% margin. This way, the gain will offset the loss later.
Getting ready for the ride....
Here's what I'm gonna focus on when the market opened for this week.
The Swiss franc was one of the top decliners in last friday volatile day. However, with the swissie-based pairs coming up on support across the board and both ECB (Europe Central Bank)and SNB (Swiss National Bank) looking for further rate hike, I think big levels should hold.
Technical picture of EUR/CHF pair shows a head 'n shoulder formation on the daily chart. Resistance is seen on the shoulder that lines up with 62 fib level at 1.6537. Support is found on the neckline of the pattern at 1.6420.
Here's what I will do. If the right shoulder holds up, I'll open a short hedge positions targeting 1.6450 and if price penetrate through that level, I will go for a long hedge positions without definite target. I will just close the long positions when the indicators told me so.
Euro Zone - The economic calendar for the Euro-zone will be spreads over the course of the next week following Wednesday's ECB decision. Next Thursday's event risk should draw the most attention though, as inflation data for the month of May will hit the tape. Both headline and core Euro-zone CPI are anticipated to hold at a lofty 1.9 percent - just below the ECB's 2 percent ceiling - but a surprise jump above the upper limit could leave FX traders in a frenzy to price in another rate hike. The following day, markets will look towards the Euro-zone Trade Balance which should show a surplus once again. However, the release is not typically market moving and isn't likely to do so this time around either.
Switzerland - The major piece of fundamental risk this week comes next Thursday, when the Swiss National Bank will announce their decision adjustment to the 3-month Labor target rate. While the central bank is widely expected to hike rates, the decision isn't likely to do much for the Swiss franc in the long-term, as the carry trade will likely continue to work against the currency. However, the Swissie may see a brief, sharp gain upon the announcement of rate normalization as such policy action is undoubtedly bullish. The other piece of scheduled news comes on Friday. While Adjusted Retail Sales are estimated to ease back in April, this volatile indicator does not tend to be much of a market mover, so traders may find it more advantageous to keep an eye on broad carry trade trends as well as USDCHF price action.
The Beginning
Welcome to my blog site. I'm Harwin Pun, co-founder of True North Concepts and the official forex trader for PMTFC.
Fascinated with the correlation hedge strategy Mike A. presented to me, I did a further studies and some intense research and I came up with my own hedge startegy that suited my temperament.
The intention of this journal is to documents all my significant entries and exits. I figured it will forced me to trade much more selectively and with discipline. I will also share some personal insight on current market situation as it comes.
I will manage 2 accounts at the same time. One trading with FR strategy (PMTFC) and the other with the help of True North's hedge calculator (TN). To those of you who are not familiar with True North Concepts, you can check this site www.freewebs.com/truenorthfx/.
All the trades that I will take will be based on 1 Hour to daily timeframe, with 2 timeframe Stochastic Oscillator, CCI 14 period, ADX 14 indicators, Fibonacci levels, Daily ATR, 72 EMA and some trendlines and channel. I will only focus on the EUR/CHF pair, since it will be my gauge for the EUR/USD, USD/CHF hedge trades.
