Staying on the Right Track

The AUD/USD long trade I entered two days ago is going quite well, so far. I'm up 120 pips right now, but am not ready to take my position off just yet. Sometimes, these rallies can just keep going and going without coming back enough for another favorable entry point. In this case, I'll raise my stop to around the 0.9140 level, hence, locking in 70 pips of profit if the pair decides to come crashing down. If the rally continues, I will raise my stop once again.



The worst part of trading is being right and NOT making money, or worse, losing money - although certain people would argue that there is no difference. So, keeping true to that rule, since I am already "right" on this trade, I will try to stay in it without risking the rest of my profits (by raising my stop-loss). This way, if the pair has another big up day or more, I will still be on the train...

Going in the Right Direction - USD Weakness

With a rate hike coming out of the U.S. basically being completely ruled out for the remainder of the year at the very least, there is little reason to own the USD right now, unless panic sets into the global markets. If there is even the slightest risk appetite out there, the USD will depreciate.

I bought the AUD/USD this past hour is the hopes that it will continue its bullish trend, which has been in effect since the beginning of the year. I'm risking 100 pips with a potential reward of about 700 pips, based on the previous high off the weekly chart (shown below).

Wednesday's retail sales numbers have modest to weak expectations, Thursday and Friday's CPI, Industrial Production and U. of Michigan Confidence reports also do not show any promise of bringing the USD higher. However, these reports should bring some momentum to the forex world and, hopefully, push my positions in the right direction.

Down But Not Out

Yesterday's rally in the US equity market failed to lift the USD/JPY pair higher, or anything against the JPY as a matter of fact. This was surprising to me, as I'm sure it was for many others. Usually the JPY, like the USD, declines when the markets rally, as a sign of risk appetite in the marketplace flocking to higher-yielding assets and away from low-yielders (JPY) and safe havens (USD).

The USD/JPY chart showed a nice reversal pattern last week, yet has not gone higher since, however, it has not broken the support level either. For now, my trade from last week is down but not out. There isn't much in the way of economic data this week to get help from the fundamentalists, so I'll have to rely on basic market trends and momentum to lift my trade into profitability.

Getting In Ahead of the Game

Yesterday's GDP data came in better than expected, showing that although the greatest economy on Earth is still contracting, it's doing so at a slower rate:

GMT 12:30 PM USD Gross Domestic Product (Annualized) (2Q F)

-0.7% (actual) -1.2% (expected) -1.0% (previous month)

This morning's jobless claims numbers was basically a wash, coming in as expected, however, pending home sales for the month blew expectations out of the water:

GMT 14:00 PM USD Pending Home Sales (MoM) (AUG)
6.4% (actual) 1.0% (expected) 3.2% (previous month)

Tomorrow is the all-important NFP and Unemployment Rate figures, probably the single biggest market-moving data of the month. There are modest expectations going into tomorrow, so the stage is set for a potential nice surprise.

The USD/JPY showed a reversal bar off the daily chart this past Monday (highlighted in the chart shown). This is a good level to get in, ahead of the NFP report tomorrow, in anticipation of a potential reversal. Support lies at the 88 level, making for approximately a 150 pip risk trade. If the reversal takes place, USD/JPY can easily go up to the 92-93.50 level, creating a very favorable risk/reward bet.

Hold Your Horses...

My USD/JPY and EUR/JPY trade from last week is still moving in my direction and isn't showing any real sign of abating. Aside from taking some profit from my USD/JPY position, I've basically held my trade as is until I see reason not to... I raised my stop for the USD/JPY to 91.69 (locking in 70 pips on my existing lots) and EUR/JPY to 134.71 (locking in over 200 pips).

Language Worth a Thousand Pips

Aside from Durable Goods and New Home Sales figures due out this Friday (both have positive expectations), the FOMC is expected to announce the Fed Rate this Wednesday, which is widely expected to remain at 0.25%. I'm not sure anyone on the planet expects rates to actually be hiked this Wednesday, however, there is debate about the language that will be used. The transcript to every Fed rate decision is carefully analyzed for certain key words that may have an enormous effect on the equity and forex markets. If the Fed's commentary is somewhat hawkish, signaling that a rate hike has moved up in its timetable, then the status of the USD as a pure "safe haven" currency will begin to diminish, and it will once again be looked upon as a high-yielding currency where investors can park their cash. This would undoubtedly begin a change in momentum for the USD against some of the majors, particularly the EUR and GBP. If the Fed makes it known that rate hikes will begin soon, the EUR/USD can easily come down from it's current 1.4600 level to the 1.3 level within weeks or months. If not, the current USD bearish trend may very well extend through the remainder of the year.

Holding onto a Good Thing

Since I doubled down on my bet against the JPY about 24 hours ago, things started to go my way in a hurry. A rush of positive economic data from the U.S. has pushed the markets higher, which in turn creates more risk appetite for higher yielding currencies. I'm up over 150 pips on my EUR/JPY trade and I'm in the green on my USD/JPY trade, which was about 20 pips from being stopped out for a loss yesterday. With housing starts and initial jobless claims due out any minute, I expect the market to take these pairs even higher. We shall soon see....

Betting Against the JPY

The USD/JPY trade from last night hasn't gone very well so far, but I am still in it and have not been stopped out.

Considering the good news this morning out of the U.S. for CPI and Industrial Production, there should be some risk appetite in the market. I will add to the flame here by increasing my position against the JPY. Instead of going in the USD again, I will go long the EUR/JPY with a stop just below the 131 level, where there is some clear daily support. About 200 pips is a lot to risk for one trade, but I am not going in too heavy and there is a ton of room to the upside here, so I still believe the risk/reward ratio is in my favor.

risk ~ 200 pips

reward ~ 250 - 500 pips

Charms and USD/JPY Opportunities

My wife and I just finished feeding our twin sons. The level 3 nipple is still working like a charm, especially at night-time, as there's less spillage at night than in the day. The boys are already fast asleep in their crib (they are still sharing a crib). let's hope it stays that way for at least the next 6 hours...

Now that I'm up, I took a look at the market and see a nice little opportunity to get into the USD/JPY. It's trading near some hourly support, which is around the 90.80 level, which isn't far from the daily support at around the 90.20 level. I'm going long a few lots around here as I think this presents a favorable risk/reward situation. With the recent favorable economic data coming out of the U.S., and the CPI and Industrial Production coming out in the morning, there should be plenty of volume to move the market.

My Twin Boys - Feeding Frenzy and the Epiphany

My twin sons, Noah and Benjamin, were born on 7/27/09, Noah being the first (by a minute) and the bigger at 5.7 lbs, while Ben was born at 4.14 lbs. Ironically, Ben went right up to the nursery, eating like a horse and burping like.... well, like his dad... Noah had to spend 3 days in the NICU for monitoring, as his blood-sugars weren't where they were supposed to be. After 3 long days, the boys were reunited!

After 2 weeks at home with the boys, and no more 24 hour help around, it hit home pretty hard that these 2 guys completely depended on us to care for them, no matter what! So, the feeding frenzy began and hasn't quite ended. Working out a schedule with my wife proved to be far more difficult than I imagined. Feeding both at the same time, while essential in keeping as "normal" a routine as possible without having one long, constant feeding, is more difficult than it seemed. After the 1 hour mark of a single feeding, while the little ones took turns falling asleep in mid-feed or just being uncooperative, one can lose one's train of thought, and one's mind, very easily...

Even when my wife and I fed them together, taking one each, it was still quite difficult, as the feeding still often took over an hour to complete. Once the feedings were done, we had possibly an hour or so of quiet time before the next feeding began. Quiet time never seemed to go as smoothly as we'd hoped...

With my sanity and my marriage in utter dismay, we got a visit from an unlikely short, petite, Russian brown-haired girl. An experienced speech therapist who also consults on infant feedings, came by and heard our story. She suggested a few things, but the epiphany came when she uttered the 3 most beautiful words I had heard in 6 weeks - "try bigger nipples!" Although this might sound somewhat controversial, to use level 3 nipples on 6 week old infants, I was desperate and needed to try something... Considering we have been putting a little rice cereal in the boys' formula (a recommendation our doctor made to alter the consistency and help keep the formula down), the bigger nipple idea seemed to make more and more sense. I instantly went right over to the nearest Babies R' Us (a place I'm beginning to call my second home) and purchased 3 packs of level 3 nipples. That very night, with Noah in my arms and Ben with my wife, the boys downed about 3.5 ounces of formula with rice cereal, let out a burp that sounded more like a Mozart symphony to my ears and went quietly into a deep sleep, laying in their cribs like 2 peas in a pod, all in under 35 minutes. Alas! the day is saved!

With time to spare, my wife and I gaze at each other with an indescribable look of joyous insanity, with a hint of skepticism, as sometimes things are too good to be true. However, 3 feedings later, this new scheme seems to be the answer (I'm knocking on wood). Who knows, maybe tonight, we'll even watch an entire movie together....

Return to Liquidity and the EUR/JPY

With a relatively light economic calendar week ahead, yet a potential return to liquidity in the markets, as the Summer doldrums should be officially behind us, trading should turn awfully interesting over the next few months. I expect a great deal of volatility and potential break out before the year is up.

I'm turning to the EUR/JPY, as this pair is very indicative of risk appetite in the global markets. Most recent economic data has pointed to a global recovery, including housing, jobs and earnings.

EUR/JPY looks poised to break out to the upside, per my chart above. I will be looking for opportunities to buy this pair. Of course, I will always look for an appropriate risk/reward situation before entering a trade.

I think the first Daily support level exists around the 131 level. Below that is 128 and then 125. I will look for opportunities off the hourly charts to get involved in what will hopefully be a very long and profitable series of trades.

No Crying in Trading

So, my EUR/USD trade from yesterday got stopped out for a 120 pip loss. That's ok, because this is a game where one needs to know how to lose as well as how to win. When I take a loss, I will be the first to admit it, but it doesn't mean I was wrong to do the trade. In fact, there is no right or wrong, just like there is no crying in trading. Right or wrong are moral distinctions. This is trading! Before every trade, I understand my risk and potential reward possibilities. I am well prepared to either take profit or take a loss at certain levels. The only thing that can go wrong is if one doesn't stick to those levels and begins to use their feelings to assess a trade. I do not do that, I stick to the plan. always!

Moving on, the EUR/USD still looks bullish to me (as does the EUR/JPY), but as I indicated in my piece on Monday, there is plenty of wiggle room to the downside here (about 500 pips until Daily support). So, I will sit back here and let the markets adapt to the latest rumors of U.S. bank trouble and get back in when I see things have stabilized somewhat - off the daily chart!

Enter the EUR/USD: A Short Tale

I just went long the EUR/USD at 1.4315 with a stop around the 1.4194 level. The chart below should speak for itself: a well defined hourly uptrend with an entry point near the 100 and 200 day EMAs.

I'm also keeping a close eye on the Yen, especially EUR/JPY. Based on the 2 time-frame chart below, EUR/JPY looks to be sitting right at some major support. I would be ready to risk a trade as long as it stays above the 132 level. So far, just keeping an eye and waiting for a nice entry point.

Appetite for... Good or Evil? Left or Right? Up or Down??

My long EUR/JPY position was stopped out Friday afternoon at the 133.97 level for a mere 30 pip gain. I was protecting my profits in the hopes that if the pair fell through my stop-level, I would have a chance to buy it back lower. So, here we are, Monday morning and I can buy the pair back almost 100 pips lower (see chart below). The question is should I??

The answer lies in defining global risk appetite, at least for the week ahead. If the USD should find real strength this week and the week ahead, it would mean that investors' appetite for risk is weakening and they will all flock to the USD like birds going south for the winter. And after just a few days, the momentum can build up so intensely that the US dollar may look like the L.I.E. on Labor Day - a parking lot. We saw this last year around this time (see EUR/USD chart below). Although the circumstances were a little different (the credit, housing and auto crisis was relatively fresh on the global scene), no one can say with outright certainty that momentum of that nature isn't again possible.

The US economic data out this week tells a mixed tale of good and evil. Chicago PMI came in significantly higher than expected, boosting the higher USD argument:

Mon Aug 31GMT 13:45 USD Chicago Purchasing Manager (AUG)

(actual) 50.0 (forecast) 48.0 (previous) 43.4

The remainder of the week includes improved vehicle sales expectations (which is a doomed figure, riding out the tale-end of the cash-for-clunkers momentum), higher ISM Manufacturing numbers, and lower pending home sales and construction spending figures. This mixed bag of cherries will be topped off with a worse-than-expected unemployment number, coming out Friday.

So, as GNR would say, "where do we go now?? ah ha ah ha ah ha ah haaaa...." Is the USD going up or down, left or right? The short answer is, I don't know. The better answer is most likely DOWN! there I said it...

From the charts below, support levels for the EUR/USD, Cable, USD/JPY and EUR/JPY are about 500 pips below the current market price. That's quite some wiggle room, so I would keep a fairly tight stop on any short USD or short JPY position (the safest play probably being long USD/JPY). I will look to get back into the EUR/JPY and possibly USD/JPY and/or EUR/USD once the hourly charts look a little more favorable from a risk/reward standpoint. I'll try to keep my positions posted...

Sorry for the long-winded article. I'll keep the rest short and sweet... child o' mine!

Riding the EUR/JPY Momentum Train

With better than expected U.S. GDP data out yesterday, and increased consumer spending data in the U.S. already reported today, my EUR/JPY trade from yesterday has been riding the momentum train.
I'm taking some profit here, as the pair has touched the 61.8% fibonacci retracement level off the hourly chart, from its most recent decline. I'm taking half my position off the table for a profit of over 150 pips, which is just over a 1:1 risk/reward ratio. I'll raise my stop to just below the 134 level (133.97), as that is just below where some support shows on the hourly chart and still above my entry point, so my profits are locked in (barring a severe gap down over the weekend, if the trade should last that long in the first place).

I will not look to add any positions, as it is Friday and I will, once again, take my weekly profits with gratitude and humility and run...

U.S. GDP, Jobless Claims and the Yen

As reports of a deceleration in global growth, and specifically in China, sent the carry trade lower overnight, my long EUR/JPY position was stopped-out at 133.81.

With daily support sitting around the 132 level, and hourly support around the 133 level, I got a chance to buy this pair back at the 133.30 level with a stop placed around 131.91 (see chart below).

U.S. GDP and Jobless claims figures are due out in about 10 minutes and expectations are relatively low:


GMT
12:30 USD Gross Domestic Product (Annualized) (2Q P) (forecast)-1.5% (previous) -1.0%

GMT
12:30 USD Initial Jobless Claims (AUG 22) (forecast) 565K (previous) 576K

Low expectations means this is the U.S.'s to lose. A slightly better-than-expected number should help push the markets higher, along with EUR/JPY.

And if anyone is wondering why I chose EUR/JPY, as opposed to GBP/JPY, my "indicator" pair, EUR/GBP (see chart below), should give it away, as I wrote about previously.

Consumer Confidence Increases

Consumer Confidence in the U.S. came in higher than expected:

GMT
14:00 PM USD Consumer Confidence (AUG) (actual) 54.1 (forecast) 47.9 (previous month) 47.4

The initial move was to the upside for USD/JPY and EUR/JPY. The next two or so hours will be pivotal, as the market will determine whether the pairs will have enough momentum to break through their resistence levels of 95.00 for USD/JPY and 136.00 for the EUR/JPY (see chart below), or whether this will be more of a sell-on-the-news type situation.

Consumer Confidence & the Carry Trade

The U.S. Consumer Confidence report us due in less than one hour and expectations are slightly higher than last month:

GMT 14:00 PM USD Consumer Confidence (AUG) 47.9 (forecast) 46.6 (previous month).

This is certainly an important figure in the forex world, as it can very much impact the USD and the carry trade, even instantaneously. Let's take a quick look at last month (chart below), when the numbers came in 2.4 points lower than expected (forecast was 49.0, actual number was 46.6).

As you can see in the above chart, both USD/JPY and EUR/JPY (the ideal carry trade currency pairs) plummetted about 100 pips prior to the release of the consumer confidence numbers, then dropped over 100 pips in the 3 hours following the release.

My EUR/JPY trade, which is still on since last week, has been volatile, but still working for me. Like I mentioned last week, long the EUR/JPY (or short the JPY) is my preferred direction (this is a carry trade), so I'm more willing to ride out the heavy waves of volatility in return for a potential big upswing, and every day that I'm still long the pair, I earn money on the interest-rate differential).

Right now, the momentum cetainly seems to be in my direction and so I have two choices: stay put with my current trade or add to my position. Since I missed a very nice entry point at the 134.20 level, around 2:00am EST, I think my best bet is to stay put and ride out the wave as far as it takes me.

Winner, Winner, Chicken Dinner...

I'll take my chances that the makers of the movie 21 don't sue me for using this title. Looks like the EUR/JPY trade is going very well. I definitely made the right decision to stick with it, as the recent existing home sales numbers, released 10:00am EST, exceeded expectations. The U.S. equity market surged, as did the carry trades (basically, anything against the JPY).

The EUR/JPY broke out of the hourly resistance I mentioned earlier today, and I will look to take some profit here for a risk/reward close to 1:1. The only difference between how I'm taking profit here and last Friday's profit taking on the GBP/JPY "hedge," is that being short the JPY (long EUR/JPY) is very much my preferred direction and so I'm more willing to leave some risk on the table, even if it's through the weekend. Additionally, after taking some profit, I will raise my stop-loss to the 133.81 level in order to protect the remainder of my trade.

Volatility City and the Dreads of Fridays

There's clearly some resistance around the 134.50 area for the EUR/JPY, as shown in the chart below.

The resistance has made itself known since the night before, so if I was more of a day trader, I could have taken at least some profit up at around the 134.20 level last night with the intention of buying back lower. Thanks to the intense volatility of the forex market in general, I could have taken profit at the resistance level around 7:00-8:00 pm EST last night and bought back again about 100 pips lower by midnight to 1:00 am, a few hours later. Would've, could've, should've... but I did not! and I have no regrets either. There is simply no time for regrets in this business. I am grateful for the profits I make and look forward to future trades. That's all.

So, right now, we're at the same resistance level and it's Friday! Dreadful Friday, with the uncertainty of an entire weekend looming ahead. I will wait out a few more hours before making any decisions on my existing trade with the EUR/JPY, but I am hopeful that it very well may break out to the upside and I can take some profit before the end of trading today.

I Meant For That To Happen...

I'll be perfectly honest, I'd rather the EUR/JPY just have taken off in a straight line upward last night. But it didn't and I was well prepared for that. Just as I wrote yesterday, I was suspicious of a false break, which is exactly what happened (see chart below).

Luckily, my stop was well below that and, not only I am still in the trade, but I am averaging down by buying another 2 lots around the 133.25 level (which is about 50 pips below my initial long position). Also, the 4-hour chart (see below) shows a nice reversal candle, which is even more incentive to get involved here. Additionally, the daily chart (not shown) has not shown a break in support.

Although I don't like the drama and would have liked for the trade to have gone my way immediately, this could be even better. Since I'm averaging down, I'm also establishing a new (and higher) stop at around 131.91, therefore, further minimizing my risk.

Original Long:

Risk: 175 pips

Reward: 230 - 400 pips

Additional Long:

Risk: 137 pips

Reward: 270 - ?? pips

Long EUR/JPY, As Promised

As per my trading plan, mentioned the last 2 weeks, I initiated my long EUR/JPY position this hour (see chart below).
Risk: 230 pips
Reward: 230-400 pips

I missed a beautiful entry point last night around the 133 level, but that's the way it goes. I think the dip over the past 6 hours provides an adequate entry point. I'm placing my stop well below the obvious hourly support at around 133 because I want to give my trade a little room and don't want to get stopped out because of a false break. Because the amount of risk (230 pips) is a little more than I'm usually comfortable with, I'm taking on only 2 lots. If the pair dips further and forms some support above my stop, I'll buy another 2 lots.

Closing Out Before the Weekend

I took the remainder of my GBP/JPY short position off at 156.55, for a 250 pip gain. Since my risk was 150 pips, I made 1.67 times what I was willing to lose on this lot, a 1:1.67 risk/reward ratio, which is not bad at all. I'll take the money and run, especially with the uncertainty of a weekend ahead. I'll be looking more aggressively for an entry into a long EUR/JPY, USD/JPY or GBP/JPY position next week...

Taking Profit Friday and Protecting Trades

Per Yesterday's GBP/JPY trade, I'm taking a few contracts off the table to lock in some profit. The important part of taking profit, especially while leaving a portion of your base position on, is to try to lock in more profit than you initially risked. The good ol' risk/reward ratio in effect.


I was willing to risk about 150 pips on my initial trade. I took half my position off the table this past hour, locking in 188 pips (per chart above). Furthermore, I've adjusted my stop-loss to below my initial short, around 158.53, in order to protect the remainder of this trade, as I'm not as willing to maintain my risk on the "hedged" portion of my trade strategy. By placing my stop below my initial short, I'm automatically locking in a minimum profit of about 50 pips on the remaining lots of my trade. Keep in mind, this is not my preferred direction against the Yen, as I noted clearly in yesterday's piece. I always want to be short the Yen (long EUR/JPY, GBP/JPY, USD/JPY, etc).

I'm still watching the EUR/JPY and USD/JPY for entry points in the long and interest-rate favorable direction. There was a point around 3:00-4:00 pm EST where I could make a case to have entered at least an initial position, but I did not see a favorable risk/reward ration for an appropriate trade.

In the old days, something silly like risk/reward would never have stopped me. Now, I must stay disciplined and trade ONLY when it is favorable to do so. I seriously doubt I will enter this side of my strategy this week.

Be wary of entering trades on Fridays, as I have given back perfectly productive weekly gains all because the Market sometimes goes against all rhyme, reason and sanity on Fridays.

Gentleman, Start Your Hedging...

Looks like the number of Initial Jobless Claims for the week was slightly higher than expected. Although this was not wonderful news for the U.S. economy, it was far from terrible. So, the economy seems to be doing less worse every day. It's only a matter of time before this recession is a thing of the past. When will that time come? I can only say it will not be today!

I started the first phase of my mid-term trading strategy today with a hedge. I shorted GBP/JPY this hour (8:41 am EST) with a stop set at the 160.50 area (chart above). The pair retraced back up exactly 61.8% from it's most recent decline to the 155.95 level (from the 8/7/09 high of 163.05), and then followed by a very convincing hourly down bar this past hour.

Risk: 150 pips

Reward: 100-250 pips

This is not my preferred direction. I'd much rather own anything against the Yen (buy EUR/JPY, GBP/JPY, USD/JPY, etc). However, like I said above, this is only the first phase of my trading plan, and I am waiting very anxiously in the wings to go long EUR/JPY as soon as I see an appropriate entry point. I will try to post here as soon as I make my move.

Contrarian Trade Looming and a Presidential Leak

By now, everyone in the forex world knows that the NFP numbers were much better than expected, especially since President Obama leaked the news last night at a fund raiser in Virginia:

I'm convinced that actions we've taken in the first six months have helped stop our economic freefall….We're losing jobs at half the rate we were at the beginning of this year...

Well, so much for surprises! However, good news is still good news and the recent slowing in job losses is undeniable. I'm sure there will be a great deal of hoopla through various media outlets about how the US economy is on track and all signs point to a firm recovery through the rest of this year. Let me say now that this does NOT necessarily mean the USD will be rallying, especially for the upcoming week. It is too late to place any trades today, as the the train has officially left the station. But next week will provide plenty of opportunities. Let's take a look.


My main "indicator pair," the EUR/GBP (chart above) has been basing, or flagging, for months. Since the preceding direction is upward, we have to assume that since the pair has not broken down, it is setting up for a move higher; therefore, I will be favoring a long EUR, short GBP bias.

The EUR/USD (chart below) has been rallying basically since March 2009 and I will look for an opportunity to buy the pair next week, once I see some kind of reversal pattern from its most recent short-term dip.


The same concept will be applied to the EUR/JPY, only I expect this pair to rally more so if the equity markets rally as well.

I will also find a spot to possibly go short the GBP/JPY, in case the equity markets take a hit. This pair seems to be a proper target to fall, even if only a corrective dip.

I will follow up with more details and precise trade levels next week.

Range-Trading

EUR/GBP is more of an "indicator" pair than something i like to trade. For example, if there is overall USD strength in the market, I would use EUR/GBP to help decide whether to go short EUR/USD or GBP/USD. In this case, and because it's a Friday and I'm not expecting any significant breakouts, I really like the range EUR/GBP has been trading.

I drew a resistence line around the 0.8700 level. This hourly chart below shows a nice rally last night and a potential reversal. I shorted a few lots around 0.8650.

Risk: ~50 pips
Reward: ~65 pips

Taking Profit

The EUR/CHF trade seems to be moving along well. right now it's touching the 200 day EMA off the daily chart, which should act as some sort of resistence. This is a great place to take a little profit and take a little risk off the table.

I'm still long the pair with a few remaining lots and will, or course, continue to keep a close eye on it. I'm particularly watching the retracement to the 1.5179 level (61.8% Fib Retracement). If it falls below that, i'll still be profitable and will look for another opportunity to get long. Until then, I'm keeping a few lots and hoping for another rally.

EUR/CHF - Pick Up the Pieces

After missing out on the USD/JPY rally yesterday, as it never retraced enough for me to take on the risk, I'm going to pick up the pieces and move on... EUR/CHF is not the most popular pair in the forex world to trade, but it seems to be falling into a nice setup. The pair rallied over 100 pips in a 24 hour period, which not only isn't unusual but pales in comparison to the 300-plus pip rally the EUR/JPY enjoyed in the same period. Around 2:00am EST, EUR/CHF nose-dived 40 pips and proceded to glide down to the 1.5150 level, which is about a 61.8% Fibonacci Retracement from yesterday's rally and where both the 100 and 200 day EMAs lie.

I labeled the 1.5100 level as the first major support level, seen from the daily chart.

For further confirmation, the weekly chart shows a bullish flag that's been forming since March 2009. Usually, these flag formations resolve in the direction of the previous move, which is upward in this case.
Risk: ~30-70 pips
Reward: ~ 50-140 pips

If You Miss the Train, Wait for the Next One...

A great early lesson on the frustrations of being patient. It looks like I missed a relatively small move in the USD/JPY, about a 50 pip move. The pair never retraced enough for me to pull the trigger and go long. The fact that USD/JPY was trading very close to it's 100 and 200 day EMA off the hourly chart made me picky and hesitant enough not to "chase" this pair. Although the pair has moved higher without me, it certainly didn't "run away." I'm still bullish for the near-term (maybe the rest of the week).

I labeled two different support levels, 92.48 and 91.70. If USD/JPY retraces back into the "Kill Zone," but doesn't fall below 91.70, then I'll go long.