Currencies once again are choppy. Just like yesterday, very good day for short term traders. I do some of that, but try to cover intermediate type trades here. This has not been easy this week to date. Granted, it is only Tuesday, but I’ll be away tomorrow and unable to post anything, so for me half of the week is gone. Couple of trades from previous days both included NZD. Kiwi got weaker and entry prices were not met. Not the end of the world, these could have been losses. I’m cancelling both of them. Moving them lower, both NZD-CAD and NZD-JPY, and trailing latest minor high might not be a bad idea, but I will not be able to follow the markets close enough to do that.
Yesterday I mentioned that a trade in AUD-CHF was under way. It was first suggested last week in “Forex goes mainstream” post.  Quick reminder, premise was to sell AUD-CHF at 0.8115 and look for 150 pips gain. The set up was a simple down breakout, out of misshapen head and shoulder, or a crooked crown (whatever). Fairly long chart, 4H, was used, so the outcome was not expected immediately. When the order was finally triggered, price moved under 100 SMA and created couple of minor highs, providing not great, but decent, exit zones, should the trade go wrong. And that’s what it did, reversed as soon as filled. Nothing unusual. From my experience, some pull back is a norm. Breakout trades, moving straight to the target, are exception. There are some ways to increase probability of this to happen, but this includes additional filters, eliminating a lot of trades. I might discuss it in more details in another post. About the time my last entry was posted, Swiss Franc and Euro came under pressure, resulting in large move, lasting about an hour.

That’s when price on this chart hit 100 SMA.  I decided to sell it again, same size. Additional risk was small, between 30-40 pips. Had few things going for me, proximity of previous high and also time of a day, when trends tend to reverse, or at least exhaust themselves. Looked like chances were good for a reversal, or, from my perspective, resumption of down trend.

For once I was not disssapointed. Price fell and about 10 hours later I closed both trades at 0.8131. One lost 16 pips, while the other made a little over 100 pips. Not the best of exits, but could be much worse. Since that time price consolidated. Another short entry at about 0.8074 is possible, but it will depend on my ability to follow the markets tomorrow.
I think Yen pairs are getting closer to being a buy soon, maybe as early as tomorrow. Outside of that, this looks interesting to me.

Daily chart of GBP-AUD. It is slowly turning around, trying to, at least. I will give it a shot at 2.0930, with a target of 2.1450 or so. If this trade happens, I’ll watch it on 4H charts trying not to loose more than 350 pips. Back on Thursday.

Mike K.