Three weeks is a long stretch for me to be away from computer. Well, maybe not exactly, but trading has been in a background. This means that right now I have this “itch” to trade. Part of me feels “obligated” to get busy right away, find a lot of set ups and go for it. And then there is the other side that screams caution. After trading for several years now, I’ll better listen to the second persona, even if it means being slow out of the gates.
Perfunctory examination of charts indicates to me that there is great dose of indecision and uncertainty in the markets. Most of the crosses followed here are building some kind of holding patterns, or are in consolidation. This applies to daily charts. A lot of major trends that I took advantage of earlier in the year have stalled. Some of them reached my long term objectives, like the beast, some came short. I will devote a post to GBP-JPY later on in the week.
One of the currency pairs which is yet to climb to long term targets is GBP-CHF. As of right now, I still think that major trend is bullish and will remain so for a long time. Meanwhile, however, we experienced a sell off, which currently looks a lot like a consolidation, with market seeking reasons to go either way. This is best seen on 4H chart.
Price is contained within a wide, 400 pips range. Move outside of the boundaries could decide direction of the next intermediate swing. On smaller time frames, there could be plenty of opportunities trading inside the range. I’ll probably do nothing here, just watch for now. Somebody asked me before about the summer slowdown. Well, this is typical behavior of currencies during summer and it can be seen among many pairs.
Not all, though. Canadian Dollar went a very good run over last 2 weeks. I had been looking for trades in CAD pairs before my departure. That proved a little premature, producing minor gains. At any rate, this currency moved sharply, in fact, perhaps too much. I think that short term correction is in the making, especially with Bank of Canada issuing cautionary statements. They say intervention will happen if CAD gets too strong. In a typical cryptic language of central banks, they neglected to specify what “too strong” is.
EUR-CAD has fallen about 1000 pips, touching important support at just above 1.5300. In my mind chances for reaction are high here. Hourly chart provides good entry at 1.5488, for a 100-110 pips trade. If the price moves lower, I’ll reset buy order to just above next minor high. Other CAD pairs present similar situation.
As it is customary for me, I’m also looking for opening gaps and short term (5M charts) buys in GBP-JPY. Outside of that, I’ll probably take less trades than I normally do, until all the rust is shaken off. With any luck it will only be this week.
Mike K.
Mike, thanks for the suggestion for gbp-jpy trade while you were gone. I left a comment earlier that it worked out great.
I found it difficult to trade last few weeks. Nothing seemed to work. Now you mention the summer effect. Do you think this is a reason behind ugly charts?
Good thing, Grace. Glad to hear it.
Bob, it is extremely difficult to define the “summer effect”. After all, markets can consolidate at any time. However, if it happens to many currencies at once, chances are that volume dropped tremendously, probably helped by a lot of people taking vacations now.
Good to see you back and in high spirit.
Hello. I read a lot of your posts last week and I must say that I really like them. You are bullish EUR/CAD. Does it mean you are selling CAD/JPY?
At the moment I’m just watching the 86.60 area in cad-jpy. Like I said in the post, for now don’t really want too many trades at the same time.