During regularly scheduled monetary policy meeting, Bank of England left its benchmark interest rate and asset-purchase plan unchanged. No surprises, this was largely expected. Analysts claim that BoE has little if any reasons to make adjustments, even if more voices are raised about possible credit rating cut for country’s sovereign debt. Some suggest that probability is high for that, if country doesn’t improve its debt reduction program. I don’t think it is very likely, because than many other countries would face similar actions. So, for now BoE kept its key rate at a record low of 0.5% and its asset- purchase program at 200 billion pounds.
Meanwhile new Japanese Finance Minister Naoto Kan didn’t waste any time expressing his opinion about currencies in general and Yen in particular. He promised to work closely with the central bank to bring JPY to appropriate level. In his words this would mean 95 for USD-JPY. This didn’t cause any major jolts, especially since Yen has been in retreat for some time now, but JPY weakened farther, namely against USD and AUD. I expect more comments of this type in near future. Question is are they willing to do anything outside of being vocal?
I was looking for some weakness in Canadian Dollar, using GBP-CAD to go against CAD. Last post had a 4H chart of this cross, where I sought reversal. After that update GBP-CAD stopped moving almost at all, with ranges contracting to a strangely small level. Could have been that markets were waiting for BoE decision or simply a dead time of trading day. Eventually price rolled lower right before London open, so I moved on to smaller, 1H chart, as indicated in last post.
Eventually market started to reverse, moving about this really minor low of 1.6470 and I got in with a small objective in mind. It was closed within an hour for 50 pips. I prefer to see a little more complex bottom to form here before next trade. The blue line indicates more less of what I’m looking for. In my mind these bigger patterns are easier to trade then reactionary set up like the one above, or next, in EUR-CAD.
Here entry was even simpler, just a candlestick reversal with very small risk. This trade also produced 50 pips in short order. Just like previous example, I would like to see bigger reversal base to created here, one that can be planned for and could deliver 100-150 pips or more. Blue line indicates approximate price build up which would make me happy. Will it happen? Don’t know, but it would be indicative of more stable bottom, with possibility of bigger rewards. However, it takes time to develop.
Movement in EUR-GBP has slowed down recently after the gains Euro had. I’m going to try a trade on the short side of this cross. Hourly chart is showing possible reversal, which, if concluded could bring a decent trade. Sell order is placed at 0.8977 with 40 pips objective. Longer term sell, using higher magnitude chart (daily) is still valid. It was described in Larger picture post. Obviously, it is not going to happen very soon, if at all, so there is no reason to try for smaller pips in the meantime.
Mike K.
EUR/GBP: I’m not able to stay awake tonight to play that game but I wish you well.
I haven’t wanted to say anything but the new gray background and whatever else you changed has made navigating this site problematic. Often, the bottom of the last chart gets cut off.
Not sure I follow you. Posts have been simply split in half with the “continue reading” sentence. This way pages are not so ridiculously long as before. But I’ll talk the programmer and see what he can do.
I like this eur/gbp play. Short and to the point.
of course, no guarantee it will happen like that.
Mike,I’m trying to see if I can have 0 or < 5:1 leverage on FXTrade but when I go and try and change it it shows only 10:1 leverage as the lowest. Are you sure the no leverage option is possible on OANDA FXTrade?
Peter, the setting you choose indicates MAXIMUM leverage that this account would be allowed to trade with. You can trade at any lower level. For example, all my accounts are set with the max 50:1, but most of trades are done at 1:1, 2;1, every now and then 4-5:1. Let’s say you have $5000 in the account. If you trade in $5000 lots, you effective leverage is 1:1. So, if you choose 10:1 option, you can use leverage up to 10:1 but no higher.
Mike,thanks for clearing it up .I wrote to OANDA a few days ago about it but haven’t received any response yet.
I hope the new year brings more upward movements than downward ones.
Just something I’ve been mulling over , it might be helpful to others here .I was thinking of how I can minimize risk of big losses?I’m going to try putting many very small buys with low or no leverage on different currencies at the same time.Today the Japenese Finance Minister has gone back on his “low yen” wish .So there may be upward movement of JPY on the USD and AUD on Monday.Do you or anyone else read teh FOREXFACTORY for news ? How do you(or anyone else) get the relevent forex influencing news each day ?
What do you think ?
Best Wishes
Peter
Sydney,Australia
I don’t read Forexfactory. There are countless sources of news. About every broker provides some kind on news feed. Even on this blog, on “Forex data” page there is one, plus the economic event calendar. I don’t trade news releases. By that I mean that I don’t try to guess the outcome, and to open position before hand.
http://fxmadness.com/2008/07/26/trades/trading-economic-data-releases/
Not sure if it is best idea to spread trades everywhere at the same time. For example, being long USD against all other currencies is great if it goes your way, but not so if you happen to be wrong. I think it is better to analyse each chart on its own merit, and concentrate on 2-4 at the time.
Peter, when you first start out, you are flooded by information and ideas. Sometimes it is overwhelming and confusing. Things start falling into place after some time of starring and charts and trying all kinds of stuff. Eventually you settle on something or other and can give it a real shot. That’s why you should use demo account for a while and see how it’s going.
Mike,thanks for the advice
Best,
Peter
Sydney,AUS
Mike, I totally agree with you about too many ideas. Having just finished my first full year trading I can say that the biggest problem I faced was that everything looked and sounded good to me. Every system, every blog post, every chart pattern looked interesting. Boy, how wrong I was.
[...] Trade in EUR-GBP from last post. Entry was at 0.8977 with 40 pips target and it happened as intended. Existing support at 0.8920 held, perhaps too well for my purposes. Rebound was very sharp, even went through the 100 SMA, which I [...]
[...] pairs had a small shock of their own. New finace minister, Naoto Kan, was quoted having more comments abut the Japanese currency. This time he changed his sentiment, by [...]
Paul, same here. There is in information overload and it is so difficult to focus on something. Like you said, everything looks good, or is presented in such a way that seems no-fail. A lot of disapointments along the way. Now, after about year and half of trading I start grasping what it means trade in the way that fits my personal tolerances. I wanted to learn fast but was overwhelmed by amount of material. Very frustrating. Now I think realistically that it will take me another 1-2 years before I’m consistant, but am at piece with it. Trading has already become much easier, not just winning/loosing aspect of it, but ability to stay with a trade, taking losses as a matter of fact(almost!)etc. It takes time.