Wow this week has been a crazy rollercoaster ride with the central banks steering the way. There was FOMC statement, BoJ statement, appreciation in oil, and in result, a volatile trading week. Stop losses were a trader’s best friend and the volatility alone was enough to give panic attacks. This week was an ugly week whether you were short dollar or long; unless you were a boss and caught both movements. It was a messy and dysfunctional week I’m glad that it’s finally over.
On Wednesday during the post-FOMC volatility, I lost a lot of money from going short dollar. My reasoning, it wasn’t any new news, nothing changed, rates weren’t hiked, and movement was driven by hype. I knew the rise in dollar was completely exaggerated and called out my skepticism that day. Today, it’s Friday and nearly every dollar pairs are near the range of the pre FOMC levels. Just goes to show important timing is. Had I just held onto my short dollar positions and added long entries on the way up, I would not have had this drawdown.
Today was a more successful day. Just yesterday I called the dollar short move, got some small short dollar positions in, and woke up to some profits in pips. Although London set up the move, the main events happened during NY session. As the downward pressure on the dollar became greater and greater, EUR and GBP suddenly flew off; GBP/USD being today’s VIP, gaining over 120+ pips! The market levels are finally back to pre FOMC structure and we’ll see where we’ll go from here. Have a happy Halloween folks.
Check out the before/after picture from yesterday to today.
I tried making up for my losses yesterday, but I dug my grave deeper in the process; this is called revenge trading. Trading to make back your losses from the previous day is always difficult because you’re emotionally unstable which results into reckless trading. The fact that I had a huge position during a FOMC statement is embarrassing in itself, but there’s no excuse. I was greedy, stupid, irresponsible, impulsive, and did I mention stupid? Money management is something I always struggled from Day 1 because of my small capital. I want to my wins to be large and grandiose while I’m completely disregarding proper risk management. Don’t be like, stop being greedy.
I was surprised to see dollar slowing down today. After the big aggressive push from the hawkish FOMC statement, it seems like the hype quickly died down. As stated yesterday, the dollar is at a big resistance. This means it’s going to take some great force to push this out of structure and create new highs. This is a good opportunity to short the dollar because there aren’t any good news till next Friday for the NFP. I can definitely see a pullback, and a doji has formed right at the resistance.
Doji on support after a news driven rally. Check out that wick, followed by a doji.
One word to describe today is Oww! My short dollar from yesterday actually became profitable as EUR/USD and GBP/USD made up from it’s fall; couldn’t have been happier waking up to it. Although I knew shorting the dollar would be a dangerous move, I felt like fundamentally data was short and technically the dollar was overbought. I was so sure that the dollar will take a big hit from today’s no rate hike. I kept my short dollar trades from yesterday and even added more position before the FOMC statement and fastened my seatbelt.
I was right on the no rate hike. However, Yellen was surprisingly more hawkish than she was on September and I could not believe how happy the market got. Yellen said our economy was growing at a moderate pace and removed her concerns about global markets. Compared to her concerns and dovish sentiment from September, today’s statement was definitely more hawkish. Basically Yellen still puts December as an option to raise rates and needs data to give her the okay. One problem I had about today was how exaggerated today’s move was. She did not say December was official nor did she say anything spectacular on the U.S economy, yet the EUR/USD fell almost 200 pips. I feel like Yellen should be more honest with the public and not give any false promises. Once December comes around the corner, she better not change her language…
With that said I had a hefty loss today, high triple digits. I got in a long dollar trade after the FOMC and feel like the EUR/USD can drop more during London.
I’m long dollar for now.. but concerned about the resistances it’s about to face.
Tomorrow is finally Fed day where we will hear from the head Chairwoman, Janet Yellen. The majority of market is on the side of a no rate hike as the previous datas were short. Housing, inflation, and the labor markets all signal weak growth and does not look ready for a interest rate raise. It will be interesting to see how Yellen describes our economy. I’m hoping the Feds can talk up a bit more and give us more clues about their plans. Would they still lead the market onto a December rate hike, after failing to raise on October and September, or will Yellen just save the hike for next year? How many false promises can the Fed’s give? I’m expecting a dove statement tomorrow and still remain skeptic.
The rise in dollar today was very surprising. The bears were still in control during London session, however, once Core Durable Goods number got announced, the dollar rallied hard. The surprising bit, Core Durables came out short! In a dovish sentiment, with a mediocre data, I was expecting the opposite. Throughout the day, the bears tried it’s best to keep the dollar down but the bulls had too much pressure. Today was a lot more volatile than I expected although I was consistently wrong on shorting the dollar. As of now, I still have current short dollar trades running. I’m hoping for a dovish statement tomorrow and the dollar to fall back down. Dollar is in a familiar resistance area with a pullback due. I can’t see the dollar break out of this zone without a rate hike.
Can’t see dollar breaking structure without a rate hike.
So I was expecting a bounce from Oil this morning, but boy was I wrong. The bearish momentum continued to push price down. Oil right now is sitting at an important spot as we speak. A bounce to $44’s is most likely to occur, but if the bears continue to dominate, it can fall through this support and possibly go test lower $43’s. Although I was wrong about the bull oil call, everything went to plan because USD/CAD took a dip where I took a decent profit and bailed.
I was short dollar this morning and expected the EUR/USD to finally take a little bounce here. With the help of a lower than expected new home sales and Dallas Fed Manufacturing Index, the bears took a hold of the dollar for the majority of NY session. My guess is that the market will move side ways until Wednesday where we will finally hear from the Feds. If the stock market and vix told us anything recently, the market does not expect a rate hike for October. I can definitely see downward pressure on the dollar as we approach Wednesday, and unless we hear of a rate hike or some improvements in the U.S markets, the dollar will probably take another dip.
Dollar continued it’s mighty rally today but the strength is slowing down. Better than expected PMI news from Europe couldn’t even bring the EUR/USD up. But although the dollar finished the week off strong and healthy, remember that all good things must come to an end. USD/CHF ,which has a similar behavior to the dollar index, is at a resistance and EUR/USD is touching a strong support at 1.09. The dollar is strong, but the Fed’s will probably announce a no rate hike this month and traders know that. I’m definitely expecting a bounce from the EUR/USD next week and expect a dollar pullback.
Interesting set up on oil and I’m holding my shorts for USD/CAD as I speculate a rally in oil next week. First off, oil has touched a very strong support line; the same one that pushed it up a couple week ago. Secondly, a dollar pullback is most likely to come after strong rally, and most importantly Hurricane Patricia is coming toward Mexico and is looking ugly. According to CNN, “(CNN)Hurricane Patricia, the strongest hurricane ever recorded, made landfall at 6:15 p.m. (7:15 p.m. ET) on Mexico’s southwestern coast near Cuixmala with 165 mph winds, the National Hurricane Center reports.The Category 5 storm has been described as potentially catastrophic for those in its path.” This hurricane is no joke and will probably affect Texas as well which would definitely affect oil prices. Fundamentals and technicals are both showing bull for oil, which is why I’m holding my USD/CAD shorts for the weekend.
Price is touching the same area where oil previously rallied. Funny how Hurricane Joaquin helped oil pop last time, this time it’ll be hurricane Patricia.
There you have it folks, just yesterday I showed the EUR/USD on the brink of a major support and Draghi has pushed it into oblivion. The pair fell over 200 pips today and looks like it’s thirsty for more. According to Draghi, the Eurozone is in a major slow down right now and QE isn’t working as expected. In December, Draghi will announce the next step for QE whether it is changing the length of the program or even changing the size of the monetary support. The bank may spend more than 60 billion euros per month to expedite the economy’s recovery. It will be very interesting to see EUR/USD break out of the 1.10. For now I’m planning to short any pullbacks.
Right now I’m very conservative with my account. I faced a really bad losing streak last month and needed to slow things down a bit. I’m using tighter stop losses, safer take profits, and smaller position sizes. If I was trading the way I was trading months before, maybe I could’ve had a triple digit day today. To be honest, I needed a little slow down at the rate I was going. Eventually I’ll start increasing my sizes again, but for now I’m slowly getting my feet wet again.
If you’re late to the EUR/USD short, don’t short it now. Expect a bounce here, then look for shorts.
The EUR/USD has been consolidating for a while now. The dollar has been gaining mild strength but nothing too exciting. There’s an ECB conference scheduled for tomorrow early in the morning which will push the EUR/USD out of this limbo and start a new trend. My guess from the ECB is pretty dovish. I’m hoping Draghi to announce the extension of QE and in result push the Euro down. If the U.S is feeling the drag on it’s economy and is hesitant on the rate hike, there’s no reason to believe other economies are doing swell. Out of all the global economies, the U.S seem to be the economy that sucks the least.
Although it was another boring day today, there was much action in the USD/CAD. The Bank of Canada left rates unchanged and said to feel the impact of falling oil prices. It also didn’t help that the Crude Oil Inventory came at a high of 8.0M barrels vs 3.5M barrels. Majority of my profits came from riding the USD/CAD up. I can’t really see oil rising again unless there’s more demand than supply or another oil impacting news. I’m looking to buy the the dip in USD/CAD and see oil fall some more.
Here’s the boring sideways movement from EUR/USD. It’s sitting on a support right now awaiting the ECB conference for tomorrow.
Although the dollar has been gradually increasing the past couple days, it’s still a gentle crawl at best. At the moment, I do feel much safer being on the long side of dollar, however that doesn’t mean long dollar is the best choice. As a day trader and scalper, it’s very difficult to trade dollar pairs right now due to it’s consolidating behavior. My strategy right now is to not get too comfortable in a position; I get in, profit, get out, rinse and repeat.
Caught a couple pips on long dollar side with AUD/USD and NZD/USD. The New Zealand dollar faced a deep fall today due to poor dairy sales. The country is a dairy exporter and the GDT Price Index gave the currency a hard push down. Australian dollar is also facing downward pressure from weak China GDP numbers. I’m hoping the dollar will find some strength in the near future, but I won’t be surprised if it pulls back before a long rally.
Truly a boring day today, market moved sideways throughout the whole NY session. I tried longing the dollar as it seemed anxious to break out to the long side but traders were teased. After the much awaited dollar rally, traders were left disappointed with their EUR/USD shorts giving little to no profit. It’s expected for Monday’s to be slow, but today was exceptional. I still have my eyes on long dollar, maybe tomorrow will be the day.