It is 1.00am NY time Thursday September 10 and the market is at 1.4575
The market has peaked (to date) at 1.4600. We may be near the top. As stated yesterday, this has been an impressive rally to 1.4600 by the Euro or, more the case, a serious fall in the USD. I am not prepared to risk a short trade against such strength at the present time. I will wait for a significant retracement and then go long.
This has been a week to be very cautious. The first rule is: Do Not Lose Money.
Edit 3.00am NY time Market is at 1.4572 The market has hit a high of 1.4600, then dropped back to 1.4533 and has now struggled to reach 1.4586. I think we may be seeing the start of the correction. However, the Bank of England Interest Rate decision at 7.00am NY time could have a wild-card impact.
Edit 8.00am NY time Market is at 1.4561. The market was starting to show weakness (falling to a low of 1.4519) but as expected the BoE decision bounced it back up. I am still of the opinion that we will see the market retrace back down to the 1.4400 area (near the 1.4380 Resistance -turned-Support line) .....within the next week.
Edit12.10 pm NY time Market is at 1.4571 This market is too high for me to take a long trade. And it is too erratic to take a short position. I intend sitting on the sidelines until the market settles. I don't wish to break the first Rule (see above) . Sometimes it is better to NOT be in a trade.
Emails
Email 1
Regarding the recent breakout from the 4hr 300-period timeframe, I notice when looking at the longer-term timeframe (daily, 1 year) that there seems to be a resistance line running between 1.4340 (3rd June), 1.4450 (3rd August) and 1.4537 (8th Sept) and a support line at 1.3750 (16th june), 1.3835 (8th July) and 1.4044 (17th August). To me, this seems to suggest that we should be looking at a retracement back towards 1.4150 considering we're at the top of this channel. I prefer my Resistance lines to always be downward sloping (pointing to the bottom right hand corner)... when I can't see a downward sloping Resistance line, I get VERY cautious
Are these longer term support and resistance lines elements that you would consider significant and consider trading around? (If you are considering going short) I would be VERY careful of this bull market move. I want to see a drop, then a partial rise, and then the start of another drop, because then I know its going down
Email 2a ( The tale of a trade...from late last week onwards)
So my pending short at 1.4275 got picked up obviously... not doing so well now, but hoping that it won't climb up to my SL @ 4375 before reversing. Dumb trade... i will be curious to see how this pans out...I can see your later emails so I look forward to seeing how you thought this trade through...I just hope that I am about to read that your SL closed you out at only a 2% damage to your account
Email 2B
Still stuck at 4275. Got room still before my stop, but not terribly pleased with being trapped down there. You know, the shittiest thing about taking a dumb trade is that you're all tapped out risk-wise so I couldn't take the trade at 4350 with you... Bummer. LOL...the cost of impatience ! We have all been there !
Now I've just gotta ride this back down to break even hopefully. I sure am glad you're confident this market is going to fall too. Obviously we could be wrong, and I'll bleed a bit on this one, but it serves me right. Learning patience and to control my fear... my gut isn't liking me right now... I still haven't seen any evidence of a stop Loss...??
Email 2c
Well, looks like we were both wrong... After it cut through that daily and H4 trendline, I decided that I was not going to AH it. Then I read your blog and you said the same. It could just be a headfake up to 1.45 before taking a plunge down to the support line, but I'm going to wait to see what happens at 4380 before I do anything. Hmmm... I am now assuming that you don't have a Stop Loss in place. I hope that you have kept this trade to 2% of capital risk
Email 2d
You're funny. Of course I had a stop loss, I'm not a TOTAL dumbass, just partially sometimes. LOL...LOL...Not at all...We all make a loss trades... It happens as sure as the sun rises each morning...
Yeah it was a lame trade, but I absolutely do not trade without a stop. Good...Just checking / reinforcing
Now, granted I bent the rules a bit on this one, I had my stop set for 4375, 100 pips, but was lamenting my entry at 4275, as that 100 pips put me right before the 4380 resistance line, so I bumped it up to 4390. thats not too bad...
Yeah, maybe a little bad, but it was one of those things where I think it was the right thing to do. Exactly
Sure, it hurt me a little more in the end, but I don't really regret it. I told myself, if it pushes through 4380, it's not going to stop, so I don't want to be in it anymore. 4390 was 30 pips past the daily trendline, and I didn't see it stopping if it got that far. Good strategy and good trading... I am proud of you !!!!
Email 2e
I've been thinking about how I handled that trade, and it was piss-poor actually. LOL...LOL..tell me how you really feel about it !!! Don't beat yourself up too much ....you did what you thought was right at the time...
Ultimately, what it came down to was this - I married my position. I was so certain that the market was going to dive that I kept telling myself it would be ok. I did the same...But you have to have a direction in your mind as to which is the correct direction...In this case we were wrong.... It happens
Instead I should have taken the loss like a man, and let the market prove to me it's intentions. Let your winners run and cut short your losers... Harder than I thought actually... Yes...but you had a Stop Loss that was not too large and not tight so as to be stopped out prematurely. And you had a plan for your trade and you stood by it. You did nothing wrong. The market just went against you...It happens
Email 3
When the market breaks your main support or resistance line, whats the percentage it will come back and test it closely and whats the percentage it will keep on its way with no retest? About 50% for each And also for it to turn to an uptrend does it require just a straight break like we saw today or does it require the break, then the retest , and finally the continuation up to be considered an uptrend? It can be both, but it is always safer to wait for the retest
Email 4
Going back to the US economy...I agree on it's dynamicity...however as China is the biggest foreign player in the USD .... doesn't that constitute a big question mark in certain circumstances - given they have a political agenda of their own to follow? From my viewpoint they've got the US by the balls and I'm sure they enjoy giving a little twist every now and then just to remind the administration.. problem is those twists could trigger a stampede effect. Yes, I think that has just happened with the Gold price...I can almost hear the Treasury portfolio guys in Beijing screaming at the Gold Portfolio guys that they are screwing up the value of the total USD Treasury holdings by being too clumsy in their stockpiling of Gold.....
who wouldn't follow if China said it had decided to reduce it's overall holdings in USD...which I believe they've already done even by hoarding up on raw materials....They are hoarding up on raw materials ...But they are still accumulating USD Treasuries at a furious rate as well.. They have been buying through London to attempt to disguise just how much they are still accumulating That is how fast they are starting to take control of the USD
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