Pipcrawler's Pick Journal

Discussion in 'Journals' started by pipcrawler, Apr 5, 2006.

  1. It was a tough tonight, but I managed to find a good setup on a pair I haven’t posted on here yet…EUR/GBP! I rarely look at this pair, but there’s a lot of potential movement in these two currencies in the next 12 hours. We have interest statements out of both banks coming up at 7:00 am EST from the Bank of England and 7:45 am EST from the ECB. Also, we Euro-zone PMI coming out at 4:00 am EST. Now I’m favoring a long trade for a few reasons:
    1. Expected positive retail numbers out of the Euro-zone.
    2. Central Banks diversifying their reserves with more Euro purchasing.
    3. Recent economic weakness in the UK has lead to Pound weakness. We’ll keep and eye out for hints of a possible rate cut.

    Of course, in the markets you can be totally wrong! UK may decide to raise interest rates, weak numbers may come out of the Euro-zone, all the oil in the world may dry up, or pigs may learn how to fly! Whatever it may be, surprises are always around the corner, so it’s a good idea to be prepared both ways.

    So, if the pair decides to drift higher I’ll look to buy at 0.7030 with a stop at 0.6990. Close half of position at PT1 ( 0.7055) and move stop to B/E. Then go for PT2 (0.7085)
    If the pair drifts lower short at 0.6960 with at stop at 0.7005. Close half of position at PT1 ( 0.6932) and move stop to B/E. Then go for PT2 (0.6880). With the short trade keep an eye out for when it hits the 200 SMA. You might want to start doing a trailing stop depending on how the pair is reacting. Please close opposite order once trade is entered. Good luck and good trading.
  2. At 2:00 am EST we have the BOJ releasing its monthly Monetary policy report. This report covers economic developments and serves as an indicator to possible future interest rate moves. As you can see in the chart, the pair is in range mode as traders await the announcement. I’m looking to catch some volatility tonight with possible hints of an interest rate hike.

    Long EUR/JPY @ 143.75, stop @ 143.45, PT 1 @ 143.90, PT 2 @ 144.40
    Short EUR/JPY @ 143.13, stop @ 143.60, PT 1 @ 143.00, PT 2 @ 142.55

    Now with economic news coming out in the Euro zone I suggest taking profits at PT 1. Of course, if you hit PT 1, close half of position, set stop to B/E for other half, and go for PT 2. Close opposite trade when position is entered. Close all trades and open orders at 12:00 pm EST or at your discrection.
  3. Tomorrow morning at 5:00 am EST we have the release of the E-12 CPI report.
    The number forecasted to be at 2.2% and any number over 2.0% is considered to be at a very fast rate of inflation. This number will be closely watched and may give insight on whether will hike rates in May or June. So, today’s pick will try to capture any potential volatility from that report.

    Long EUR/JPY at 145.45, stop at 144.95, PT1 at 145.65, PT2 at 146.00


    Short EUR/JPY at 144.93, stop at 145.40, PT1 at 144.72, PT2 at 144.50

    Watch out for resistance at the 50 SMA and 100 SMA.

    Remember to close half of position when the first profit target is reached. Then move stop to breakeven for the second half of the position and go for PT2. Close all orders/positions at 3pm EST or at your discretion. Good luck and good trading!