MP FOREX ADVISORY

Posts Tagged ‘Forex Trading’

Today concludes one of the most wild, tumultuous, and volatile weeks that we have seen in the global markets in more than five years. We were successfully able to apply the Master Pro breakout system in such a manner where we were able to ride some good trends – such as catching a piece of the EUR/USD on its dramatic drop – while at the same time reducinging our risk by applying the enhancement to our money management model.  The Greek debt crisis and the ensuing violence in Greece has dominated the news for the most part. Today, the EUR/USD reversed a climactic decline to a 14 month low with news that German lawmakers have approved a substantial rescue package for Greece. The beleagured EUR/USD fell more than 800 pips this week before regaining some lost ground today. The pair closed the week well below the key 1.3000 level at 1.2730. Likewise, the GBP/USD also suffered a massive decline, dropping more than 800 pips before gaining back more than 300 pips in today’s trading. The GBP/USD suffered particularly after the election in the UK resulted in a hung parliament – with no outright majority. However, the pair made back lost ground after it appeared that Conservative Party leader David Cameron, with his emphasis on fiscal discipline, would be able to form a coalition that will make him the next British Prime Minister. All indications are that May will continue to be a wild month as global economic anxiety is reaching a critical level. We will closely monitor the situation and keep you posted. Have a great weekend!

We had another roller coaster of a week in the forex market with both the GBP/USD and the EUR/USD starting the week strong, followed substantial weakness, followed by a V-Reversal up and lastly ending the week with a sharp V-Reversal going down.  The wild swings that we are seeing nearly across the board reminds us quite a bit of the erratic and difficult market conditions that we saw in the few months immediately following the 9-11 tragedy.  Investors continue to be extremely apprehensive about buying into the EUR/USD due to continued concerns about the debt crisis in Greece and out of fears that this one national crisis could turn into a continental crisis.  Moreover, investors also appear to lack convition to continue shorting the EUR/USD for the moment as it is already nearl 2,000 pips below its 2009 highs.  We have been working diligently on an enhanmcement to our money management formulas, which we believe will better equip us to deal more effectively with a market that is loaded with apprehension and V-reversals.  This enhancement tested extremely well in hypothetical trading, and we intend to compliment the Master Pro System with it starting next week.

We experienced a few setbacks this week particularly in trades taken in the GBP/JPY and in the USD/DKK.  The GBP/JPY chopped around more this week than we have seen all year thus far.  Wednesday through Thursday was the most difficult period in the GBP/JPY as it fell more than 100 pips, then rose more than 100 pips, then fell more than 100 pips, and then rose more than 100 pips all in about a 24 hour period.  Such choppy and erratic price action poses a major challenge when trading breakouts.  We spent an enormous amount of time over the past couple of days in adding an additional filter, which will allow us to avoid most of the choppiest market conditions and to focus on trade signals that offer us the most optimal risk-reward ratios.  We are happy to put this week behind us, and we are looking forward to beginning next week with renewed focus. 

Our USD/DKK trade defied expectations this morning and moved sharply up rather than continuing its move down as expected.  We closed our short position, and we were able to ride a nice long position up, which we closed out early in the European session for a good overall net profit.  We also entered a short position in the EUR/AUD, which almost immediately moved in our favor and which we were able to close today with a nice gain.  Lastly, we entered a short position in the GBP/JPY today just before the open of the Asian session after spotting a bearish technical formation on the short and medium term charts; this trade also went immediately in our favor, and we were able to close out early in the Asian session with a nice gain.  The Master Pro FX breakout trading system over the past couple of days has been right on the money, which has allowed us to post a solid week thus far!  As we move into the final trading day of the week, it appears that the EUR/USD is poised to fill the gap it registered at the beginning of the week, while we continue to await a more clear sign of direction in the GBP/USD.  We look forward to monitoring the impact of the Euro Zone CPI data and the US Building Permits tomorrow morning. 

We ended the week with a couple of good breakout trades in the EUR/JPY – one of them was a short position taken on Thursday while the second was a long position taken early this morning.  In erratic fashion, as has been representative of the market we have seen over the past several weeks, the EUR/USD spent the first half of the week falling hard, dropping more than 200 pips, and the second half of the week was marked by an upward surge that was equally strong.  The GBP/USD spent most of the week consolidating, playing a range between the 1.5300 and the 1.5130 level before breaking out on the long side this morning.  A sustained break above the 1.5382 level, which marks the high of 3/17/10, could pave the way for a more susbtantial advance next week in the Cable.  We expect some great breakout trading opportunities over the next several weeks.  We will keep you posted.

Monday, April 5 was a holiday for much of the world, which resulted in light trading activity.  On Tuesday, April 6, the Federal Reserve released the FOMC Meeting Minutes, which shook up the market late in the US session.  We managed to make some small net profits on our trading the first couple days of the new week, as we have primarily focused on the EUR/USD and the GBP/USD.  The combination of some poor economic fundamentals, including disappointing GDP numbers, along with continued concerns over the default of Greece has sent the Euro pairs reeling.  We will be paying close attention to some critical economic news, which will be released later this week including the British Interest Rate Statement and US Unemployment Claims.

The EUR/USD continues its schizophrenic price action – not sure if it wants to trend up or down.  Yesterday, the pair fell more than 130 pips from a high around 1.3536 while today, it suddenly reversed courses in the European session and surged more than 150 pips from a low around 1.3384 – shattering both its daily and weekly pivot points.  The GBP/USD has been far more stable – trending upward since the beginning of the week.  We had trade signals in both the EUR/CAD and the EUR/USD since our last update, and we were unfortunately stopped out of both trades.  Our short trade in the EUR/USD was closed after a sudden spike up above the weekly pivot point early in the Asian session while our EUR/CAD trade was closed in the middle of the Eurpean session after forming a short term 1-2-3 reversal pattern, which ended up turning on us after the release of several medium impact news reports out of the Euro Zone, which ended up strengthening the pair right into the US session.  Days like this help us to realize that we need to be focused on the big picture when it comes to trading.  Losing trades and occasional drawdowns are part of any trading method; however, we are confident that the methods we employ, which have been tested extensively in both back testing and forward trading will stand the test of time.   We look forward to getting back those two trades in short order. 

This afternoon, we saw very little action.  We opened a few small positions in the GBP/JPY, which were closed for a net marginal profit.  We had sizable orders for two long positions in the EUR/USD and the GBP/USD a couple hours before the open of the Asian session.  Our EUR/USD order missed being filled by just a couple of pips while the GBP/USD trade missed being filled by only half a pip.  Both trades would easily have hit their profit targets.  While such experiences can be frustrating, patience is always the best course of action in trading.  We will be keeping a close eye on the British GDP report, which will be released early tomorrow morning.

The past couple of trading days have been quite challenging as we have witnessed higher than normal levels of volatility, which have proceeded right into the late hours of the US session – a period that is normally characterized by calmness and stability.  We ended up cutting a couple of trades for small losses – one in the EUR/GBP and another in the EUR/USD.  However, we were able to make ground back on Thursday as we grabbed some pips in a short position in the EUR/USD.  We also ended up roughly breaking even in trades in the GBP/USD and the USD/JPY.  News reports involving the Greek debt crisis keep hitting the market like a recurring bad dream - putting continued selling pressure on the Euro Dollar and injecting apprehension and instability into the market.