Don’t get hot and cross – it’s Easter!

The more I looked through the price action of the last two weeks, the more I am reminded not to look for ‘something that’s not there’.

It seems that consolidation abounds and while there have been some significant moves within ranges, it really doesn’t pay to be trading more on hope than logic!

The one thing that the forex market does well, is to bring out the addict in all of us and, with that, comes the need to trade.

I accepted this long ago and eventually cured myself (‘healed’ is perhaps the word the psychs use?!); however it was a long process, and it took time and much lightening of the bank account: in and out of therapy, spending time seated ‘in the round’ with my group. Our stories were all similar and we were ready to seek redemption, say sorry and do it all over again.

My name is David and I am an addict: I cannot stop the desire to buy, or sell, or hedge or…..and it went on. There was much hugging and empathetic nodding in those days, as I revealed my inner soul and attempted to exorcise the demon need to make money.

You gotta be in it to win it!

Well indeed that is true, but the reality is that you don’t need to be in it all the time. Patience, timing, entry levels. Give yourself the best chance.

Let’s look at a few current scenarios.

The H4 Gold chart below shows a couple of examples of opportunities. The first was the evident breakout of the downward channel: selling the break with a close on re-entry back into the channel was a reasonable gambit and one that yielded a decent entry (maybe employing the H1 chart).

 

This trade could have been taken with a risk/reward of 1:2 or even 1:3.

In the last 3 days we have now moved into another breakout opportunity as marked the consolidation in the shaded box. A move to the topside, in my opinion, has a target of USD15, and, to the downside, of USD20, with USD5 stops. Bigger picture I am looking at the downside and feel we are more likely to test USD1250, 1225 and I will be looking for new lows.

 

Wedged in! A different perspective, pattern-wise is offered by EURUSD and EURJPY.

EURUSD Daily

Similar stories, similar patterns and likely breakouts in the not-too-distant.

Keep an eye to the news for clues but these will provide a very good trade shortly. My money is cautiously on the downside.

 

EURJPY Daily

US Oil is providing a very interesting upward possibility with a daily double top on the resistance and a rising support line from 9 January now coming in around USD101. I had called this well in my recent articles looking for targets 104-105 which have been achieved over the last week or so. I didn’t get the most out of the trade which is frustrating. However, now I would buy dips to 101 and look for a retest of these recent highs, target 108.25.

And, finally, for my current favourite. I blogged on markettutors.com earlier this week of the double top and bottom on Arabica (based upon July 14 futures).

I am now rather buoyed up and ready to look for a topside break; I admit this is a big picture call but my target over the next few months is 250-260 cents.

I am led to believe that the draught has had some current relief with a fair amount of precipitation; however the damage is done.

The chart shows clearly the channel bounded by double tops and bottoms with an obvious stop on the downside on a close below 168.

I do not normally put this sort of stuff ‘out there’ but it might be fun to watch!

Arabica Daily

A measured move on a topside break could take us to 250+, and furthermore, the fundamentals support it!

The S & P bounced off the very low 1800s and missed my first profit target; we now have healthy short covering and trade only 10 points below my trailing stop on my short position; while that may close me down in profit I really prefer the short side and if stopped I am likely to resell next week.

I intend to have a peaceful Easter break (one break worth taking!). I am neither hot nor cross; my exposure is sorted and I am not chasing trades that may induce stress, my temperature to rise, nor my temperament to be tested.

May I trust you do the same; have a happy Easter!

 

Author: David Horton is a partner in Market Tutors Ltd in the city (markettutors.com). He has had a significant career in financial markets; he is a trader and trainer with a passion for coaching and mentoring with a good dose of humour.

davidhorton@markettutors.com