Posts Tagged ‘breakout’

gbpjpy1.jpg The pair finally broke from its triangle – down, as I long expected. Freaking heck that took long enough. Usually went it goes sideways for a good while it breaks out and acts like a teenager with long pent-up energy – it goes bananas. I circled previous times like this in the last several months. It should be good for a good many hundreds of pips so enjoy the ride!

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euraud.jpg Anyone remember how we had looked at some recurring patterns on the CAD/JPY, a few weeks ago? The EUR/AUD is doing it too. Let’s see if we get a repeat performance  – although the CAD/JPY got the smack-down today and that run is over. Unsurprisingly the EUR/AUD’s major tops and bottoms align in the same time period as the CAD/JPY’s, but interestingly the commodities (AUD and CAD) are heading opposite directions. Let’s see if the pair bounces back from today’s fall, after it broke out yesterday.

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fallingdollars.jpg Psst! Did you notice? Someone poked out of its channel yesterday.

Encouragingly, it closed near its high. The way to trade this: don’t hop in now, wait for it to calm and buy the bounce. A few hundred pips in the bank, anyone? …


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cadjpy1.jpg It’s not hard to look half-way smart when you talk about something (CAD/JPY) for weeks and then it happens, gloriously … when it’s a red-hot currency or currency pair. But let the real lesson not be lost: the lesson about picking battles and going for the best bets.

To be super annoying, let me quote myself (really, so I can just copy and paste and not re-type it):

Why not look for the obvious trade? A definite resistance break, a definite bounce off support in a great trend, etc.? After all, we can only manage a handful of trades at a time, so let them be the best.

The loonie just broke 400 pips higher against the yen. Depending on where you got in, you’d be up at least 300 pips by now. this also shows limitations of oscillators identifying overbought/oversold: for something super-hot, they scream wolf too much. Go here for an article discussing when to heed this and when not to, select the 11/09 archived article. Breakout situations like we just witnessed with this pair are often exceptions many traders make to “don’t buy when overbought/sell when oversold”.

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fishjumpsmaller.jpg     I thought I’d put this on here as it’s happening for everyone to learn from it. Right now the EUR/USD pennant is popping, breaking above mini-resistance (green oval in chart below). Note that we’d like to wait until the end of the day to take a buy signal. If then end of the day comes, and the bar has peeled way back from its high, the strength of this pop really diminishes.

    This is definitely a break out of the pennant – which is not as significant as the break of a triangle. Is that a buy signal? Usually not, no more than any other support/resistance break usually is. They are the places where you want to find your buy signals. Use your favorite system (i.e. “Workshop Study Set” in Studies) and if you have a buy signal, it has much better odds by being in the context of this pennant-pop.

    Other things which could increase your bullishness/inclination to take the signal would be:

– your posture (for example, “I’m a die-hard euro-bull man!”),

– looking at other events happening (U.S. stocks at support, break lower = bad for the euro), or

– the size of the pennant – had it been bigger it would have been stronger.

    Our goal is to get good at trading the same method over and over. Repetition is key, so stick with certain studies bundled in a system. That said, you’re also an observer, so observe how trades go with a simple “naked” signal, and in the context of situations like this pennant popping.


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georgio-stoev.jpgThis from Georgio Stoev, our resident Greek wonder, one of our currency coaches:


So there you have it: the pounding of the sterling by the euro. Beginning of the end, I am thinking .72 as a target over the next couple of months.

Broke the ascending triangle, about 200 pips from top to bottom. 0.72 is also a strong resistance level on LT basis.   Fundamentals in the U.K. are quickly deteriorating just like in the U.S. becaus of the credit crunch. Housing gave a big boost the UK economy over the last couple of years.


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So it broke to the upside today, now let’s look for this below (a retest and then continuation higher). If you didn’t get in on the break, wait for that retest before considering a buy signal.


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