Quick Updates in the Morning

1. Big Stop loss run in USDJPY.
2. This led to big run back to the bottom for EURJPY.
3. USDJPY jumped right back up and EURJPY jumped right back up along with it.
4. Sell rallies is the way to go as far as EURUSD is concerned.
5. China seen selling AUDUSD above 1.06
6. Moody's downgraded Ireland to junk status.
7. Large sell orders at 79.80 for USDJPY
8. Expect lot of volatility during the day.
   

Some Closing Thoughts

A topsy turvy slowly drawing to a close. Still the direction is a bit unclear on the euro and we havent had the FOMC minutes yet!! If euro closes above 1.4040, that would be a bullish sign for it and it could then translate into a move to fill the gap formed over the weekend at 1.4255.

As i said, a very highly volatile day and it could lead to more volatility over the coming days. Keep your stops tight and dont get greedy. The overall trend continues to be USD bullish but there would be retracements and this is what we traders need to guard against.

Europe's problems would not go away in a couple of days or a week and they are here to stay. The overall bearish trend on the euro exists but beware of retracements.

As for the GBPUSD, it has been another slow day compared to what the euro has been doing but it still has moved abt 150 pips today. But it has basically ended where it started the day and as it has been doing over the last 2 weeks or so, it has been in consolidation mode with a downward bias but the move downwards has been very slow despite bad data. I would expect more downmoves in it but as it is still tied to the euro a bit, the moves of the euro could have a great bearing on how the cable moves.

How to find Control Price Points

Control Price points are calculated based on the high/low and close of specific bars. Such bars are available in all timeframes right from 5M to the weekly. Of course, each would have its own characteristics, TP and SL.

These bars are not fixed and as price changes and new bars appear during the day, there is a chance that new control bars appear and hence new control prices appear during the course of the day.

So, the way it is done on an intra-day basis is to wait for such a control bar(s) to appear. They might appear during any part of the day but usually once during each session. Once they appear, then u can easily get the control price points. These bars control the price during the session and thats why they are called control price points. These bars try to hold the price within the bars but if price moves out of it, then they dont allow price to come back inside.

This is used while trading for the day.

Attached is the euro chart 5M chart for the day. Bars marked as A and B are the control bars. This can be found immediately after the bar closes (how will be discussed later) and you can see that how these bars try to keep the price within them and when the break down happens, these bars dont allow the price to come back inside easily.

Now the price is back inside these bars and again these bars will try to keep the price within them. So you can trade within these bars or if price breaks out of these bars, then you can trade those as well.

How to Trade the Control Price Points

Attached is a chart where i have marked off the control price points from yesterday and today (all these price points were mentioned in my articles, so i am not stating anything after the fact). The price point mentioned yesterday for GU was 1.5930....Look at points A and B and you can see that price retraced exactly to that line. If you had taken a short there, you would be up by 100 pips now. And your DD? less than 10 pips. So your reward:risk is 10:1

Today, i had mentioned the control price point as 1.5900 and 1.5880. 1.5900 was not revisited but 1.5880 was indeed revisited, a short there and you would have been up by 50 pips now. DD? again, less than 10 pips. So your reward:risk is 5:1.

Mark off the control price points in your charts and trade between the price points or if its broken, wait patiently for price to retrace and then take a long/short with small SL.

Of course, this would not work 100% but with reward:risk of 10:1 and 5:1, you would make a lot of money with 80% chance of success, which this system has.

You can trade this better by taking half off once u are up by 30-40 pips and trail the rest so that you can make full use. If you had shorted at 1.5930 and held on to half the position and again shorted at 1.5880, you would effectively have 150 pips in the bag !!

Controlling prices for EU and GU

From today, i will try and publish the controlling prices (based on my new method) for the day for EURUSD and GBPUSD. This will be very useful for day traders as this can be used for day trading either between these prices or beyond.

For today, the controlling prices for EURUSD would be 1.3935 and 1.4000. You can either safely trade this range or if this range is broken, these prices will then act as support/resistance for the day and you can safely taken longs or shorts close to these prices. These prices would be exact and therefore trades can be taken with very small SLs of just 10-15 pips. As the price range is high, you can trade the range as well.

For today, the controlling prices for GBPUSD would be 1.5880 and 1.5900. As this range is very small, the way to trade this would be to either short it when price nears 1.5880 or go long on break of 1.5900 with very small SLs and TP of 30-40 pips. As the price range is very small, dont trade the range between 1.5880 and 1.5900.

Quick Updates in the Morning

1. EURGBP in good support region
2. EURJPY keeps falling and takes out overnight lows. Not looking good.
3. Cable falls to support at 1.5880 (61.8 of 1.5340/1.6745) and has broken thru it a little indicating further downfall.
4. EURCHF hits record low and expect still more lower prices
5. General risk aversion pointing to new uptrend in USD
6. Next important support for EURUSD at 1.3905 where the 200 DMA comes in
   

A 'Short' Note on GBPUSD

Hi All,
Nice to be back after a long time. Anyway, attached is the 5M chart of GU. Some may be surprised that i use a 5M chart to time entries but i have found a new special technique for timing my entries with very very low drawdowns. Using 5M charts, i can enter trades with DD as low as 15 pips and such trades yield anywhere between 40-100 pips. Not bad RR huh!!

Anyway, i will reveal this special technique later but for now, as the chart shows, 1.5930 is key. It has a confluence of a lot of things for it to be a key price region. It is a region which acted as strong support for a long time and it has been broken now. So any move towards that region will be followed up by selling. So, i have sold there and i believe that its a good place to sell with a small SL. It also ties up nicely with the new technique that i have found to work.

So, though its quite late in the day for me, i have taken this short and will leave this overnight. Please have tight SLs and Asian sessions usually go around to hunt for stops.

Will catch you with my next article.