Timing is everything in the market. You can be right on direction; but if the market fails to move, then you could still end up losing. Eventually, impatience leads to greater leverage that further exposes us to smaller swings in price action until we are eventually stopped out on what can essentially be a hiccup. This is a lesson that extolls the virtues of sound money management; but it also tells us that we should be realistic on expectations related to timing. For example, the congestion of the past few weeks and relatively high volatlity through that period encouraged me to look for short-term setups. However, conditions have changed again. While we are still looking at congestion and activity is still generally high; the weekend is quickly approaching and the threat surrounding tomorrow's NFPs is distorting the market. This economic indicator has the very annoying effect of completely draining volatility and liquidity (which every now and again leads to a short-lived but severe breakout) through the day/days preceding its official release. This is just a reality of the market; but it is important to adapt to it. Given the technicals we have now and the lack of underlying momentum when the release passes; I think it is best to not add any new positions and perhaps move up stops as the clock ticks down.
For my more active positions, my reduced size NZDUSD was pushed through resistance and tripped my stop before reversing 7 pips higher. I could still make the argument for a short-term reversal; but this setup had a technical and timing objective in mind, so I will stick to the plan and move on. My other active short-term setup, long EURAUD, is at risk to a shake up in risk appetite; but I'll ride that one out. With my stop at 1.4035 and in a reduced size; it is an acceptable risk to see how the channel plays out. In the meantime, my longer-term majors exposure (long USDJPY and short EURUSD, GBPUSD) has shown little overall progress; so I await a true trend here. I am concious of the time these pairs are taking up though; and will move up stops to perhaps quicken performance (if I'm stopped out for modest profit, I can always get back in when technicals and fundamentals tell me these pairs are actually moving).
As for my potentials, there are many; but I will have to sit on all of them given the impending event risk. For short-term patterns, I like USDCAD within congestion between 1.0675 and 1.0475. NZDUSD is also encouragable around 0.7175. Taking a little more time in their potential setups, EURNZD has turned to congestion though it could easily catalyst a big bullish swing on a long-term trendline reversal given the correct fundamental support. I ignored the quick breakout from GBPNZD (to concentrate on GBPAUD which was itself profitable); but thsi pair is also carving a larger ascending wedge pattern that could develop later. And then there is AUDUSD in its confirmation of a larger rising trend channel going back three months now. Lot's to watch; but be cautious with your finger on the trigger.
DailyFX provides forex news on the economic reports and political events that influence the currency market.
Learn currency trading with a free practice account and charts from FXCM.
