Riding the “Post-Interest Rate Decision” Rollercoasters

Hey guys, choppy market action today after yesterday’s interest rate decision - 0.5% cut and more cuts expected, so the headlines read: broad bearishness for the dollar. Which is why we focused on some short-term SHORT setups on EURUSD, GBPUSD At times like this when the market actors agree on a certain scenario (in our case the dollar falling), I’m thinking they will probably be right, but NOT RIGHT AWAY. Remember - the fundamentals are not what they appear…

EURCHF displayed an excellent shorting opportunity (a perfect wave formation backed up by divergences and trendline break) - we went in 1.6103 and closed the position during US session for 71 pips (the trade of the day).

We also took a short GBPJPY - low risk position for a large target - our 30 pips stop got hit by 2 pips and price rallied to our target just after that - better luck next time!

Also, took a short EURUSD on a retracement however the pair went up again in a 3rd test up and we got stopped out for -35.

Overall a positive day, however the effects of rollercoaster rides in the main currency pairs obviously didn’t help our technicals.

We also observed bullish scenarios in EURCAD and bearish on all yen pairs - it was only during US session that the yen started to gain some ground (after the US jobless claims report) .

Let’s see what tomorrow brings - I’m still bearish on EURUSD and GBPUSD, for as long as they don’t break the triple tops on the large charts, in which case I’m expecting a sharp rally up that would put an end to the current correction.

This is a video summary of the Live Forex Trading Room session on October 8, 2007.

Today’s Summary, by Sunil Mangwani:

Besides the trades that we execute, these recaps are becoming more and more important for the procedures which we use to analyze the trade, and the different tools we have in our toolbox to correctly assess the situation and make a good trade. Lets go over the different procedures we follow which hopefully culminate in a profit.

On the GBP/JPY, 1h charts, what we were looking for is a Hidden Bullish Divergence - waiting for price to come and find support at a Fibonacci Fan level. When it did so, we went Long on this pair, and managed to capture some profit on the upmove. This was a decent trade, but he point is that we identify a situation and use our tools to let price give us a confirmation.

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This is a video summary of the Live Forex Trading Room session on September 27, 2007.

Today’s Summary, by Sunil Mangwani:

Good day today, with several good moves and great trades. Lets start right off with continuing where yesterday’s recap left off.

The GBP/USD has been Long into a trade since yesterday, based on our Divergence strategy. The price went up and reached our Fibonacci targets exactly as we estimated. The fib ratios and systems we use are very, very effective. Price paused at the 127% fib retracement level, and went up to the 161.8% level, where we closed off our trade for a profit of about 170 points. An excellent trade.

On the intraday basis, we had another trade on the EUR/USD. We went Long at a Hidden Diverence - higher lows on price, double bottoms on stochastics. This Hidden Divergence is supported by Fibonacci Fans, and we calculate our targets based on Fibonacci Expansions. You can see the accuracy of this long move up - price stopped right at the expansion level of 127%. Another excellent trade for about 50 points.

On the intraday basis as well, on GBP/JPY we were looking at a Triangle Break. We had plotted a Triangle on the 4h charts and were waiting for a break based on our Rules of Thumb for Triangle formations. Another effective trade of about 150 points. An excellent trade for our students and instructors.

I also want to show the effectiveness of our custom FXI Pivots indicator, usable on both Daily and Weekly periods. In this case we are using it on Weekly data, and it has proven very effective. The levels of support and resistance and the range for the week give us signals to enter a trade on the EUR/CHF, for a profit of about 120 points. As one of our members put it - a “walk in the park”.

All in all, an excellent day more than compensating for several slow days.Enjoy the video and see you next time at our Live Forex Trading Room!

Click here to view higher quality versions of our past Live Trading Room summaries on our forums.