2018.10.15 Forex Trade Plan

Legend

  • POTW: Plan of the Week
  • Red: High impact news
  • Orange: Medium impact news
  • OCO: One Cancels Other trade. More than one trade entered. First one to trigger cancels the others.

Calendar

News Schedule

Monday: 0830 USD, 1030 CAD
Tuesday: 0830 CAD
Wednesday: 1400 USD FOMC Minutes
Thursday: 0830 USD
Friday: 0830 CAD

Upcoming

  • Bank of Canada, Wednesday 10/24

Watch List

USD.CAD

Decade-long Cup & Handle formation
Weekly zoom in on handle
Daily showing breakout
4Hr showing entry point

Ignore the chart showing entry at 1.3040. I had to close and reopen the position from 1.2797. The position is up over 200 pips.

ACTION: Add to the position ahead of Wednesday FOMC Minutes.

USD.JPY

Monthly Cup & Handle
Weekly pullback to support
Daily entry point nearing

USD.JPY also shows a decade-long cup and handle formation, one of the most reliable trading patterns.

ACTION: Let the Daily settle and seek entry between 111 and 110 for a long term hold. Same strategy as USD.CAD.

GBP.JPY

High base formation
  • High/low base breakout is one of the highest probability trades.
  • I believe this is a bullish continuation pattern.

Trade:

  1. Limit entry at the bottom of the base with a tight stop below the breakout point.
  2. Sell stop OCO at the breakout point in case this runs bearish.
  3. Buy stop OCO entry at the bullish breakout point to double the position on breakout.

Analysis

Fundamental Bias: Strong USD

I believe that the Fed and Trump Administration are orchestrating a strong Dollar policy that will play out over the coming years at the expense of emerging markets worldwide. We can expect a restructuring of US healthcare and Social Security, the return of a strong middle class due to automotive, defense and high tech manufacturing especially including steel, aluminum and 3D printing.

Technical Bias: Strong USD

The charts show strength in the USD against both CAD and JPY. USD.JPY is still correcting. Both charts show one of the most reliable patterns, a cup and handle formation, on a decade-long monthly chart. Timing the entry on multi-time frame trades is always tricky. On CAD, we’re in. On JPY, we’re waiting for the Daily to settle or smooth before entry. We’ll re-evaluate USD. JPY ahead of Wednesday’s Meeting Minutes.

To that end, I will look to add long-term leveraged positions to USD.CAD and USD.JPY, and take shorter term opportunistic trades in other pairs such as GBP.JPY.

Trade / Results:

Open Position: Long USD.CAD
Entry: 1.2927
Target Exit: Long-term hold, 1.47
Exit: Open
Gain / Loss: +200 pips

Update 10/18

USD.CAD appears poised to break out of the handle as the election nears.

Update 10/23

USD.CAD is consolidating in a 50 pip band between 1.3079 and 1.3132. Stop loss moved up to 1.3075. If the pair reverses, it’ll be only for a 50 pip move before moving sharply higher on anticipated Bank of Canada dovishness. 50-day support on the 4-hr chart is at 1.3035. Re-enter at that level, a full measured move south.

Action

Be prepared to take profits on tomorrow’s 0830 CAD news with a tight stop and reverse position through Wednesday’s BOC decision of next week.

After Action Review

Lesson Log

  • Maintain tighter stops on charts that are elevated well above the Daily MA in order to lock in gains or seek to enter on pullback.
  • The Administration is working in concert with other officials to actively manage the currency and prevent aggressive breakouts. Enter positions at pivot points .
  • Patience. When a pair is extended and you anticipate a pullback, set the ambush and wait to trigger. De-lever and allow for room to move so as not to be stopped out.
    • Huge measured moves that seemed highly unlikely have occurred on two occasions, both of which, had I set the ambush entry and waited patiently would have yielded enormous gains. Set the ambush and wait.
  • On light news days, play the 5 & 15 minute chart with a News Trail (10-pip trail on a 20-pip trigger).