Forex Frenzy

We’ve got ourselves a veritable FX frenzy today – as it’s late and you’re all starved for Mole’s notorious delicatessen let’s skip the entrée and dig right into our plat principal:

AUD/JPY – a lot of activity here. The hourly clearly shows that low participation mid day ramp that got us to the 78.45 NLBL. Which is of course where it stopped to dust itself off and think about what may come next. The daily had us tickle the 78.04 NLSL, which if breached would have surly taken us into 76.84 or perhaps even lower toward 74. If we make it a bit higher here then I think the hourly can take us into 78.85 where we have an obvious cluster of resistance – I’d be out there and wait for a retest.

If you are looking down note that the hourly NLSL at 77.99 roughly lines up with that daily NLSL – so that’s your uncle.

But wait – there’s more where that came from:
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Cable decided to take a walk on the red side after blasting through the 1.5875 daily NLSL. There may be a retest however – we are currently sitting on two lower hourly BB lines (i.e. 25 and 100) and there’s also a brand spanking new hourly NLSL at 1.5798 – all of which will act as temporary support.

Instead of chasing this down I would take my chances and wait for a push into that cluster of NLBLs looming above. <whineyvoice>But Mole – won’t they expire by the time we may get there?</whineyvoice> Yes, true that – but there’s still that 25-hour SMA and right above that we have the 100-hour SMA. Anyway – I think that’s the perfect time to get positioned either way. In Scott the Convict speak a push up would give us a retest variation sell, which reminds me that Scott sent me a beautiful write up on the subject I yet have to add to our cheat sheet. I’ll do that after the market closes today.

Anyway, this is how you got to roll as a trader – you need to look at those charts and think three moves ahead. And once an opportunity (i.e. a setup) presents itself you don’t think twice and you strike – from there you simply follow your trading rules and do your best to fade all emotion. We are all human and trading is a bit like using ‘the force’ – the dark side always beckons.

USD/CAD – very very interesting setup. Watch the hourly as it is currently testing a NLSL at 1.0204 plus there is the 25-hour SMA plus the 100-hour SMA right below. I think that ought to be good for some support. If we slide below all that then I thin we should be heading back down to the daily NLSL at 1.0076. If we hold then we probably push into the hourly NLBL at 1.0244 and potentially even into that brand spanking new daily NLBL at 1.0265 – only a few pips away. Not noted on the chart but something I just noticed is that the upper 100-hour BB line roughly matches that daily NLBL. Then there’s the upper line of the 25-day BB which is dropping toward that NLBL. Bottom line is that this is probably a fantastic place to get positioned – either way.

NZD/USD – the kiwi seems to want to go all the way to the lower 100-day BB line which is roughly at 0.755. However, the hourly apparently is in the process of building a floor here. There’s an hourly NLSL at 0.7672 and both lower BB lines – all of that support will have to give in order for the daily to make it lower. If we hold here then I would watch for a breach of the 25-hour SMA which could get us all the way to 0.7799 where hourly resistance looms. That’s also where the 25-day SMA is heading – isn’t it nice how it all falls in place sometimes? 😉

Finally here’s the outlook on the spoos for you equity junkies. I have no idea what drives this higher right now but somebody is buying and we cannot argue with price. The next cluster of resistance is at the upper 100-hour BB line around 1271.5 – not too far away from the daily NLBL at 1275.25. That’s probably the best place to take on positions – either way.

That was a very nasty fake out this morning. You may recall that inside candle setup Scott and I pimped previously and of course we dropped below at the open and then raced back up. That is why you set your stop and be disciplined with it – have no compunction about taking the other side if monkey business seems to be on the menu. The Zero was absolutely unimpressed early this morning and that should have been your first clue – heck, how many times has this thing gotten us out of trouble in the past few years? 😉

A warning about that symmetrical triangle. Quite often what you get is a ‘false breach’ – a head fake of sorts. You think it’ll resolve in one direction but then it turns on a dime and races the other way. Be prepared for that and instead of betting the farm, bet small initially and then pyramid into more contracts as the tape proves you right. If you are math challenged like most of us (except for Volar) then Benny’s Pyramid Calculator may be of great service to you.

Now go out and play but I want you back in the house for breakfast 😉
[/amprotect] Cheers,