I had another record day today and bagged my best trade ever by catching a 344 pip x 2 cars (over $4k) on 6B. Fortunately, I was not even tempted to take any longs last night with the repeating P pattern on the Market Profile. See below for a 2 week composite that bring in some key areas below. I was pretty sure that we wouldn’t break 6240 today but when we do we could be looking at a significant continuation move down. I will post more analysis of these key areas over the weekend.

I traded 6E, mostly on the short side, for most of the day yesterday and managed my best day for the year so far (4.4%). It is worth noting that this 30 minute chart is indicative of a continuation move upward.  The “P” pattern formed on the Market Profile for 10/21 shows price exhaustion and normally a good place for trade placement for a rotation back to the mean. But in this case we need to exercise caution with shorts due to the fact we had a repeat of the “P” pattern on 10/22 (today) on lesser volume.

6E Monthly Profile Chart plotting price value area in red on histograms and POC lines in green. The cumulative yearly volumes are plotted to the left of each year in thin blue line.

Daily 6E Chart showing key S/R areas and 200EMA.

With regards to the monthly ES Market Profile we have rotated around the 1061.5 area forming a recent high volume node with a September POC 0f 1059.25 and a running October POC of 1061.5. We are now trading at least 50 points lower than last years lower end of yearly value area. That being said going into tomorrow, a low volume holiday, I will be looking for shorts and a rotation down before rotating up as we will need significant buying conviction and volume to rotate up from this area. Last years POC and high volume node is 1275.25.

I did not really have a chance to trade as I was in bed sick most of the morning. I did set up a nice ambush short on the EUR/USD before going to bed last night with a limit buy right at the 50% retracement at 1.3007 and set a stop just above the 61.8% retracement. The order kicked off, price moved to the 61.8% to the pip. It hit its -23.8 target perfect for 50+ pips. I tried a couple more scalps and stopped out to finish with a gain of +36 USD. I am not sure exactly why you can not click on my charts and expand. I just noticed this problem and hope to figure it out tonight.

The GBP/USD could have peaked at 1.5067 on Wednesday. Each of the 3 previous peaks on the 4 hour chart show a divergence on the ADX (a sign that the trend is less strong during each wave). We closed on Friday right in the Ambush long area from the last move up from last Friday. If we break down here a bit, the short term trend change will be confirmed by breaking below Price Level 3.

The EUR/USD has been consolidating. I think in part due to the fact everyone is trying to figure out if we are in a bear market rally or not. Thursday and Friday were low volume across the board as Friday was a holiday. The EUR/USD did not quite touch the -23.6% on Friday from the move down on Thursday but precisely hit previous S/R at price level 3 seen on the chart. It’s also worth noting that we bounced of 200 EMA on Thursday. We will likely trade up into area indicated by yellow oval on chart (50% retrace from Thursday). Above this we have a strong S/R level indicated by price level 2 and also the 200 EMA.

I expect that there will be continued overall pressure downward on the EUR due to all of the comments that came out of ECB last week about quantities easing. Essentially, this not much more than printing and injecting cash.

In December the EUR/USD pierced the 61.8% ambush short in December and overall trend continued downward. On the daily chart we pierced the 50% but not the 61.8% from the move down from ambush short in December. ADX indicates a slowing trend. There’s still a lot of resistance as in the hourly chart above. We are at price level indicated in yellow (previous S/R), already bounced off 200 EMA days ago and also have resistance from both 61.8% Fibonacci Fan from move down from ambush short in December. A break of this area could be significant to the upside. My bias is to look for ambush shorts to fail on the hourly and 15 after we open.

An interesting EUR/USD setup on the hourly chart, we are in an area of consolidation with retracement confluence of the 50% retracement from lows on Monday, a week ago, to last Monday and with the 50% retracement from the high at 1.3738 on Thursday, a week ago. Second image is zoomed out, larger time frame. The 61.8% retracement of the same price range has proven over the past 10 days to provide significant S/R. There is also some S/R in the range by the 38.2% and 50% Fibonacci Fans. After a confirmation of a break and trend out of this price level, the bulls could move it to near 1.41 in the near term. It’s likely that it will retrace to around 1.2970, near the -23% retracement target before breaking through overhead resistance. I will post charts of more time frames with analysis when I get time and also discuss some of the funadamentals that may come in to play next week.

I was out of pocket for the greater part of the day. Looking back I am glad as the EUR/USD ran up hard and from the looks failed many micro technicals setups for intra day trading. The ECB cut the rate by only 25bp instead of the expected 50bp. I suppose in the short run, this gives them a bit more “dry powder” cut them again… You have to keep in mind that the rally of EUR likely was fueled by traders making position adjustments due to the ffact they discounted for a 50bp move…

I have had several people online and a couple from the local Forex Meetup Group ask for more information on Ambush Trades and how to apply them. They work very well in many markets. Here is a video from David Halsey AKA Eminiaddict for those interested in learning.

There was no relief for the labor market in March. In fact, there’s a decent chance that payrolls dropped by the largest amount in more than 60 years… No April Fools.. The dollar is still appreciating against all higher yielding currencies. Do not forget that these days, bad news is positive for the dollar and good news is negative. This is in part because the dollar is primarily trading on risk appetite and not econmomic data.

I do not normally trade this pair but I am going to keep an eye on it near term as it sold off hard this afternoon on comments from the RBNZ. They had just cut their rates by 525bp and now they, the central bank, are suggesting more rate cuts or they could start buying long term bonds.

I finished the day flat with a gain of +458 USD. I am exhausted from lack of sleep and ready for a break. I primarily traded the EUR/USD until lunch and took one USD/JPY Short at 99.18. See top image. I don’t normally trade the USD/JPY as I find it less predictable to my methods than the Cable but someone mentioned in a group that it was bouncing on its 200 EMA so I took a look. I don’t usually plot MAs and if I do, I do not pay them much attention. I noticed it hitting or about to 61.8% of the big move on the daily and had just hit highs just over S/R on the hourly. I got in a bit late but took a short 1 mini contract at 99.18 to 98.97. I also scalped one other time 2 mini contracts short for less than 10 pips.

It was not my best day performance wise by any means but was my best day trading FX so far. I have been using very small positions and learning as much as possible. I looking forward to pushing a bit harder and increasing my position size slowly. I have not mentioned in this blog but the primary reason for my interest switch from the S&P Emini ES was in because over the next few months I may have some non-trading related activity that will tie me up during the day hours EST. During those times, trading the EUR/USD and Cable, will offer me an instrument with many of the same price action characteristics and the liquidity needed to trade during the hours of around 4:00 AM to 11:00 AM. The S&P Emini ES only has liquidity during the cash market hours for the US.

The Cable is setting up for a big ambush short after it pierces the 50% on the hourly with a target 1.3228. If this happens it is likely that it will run down to or near yesterday’s low.

We broke through the previous S/R at the pivot. It’s possible but not likely that they run this thing up to 50% fill from Fridays highs on the 1 hour chart. I will set up a bracket short before going to bed for that area.

Profit targets were hit after bouncing back from 1.3200 previous support/pivot area.

I finished the day with a gain of +201 USD. I made 2 trades on the Cable yesterday evening and several in the AM today. Not much happened after lunch until it broke out of channel (blue on 15 min.) and just took a 2 mini contract short position at 1.32 with a tight stop a previous swing high/low off the 15 min. chart. If it breaks above that price level and stops me out, it could easily run up near 1.3350 range (50% retacement from Friday’s high). Note: we moved down into ambush long today on the daily from lows in March and barely touched the 50%. I would expect this t o retested before looking long. This is a bit of a risky very short term trade with a tight stop. If it stops out I will be looking at next ambush short on the 1 hour chart.

The big story of this past week was the possibility of the dollar being replaced by the global reserve currency but the reports that this topic will not be discussed at the upcoming G20 summit provided a bit of relief.

I don’t think that the US economic date contributed anything to the rally of the USD as it was mixed. The rally was mostly based on overall weakness coming from European economic reports and the expectation of the ECB cutting interest rates.

Other lesser factors contributing to the rally: the US equity futures trading down and the Japanese buying Yen and selling all other currencies ahead of their March 31^st fiscal year end.

A high TICK reading of the day was recorded at 15:33 and a higher price follow at 15:35 indicating that there are higher highs to come. The next high TICK of day was recorded at 15:45 followed by a higher price and price continued higher into close.

I finished the day flat with a gain of +224. I scalped the ES a few times in the AM and we traded down to 752.5 at 1:18 PM. This corresponded to 1:11 TICK reading of a new all time daily low of -1319. Shortly thereafter I took a 200 share position of DZZ and closed later for 0.35 points. It can also bee seen on the charts below that we made the high of the day 778.75 a few minutes after seeing the new high TICK reading for the day of 1316.

In the afternoon I got the Think or Swim platform loaded and did some basic setup. I have already set up the custom Fibonacci retracements and basic charts. I plan on setting up the market internals and also market internals/market breadth spreadsheet over the weekend.

We have broken down out of the short term upward trend line at around 814. Support levels below will be around 805 (last Thursdays low was 805.5) and then 800 areas. There’s not much below that down to a retest of November’s low at 739.0.

The Daily Pivot Monday is 826.5. If we were to break out upward I will be looking to short around 825.25 depending on afterhours trading. At the moment, my overall bias is downward.