October 24, 2008
Weekly Trading Update - October 20-24
Wow it's been quite an incredible week on the forex markets. It's not very often that you see a currency pair go down in a straight line from Monday until Friday but that's pretty much what happened to the GBP/USD, EUR/USD and USD/JPY pairs. The GBP/USD was particularly volatile with a trading range of around 2200 points. So how did I do this week?
Well I'm starting to think I should focus on long-term trading and pay attention to my predictions. In my last blog post on Tuesday night when the GBP/USD was at 1.6730 I said that the monthly and quarterly charts were indicating a potential fall to 1.50 and maybe even 1.40. However I had no idea it would attempt to test the 1.50 level just a few days later, but that's exactly what happened because just today it slumped to around 1.5275, which was an incredible move.
Unfortunately I didn't catch any of this fall because although there was a nice downwards EMA crossover on the 4 hour chart, the entry point didn't arrive until the middle of the night when I was asleep so I missed out here, and it was the same story on the EUR/USD pair as well.
I did, however, manage to capture a decent slice of the downwards move on the USD/JPY pair. The EMAs that I use crossed downwards on Tuesday morning and using the 2 hour charts I managed to get a nice short position at 101.40.
I was pretty confident about a downwards move here because there was a nice double top forming and divergence on the MACD histogram (on the 4 hour chart) so I gave this position some time to unwind.
The Supertrend was a key indicator here because it was currently bullish and stood at around the 100.00 level so I was waiting to see whether it would break through because this would surely see a sustained downwards move. Unfortunately this level acted as resistance initially and after struggling to break through I decided to close half the position at 100.40 extremely late into Tuesday night / Wednesday morning.
I then decided to let the other half run moving my stop loss to break-even and see what would happen overnight, setting my target price at 98.00 in case it broke through. Luckily for me it did smash through the Supertrend and psychological 100.00 level and I woke up the next day nicely in profit. It hadn't reached my 98.00 target but after drifting slightly during the day I decided to close out at 98.71 for what I thought at the time was an excellent profit.
Of course the price then continued to fall dramatically and even touched 91.00 earlier today so I missed out on another 771 points which I'm really gutted about because it could potentially have been my best ever trade.
Not to worry though, in monetary terms I still made a lot of money this week and it certainly beats working for a living.
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