Fed Disappoints With Neutral Tone – November 19th 2015 Market Commentary
From time to time you guys see me mention my daily market preview videos. I had an emails asking how they differ from the free daily market commentary so I thought I would share the difference as it relates to a real world trade setup. You can read more about that under the GBP/USD section in today’s commentary.
EUR/USD Creates Stop Run Off Lows
The Euro created a very nice stop run off of the newly created lows. I actually didn’t have a lower level listed for the EUR/USD yesterday. You can see that in the screen shot I took of yesterday’s daily market preview from the members area. What we did have was a newly created level. In our online day trading course we outline exact criteria for seeing the creation of a new level when there is no other level in the area. Yesterday, that criteria was more than satisfied and we later had a stop run of the European lows during the NY Session. This trade was closed at break even prior to the Fed meeting as I don’t carry trades into news that is capable of spiking the market more than 15 pips.
I would look at today as a first push to the upside but the majority of the move occurred during the Asian session and therefore I will continue to keep an open directional bias as I do most days. One of the most misunderstood aspects of the forex bank trading strategy is the importance of cycle. If you read the blog on a daily basis you will see we trade most days without a directional bias. Level selection and then seeing a valid stop run of that level is the most important aspect of the trading strategy, not level selection. Therefore, trading without directional bias is not much of a concern as the other factors filter trade direction for us.
Pound Breaks Above Range
The Pound has made a very decisive break above the previous range. At this point we do not have any upper levels from which I would consider a stop run trade short from although that may change as discussed in the daily market preview video. Last night we did have a nice stop run reversal day trade setup short from one of our pre-selected levels. As you can see in the picture below, when I select levels in the daily market preview they are down to the pip. This is critical because the confirmation entry day trading strategy requires an exact size break for it to be valid. Specificity is crucial to validating a valid trade setup one that is not valid.
During the European session, at 5:00 AM Eastern to be exact, the stop run was initiated. I have labeled out the candle out below which won’t make a great deal of sense to your if you don’t understand what we term as the progression of candles. Bottom line is the final #2 candle produced the confirmation and the entry was on the pullback of the #3 candle. The entry would have been 15 pips from the high and the NY Session created enough of a move down to hit the full 4% take profit. For those of you who are still in the process of learning how to day trade forex profitably, the beauty of this setup is everything shown is mechanical. The candle count in the picture below is mechanical. None of that is discretionary as there is a mechanical rule that determines the exact candle count which takes the emotion out of making the decision. The is also a mechanical criteria for exactly where the entry is to be taken, how the stop loss is to be set, and how the trade was managed. If you didn’t see the trade analysis for October I would highly recommend watching it as it details each setup just like this.
For today, the I will still keep an open bias on the GBP/USD. If the majority of the push had not occurred during the Asian session then I would call it a first push up and only look for the second. Technically at this point we are only looking for the second push to the upside because I do not have a upper manipulation point from which I would consider a short. I will be leaving the possibility for a new level to form intra-day though, which is why I’m leaving direction bias open in the event that happens.
Forex News For November 19th 2015
UK Retail Sales 4:30 AM Eastern: This month -.5 is the expected number for Retail Sales. Last month we had a very large deviation from the expected number and the market did create a large spike but then retraced that spike and moved back through pre-release. In fact, 3 out of the last 4 UK Retail Sales have had a reversal of the initial move, with most pushing the opposite direction within an hour.
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