Evening Forex Setup

Good Evening Traders and Investors,

It is a chilly -4 in Park City with a few more days of on again/off again snow storms. I will be sure to let you know how it schusses when I chime in tomorrow evening.

We have some very interesting charts to look at this evening - bringing into focus a key technical pattern that occurs often. Once you recognize it, you can use over and over and over and you can even use it in:

• indices

• etf's

• single stocks

You can also use it in various time frames as you will see tonight.

What pattern am I talking about? It really isn't so much a pattern as a formation. Let's go to the charts:

Look how the lows today were finally broken and we traded below the 0.00 line around 1.6275. What happened once we broke through? We retraced and came back up to the old support level of, you guessed it, 1.6275. We used it as RESISTANCE!

Old support becomes new resistance.

Now, let's look at chart 2:

We know the relationship between the dollar and the equity markets. If the equity markets continue to break, look for the GBP to break its suppot at 1.6250 and then use it as resistance like we saw in Chart 1.

How do we trade this? Easy, as we hae a few options:

1. Trade short into it - the "expectant" trade - I recommend this least of all, but for all of you antsy pants out there,e my guest.
2. Trade as it breaks it and use momentum to carry the GBP lower
   
3. Trade the "second chance" - in my opinion the best risk to reward trade of the three

As in chart 1, we broke support and then came right back to that level. If you are patient, you can wait for the retest of the old support level and get in as close to that level as possible. This way you have your risk built in -if it comes back above that level, you exit with a small loss. If it "touches it and kisses it good bye" you have a super risk to reward trade.

The same works for old resistance becomes new support.

Going into tomrrow, I wouldn't be surprised to see the strong equity market bounce, but then again I wouldn't be surprised to se a strong equity market breathe a little more to the downside. Either way, we have some plays to look for that provide a nice risk to reward and a well thought out trading plan.

Happy Trading and Be Environmentally Cool

Brian

Can You Say Resistance?

Good Morning Traders and Investors,

Does a positive jobs report mean the phones are going to be ringing off the hook at the ski resorts? Well, with 7 straight days of snow in the forecast, conditions are ripe for an increase in phone traffic for Wasatch/Park City resorts.
Does the jobs number point to an increase in retail sales and an overall continue to the recovery?

Let's go to the charts....


The $SPX still has resistance (lasting almost a month) at 1115.00. As we know, the trend is up, BUT the charts need to make a higher high to continue the trend. As of now, we have that new intraday high on the charts, but let's see how we close going into the last hour of trading and more importantly the weekend. I repeat, the close is important!

As I mentioned last week, Bear Calls have worked well as we have primarily been sideways over the past few months - slow growth is what we want!! Your out of the money calls (number one way to generate income in your 401K/portfolio) would have worked very well for most sectors/stocks.

The dollar is up over the past two days, but still very close to its lows overall against the majors.

Happy Trading and Be Environmentally Cool

Thin and Whippy

Good Morning Traders and Investors,

It is 14 degrees outside and the snow is LIGHT and FLUFFY - too bad we can't do anything with it as there isn't a base underneath!

If you are looking for trading opportunities this week, be careful as the base (volume) may not be support the moves that you see. This is typically a very light volume week, but moves can be exaggerated as volume is thin.

Not much data today, so it looks like at the onset, traders are trying to push the market higher. Tuesday and Wednesday present a SLEW of data, so there will be opportunities, but BE CAREFUL!!!!! One wrong trade and the moves may dry up and you are left with a bad week going into Turkey Day.

The psychology this week is trade, but trade with the throttle pulled back.

On the investment side - the trend remains the same - up - just keep an eye on the aforementioned economic calendar for clues to how the economy is plugging along.

Regarding Forex specific trades - one good opportunity is all that is needed to make for a good week - hopefully 2 or 3 come along, but forcing trades is out of the question! Until the dollar breaks out to the downside to continue its swoon, I think selling dollar dips at support/good locations is a decent trade. We may just get that trade today as the dollar is getting hammered in direct relation to higher equity futures.

Happy Trading and Be Environmentally Cool