» 2005 » December

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I hope this will help us to discuss about money & risk management, strategies, technical analysis… etc.

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Today a short term reverse is expected on Euro Dollar. The price is just bellow the 20 weeks moving average (GBP USD is in the same configuration).

Our trading plan will be :
Short on EUR USD and long on USD CHF. We will protect this trade with a long on GBP USD

Today I’ll follow USD downtrend with a long position on GBP USD and two short positions on USD CHF and USD JPY. I’ll cover those trades with a short position on EUR USD.

If the dollar continues to fall I should make profit on three trades.
If the dollar reverse I will lose on three trades but EUR USD short should cancel the three losses.
If the dollar doesn’t move I could lose on the four trades.

To take my positions I use EUR GBP and correlation

The last three days were very bad. I didn’t take profit on my trades, the price only hit my stop loss(edit : except with USD CHF which win more than 100 pips and cancel many losses :) ). When I am in a such period I limit the size of my positions. I will risk only 0.12% on each trade instead of 0.25%.

I’ll try to build as little drawdown as I can.

If you follow my recommendations, please take care, don’t forget your stop loss and wait for a best period for my system ;)

When Euro Dollar broke 1.1940 I wanted to sell it. I noticed a reverse configuration but the movement is too fast and I have a strong bullish pressure on the 4 hours chart and the price didn’t broke the pivot point (based on GMT time frame).

The very short term technical configuration is bearish and the short term configuration is bullish. If I listen to my experience I would sell at 1.1935/40 with a stop near 1.1960 and a take profit at 1.1850…

Euro dollar is on the support of actual short term range (4hours chart) but I have an important long term bearish pressure. I’m still waiting for a down break.

I think I won’t trade today.

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This morning I receive a question : “As i see the condition in EUR/USD and USD/CHF are similar. Why did you decided to take a position in EUR/USD and don’t take a position in USD/CHF?”

It is a recurring question. My answer is always the same : “There is a bearish pressure both on EUR/USD and USD/CHF. I prefer sell EUR/USD than buy USD/CHF.”

Every day I post a forecast on EUR GBP this analysis helps me to make an arbitrage between EUR USD and GBP USD. I do do the same thing for EUR CHF but I don’t post it, I’ll try to write the analysis every day.

The weekly configuration is still in a bear trend. The consolidation which lasts since 3 weeks didn’t manage to reverse the pressure. The weekly chart follows the trend line.

But the price should break the support this week or next week to keep 1.1000 as target.

It’s not easy to trade with long term chart (psychology, money management…), I do not trade with long term forecast but it helps me to take short term decision. The long term bear pressure doesn’t allow long position.