Browse Symbol Stacks: AUDUSD: Blanks of the trader

Recap

It has been no surprise based on previous experience that comebacks after the breaks serve very often as hangovers after nigh out. There was no difference this time, as two posted patterns on GBPUSD and AUDUSD were blown without much hesitation last week with USD strength kicking in across the board. The are couple of ways to limit the downside when this kind of situation unfolds.

 First of all both setups were anticipating USD weakness going into the week, so having two positions taken was very aggressive way play on what seem to be same trading idea although split into two pairs. To limit exposure for USD, single position on either pairs would be sufficient to minimize the loss. From risk management perspective two losing trades should be small enough so there is no devastation to trading account (max 2% of initial buying power per trade recommended). Maintaining market neutrality when possible. This is subject for a separate post. The most obvious steps that can be taken is hedging initial directional positions as well as utilizing options to the initial underlying.  Prime Risk Events (UTC time)  Monday Australian retail sales (June), 2.30am: This primary gauge of consumer spending declined, missing expectations last month. A bounce of 0.3% is expected this month. Market to watch: [CURRENCIES:AUD/USDUK construction PMI (July), 9.30am: This survey print left expectations in its wake last month, with 62.6 against 59.7 expected. This month the consensus is for a print of 62.1 . Market to watch: GBP/USD, EUR/GBP Tuesday Japan services PMI (July), 2.35am: This is expected to remain in the contractionary zone. A print of 49.0 is expected. Market to watch: USD/JPYChina services PMI (July), 2.45am: June’s survey showed a 15-month high. Expected to remain in expansion in July. Market to watch: China A50, AUD/USD, copperRBA bank meeting (August), 5.30am: Rates on hold for 12 months now and not expected to move in August from current 2.5%. Watch for hawkish language. Market to watch: AUD/USDFrance, Germany, eurozone services PMIs (July), 8.50am – 9am: Survey expected to show prints of 50.6, 56.6 and 54.4 respectively. Market to watch: EUR/USD, EUR/GBP, DAX, EStoxx 50UK services PMI (July), 9.30am: 58.1 forecast, an improvement on last month’s 57.7. Market to watch: GBP/USD, EUR/GBP, FTSE 250US services PMI (July, final), 2.45pm: 56.6 is forecast here. Market to watch: US indices, dollar crosses Wednesday UK industrial and manufacturing production (June), 9.30am: Month-on-month growth of 0.6% and 0.7% expected. Market to watch: GBP/USD, EUR/GBP Thursday Australian unemployment rate (July), 2.30am: Expected to remain at 6%. Market to watch: AUD/USD, ASX 200Bank of England decision (August), 12pm: No change is expected. Rates to remain at 0.5%. Quantitative easing static. Market to watch: GBP/USD, EUR/GBPECB decision (August), 12.45pm, press conference 1.30pm: Minimum bid rate to remain on hold at 0.15%. Press conference will offer more clues to policy decisions. Market to watch: EUR/USD, EUR/GBP, DAX, CAC, Estoxx 50Initial jobless claims, 1.30pm: Expected to increase to 305,000 from last week’s 302,000. Market to watch: US dollar crosses, US indices Friday Australian unemployment rate (July), 2.30am: Expected to remain at 6%. Market to watch: AUD/USD, ASX 200Bank of England decision (August), 12pm: No change is expected. Rates to remain at 0.5%. Quantitative easing static. Market to watch: GBP/USD, EUR/GBPECB decision (August), 12.45pm, press conference 1.30pm: Minimum bid rate to remain on hold at 0.15%. Press conference will offer more clues to policy decisions. Market to watch: EUR/USD, EUR/GBP, DAX, CAC, Estoxx 50Initial jobless claims, 1.30pm: Expected to increase to 305,000 from last week’s 302,000. Market to watch: US dollar crosses, US indices   Market Observations/Strategy development

Since paying more attention to options of initial underlying in time of low volatility, there is one single premise that can be useful for beginner traders to build their systems around. 

In the image above Bell curve represents distribution of data relative to current value. This applies very much to the prices of the underlying FX instruments where >95% of price is contained within 3 standard deviation (3σ) of the current price. To see this in practice refer any good charting package will contain Standart Deviation and Bollinger Bands volatility indicators or alternatively click on new

charting

feature of this blog. What beginning trader without stable strategy can do, is plot those indicators and notice how the price is moving in relation to the σ.

EUR/USD

Will be watching 1.35's level on longer for short entry, click on the chart below for more details.

1.661's is the area to watch on daily chart in my book. See more details by clicking on the chart.

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