February 19th, 2009
By: Stephanie
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It's February 19th, 2009 and time for our Angel Pair Picks!
For the second day in a row, none of our trading methods are showing high probability low risk trades. However, we will look at the pairs and see why we might want to stand aside, or if we want to place some trades.
As we predicted yesterday, the EUR/USD retraced some of its recent downward push. The price climbed almost all the way back up to the 1.2800 level before dropping back down to the 1.2650 level. With the CPI coming out tomorrow, we are passing on trading until after the news. This might be a good time to place some channel orders to catch the news reaction tomorrow morning.
The GBP/USD has been trading in a sideways channel for the past several days. For scalpers and very short term day traders, there might be some money to be made, but again, we trade on trends, and sideways trends don't work for us. However, this pair could make a move tomorrow because of the US CPI at 8:30 am est. Which direction will depend on the announcement.
For the USD/JPY, the upward momentum is slowing, with weakness showing in the narrow trading range. Some upward movement is still possible, but with the news announcement tomorrow morning, and the fact that the pair is trading near the 94.00 resistance level, we are going to pass on this pair.
The USD/CAD shows some potential for the downward momentum to continue. If you were in on our trades yesterday, you could still be short on this pair with it in the profit range. Even while the price has been pulling back down, the pair has been showing great weakness in both directions the past two days. We feel there is no strong trend right now so we are standing aside.
The AUD/USD looks weak as well. Perhaps everybody is waiting until after the news announcement tomorrow. But even with the pullback in price the past two days, there is no clear trend. If anything, there is some potential for the price to return to its downward trend over the next 12 hours.
The USD/CHF has shown some upward movement for a few days. But yesterday was a perfect Doji, which shows indecision in the market. This means the pair could continue it's upward movement, continue trading in a sideways channel, or reverse and come back down into the middle of its channel. And then with the news tomorrow, anything can happen. Not a market we want to trade.
However, we are going to place some channel trades on the majors tomorrow. Since the US CPI news comes out at 8:30 am, we will look at the market prices for the pairs at about 5 to 10 minutes prior to the announcement. Our intention is to place both buy and sell orders +/- 25 pips from market just before the news release. Our initial stop losses will be 100 pips from market price. Once the news is released, if there are any major price swings in the pairs, the orders will trigger. We will watch them carefully and make sure to cancel any orders not triggered within 5 or 10 minutes. As soon as any open orders move into profitable range by at least 15 pips, we will move our stop loss to the entry price plus 2 pips.
This is known as trading the news. It can be quite profitable sometimes, but there is some definite risk involved. This type of trading is more akin to gambling than trading, and usually for more advance traders.
Keep in mind, the trades we plan on placing tomorrow morning are not high probability low risk trades. But we think there is some potentially good profits to be made. It is a risk we are willing to take.
Check back tomorrow to see how our picks make out! Let us know how YOUR trading is doing!
IMPORTANT NOTE: These are not Forex picks nor Forex recommendations. This information is provided for educational and informational purposes only. Use this information at your own risk. You MUST apply your own trading methods and your own opinions to an Angel Pair Pick to determine if a trade should be considered. Also, you do not need to trade all of the Angel Pair Pick pairs, nor should you. There's no need to place more than a few trades on any given day and our recommendation is when you get to 6 open positions, don't add any more trades until one of them is closed out.
Note: Forex, futures, stock, and options trading is not appropriate for everyone. There is a substantial risk of loss associated with trading these markets. Losses can and will occur. No system or methodology has ever been developed that can guarantee profits or ensure freedom from losses. No representation or implication is being made that using Angel Pair Picks will generate profits or ensure freedom from losses.
