Firts Full Day Trading Session

As I was trained in analyzing and investing in stock market early in my carrier, my preference time frame for investment has been as a long term trader. Despite the long term view, I don’t prescribe to the mantra of buy and hold strategy ala Warren Buffet, I am more of adopting the concept of market timing that is skewed to technical analysis than fundamental analysis.

In my current adventure in the fast and liquid forex market, I decided to be more as short term trader and most of my trades can be term as scalping i.e. holding my trade for a few minutes and within one day.

Although scalping is a high risk but is more enjoyable. Glue to a monitor for 2-3 hours might be boring proposition for some people but I am used to it. As a ex-equity/share  analyst and trader I am used to monitor shares price zigzag  between bid and ask prices  from 9 am to 5 pm.  

Much has been said about short term trader suffering from market tunnel vision. They are presumed to be watching one or two pairs of currencies in the short term and are unable to see what is happening in the rest of the market around them. As for me, I do take interest in the fundamental that are affecting the currency such as the economy of the country and the role played by the central banks. Analyzing the fundamental and deciding whether the market has factored the fundamental events into the prices make the process of forex analysis based on the technical tools much smother and easier. 

For the fast few months, through trial and error and sieving through info’s available in the internet I managed to device a trading plan or strategy  based on a few of technical tools. Although my trading plan is not a holy grail to become instant millionaire at least I am comfortable with it and I am confident that the plan can made some money.

For the beginning, I will concentrate on  four currencies pairs-EURJPY, USDJPY, EURUSD and GBPUSD.

Beginning, from today blog, 2009  first full day of post-holiday trading of forex,  I will make an effort to post my analysis and the position I took.

Early morning I was quite busy and the only time that I could be in front of computer was at about 5pm(Malaysian time). By that time London has open and I managed to have a look at few of the pairs and decided to trade the USDJPY. My comment is as follows: 

The greenback surges across the board in European session without any fundamental news behind it. The only news was reports that President-elect Barack Obama and congressional Democrats will push for a $775 billion stimulus package that includes as much as $300 billion in tax cuts that helped lift stocks,

On the chart, a pennant (ABCD) was formed with the base CD is the daily pivot point, When London open, USDJPY broke through 92.00 level. Today is expected to be bullish since last Friday, price breached  downtrend resistance line E. The uptrend coincides with breakout from the Bollinger Band squeeze and the blue lag moving above 15 level. (Note: the red lag is flat above 85 level indicating a bullish position). I entered the market at 10 GMT when prices are hovering at 93.00 level with my profit target at 93.40. At that level, there are two resistance level, the daily pivot point R2 and Fibonacci 1.618 extension from the swing low of 90.80 and the high of  92.41.

I used the 5 min time frame for entry and exist.

5 minutes after New York open, based on my 5 minutes time frame technical tools, I short USDJPY with my profit target of 20 pips.. I managed to close 30 mins later. With 60 pips in my bag I decided not to trade. With a few more hours before my bedtime, I surf the net for the news and trading commentaries.