New Years Resolution and Trading the Euro on January 2nd

Dear Readers,

Welcome everyone! I wish you all a happy new year and lots of health, happiness, and trading success in 2013!

My name is Chris and this is my first post on Winners Edge Trading blog. I am excited about writing here and starting the new trading year! Every day I will be posting my analysis on trade setups so stayed tune to this blog. For those of you who are interested: I am in my 5th year of trading and am now a full-time professional trader.

Well it’s 2013… and at the turn of the old to new year, it is quite a common habit to see new year resolutions being made. Personally I hardly do so. Not that the habit is bad. But I rather implement my goals and improvement points faster / immediately. Basically it boils down to the fact that I am used to evaluating myself on a daily and weekly basis. So that is definitely more often than once a year. I guess that this is a good element we traders get from trading: the constant need to evaluate ourselves.

We evaluate, among others, aspects such as:

a) your own performance,

b) your own thinking and analyzing process,

c) your own trading rules/plan, and above all

d) our own discipline. We do all this, more often than not, without the pressure and watchful eye of a boss!

This year is an exception to the rule and I actually do have one new years resolution this time around! My goal for 2013 is to analyze the charts in a more simple fashion. You might wonder why have I spent years learning to analyze the charts, only to desire simplicity at the end of the day? My answer is: it is all a matter of having sufficient experience to know which tools to use when. My goal is to approach the charts with the same clarity as Nathan does. Keeping the analysis clean and to the point will keep me focused on implementing my strategy and trade plan, reduce second doubting, and allow me to focus on discipline and trading plan implementation. I will keep you updated on my progress!

In any case, I would love to hear if you have any new year resolutions, and if so, which ones? Please share your feedback and leave a comment on your goals and targets for 2013!

If you are not consistently evaluating yourself, then I have an immediate new years resolution suggestion for you. You should be doing this on a regular basis. The following I believe would be a good goal:  “I will evaluate my performance on a daily basis and review my daily evaluations at the end of the week, month, quarter and year”. Let me know if you have added this to your list!

After the usual warning that trading still might be a bit slow for the next few days, let us now focus on the charts, like euro trading. During the holiday season there were some movements in the currencies. Especially the USDJPY and its pairs moved up aggressively a few hundred pips. I am still bullish on this pair and will monitor it with a hawk’s eye for potential long entries.

01-02 USDJPY 4hr

However, I am cautious right now, as there is divergence on the 4 hour chart so  I am looking for a bigger pullback either in time size or pip size before buying the currency pair. At minimum I would like to see the awesome oscillator return closer to the zero line before buying a break of the flag. Basically, I am looking for a bounce off a 382 or 500 fib plus a reversal pattern confirmation.

01-02 USDJPY 1hr

After scanning the market the EURGBP and the EURUSD seemed to be ready for a break this morning. The EURUSD has so far made 3 waves up on the 4 hour chart. Since the 19th of December this pair has been correcting sideways. The entire correction looks like a wave 4 (in EW terms), which normally translate into a continuation of the trend. In this case a further advance of the EURUSD to the upside. If we put a single line trend line (SLT) above that price action, we can see that the recent impulsive move up broke the SLT.

01-02 EURUSD 4hr

After that, an ABC correction was made back to the broken SLT and up again. The move up after the bounce was impulsive and considering the fact that the 1 hour, 4 hour, day, and week charts all indicate a pending up move, the EURUSD looks bullish. However the correction of the impulsive SLT break could be quite deep. Wave 2 corrections tend to go back all the way to the 786 and this could easily be a wave 2 of wave 5 (the impulsive break being wave 1). Also, the entire wave 4 correction can be a lot more complex and deeper. The shoot up could be a false move up. Furthermore its very early in the new year so put all together I placed a very small risk on my EURUSD long entry at 1.3071 and placed my stop loss under the recent hourly swing at 1.3227, which got taken out for a loss and the EURUSD indeed corrected a lot deeper.

My EURGBP luckily fared better.

01-02 EURGBP 1hr

The sell at the break of the bear flag was a good trade but to to my own rules I needed to take the trade off as it was taking too long before I could move the stop loss to break even. I was also considering a buy on the GBPCHF which would have done well but I had to step away from the PC for an hour and missed my entry. That’s part of trading folks. However in the long run it’s all about being & staying disciplined and following your trade plan… so no regrets. Better “luck” next time!

At the moment I have no signals to act on. Also my trading day is coming to an end as I trade the London session, so I will wait for the next trading day to arrive. Tomorrow this post should be available earlier in the day, as I now know how to actually post this article 🙂

Talk to you soon and good trading!

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