Strength in Dollar Leads to Opportunity in Gold and Pound

This morning I discussed in our member area and on Twitter how the Dollar remained as my primary focus. We watch the markets that are moving with or against the Dollar and then evaluate which markets to trade based off of those reactions.

I Tweeted out and told our members that the Pound has now firmed up against the Dollar. Meaning that the Pound has stopped selling off on Dollar strength…the Pound was actually rallying with the Dollar this morning.

The Gold market did something similar yesterday when the Gold market failed to go lower with Dollar strength and then rallied with the Dollar.

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Gold Double Top on Daily – from Pauly @spztrader

Written by: Pauly @spz_trader

For the last two weeks I have been pointing out the possibility of a double top on the daily chart for Gold.  Gold has made two runs to 1378.  1380 is the 38% (1044/1924) fib level.

Gold’s last real chance to break higher was on #NFP day.  Most of the market felt the number would come in weaker after the previous stellar number, 287k.  Certainly, a weaker number would open the door for a delayed Fed.  Well, we get a solid 255 with upward revisions on back data.

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How Discretion Makes a Successful Trader

This morning we we’re watching Crude Oil (CL_F). I told our members and tweeted out about 48.18 as our pivot for direction. Keep this in mind:  I use Beacon for my support and resistance lines, but I don’t live and die by them. I watch the reaction in the market along with divergence to confirm whether or not I should be trading Beacon levels.

As traders we cannot live and die by anything, we need a process and a strategy.  I am a system trader that uses discretion.  That means that I have a system that I use to determine trades (Beacon), but I don’t trade every single level, and that’s where the discretion comes in.

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Don’t Forget the Bigger Picture

In the past, I used to be so hyper focused on the short term action in the market that I would completely forget about what’s happening in the bigger picture.  I’d want to be short or long based off of short term action and completely forget or even ignore what the bigger picture trend is.

Traders, including myself, can have a tenancy to micromanage their trades and ignore what’s happening on the longer term.  That was a major weakness of mine and it cost me greatly at the beginning of my career.  Once I started to take more time in my preparation it started to spill over in my trading.

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The Dangers of Trading Out of Boredom

In my experience, quiet markets are much more dangerous than busy markets because time starts messing with your head. You’ve been sitting at your machine for awhile with nothing setting up and bam! you put on a trade just out of boredom.  Seems harmless until it goes against you, and you maybe decide to add because it’s slow, and you say to yourself “markets not going anywhere”.  haha famous last words!

Next thing you know your sitting on a big position that’s a loser and panic starts to set in.  (I’m actually explaining to you what has happened to me so many times that I’m actually getting a bit of anxiety just from writing this)

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Dollar and Euro Correlations Lead to Big Trade


I say it in every webinar, all of my morning commentary, on twitter, in live events, and everywhere else I speak about trading.  I’ve said many times before that if you are just looking at your one market you are missing everything.  Today’s action was mostly driven by the Dollar.

The Dollar got weak and that pushed a lot of markets higher, including the Euro.  The Euro was on our radar for a short around 1.1130-1.1146 area.  Support in the Dollar was coming in around 96.05-95.93.  When we got to our resistance area in the Euro, we immediately looked at the Dollar.  The Dollar was the market leader because everyone was reacting off of their action.  So we look at the Dollar to see if they are at support the same time we’re at resistance in Euro for CONFIRMATION!

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Trading the Dogs Days of Summer…

Trading the dogs days of summer…

This used to be a time in which I would most likely over-trade and lose money because I would be in a big hurry to trade and make money.  After years of making the same mistakes when the volume and the volatility get really low, I finally figured out how I needed to trade on these days.  Trade smaller and risk less.  It was just that simple.

If you’re a trader who is new, or just a 1-3 lot trader, then this market is probably not for you.  I always take the worse case scenario and go from there.  There is nothing worse for a trader than a situation when you get stuck half or more of your normal risk per day on a day where you know it will dry up after the morning trade.  Now you try to make a little back and most likely you lose a little more and with more fees now stacking up.  At some point you may even lose way more than you would on a busy day just because you got frustrated.

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Breakdown of Divergence Creates Clean ES/NQ Trades

This morning on Twitter and in our member area I spoke about the divergence going on between Biotech & Energy.  Biotech was leading the Nasdaq higher while Energy was the weakest sector in the ES (S&P), keeping the ES at the bottom or middle part of their range.

When we see divergence in sectors, this tends to keep the ES in a range bound scenario until one of the leading divergence markets reverses and works with the other market.  The key for us is to watch our Beacon strategy to see if we get alerts at the same time.  If we get an alert at the same time, that is confirmation that both the NQ and ES are hitting resistance at the same time.  This is the type of trade we will look for because it confirms that they may work together and get away from being divergent.

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