Forex Course Currency Trading Commentary

October 5, 2004

September sales were soft, but all eyes are on the

payroll report due out this Friday. A very important

number heading into the election. It could be one of the

tipping points, as voters decide which way to lean.

Today, so far, we are still above Tom DeMark’s ‘down’

trendline on the daily chart (previous chart) – which is

providing support (previously resistance). Price is also

above the 200 moving average. If you look at a long-

term chart for the euro, you will notice that price is now

going sideways, but the bias still remains bullish. Not

much trading excitement today, with price pretty much

being contained between M2 and the central Pivot. We

did have railway tracks at the London open, with a

quick reversal. The most active time for the London

session is from 3 am ET to 6 am ET, with anticipation

over the New York session usually starting around 7 am

ET. That’s when we had a decent run up to where we

are now (2309 at 10 am ET).

(See currency trading chart below)

Oct. 6, 2004

You can see divergence on MACD to price that occurred

mid-afternoon yesterday, and set the stage for further

declines coming into today’s session. As price entered

today’s session, it formed railway tracks and a double top

right at M2, which was further evidence that more down-

side pressure was in the works. You can see that the

double top coincided with another top at the same level

just prior to price entering today’s session. Strong

indications of price weakness. Yes, today was supposed

to be an M2/M4 day, but so far it looks more like an M1/M3

day. Close enough. You can’t always play by the rules.

You have to let price reveal its hand, and follow suit.

Following divergence’s lead yesterday, and trading

accordingly, put ~47 pips on the table. The thing to watch

for now is whether M1 will hold, as at 9:15 am ET.

(See currency trading chart below)

Oct 7, 2004

The increase in the purchasing manufacturer’s

index of hiring suggests the economy is growing

fast enough for the government report on Friday

to show that payrolls expanded in September.

Today was declared an M1/M3 day and, as you

can see, the London open stopped price in its

tracks right at M3, almost like magic. Obviously,

the fireworks won’t really get underway until

tomorrow’s payroll report comes out. Yesterday,

we had two good trading opps. mid-morning and

mid-afternoon with the formation of hammers

after severe downturns in price. Today’s rapid

swoon after the London open didn’t last long. As

Mike Clements has said before, such events don’t

last, and should be used to look for the eventual

turnaround. Notice how price tested the M3 level

twice today – once at the London open and then

again at the New York open. Magic folks!

(See currency trading chart below)