Hello everyone.  I wanted to briefly introduce myself.  My name is Derek Frey and I am the head trader at O&F Futures, FOREX, & Options.  I have been a regular on FXstreet.com for almost 5 years now.  Many of you may have been to one of my webinars.  I also want to thank Rob Booker for all of his great posts.  I will be taking the “Postcards from the Edge” Blog over as of today.  I will attempt to post daily with some of my insight into the days market action.  So now that all of that is out of the way lets get started with today’s outlook:

Today we are seeing the markets continued to be gripped by fear.  The Auto industry really did not put on a good show yesterday in Congress so investors are fearful that the “big three” may be left to fail.  Today we expect many of the pairs to see expanded volatility.  The Euro remains the one currency that has not yet broken its support levels.  If these levels hold we could see a sizable rally off of them but first we need a catalyst for the rally.  None of the economic reports this week have spurred a rally but we are seeing a few things on the horizon that indicate a near term top in the Dollar is being put in.  Be careful these next few days as some sort of government action or intervention seems imminent

Wombats are angry! 

It is Friday afternoon and this is close to the 9600 area.  Even so, a good close below that area would trigger sell trade. Stop loss above .9635.  Target is the green line or .9555 or so.

-Dave

Today was good for short term trading.  The EUR/USD 5 minute trade that we set up a little while ago worked out nicely.  To see the original trade idea, close your ideas and imagine a field full of beautiful flowers, or just click here.

Here is the result: the pair did close above our trendline, and did rise to our purple resistance line of happiness.

I could not help myself.  I added another trendline — a red one (the steepest kind we draw) to the setup.  Now on the GBP/USD we can trade a close below the red trendline down to the blue.  There are a lot of people talking about how the pair is overextended, including James Chen, my fellow blogger here  at FXStreet.

Here’s the new trendline:

Here’s another way of looking at the GBP/USD.  There are so many ways to look at support and resistance; this happens to be another double-trendline setup that I like very much.

Oh, and a manure thief really did fall into dung.  Not making that up.

Here is the 4 HR chart to start us off, so that we can see the green (base) trendline.

And here’s the 1 HR setup that we can use for the trade.  I am waiting for a close below the blue trendline, as usual.

Dave is getting ready for chart school, so he’s busy right now.  He wanted me to pass on this chart for your enjoyment.  He is waiting for the EUR/JPY to close above the red trendline.  Where it goes from there?  He said he’ll update you later, if it breaks.  But at least he’s going for 169.00.

This is a short term trade.  Today I think we’re better off looking at new trades that are short term — because so many bigger moves happened yesterday.  And I am not in the mood to hold anything over the weekend if I can avoid it.

The lady really did find a live grenade in her backyard.  And the EUR/USD did blow up yesterday.  Let’s see if it can keep going: if the pair closes above the red steep trendline on this 5 minute chart, then it can most likely get all the way to the purple resistance level.

Today I read that a life jacket from the Titanic sold for $68,500.  I am guessing that a trader bought it.  It’s not going to help if he or she is trading the USD/CAD.

Here’s an update on our two-trendy trade.  If you want to see the original idea, just click here and you can read all about it and see the original trendlines. 

The trade is now open and it’s actually moving in our direction.  It’s up about 50 pips (it opened just above 1.0100.  Now would be a marvelous time to move the stop to break even.

The GBP/USD got to our first trendline … and could be getting ready to smash through it and on down to the green one.  Let’s start things off by reviewing from whence the green trendline came.  This is the 4 HR chart:

Now let’s get a closer look, by dropping down to the 30 minute chart. I think you can manage/open this trade from the 15 minute chart or the 30 minute chart.  Either would be fine with me.

I am closing the trade with a 15-20 pip loss.  I don’t like the trade any longer, and I would much prefer that the pair drops farther much faster.  There is a chance that the pair is going to go the other way instead, so I don’t want to be a part of it any longer.  We can redraw our trendline later and reset up the trade over again from the start.