$8,500 Profit Trading NZDJPY

GM, profit pioneers! This is Currencies & Coffee, where we transform market madness into a delightful dance of trading brilliance - add a sprinkle of laughter.

Here’s what we have covered today:

☕Inflation Rumble and GDP Dance - U.S, China, and the U.K

☕ Navigating Best & Worst Months

☕$8,500 Profit Trading NZDJPY

🗞️Movers & Shakers🗞️

Let's take a closer look at the market highlights from last week and examine the upcoming key events for this week to assess their potential impact on currencies.

Last Week's Highlights

➡️ US Credit Downgrade: Fitch's downgrade of the US credit rating to AA+ triggered a risk-off sentiment. Investors turned to safe-haven assets, leading to a decline in AUD/USD, which fell to an 8-week low.

➡️ BOE's Dovish Hike: The Bank of England's 25bp interest rate hike was perceived as relatively dovish. As a result, money markets lowered their expectations for the terminal rate. This development could weaken the British pound.

➡️ RBA Holds Steady: The Reserve Bank of Australia kept its interest rates at 4.1%. The decision was influenced by weak retail trade figures and a negative GDP outlook. Such indications might imply a peak in RBA rates, which may impact the Australian dollar's strength.

➡️ China's Services PMI: China's robust start to Q3 was marked by solid business activity. However, a less optimistic outlook for the next 12 months may affect market sentiment and influence the Chinese yuan.

➡️ BOJ's Yield Control: Japan's 10-year yield reached a 9-year high after the Bank of Japan allowed it to rise above 0.5%. This decision could lead to fluctuations in the Japanese yen's value.

This Week's Key Events

📅 China's Inflation (August 9, 1:30 am GMT): Falling consumer prices in China may impact corporate profits and consumer spending, potentially affecting the value of the Chinese yuan.

📅 US Inflation (August 10, 12:30 pm GMT): Watch for the Consumer Price Index (CPI) and core reading. A higher CPI could signal rising inflation and influence future rate decisions by the Federal Reserve, potentially impacting the US dollar.

📅 UK Preliminary GDP (August 11, 6:00 am GMT): The UK's GDP data for Q2 could have implications for the Bank of England's focus on inflation and wage growth, which may impact the value of the British pound.

Navigating Best & Worst Months

As a long-term profitable trader, I've gained valuable insights into the seasonal market patterns that significantly impact trading conditions throughout the year. Understanding and leveraging these seasonal trends can provide you with a powerful edge and lead to consistent profits. So, grab your cup of joe, and let's explore how to navigate the different periods of volatility and make the most out of each trading season.

The FX market can be broadly divided into three distinct periods of volatility, each offering unique opportunities:

1. The best months for trading are from the latter half of January until May. During this period, there is a surge in trading activities and better liquidity due to the return of market participants from holidays. This time presents favourable opportunities for traders to benefit from market fluctuations and ride market trends.
2. During the summer months of June, July, and August, there is a decline in market activity. This is because many institutional traders in Europe and North America take vacations during this period, which leads to reduced trading volumes and thinner liquidity. As a result, price swings can become more significant and less predictable. ‌‌‌Here are some helpful tips for trading during the summer months:

• Consider using a range-based trading approach to capitalize on smaller price movements within well-defined price ranges.
• Focus on short-term trading and be responsive to short-term opportunities.
• Keep an eye on Labor Day, which is celebrated on the first Monday in September in the U.S. This date often marks the beginning of increased trading activity after the summer slump.

3. The months of September, October, November, and December make up the third period of the year. During this time, there is an increase in trading activity known as the autumn boom as traders return from their summer vacations. However, trading activity typically slows down during the latter half of December, a few weeks before and after Christmas. This pattern is similar to the summer months. To manage this period effectively:

• Stay Mindful of Holiday Periods: Major holidays like Christmas and Easter can lead to decreased trading volumes and unexpected market swings. I recommend traders take December off and spend some time away from the charts.
• Embrace the First Period of the Year: The first period of the new year is typically the open season for trading. Traders have an opportunity for four-to-five consecutive months to make profits before the summer drought returns.

Action Steps:

1️⃣ Study historical data to identify the best and worst months for trading in the FX market.

2️⃣ Adjust your trading approach during the summer trading slump, employing range-based systems and short-term strategies.

3️⃣ Capitalize on the autumn boom for enhanced trading opportunities and improved profits.

4️⃣ Stay mindful of major holiday periods and manage your trading accordingly.

5️⃣ Embrace the first period of the year as a window of opportunity for profitable trades.

SIP, LAUGH, TRADE 😁‌‌

📈LATTE LINEUP📈

‌ ‌

‌‌-NZDJPY- (Setup shared in Nexus Hub)

I shared this setup in our Nexus Hub last week, outlining the game plan. It netted me about $8,500 USD profit with half the position still running.

On the higher time frame (HTF) of the 8-hour chart, a bearish trend emerged, characterized by the formation of a new lower low. The subsequent retracement leads the price back to the previous high and aligns harmoniously with the 100% Fibonacci level. At this crucial level, the price's attempt to push higher was met with strong resistance, evident from the sharp and decisive bearish engulfing candle. This pattern suggested a potential fakeout, warranting a closer examination of a lower time frame (LTF).

The HTF's bearish momentum manifested in a significant shift in market structure on the 30-mins chart, as evident from the development of a small range that ultimately broke to the downside. This crucial move paved the way for a new lower low and, subsequently, a retest of the LTF support level as a firm resistance. The confirmation of our short entry came in the form of rejection candles, bolstering my confidence in the market direction.

Ensuring my risk was well-managed, stop-loss was strategically positioned above the previous highs of the range. This safeguarded our position against any potential adverse market movements. Aligning with our overall trading plan, the target for this trade was set at the HTF low, providing an attractive risk-to-reward ratio.

Adhering to my trading strategy, I opted to take profits at an intermediate level along the way to our larger target. This tactical decision allowed me to secure gains while staying on course toward our ultimate goal. With the trade still active, my stop-loss is trailed to lock in profits, safeguarding a portion of my gains from any potential reversal in the market.

As we continue to monitor the trade's progression, my attention remains keenly focused on the marked red range, eagerly anticipating a potential downside break.

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-AUDCAD-

HTF(8-HR): As we delve into the 8-hour time frame of AUDCAD, the price action clearly depicts a classic downtrend characterized by the formation of consecutive lower lows and lower highs.

Building on this downtrend, the price has orchestrated a new lower low, followed by a retracement. This retracement allows the market to retest the previous support, looking for it to act as resistance.

Adding a layer of significance to this area, the 50% Fibonacci level aligns with the retest of the former support. This confluence strengthens the potential impact of this resistance zone. Notably, rejection candles have materialized within this zone, bolstering the case for resistance. These candle formations serve as a visual testament to the market's hesitation around this level.

LTF(15-mins): We can see here on the 15-minute time frame that the price was initially making even lows before a new lower low, confirming the HTF selling pressure. We now have a retracement to retest the previous LTF support as resistance with a double top forming. I'll be looking to take a short position on the engulfing or rejection candles, with my stop loss above the previous highs and targets at the previous HTF low.