CPI, PMI, Retail Sales, Central Banks, Profit Optimization & 800 Pips For the Taking

Good morning, trading enthusiasts!

Here’s what we have covered today:

☕U.K. CPI, Canada's Retail Sales, SNB Rate Decision, BOE Policy Statement and Global PMI Watch

☕A Roadmap to Profit Optimization

☕800 Pips For the Taking?

🗞️Movers & Shakers🗞️

U.K. CPI report: On Wednesday, June 21, at 6:00 am GMT, the U.K. will release its May CPI figures. Analysts project a decrease in headline inflation from 8.7% YoY to 8.4%, while the core CPI could decline from 6.8% YoY to 5.8%. A lower-than-expected CPI reading may ease pressure on the Bank of England (BOE) to continue hiking rates, potentially weakening the pound.

Canada's retail sales: Also, on Wednesday, June 21, at 12:30 pm GMT, Canada will publish its retail sales report. Expectations are for a rebound in consumer spending, with analysts anticipating 0.3% increases in headline and core retail sales. Stronger-than-expected retail sales data could increase the likelihood of another interest rate hike by the Bank of Canada (BOC), potentially strengthening the Canadian dollar.

SNB monetary policy decision: The Swiss National Bank (SNB) will announce its interest rate decision on Thursday, June 22, at 7:30 am GMT. While another rate hike is expected, with the central bank potentially increasing borrowing costs from 1.50% to 1.75%, the impact on the Swiss franc may be limited. However, if the SNB surprises the market by pausing its rate hike cycle, it could potentially weaken the Swiss franc.

BOE monetary policy statement: On Thursday, June 22, at 11:00 am GMT, the Bank of England will announce its policy decision. Another 0.25% interest rate hike is anticipated, but the decision is not expected to be unanimous. If more Monetary Policy Committee (MPC) members call for a pause in rate hikes, it could signal that the BOE is approaching the end of its tightening cycle. This could lead to downside pressure on the pound.

May PMI readings: On Friday, June 23 at 7:15 am GMT, France will release its manufacturing and services PMI data, with the manufacturing PMI expected to fall from 45.7 to 45.2 and the services PMI to drop from 52.5 to 52.1.

-In Germany, flash PMI data will show a potential increase in the manufacturing PMI from 43.2 to 43.6, while the services PMI is projected to dip from 57.2 to 53.6.

-In the U.K., the flash manufacturing PMI is expected to decrease from 47.1 to 46.8, and the services PMI might decline from 55.1 to 54.5.

-Lastly, in the U.S., the manufacturing PMI will likely improve slightly from 48.4 to 48.5, while the services PMI could fall from 54.9 to 54.0.

-These PMI readings may impact their respective currencies, with weaker-than-expected data potentially weakening the currency and stronger-than-expected data strengthening it.

Economic Calendar

A Roadmap to Profit Optimization

In today's edition, we will delve into the crucial topic of trade management, exploring practical strategies to maximize profits and minimize losses. Effective trade management is the key to consistent success in trading. So, grab your favourite cup of joe, and let's dive into the art of trade management.

Set Clear Profit Targets
Before entering a trade, establish clear profit targets based on your analysis and risk-reward ratio. Define multiple profit levels, such as partial profit-taking at predetermined levels and a final target based on significant support or resistance levels. This allows you to secure profits along the way while aiming for larger potential gains.

Implement Trailing Stop Loss Orders
Consider using trailing stop-loss orders to protect profits and mitigate potential losses. A trailing stop automatically adjusts your stop loss level as the price moves in your favour, locking in profits while giving the trade room to breathe. This technique enables you to capture larger gains during strong market trends.

Scale-In and Scale-Out Strategies
Consider scaling in and scaling out of positions to optimize trade management. Scaling in involves entering a position with a partial position size and adding to it as the trade moves in your favour. Scaling out involves taking partial profits at predetermined levels while allowing the remaining portion to run. These techniques can maximize potential gains and reduce risk.

Adjust Stop Loss Based on Price Action
Regularly monitor price action and adjust your stop loss accordingly. As the trade progresses, trail your stop loss above or below significant support or resistance levels, moving it closer to your entry point to protect profits. This technique helps you lock in gains while allowing the trade to develop further.

Use Breakeven Stops
Consider moving your stop loss to the breakeven point once a trade has reached a certain profit level. This technique eliminates the risk of losing money on the trade, allowing you to participate in potential gains without fearing a loss.

Learn from Losing Trades
Losing trades are inevitable in trading. Use them as valuable learning opportunities. Analyze your losing trades to identify potential mistakes or areas for improvement. By learning from your losses, you can refine your trading strategy, risk management, and trade execution, increasing your overall success rate. I, for example, never used to close partial profits and instead wait for my trades to hit my target. Analysing my performance, I realised I was leaving money on the table to feed my ego, hitting targets. I then employed partial profits in my trading and increased my profitability.

Action Steps:

1️⃣ Set clear profit targets before entering trades.

2️⃣ Implement trailing stop loss orders to protect profits.

3️⃣ Consider scaling in and scaling out of positions for optimized trade management.

4️⃣ Adjust stop loss levels based on evolving price action.

5️⃣ Utilize breakeven stops to eliminate risk on profitable trades.

6️⃣ Analyze and learn from losing trades to improve your trading approach.

By mastering the art of trade management, you can maximize your profits and minimize your losses, leading to more consistent and successful trading results.

SIP, LAUGH, TRADE 😁

📈LATTE LINEUP📈

-AUDCAD-

HTF(Daily): Previously, AUDCAD was range bound, characterized by a lack of clear market direction. However, a significant development has occurred as the price broke out to the downside, forming a new lower low. This shift in price action suggests the emergence of bearish momentum. Currently, the price is undergoing a pullback, retracing towards the previous support level, which we anticipated to act as resistance. This resistance area coincides with the 100% Fibonacci retracement level and the previous high point. The confluence of these factors adds to the significance of this zone.

Providing further confirmation of the bearish sentiment, we observe the presence of rejection candles emanating from the identified resistance zone. These candlestick patterns signify the return of sellers, reaffirming our bearish bias.

The quality of this bearish move is quite evident, displaying a symmetrical pattern with a clear lower low and a decisive break of the support level. Additionally, the candlestick formations emphasize the strong direction of the price action.

Supercharge Your Trading Experience with TradingView!

Access the easiest and most up-to-date charts right on your computer and phone. Sign up now and elevate your trading to new heights. Don't miss out - join TradingView today!

GET CHARTING!

LTF(1-HR): The price action in the shorter time frame clearly exhibits a head and shoulders pattern. This formation typically indicates a potential trend reversal, with the right shoulder lower than the head and left shoulder. Our strategy revolves around waiting for a decisive downside break of the pattern. Once this break occurs, we anticipate a subsequent retracement towards the previous 1-hour support level, which will now act as resistance. This retracement serves as an optimal entry opportunity.

Before initiating short positions, seeking confirmation from the price action is crucial. We should monitor for the emergence of candlestick rejections or engulfing patterns at the retested resistance level. These patterns will validate the selling pressure and strengthen our conviction for short trades. We recommend placing stop-loss orders above a previous high to manage risk, effectively guarding against potential price reversals. As for targets, we target the previous daily low, offering a suitable area for profit-taking.