The NZD/JPY pair is everyones favourite carry trade, including me, but at times it pays to be cautious, despite the good returns available. If we take a look at the daily and weekly charts, the pair have been trading sideways for over a month. On the weekly charts we have two hanging men and three dojis, not a partularly good sign!

I closed out my trades for a nice profit a couple of weeks ago at 88.56, and am now sitting on the sidelines waiting for a breakout. If prices break to the upside then I may open further trades depending on the strength of the move. A break to the downside may indicate a long term change in direction and I will have to look elswhere for carry trade profits.

My suggestion at the moment would be to close out any exisiting trades, and for those about to enter the market to wait and see for a confirming move in the charts.

For those scalpers who followed my advice last night on the GBP/USD pair, you should be sitting on some nice profits by now, as the currency has fallen from 9811 to a current level of 9744 – a profit of 67 pips. Smaller gains were acheived on the EUR/USD which is trading in a narrow range at the moment.

The major news annoucement today is at 6.00 EST with the release of the FOMC minutes from the May 9th meeting. If you like trading the news, then stay with the trade. For those more nervous traders I would suggest you take your profits off the table and wait for further opportunities tomorrrow.

At 9811 the GBP/USD looks weak for tomorrow the 30th May, following a significant upthrust on the day on Tuesday. My own trading style is to to take a longer view and I am still bullish on the pair long term. But for the short term scalper there is money to be made tomorrow(30th May 2007) going short based on the daily charts. The same applies to the EUR/USD as the pair correlate positively with the GBP/USD. For those of you who like to hedge your risk a bit, then try a combination of GBP/USD and EUR/USD short with a hedge on the USD/CHF which correlates inversely. 

As I suggested in my last post, this pair looks good on the short side. The Central Bank of Canada announced that interest rates would be held at 4.25%, but suggested that rates would rise in the near future as a brake on increasing inflation.

The pair have responded with a fall of over 130 pips since the announcement, and I would suggest that further downwards moves are likely over the next few days and weeks. I am currencly sitting on some nice profits, but will keep these positions open for some time to come and will be looking to take my profits somwehere around the 1.3620 level.

For those of you involved in currency trading, the EUR/CAD pair is a great short ttrade right now. Having risen sharply over the last few months, but failed to penetrate resistance at 1.55, and followed by a period of consolidation sideways, it is now in a siginifcant down move. Currently at 1.4524, it seems a move back down to 1.400 is possible If it penetartes support at this level then a move to lower levels at 1.35 would seem likely.

I am currently trading this pairon the short side and will keep you up to date with progress on the trade.

As is usual in the currency markets, the initial reaction to any piece of news is to move in one direction, followed shortly afterwards by a move in the opposite direction. For those of you who are frequent traders, this presents an opportuinity each and every time. Whilst it does not happen on every occassion, it occurs more often than not, and therefore with suitable stop losses in place, allows scalpers the opportuinity to trade on market news.

One of the classic news annoucements is ofcourse the NFP or Non Farm Payroll, which is announced on the first Friday of every month in the US. The data is only released after a total lockdown, to prevent any pre-release via phone, email or text. The pair move in one direction, followed shortly afterwards by a siginificant move in the opposite direction. The reason stated by traders is often that this is because their is an intial reaction to the news, followed by a more considered and opposing view once the market has had time for the data to be analysed. I have only one word for this – RUBBISH – the reason is happens is that it provides a wonderful opportunity for stops to be taken out before prices move in the opposite direction. The same occurs in the stock market, day in and day out, week in week out.

To get an idea of where the pair is heading next we have to move away from the short term charts of the hour, the day and the week , and start to concentrate on the month for an analysis of the technicals.

Back in April 2006, the market formed a bullish engulfing moving from 1.7358 to 1.8252 with a major resistance level at 1.9250. This level was eventually breached in November to 1.9680 and was subsequently followed by three dojis and a hanging man. For long term traders this would have indicated a turning point with a confirmation expected after the hanging man in March. However the pair have continued to rise further with what looks to be a continuation of the upwards trend with a likely move above 2.00 and beyond. 

The weekly picture is much the same, with increasingly higher levels of resistance being broken in an upwards trend. The pair show no signs of reaching a top at present, and with the fundamentals working in opposition, a move above 2.0000 and beyond seems inevitable.