A Look Inside My Friday Forex Trading Routine

On Fridays, my trading day almost always wraps up by noon. Today, I'm clocking out even earlier for a chiropractic appointment. If I'm in a position when it's time to head out around 10:45 A.M., I'll just let my automatic orders manage it. After that, I’m heading up to Orlando for an internet marketing seminar—a three-hour road trip from my place in South Florida, which I actually enjoy. I just put on an audiobook and go.

This weekend’s seminar is all about the latest in online marketing. I’m fascinated by the internet and marketing, so spending a couple of days diving into that is my idea of a great way to clear my head of the markets. It might sound a bit geeky to relax at a marketing event, but I’m a proud geek. I’ve always preferred this kind of active relaxation over kicking my feet up to watch TV. You have to find hobbies, even distractions, because the market can completely consume you. I know that from experience. Managing a demanding like trading requires a clear mental break.

After getting home late Sunday, I’ll be right back out the door at 4:30 Monday morning for New York City. The International Traders Expo is happening, and I’ll be there for the last couple of days. Since Monday is a holiday, I won’t miss any U.S. trading, and I can always trade from my hotel on Tuesday morning if I want to. I’m looking forward to meeting up with my friend, trading expert Todd Gordon from Gain Capital, and some people at the eSignal booth to pick their brains. Realistically, I probably won’t be trading again until I’m back home on Wednesday.

My Morning Market Analysis

Here’s what’s on my radar this morning. My first consideration is always the direction of the U.S. dollar. I keep a constant pulse on it using the U.S. Dollar Index Cash. What really has my attention is how the dollar tanked from 91.01 yesterday, with sellers stepping in right near the year’s high of 91.02. It’s no surprise that 91.00 is a huge psychological number. Until the price can break and hold above it, that level acts as major resistance.

This means that currencies like the EUR/USD, GBP/USD, and AUD/USD will likely find some support. I’ll be scanning these three markets for potential setups. To be clear, I won’t enter a trade based solely on my opinion of the dollar, but it’s a powerful undercurrent I have to be aware of. As of 7:00 A.M., the dollar is climbing back toward that 91.00 level after consolidating a bit earlier.

I’ve been tracking the U.S. dollar since my early days trading commodity futures. For futures traders, moving into the forex market is a pretty natural transition since we’re already comfortable with leverage and risk. A lot of people find that is more manageable when they have a background in a related field.

Identifying and Acting on Setups

Looking at the GBP/USD, I see a nice triangle pattern forming on both the 30-minute and 60-minute charts. The 30-minute triangle is a much cleaner, more balanced pattern. The 60-minute chart, on the other hand, is just coming down from a recent breakout that looks like it’s failing. An earlier buy signal at 5:00 A.M. was confirmed by the MACD histogram, but anyone who took that trade is likely getting stopped out right about now.

There are two major economic reports coming out this morning: the Core Producer Price Index (PPI) at 8:30 A.M. and the Michigan Sentiment report twenty minutes later. The PPI will definitely move the market. My sense, based on years of watching price action, is that we're either going to bounce hard off the 91.00 resistance on the dollar or blast right through it.

Here’s where a little common sense comes in. The dollar has been rallying since last night, moving from 90.54 to 91.01 right before the 8:30 A.M. news. How much higher can it really go? It's likely that traders have already priced in a positive PPI number.

At 7:30 A.M., we got an answer. The British Pound broke down through a key support level at 1.7339 on the 30-minute chart, with MACD confirmation. The 60-minute chart never triggered, making the decision simple. It was an aggressive setup right before a big news release, but trading is about taking calculated risks. The trade setup looked solid for a short entry, but the price dropped to 1.7327—missing my exit by a single pip—before sharply reversing and hitting my stop for a 15-pip loss. These are the realities of running a based on market movements.

Sticking to the Rules, Even When It Hurts

At the same time, a similar short setup was forming in the EUR/USD. The pattern wasn't as perfect, but it was valid. And again, the market dropped just one pip shy of my support level before reversing and stopping me out for a 14-pip loss. Seeing two trades bounce just short of my target is frustrating, but it’s part of the game with these kinds of .

Those bounces made me reconsider my initial thesis. It seemed the U.S. dollar was actually showing weakness. A quick look at the chart confirmed it: the dollar was struggling at the 91.00 resistance. This told me I should be looking for buying opportunities in the euro, Aussie, and pound. For many, this is how a evolves; you adapt your strategy based on what the market tells you.

Sure enough, the euro took off about an hour after the dollar hit that 91.00 wall. It looked like a great momentum setup to go long, but it happened too fast. The MACD histogram didn’t confirm the move until after the breakout had already occurred, which meant I couldn't set a proactive order. I won’t chase a trade, especially on a short time frame. I either get the price my plan requires, or I don’t enter. It may sound rigid, but this discipline is why I can outline these rules with confidence—it's what I practice every single day. This is the only way to turn a success.

And with that, it’s time to close the charts, head to my appointment, and get ready for my trip. A successful is as much about knowing when to step away as it is about knowing when to trade.