Friday, April 30, 2010

Friday 30 April

If you are American please pass this video around: 
End Too Big to Fail for Good

I have a small theory that the US markets don't care about Greece/Portugal/Spain yet and much of the losses two days ago were due to the Goldman grilling on Capitol Hill.  Then today we had the news Goldman would settle the charges and quite a rally (I think it was the biggest up day in the SPX this year).  If that is the case then Mr American Market might not like this news: US politicians talk criminal charges as Blankfein warns staff of more pain ahead.   Also Gold is supposed to be the financial sector hedge and Gold has been VERY sensitive to the Goldman ups and downs ....

Breakout and back above trendline support, same as indices.
Next resistance is 0.94 (November high)

Daily chart - bull flag, break of 1175 means back to 1206 then 1230
Wedge is clear on 1hr chart.

Still in a wedge looking for a breakout.
Downside target 0.99, topside 1.15

GBPAUD short
240 min chart
Wedge has broken short, and retested from underneath.
I also like EURAUD short and AUDCHF long.

If we get a risk aversion day Friday then sterling is very sensitive to the financial sector and I like cable short.
Silver looks to be making an inverse head and shoulders on the daily chart, one to watch.
There is no change to my EURUSD bearishness and if this resistance at 1.3260 does not hold I am looking to sell at 1.34 and 1.36 levels.

GBPAUD short  1.6500 stop 1.6560 PT 1.6370 / 1.6250
CABLE short 1.5350 stop 1.5380 PT 1.52 off 78.6fib
GOLD long 1175 stop 1172 PT 1186
GBPJPY short 144.50 stop 144.80 PT 142 - 4hr pin
USDCHF short 1.0760 stop 1.08 PT 1.0650 / 1.06
USDCHF closed BE - bad idea.
USDCAD long 1.006 stop 1.0035 PT 1.018
GOLD closed 1180 - stocks cratering (+1.6R)
GBPAUD closed 1.6408 (+1.5R) - this trade does not work with risk-off
EURJPY short 125.10 stop 12550 PT 122

Thursday, April 29, 2010

Thursday 29 April 2009

At the risk of feeling like Charlie Brown (who believed Lucy when she said she would hold the football for him to kick and then pulled it away every time) ... The indices have rolled over and we are in for a bigger correction.
We have broken trend-line support on almost every one and unless we have a spectacular rally that puts us back above them and makes it a false break then we are going down.  This happened in January when stocks fell right after earnings too.
Excuse the messy charts, I have a lot of fibs on them.

S&P cash:
Downside target projection 1112.75

FTSE futures
Downside target projection 5200

The recent past has shown that when the vix goes up and stocks go down that Gold has fallen.  I think the recent gold surge has been to do with Greece fears but if stocks continue down Gold will likely go down too.

EURUSD short 1.3220 stop 1.3255 PT 1.31 / 1.265
NZDUSD stopped out BE
GBPJPY stopped out (-1R) - house price news
EURUSD stopped out (-1R)
EURAUD closed 1.4280 (+1.4R) - euro rallying
USDCAD short 1.0075 stop 1.010 PT 1.00 / 0.99
USDCAD closed 1.0012 - indices at resistance (+2.52R)
GOLD short 1165 stop 1170 PT 1150 / 1045
CRUDE short 84.70 stop 8510 PT 83.00
AUDUSD short 92.78 stop 92.93 PT 92.00 / 91.30 - descending daily trendline
EURUSD short 1.3240 stop 1.3280 PT 1.31 / 1.30
CRUDE stopped out (-1R)
GOLD stopped out BE :(
CRUDE short 84.95 stop 85.45PT 83.00 - last try
CRUDE stopped out at close to the pip (-1R)
AUDUSD stopped out (-1R) - spiked out
EURUSD closed 1.3250 (-0.25R)

Open trades:
I closed EURUSD, it felt like a sitting duck asking for someone to come and get it.  The price action in the indices and AUD tonight makes it clear that Greece/Spain/Portugal are old news and its risk on.

Wednesday, April 28, 2010

Wednesday 28 April

First Sovereign CDS go up, then bond yields blow out and then the currency drops.  Every Euro drop has been preceeded by this.

It is very spooky that the US indices did not bounce and closed so bearish last night and I am not just saying that because of the full moon.  Full moons and new moons are often turning points for the FTSE and sterling.  Lets see what today does.

USDCAD short stopped out (-1R)
CRUDE long stopped out (-1R)
CRUDE long 82.00 stop 81.70 target 83.30 countertrend
CRUDE long closed 50% @ 3R 82.90 (+1.5R)
EURUSD short 1.3260 stop 1.3280 target 1.3150 / 1.30
GBPJPY long closed 1.4330 (+2.6R)
AUDJPY short 87.00 stop 87.20 PT  84.50/83.80
CRUDE long closed balance 82.60 (+1R) - waiting for US open now
AUDUSD short 0.9240 stop 0.9255 PT 0.9130
Im doubled up Aussie, I know.  Bad
CRUDE short 82.40 stop 82.70 PT 80
CRUDE stopped out breakeven post inventories
EURAUD short 1.4350 stop 1.440 daily inside bar break
AUDUSD closed breakeven.  Not looking good.
AUDJPY closed 86.80 (+1R) "
EURUSD closed 50% @ 1.3150 (+1.5R)
EURUSD closed 1.3175 post FOMC
CRUDE long 80.03 stop 82.63, post FOMC, PT 84.50
CRUDE long closed 80.30 - no bounce (+0.67R)
Asian session:
EURUSD short 1.32 stop 1.3225 PT parity :)
AUDJPY short 86.80 stop 87.10 PT 85.60
NZDUSD short 0.7180 stop 0.7210 PT 0.71 / 0.67
GBPJPY short 1.4255 stop 1.4305 TP 1.4105/1.39 - 4hr bear flag
AUDJPY stopped out (-R)
EURUSD stopped out (-1R)

Open trades:
EURAUD short 1.4350 stop 1.440
NZDUSD short 0.7180 stop 0.7210
GBPJPY short 1.4255 stop 1.4305


What a day with Greek contagion spreading, a downgrade for Portugal, Greece downgraded to junk and bond markets surging.  I got it wrong with the dollar, I was expecting some more downwards correction for the USD after the weekly candles of last week and some consolidation in a pennant but it has broken out and at new highs.
It is very hard not to fall in love with the downside after a day like today, and the closes were very strong, it looks likely to continue but it is not a trend change yet ... yet.  We are due for our sixth "Greece is saved" rally any time now.

The Nikkei is dropping tonight, having been closed before the fun started today.  Normally the Nikkei falling is downward pressure on yen crosses and it is certainly holding back any bounce so far.
Gold was the star performer of the day at a new 2010 high.  Every time the vix has risen hard and stocks have fallen hard Gold has gone up despite silver and all other commodities falling in line with the rising dollar.
Tomorrow is the FOMC statement where the market is looking to the Fed to remove the "lower for longer" language in anticipation of a rate hike sooner rather than later.  If this language is removed signalling perhaps some tightening combined with uncertainty in other markets Gold could fall off from its perch.

AUD has broken the equal triangle / wedge to the downside and signals more losses to come.  Today's fall took out three weeks of lower wicks!
AUD and NZD are very risk sensitive (both today fell further than the Euro in percentage terms) so much will depend on stocks and risk appetite.  With USDJPY in a broad trading range and moving with risk appetite AUDJPY will follow AUDUSD.  I am looking for price action in the 92.50 / 0.93 to perhaps sell again.

Same as AUD, I am selling rallies.  The Kiwi looks set to test the bottom of a bearish rising channel.  It is well supported by moving averages but a break below changes the game and sets up a retest of 68 and lower.  I would sell a break of the low or look for a retracement to 0.7175-7190

I am tentatively short for a short term retracement trade but seeing where this goes.  It was interesting this could not make a new high and USDCAD is normally my bellwether.  I am watching to see what happens at the 50fib at 1.007 or the bottom of the wedge to see where we go next.

Cable is almost as disliked as the Euro with its big debts and prospects of a hung parliament but before todays big sell off the chart was bullish so we will see how the week ends.  For now the descent was stopped at the trendline support and you either buy here off this trendline or you wait for price action at 1.5350 / 1.54 Fib cluster or perhaps 1.5411 breakout level to sell again.

After a 150pip move in one day it might have a quiet day tomorrow but I would not be surprised to see resistance off the old descending trendline and a continuation down to 1.31.  I like the fib cluster at 1.3270/80 and I am looking for price action there to short.

I really like this one, its the inverse of EURUSD.  If it gets that far I would look for price action to buy at 1.07 or 1.0650.  If it doesn't stop there then we could go back to the rising daily trendline support.

I see this pair as on its way back lower in a descending channel / possible bullflag.  I know the market is heavily long USDJPY but I am waiting for a drop to 90 area to buy.  For now this pair trades with stocks ... I am looking at 93.70 for a turn lower again to the 0.9150 area.

The spread between US crude and Brent has just got much wider.  US crude normally trades at a premium to Brent but this is reversed.  The last few weeks has shown a big build in supply at Cushing and crude inventories are today.  I am long for a retracement but looking to short again at 82.90/83 or 83.30

Tuesday, April 27, 2010

Tuesday 27 April

It has been one of those nights as risk appetite is waning and equities sell off.  AUDUSD has failed at the 93 level, Cable at 1.55 and EURUSD at 1.3220 and the JPY crosses are pulling back.  I am sticking with the bullish daily and weekly candles from last week and I see these pullbacks as buying opportunities for dollar crosses and I am waiting for the retracement levels.

The Greek drama is becoming old fast and EURGBP is unable to hold below the trendline it broke.  I am not buying but I will leave that one for now and see what it does at 0.8830/0.8850.  Bizarrely Greek/German 10yr bond yield spreads are now at 687bps a 12 year high.  Eventually that will catch up with EUR.

Late today is the NZD rate decision.
27 April 1987 was one of the biggest down days in stocks ever ... :)

EURGBP short balance stopped out (-0.5R)
USDCAD long 1.0004 stop 0.9984 PT 1.007 counter-trend
EURUSD short 1.3345 stop 1.3370 PT 1.3265 break of TL support
CRUDE short closed 25% @ 83.30 target (+1.25R)
CRUDE short closed balance 83.50 (+1.1R)
CRUDE closed original short balance 83.50 (1.47R)
USDCAD long closed 50% @1.007 target (+1.65R)
USDCAD closed balance 1.008 (+1.9R) - old trendline resistance
EURUSD closed 1.3280 (+2.2R) - old trendline support
EURUSD closed original short balance (+7R)
GOLD short closed 1146.50 (+2.3R) - 50fib
GBPJPY closed 50% @3R 143.90 (+1.5R)
CRUDE long 83.50 stop 83.00 PT 85.50 - 4hr doji
AUDJPY closed 86.40 (+1.6R) - Turnaround Tuesday
CHFJPY closed balance 86.70 (+3.3R)
GBPJPY closed balance 143.60 (+1.8R)
CRUDE long stopped out - Greece downgrade (-1R)
CRUDE short 83.00 stop 83.30 target lower
CRUDE short closed 82.00 - last weeks low
CRUDE long 82.00 stop 81.50 PT TBD
USDCAD short 1.0170 stop 1.0190 PT 1.007 / 1.0035
GBPJPY long 142.00 stop 141.50, PT 144.50, 4hr doji

Open trades:
USDCAD short 1.0170 stop 1.0190
CRUDE long 82.00 stop 81.50
GBPJPY long 142.00 stop 141.50

Monday, April 26, 2010

Monday 26 April

Greece is still weighing very heavily on Eur this morning but everywhere else is risk on so far!
Update: Greek Govt bonds / Bunds spread reach new 12 year high at 612bps ... risk off again!

EURGBP short 0.8660 stop 0.8675 PT 0.86 
GBPJPY long 1.4530 stop 1.4495 target 150.70
CHFJPY short 87.70 stop 87.85 target 87
CRUDE JUN short 85.40 stop 85.80 PT 83.30
GBPJPY closed 1.4560 - not doing what I expected (+0.85R)
EURGBP short closed 50% @3R 86.15 (+1.5R)
EURUSD (Fri) short closed 50% @1.33 - 50fib retrace (+2.25)
EURUSD balance stopped out (-0.5R)
CHFJPY closed 50% @3R (+1.5R)
CRUDE Jun closed 50% @ 3R 84.20 (+1.5R)
Asian session:
AUDJPY short 86.90 stop 87.20 target 85.60 - daily shooting star
GBPJPY short 145.10 stop 145.50 target 142.50 countertrend

Open trades:
EURUSD short 136.30 stop 1.3655 - 1/2
CRUDE short 85.98 stop 86.40 - 1/4
CRUDE JUN short 85.40 stop 85.80 - 1/2
GOLD short 1156 stop 1160
CHFJPY short 87.70 stop 87.85 - 1/2

Sunday Analysis

An interesting week ahead!!  Will Magic risk-on Monday work again?
Its not a secret that I am longer term bullish the USD but looking at all the charts it is clear that we are looking at a risk-on rally as we start this week with breakouts in commodities and indices and possibilities in the yen crosses.  While many dollar crosses are held back by trendlines or in consolidating in pennants the Friday candles show  risk-on reversal potential breakouts.
After it's best run since December the dollar fell off sharply on Friday on the news of Greece asking for its IMF money.  This is the fifth Greece rally and now calling in the IMF is an excuse to rally (yes, I am a bit cynical).  The CoT shows the market was heavily short EURUSD last week so a squeeze is not unexpected and could bounce higher than anyone expects after the sharp move off 1.32.  So Greece is fixed and that leaves the most important news on the calendar for the dollar next week.  There is the FOMC which won't likely change the Fed Funds Rate but the market will be watching the discount rate and the language for hints on timing, but the biggest event risk for the dollar comes Friday with the Q1 GDP figure where a weak number could dampen the markets expectations for a rate hike.

Dollar Index (June): 
After five consecutive days of gains which put the dollar back in its ascending channel the dollar fell hard back to test the channel support.  We could be consolidating sideways and forming a large pennant, similar to the ones on the daily charts of AUDUSD and GBPUSD, so perhaps more choppy sideways movement before the news later in the week gives a firm direction but it is clear that after a strong rally the dollar is doing some back and fill correcting to start the week..  

S+P futures -
Weekly bullish engulfing, daily bullish long candle, the index has made new highs with no signs of reversal.  Buy on dips, targets 1216 and 1226.  Support at 1200 should give a long entry.

FTSE 100 futures -
Weekly bullish hammer like doji, daily bullish engulfing.  Price was in a descending channel / bull flag and broke out Friday.  A pull back to test the top of the channel or a break of Thursday's hammer candle are good long entries with a target of the old high at 5795 and then 5842.50 & 5905

Weekly bullish hammer, daily bullish continuation of Thursdays hammer, this chart says crude is on the way up again.  Price has closed on the 61.8fib retracement of the recent high-low and may pullback here to give a long entry.  I would watch for price action at 83 or 83.50 to buy with a target of  90.40.  I am however a bit cautious of this long, as we have bounced off the top of a wide trading range and if the dollar continues to rally it could put downward pressure on crude.  As most of the rally on Friday was triggered by relief over perhaps (another) solution for Greece it means crude is very sensitive to risk appetite.

Weekly bullish piercing line, daily massive bullish engulfing.  Gold really rallied hard on Friday as the dollar fell and broke its downtrending resistance line.  It has stalled at the 127fib extension and I am looking for a pullback here to 1150 or 1146 area to buy. We could test 1160 before gold pulls back and that could present a shorter term short opportunity.

SILVER. Similar to gold, Silver broke out from a wedge Friday and I would look for a pullback to 18.00 to buy with a target of 18.75 / 19.50 and if the dollar continues to rally I would pass on buying silver.

Currencies - Majors

Weekly bullish doji, daily bullish hammer, AUDUSD has formed a tight wedge on the daily charts and could break either way.  There is the potential for a double top here with the November 2009 high at 94.00.
This pair is very sensitive to risk appetite and it is hard to see a reversal without a correction in stocks so I would wait for a breakout of this wedge.

NZDUSD – Weekly bullish consolidation, daily long bullish marabuzo.  Despite the bullish rally on Friday  I am bearish and looking for signs of a reversal for this pair.  The gently rising pattern is bearish to me and this is at the top of a broad descending channel.  I still like short below 0.72 and a break of 0.7050 opens up a much bigger fall.  If the dollar continues to fall this could break out on the long side and I will sit this one out.

Weekly bearish reversal, daily bearish, USDCAD is in a bear flag pattern and looks set to break lower.  The 78.2fib from the 07 low to 09 high is support for now and just below it at 99 is the 88.6 fib from the 02 high to 07low.  Above these two major fib levels I am bullish and waiting for an opportunity to buy.  Below 99 and we have much farther to fall.  

Weekly bullish bit in a tight range, daily bullish piercing line.  Price is consolidating in a wedge or pennant and due for a breakout after last Mondays bullish hammer made a higher low (just).  A break of the wedge to the upside comes in at 1.5430 and I favour a break to the upside with a target of 1.5710 1.27fib extension but 1.5830 SR level and 61.8fib retracement are also possibilities.  I will be looking for price action to cut and short at these levels but until then I am bullish ... 

EURUSD – Bearish doji, daily long inside bar off 1.32 support suggests a tweezer bottom.  Price is still contained in a steep descending channel with resistance at 1.34 / 1.3540 and 1.36.  I am a seller of rallies and am looking to those levels to add shorts. 

USDJPY – Bullish breakout - weekly  bullish engulfing, daily long bullish doji.  The uptrend in USDJPY appears to have resumed and a break above 94.77 will confirm.  Buy on dips, I am looking to buy on a retest of 93.00 / 92.75 (if it gets there).  

USDCHF – Reverse of EURUSD. As long as the SnB keeps intervening to keep the CHF in line with the EUR then this pair trades in inversely to EURUSD.  I like this pair better short than I like EURUSD long but if Greece implodes again then so will this trade and I would rather buy dips.


Weekly bullish engulfing, daily bullish hammer, this chart is strongly bullish.  However, right above at 87.50 area is a strong resistance level / range high / and potential triple top.  A break and retest of this level gets me long but otherwise below that level I would prefer to wait for a pullback to buy at 85.60/86.00 to run at the resistance level with a profit cushion.  Particularly because above that level at 88.13, the March08 low could be significant resistance.

Weekly massive bullish engulfing, daily bullish marabuzo, this pair has broken out of a pennant formation and on its way to the top of the range highs at  68.65 / 69.75.  I am looking at 66.35 to buy but a break of the high would be a more conservative trade. 

CADJPY – Weekly bullish engulfing, daily bullish continuation following higher low.  This pair has important weekly resistance at 97 and just below that an unfilled gap resistance at 96.48 that has not been filled since October 08.  I am bullish, but cautious that a reversal may not be far off.

Weekly bullish piercing line, daily long bullish marabuzo on Greek/IMF news.  Price has stalled at fib cluster and 126.40 and this is a possible short opportunity. It would need to pull back to 125.20 or 124.50 to entice me long but I am not sure this is the best yen trade.

Weekly bullish engulfing, daily bullish, price has broken above the key 145 resistance level tonight but looks a bit precarious, there is no entry long at this level.  I am watching for a pullback to retest 1.45 and see if it holds which would be a buy if it does..  If it does not I am looking at 141.75-142.50 area for a long entry with a target of  150.70

Same as EURJPY, Weekly bullish piercing line, daily bullish engulfing, appears to be consolidating sideways below 88.00 and is off the top of a descending channel.  Price is making lower highs and lower lows, this is not a long for me until it breaks the daily trendline resistance I favour the short side or a pull back to buy.

AUDNZD – Weekly bearish, daily long bearish marabuzo, and I would sell a retest of 1.30 from the underside with initial target 1.27 then 1.24 - I like this one a lot, check the monthly chart.

AUDCAD – Sideways consolidation, weekly bearish outside bar, daily long legged bullish doji (pin bar).  This does appear to have broken support, which is what I have been waiting for but it is hard to sell into that daily candle.  I will wait for better price action to short. Pass for now, waiting to short.

GBPCHF – Weekly bullish engulfing daily bearish engulfing, price bounced off trendline resistance and 200DMA.  This is the inverse trade of EURGBP and I therefore expect this consolidation to eventually result in a break to the upside.
EURGBP - Weekly long bearish marabuzo hit double bottom, daily bullish engulfing off 0.86 level.  I am bearish this pair because it broke trendline support.  It has bounced off 0.86 potential double bottom  and back above the trendline support.  I am watching to see if it holds above and offers a short term bullish trade but I prefer to wait and sell rallies.  If it holds above the trendline support I am watching for price action at 0.8870-0.8915

EURAUD – Weekly Bearish engulfing, daily rallied Friday but price has been unable to close above 1.4420 resistance, despite some forays above. After 15 consecutive down months it is hard to imagine it falling further but of course it can.  I like this short here at 1.4420 and would sell any rallies off 1.4575 or 1.48 .

EURCHF – Weekly doji, daily sideways in congestion.  A countertrend long on Greek euphoria is tempting but not smart.  This looks all set to retest the lows.

GBPAUD - Weekly bullish spinning top, daily bearish hammer at the top of a range.  I like this short and the gently rising wedge on the weekly is bearish.  I am selling rallies and watching to see if this can get back up to 1.6985 and close the gap.

EURNZD - Another pair that keeps dropping.  Weekly bearish marabuzo, daily doji on Friday, the low looks like it is about to be taken out and I would sell rallies or a break of the low.  This is still a one way train next stop 1.8340

USDNOK – Weekly bearish shooting star, daily bearish engulfing confirms a weak week ahead for the USD and this pair looks set to test the range lows again at around 5.8.  I prefer to wait and buy there.

USDSGD - Monthly bearflag broke down, weekly is bearish continuation and daily is a bearish engulfing. I like this long above 1.36 but there is no price action yet to buy, so I will pass.


Friday, April 23, 2010

Friday 23 April

A quiet morning so far I am waiting for UK GDP numbers.
After the big moves overnight down in AUD and EUR the markets I expect some back and fill for the USD but it feels like a scary Friday when anything could happen.
I have closed my EURGBP short here as I think it is due to bounce off  this 0.86 level which is a biggie and I will look to sell more on rallies.
The pound is due to catch up EUR and looks heavy but need to wait for GDP numbers.  Because I am not sure what the dollar will do today I think GBPCHF or EURGBP might be a better way to play the GDP numbers if the market sells sterling off afterwards.
I did not expect to see AUDUSD back below 92 with three black crows on the daily but if equities rally so will AUD so it is a hard sell and I will pass.   EURAUD has formed a good tweezer bottom and this pair is a big driver of AUD.

CRUDE has broken up through a trend-line from the April highs and has a daily hammer, so it might be a good buy if equities rally today, although I am medium term bearish.
This might be a quiet day for me and I will wait to see how the weekly candles close.

USDCAD stopped out (-1R)
EURGBP closed 25% balance 86.15 (+2.5R)
GBPCHF short 1.6570 stop 1.6620 target 1.64 - post UK GDP
EURUSD short 1.3330 stop 1.3350 - addition, post IMF announcement
CRUDE Jun short 83.50 stop 83.80 PT 82.50
CABLE short1.5325 stop 1.5355 PT 1.5125
CRUDE stopped out (-1R)
EURUSD closed 1.330 (+1.5R) - bull flag and indices rising
CABLE stopped out (-1R)
GOLD short1156 stop 1160 off 127 fib extension counter-trend
BRENT crude short 86.75 stop 87.10 PT 84.25 / 83.25
BRENT stopped out (-1R) ouch
EURUSD short 1.3390 stop 1.3410 - 61fib and descending trendline
GBPCHF closed  @1.6460 (+2.2R)

Open trades:
EURUSD short 136.30 stop 1.3655 - 1/2
CRUDE short 85.98 stop 86.40 - 1/4
EURUSD short 1.3390 stop 1.3410
GOLD short1156 stop 1160

Thursday, April 22, 2010

Thursday 22 April

The US dollar right now is on its best run since the week ending December 22 but yesterday it didn't do the trick for oil, silver and gold which stayed bid despite falling indices and a strong dollar.  Today they may decide to go with the flow and we could see declines in all three.

It's all about the PIGS and particularly Greece and Greek bund spreads continue to set new records.  Sterling looks supported and has had some really good economic numbers but unemployment yesterday was back to back ugly.  Tomorrow is the BoE rate decision ...

Big US news this morning with PPI and employment numbers.

BRENT crude short 85.20 stop 85.50 PT 83
SILVER short 17.96 stop 18.01 PT 17.50 - trying again
USDCAD long 1.00 stop 0.9980 PT 1.015 / 1.07
BRENT  closed 50% @3R 84.30 (+1.5R)
EURUSD short addition closed 1.3280 (+2.56R)
SILVER short closed break even - 4hr hammer
NZDUSD short balance stopped out 0.6995 (+0.5R)
AUDUSD short balance stopped out 0.9272 (+0.5R)
BRENT short balance stopped out (-0.5R)

Open trades:
EURUSD short 136.30 stop 1.3655 - 1/2
CRUDE short 85.98 stop 86.40 - 1/4
EURGBP short 0.8765 stop 0.8780 - 1/2
USDCAD long 1.00 stop 0.9980 - I don't know how I didn't get stopped out on this.  A miracle.

PS - This came out this morning:
There is pretty good money fading these calls, I'm just saying.  The ones on the EUR were no better.

a good lesson in why you keep old trendlines on your charts ...
The trendline that contained the bounce today was the old one joining the 03Dec high, the 17March high and was where we broke out and gapped up on the faux bailout announcement.  We broke back below it today and it contained the bounce in EURUSD.

EURGBP breakout setting up?

Traditional technical analysis for a wedge says you take the high at the start of the wedge (Dec08 - 0.9802) to the low of the first swing (June09 - 0.8399) and project that distance from the breakout point.
So if we breakout here around 0.8680 then the projected target could be 0.7277, which sounds wild but looks very reasonable on a weekly chart.
That kind of lines up with the 78.2 fib retracement from the 07 lows to the 08 highs.  
I would expect a bounces at 0.8180 and 0.7785 

I think a lot of traders have been looking at this chart.  It might be the reason cable has been so well bid.

Wednesday, April 21, 2010

Wednesday 21 April 2010

I know it doesn't look so good this morning but I am still bullish USD this week.  Shorter term I still have the dollar in a rising channel and until it breaks out I am staying bullish.
EURUSD has broken the tail of the daily and weekly bullish hammers overnight.  This could be a clear out of stops before a move higher but until the trend changes I am a seller of rallies.

USDCAD is the only worrying chart.  After the BoC removed its lower for longer language the market is pricing in a rate hike very soon.  USDCAD often leads the way so I am ready to be wrong but I am looking for price action to  buy USDCAD at the 78.6fib level at 0.9900.
Fabulous earnings from Apple last night mean today will no doubt start with a rally in the indices and commodity currencies.

GBP is well supported this morning with the market expecting much better unemployment numbers in a couple of hours.
EURGBP is working out well and on its way to my target of 86.00

AUDUSD short stopped out (-1R)
BRENT CRUDE stopped out (-1R)
EURGBP closed 50% @3R 0.8720 (+1.5R)
BRENT CRUDE short 85.50 stop 85.75 target 80
SILVER short 17.850 stop 18.000 target 17.400
NZDUSD short 0.7110 stop .07125 target 0.7045
EURJPY short closed 50% @3R 124.35 (+1.5R)
EURUSD short addition closed 50% @3R 1.3365 (+1.5R)
AUDUSD short 0.9296 stop 0.9326 target 0.9216 / 0.90
BRENT short stopped out (-1R)
EURJPY balance stopped out 125.05 (+0.5R)
SILVER short stopped out (-1R) - in retrospect a dumb trade

Open trades:
EURUSD short 136.30 stop 1.3655 - 1/2
EURUSD short 1.3485 stop 1.3525 - 1/2
CRUDE short 85.98 stop 86.40 - 1/4
EURGBP short 0.8765 stop 0.8780 - 1/2
NZDUSD short 0.7110 stop .07125
AUDUSD short 0.9296 stop 0.932

Tuesday, April 20, 2010

Tuesday 20 April

Markets are still retracing Friday's drop, some less vigorously than others.  Spreads on Greek bond/bunds have blown out to all time highs and while it hasn't sent EUR tumbling yet but I expect eventually it will catch up with the EUR.
UK CPI numbers have given GBP a boost and sent EURGBP tanking.  I still think this has potential to break the long time wedge downwards.
It is Turnaround Tuesday which sometimes comes late to the markets.  I have levels I am waiting for to see if the market resumes the drops of Friday.
I am watching for 1.5430-40 in Cable, 1.3530-50 EURUSD, 1.00835 USDCAD, etc. and then I am looking to see if the dollar resumes its rally.
Bank of Canada rate statement is this morning.
I am expecting the indices to perhaps correct down this week but I am surprised that the S&P came this high and then did not quite touch the 618 retracement of the highs to lows.  Actually nothing the indices does surprises me but if froth got us this high then I am not ruling out one more run up to make new highs in the 1220-1230 area before a correction.  I have the same view of AUD, and would not be surprised to see another test of 94 and the chart is still very bullish.

I missed a good long entry on Gold this morning, C'est la vie.   I have appointments today so I am trading on my laptop.  Not ideal and normal service resumes tomorrow!

EURJPY short 125.40 stop 12575 PT 121 - 50fib retracement
CABLE short 1.5430 stop 1.5460 target 1.52 - off 161.8fib extension
BRENT CRUDE short 85.00 stop 85.40 target 82.00
*I am shorting Brent because I think it will be more affected than WTI by the volcano*
EURCHF short closed 1.4330 (+1.16R) - rumours of SNB on bid at 1.4320
USDCAD balance 25% stopped out BE
USDCAD long 1.00 stop 0.9985 - fade spike post RBC news
USDCAD stopped out (-1R)
EURUSD short 1.3485 stop 1.3525 target 1.3360 / 1.32 - addition
GBPUSD closed 50% @3R 1.5340 (+1.5R)
EURGBP short 0.8765 stop 0.8780 target 0.87 and below
Asian session:
AUDUSD short 93.10 stop 93.30 target 92.35 / 92.0 - countertrend off 78.6fib

Open trades:
EURUSD short 136.30 stop 1.3655 - 1/2
EURUSD short 1.3485 stop 1.3525
CRUDE short 85.98 stop 86.40 - 1/4
BRENT CRUDE short 85.00 stop 85.40
CABLE short 1.5430 stop 1.5460
EURJPY short 125.40 stop 12575
EURGBP short 0.8765 stop 0.8780
AUDUSD short 93.10 stop 93.30

Monday, April 19, 2010

Late ... Monday 19 April 2010

Sunday analysis will be Monday analysis this week ... I got very behind.
I am still bearish EUR and EURJPY, will look to sell again on a pullback.

EURJPY short closed balance123.00 (+3.3R)
GBPJPY closed balance 25% @139.50 (+2.5R)
EURUSD closed short addition 1.3440 (+4R) - 61.8fib
GOLD short 1129.50 stop 1134.50 PT 1118 - break of Fridays low
GBPUSD long 1.52 stop 1.5170 target 1.5353 - countertrend
GBPJPY long 140.25 stop 139.55 target 142.00 - countertrend
CRUDE (June) closed 25% @82.50 (+2.07R)
GOLD stopped out (-1R)
GBPUSD closed 50% @3R 1.5290 (+1.5R)
Asian session
GBPUSD closed balance 1.5340 (+2.3R)
GBPJPY closed 142 target (+2.5R)
I am waiting for UK CPI numbers tomorrow morning to see what sterling does next..

Open trades:
EURCHF short 1.4365 stop 1.4385
EURUSD short 136.30 stop 1.3655 - 1/2 
USDCAD long 1.0001 stop 0.9976 - 1/4
CRUDE short 85.98 stop 86.40 - 1/4

Friday, April 16, 2010

Friday 16 April

Will we have profit-taking Friday or will the bulls push up for a strong weekly close?
In FX it looks like weekly inside bars across a lot of pairs after a week of back and fill.
I am out of ideas for today so will just try not to lose money.  After a week of inside bars we should see some good moves next week, and with the dollar index looking to close below its ascending channel it looks like we could see some more USD weakness.  Commodity currencies have spent the week in a very tight range which usually signals something bigger coming.

I got stopped out of NZDJPY short earlier which is irritating as it was doing quite well, but sticking to the rules has kept me in EURGBP short although it looks like I got within a pip of being stopped last night.  USDJPY spike was called by Reuters running old news story about intervention.  
EUR still looks really heavy and perhaps the gaps finally close in the last of the EUR crosses. My EURCHF short is stuck on support.
USDCAD retested the 1.000 and so far has held as support.

Gold is in a very tight range, it does need to drop more to get me to buy but 1150 is proving strong support.
The daily hanging man is ominous in Crude with a potential double top, profit taking could make that a good short today but not a trade to get married to as $90+ still looks a certainty.
Note I am not trading front month US crude, its the last week of the contract so have rolled to June.

Update:  forgot to add GE and Bank of America reporting before the bell today, building permits and options expiries in stocks could mean some volatility.

NZDJPY short stopped out (-1R)
CRUDE short 85.98 stop 86.40 - 1hr flag break target 85 / 84.40
EURJPY short 125 stop 125.30 break of support
EURAUD short closed 1.4550 double bottom (+1.28R)
GBPJPY short closed 50% @ 3R 142.65 (+1.5R)
USDCAD short closed 50% @3R 1.0076 (+1.5R)
EURJPY short closed 50% @3R 124.10 (+1.5R)
CRUDE short closed 50%@ 3R 84.72 (+1.5R)
USDCAD closed 25% @6R 1.0151 (+1.5R)
GBPJPY closed 25% @6R 141.30 (+1.5R)

Open trades:
EURCHF short 1.4365 stop 1.4385
EURUSD short 136.30 stop 1.3655 - 1/2 + 1.3560 stop 1.3590
USDCAD long 1.0001 stop 0.9976 - 1/4
GBPJPY short 1.44 stop 1.4445 - 1.4
CRUDE short 85.98 stop 86.40 - 1/2
EURJPY short 125 stop 125.30 - 1/2

Crude hourly flag break

One to watch -
EURJPY weekly, sitting on key support at 125.  Dollar weakness next week might pull USDJPY more and take this one down with it back to the lows at 119 which is potentially 600pips away (OR its a great place to buy ;) )

Thursday, April 15, 2010

Thursday 15 April

Yesterday the spreads on all European debt widened out but the EUR shrugged it off and stayed well bid.  This morning that negative sentiment looks like it might catch up with it.  EURUSD has got stuck at the 1.3680 level which was a big pivot in February and I am going to try a short here again to close the gap.
Likewise EURJPY is at a big pivot level (check the weekly chart) and struggling so that is an interesting countertrend short today also.
The equity rally has kept the commodity currencies well bid (although there is talk of an option barrier at 0.94 in AUDUSD) and I have missed the big sterling rally somewhat but if the gap closes in EURGBP and it keeps going then it will break out a long term wedge and be a very interesting trade short.  I did think that the support in EURGBP would hold but Sterling is proving strong and Euro sentiment is poor so it may finally break down.
Although Gold has broken out and looks set for higher it bounced off the 1170 level and formed a bearish evening star pattern on the daily and it needs to pull back to try again.  As a range trade this is interesting at the top of the range and I think it has potential to come back as retest its breakout level at 1118
USDJPY is not continuing its rally and I think there are a number of reasons.  The CoT numbers show the market is very onesided on the long side and also I hear that central banks who would normally diversify their USD into EUR are wary of it and buying yen instead. Also talk of Yuan revaluation TODAY is making this cross heavy.   I am hoping 92.00 or 91.30 will give some buying opportunities.

EURUSD short 136.30 stop 1.3655 target 1.35
EURJPY short127.10 stop 127.40 target 125
GBPCHF short balance stopped out 1.6335 (+0.5R)
EURJPY closed 50% @50fib 125.70 (+2.33R)
EURUSD closed 50% @3R 1.3555 (+1.5R)
EURAUD closed 50% @3R 1.4535 (+1.5R)
EURJPY closed balance @126.00 (+1.83R)
EURGBP short 0.8767 stop 0.8787 target 0.86 + lower, looking for trendline break
USDCAD long 1.0001 stop 0.9976 target 1.010
EURUSD short 1.3560 stop 1.3590 - addition, 4hr IB
GBPJPY short 1.44 stop 1.4445 target 142.65 / 141 - 4hr IB
NZDJPY short 66.15 stop 66.40 target 64.50

I am a little heavy short EUR but Greek and Portuguese bonds are being murdered so ... :)
Open trades:
EURCHF short 1.4365 stop 1.4385
EURAUD short 1.4640 stop 1.4675 - 1/2
EURUSD short 136.30 stop 1.3655 - 1/2 + 1.3560 stop 1.3590
USDCAD long 1.0001 stop 0.997
GBPJPY short 1.44 stop 1.4445
NZDJPY short 66.15 stop 66.40

End of day update:  Cable has stalled again at 1.55 following the election debate in the UK and Google failing to meet estimates has down pressure on Jpy crossed and indices.  Hence I am selling GBPJPY (& NZDJPY).  I would really like to sell EURJPY but I am already too short EUR and CHFJPY is the same trade.

GBPJPY 4hr chart

NZDJPY 1hr bear flag

Wednesday, April 14, 2010

Exotic FX options and options barriers

A good explanation of exotic FX options from Jamie Coleman at (a great news source)

Exotic options
The last decade has seen exotic options rise to prominence. The impact of these options has mirrored the rise of China as a financial superpower. China uses these options in massive size at times when they want to drain the market of volatility. Rather than merely entering the forex market to diversify their massive dollar holdings into EUR or GBP, they also actively trade the market, often in conjunction with their considerable options portfolio. One of their favorite strategies is to purchase something called double-no-touches.
Why do speculators like strategies like the DNT? They tend to have an attractive risk/reward ratio. Putting up $1 in premium typically brings $5 in payouts if the trade is successful.
Let’s define terms: A double-no-touch (DNT) is a strategy that pays the owner of the structure so long as the spot price does not touch either of the predetermined strike prices before expiry. As long as prices stay within the predefined range, the trade is a winner for the buyer and a loser for the writer, or seller, of the structure. The tighter the range specified, the smaller the premium, as the odds of staying with a tight range are smaller than a wide range. The buyer puts up a fraction of the potential payout up front and receives a multiple of the wager if prices don’t violate the range.
At present, China is rumored to be sitting on a 1.3350/1.3850 double-no-touch, which comports with recent price action.
The incentives for the counterparties in these trades are diametrically opposed. The buyer wants to maintain the range to keep his structure alive until expiry. If it exceeds the range by even one pip, it is “knocked out”.
How is that tension manifested in the market? Often, by a fearsome two-way battle. Let’s say for the sake of illustration, the base of a 1.3350/1.3850 DNT is in play. What sort of price action can we expect? Typically, the owner of the option structure will want to preserve his investment and may be willing to take some risk to do so. He’ll do that by trying to support the market and prevent it from slipping to the 1.3350 level where he would be knocked out.
The writer, or seller, of the DNT will often take a fair bit of risk to try and push the market outside the range covered by the option. Why? Because the writer has even greater risk than the owner of the DNT. The owner may have risked $5 million to put the strategy in place for the opportunity to “win” $20 million, for example. Even if the bank which sold the option loses money on the spot trade needed to force the price out of the range, he eliminates the risk of having to make a $20 mln payout. The volumes turned over near these strike prices can be huge because the stakes can be so high.
Sophisticated investors with deep pockets can defend specific levels and make large profits if successful. For example, if the market is very short with traders looking to push the market below a barrier (or knockout or trigger, these terms are all interchangeable) in search of stop-loss orders or to break a technical support level but fails, the defender of the option has bought large amounts at the bottom of the market. Our Asian friend will often hold those positions for about a penny and a half before selling them back into the market, just as traders are starting to get bullish again after a bottom was put in place just ahead of 1.3350.
Next thing you know, the market is sliding again and the 1.3350 level comes back into focus. The whole process is repeated again. Often the positions acquired in these “defensive” operations are in the hundreds of millions of euros (or dollars, or AUD, etc, depending on the market). A few “round trips” and whether or not the option position is profitable becomes irrelevant. The defense makes huge profits all on its own, if successful.
What does the price action look like when option defense fails?
How often have you seen the market slip through a much-talked about level by a few pips only to turn around and rally strongly? Likely the culprit is an effort to trigger a barrier. If Bank A sold 500 mln EUR/USD to force the market lower and extinguish barrier options, it has to quickly turn around and cover that short, leading to whipsaw price action. It avoids the huge payout but could get hurt if it can’t cover its short profitably.
ForexLive is one of the few places where traders can pick up information of exotic options that are in play. We try and alert traders to these structures so they do not get caught selling what looks like a breakout only to see the market quickly reverse field.

Wednesday April 14th

A lot of the XXXJPY's closed the daily candles as hammers and an opportunity to get long with the trend last night.  I picked GBPJPY and I bought USDJPY on a break of the descending trendline from high at the beginning of the month.
The USD is looking pretty weak and I will look to get short vs USD something on a dip either today or this week. I am watching gold and crude for long entries on dips now too although crude may have further to fall first.  

AUDUSD short 0.9318 stop 0.9330 target 92.20 (G222)
CRUDE short 84.20 stop 84.50 target 83.40 / 82.00 - short term
CRUDE stopped out (-1R)
GOLD long 1155.50 stop 1152 target 1170+, 1hr hammer
EURAUD short 1.4640 stop 1.4675 4h r hanging man
GBPJPY closed 1.4420 (+1.5R)
USDJPY closed 93.50 (+1R)
AUDUSD stopped out (-1R)
USDCAD short 0.9990 stop 1.0010 PT 0.9900
EURJPY short 127.30 stop 127.50 PT 126.50 / 126
EURJPY stopped out (-1R) :( stop too tight
GOLD long stopped out break even
USDCAD short stopped out break even
CRUDE short 84.65 stop 85.10, last trade anticipating inventories ....
CRUDE short closed breakeven ... drop in inventories.
CRUDE long 85.10 stop 84.60 TP TBD, break of daily high
CRUDE closed @2R 86.10 (+2R)

I'm having one of those days and I am trading badly.  Might take the rest of the day off.

Open trades:
GBPCHF short 1.6370 stop 1.6405 - 1/2
EURCHF short 1.4365 stop 1.4385
EURAUD short 1.4640 stop 1.4675

Tuesday, April 13, 2010

13 April, Turnaround Tuesday

The dollar index:
Has closed outside the ascending channel and unless the weekly closes back within the channel we are in for some further USD correction.  I would expect a dollar rally to test the trend line from underneath close the gap and then unless it has a major rally we are in for further correction.

I am waiting for EURUSD to close the gap and watching the 1140 level to buy gold.  The XXXJPY's still look like good shorts to me.

Update:  Medley report came out this morning saying SNB would accept EURCHF down to 1.40 so seems silly not to sell some

GBPJPY short 143.40 stop 1.4380 PT 139.70 / 138.50
EURCHF short 1.4365 stop 1.4385 PT 1.4050 - hourly shooting star
EURJPY short stopped out balance 126.30 (+0.5R)
AUDJPY short stopped out balance 86.05 (+0.5R)
NZDUSD short closed 50% @3R 0.7085 (+1.5R)
EURUSD short stopped out balance 1.3645 (+0.5R)
CRUDE short stopped out balance 84.00 (+3.5R)
GBPJPY stopped out (-1R)
USDCAD closed 1.00 BE- dollar weak
USDNOK closed 5.8600 (+0.6R)
NZDUSD closed 0.7100 (+1.25R)
GBPJPY long 143.60 stop 143.10 PT 144.80 / 146
USDJPY long 93.30 stop 93.10 target 95 - trend-line break

Open trades:
GBPCHF short 1.6370 stop 1.6405 - 1/2
EURCHF short 1.4365 stop 1.4385
GBPJPY long 143.60 stop 143.10
USDJPY long 93.30 stop 93.10

I am looking to cut and reverse on crude at 82.  61.8 fib retracement of last swing and rising trendline from Feb lows.  4hr chart:

Monday, April 12, 2010

Monday 12 April

Update:  OOPS.  First Greece says it may ask for some EU loan money today and then a German Govt official comes on the wires and says that the aid is only if Greece is unable to raise funds in the bond markets. Some of the shine is coming off EUR as a result.  I think they would like EUR lower.

The dollar took a bit of a hit at the Asian open with a 150pip gap and a 200 pip jump in EURUSD.  It is bouncing back this morning, and back in the channel and above the lower trendline would be positive  for the dollar.

I was stopped out of my EURUSD short at the Asian open and did not put it back on right away but it looks better this morning.  Today I am watching EURGBP to pullback to buy it, or short GBPCHF.

Asian session:
EURUSD balance stopped out (-0.5R)
EURJPY balance stopped out (-0.25R)
USDNOK long 5.8430 stop 5.8150   5.9 / 6.0
NZDUSD short 0.7175 stop 0.7205 PT 0.7095 / 0.6965
EURUSD short 1.3670 stop 1.3695, gap fill target 1.35
GBPJPY balance stopped out 1.44 BE
CRUDE short 85.30 stop 85.60 - addition
GBPCHF short 1.6370 stop 1.6405 PT 1.6220 / 1.61
EURJPY short 126.90 stop 127.20 PT 125.80
EURUSD closed 50% @3R 1.3595 (+1.5R)
CRUDE short addition closed 50% @3R 84.40 (+1.5R)
CRUDE short addition closed balance @84.20 (+1.83R)
AUDJPY short 86.45 stop 86.75 PT 81.80 break of support
GBPCHF closed 50% @3R 1.6265 (+1.5R)
AUDJPY closed 50% @3R 85.55 (+1.5R)
EURJPY closed 50% @3R 126.00 (+1.5R)
EURJPY closed 25% @ target 125.80 (+0.91R)

Open trades:
USDCAD long 1.00 stop 0.9965
CRUDE short 86.10 stop 86.40 - 1/2
USDNOK long 5.8430 stop 5.8150
NZDUSD short 0.7175 stop 0.7205
EURUSD short 1.3670 stop 1.3695 - 1/2
GBPCHF short 1.6370 stop 1.6405 - 1/2
EURJPY short 126.90 stop 127.20 - 1/4
AUDJPY short 86.45 stop 86.75 - 1/2