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Monthly Archives: June 2013

Outlook for EURUSD

Currently, EURUSD is trading at 1.3230, based on the daily Fibonacci, is trading above the 50% retracement level of 1.3172 and approaching the 61.8% 1.3284.  To give us a view of sensitivity, the high of 1.3644 happened on 1 February 2013 and the low of 1.2701 on 13 November 2012.  On a daily basis, the pattern is showing a potential downtrend.

eurusd_daily chart_21 june 2013

The 4 hour chart shows a high of 1.3408 on 19 June 2013 and a low of 1.2810 on 17 May, this is a 598bps difference which happened in a month.  the 76.4% retracement is at 1.3267 and the 50% level at 1.3109.  The current spot is below the cloud, however, creating some base with a potential uptrend developing.

The 15 minute chart shows that the EUR is trading in a short term band of 1.3164 and 1.3263, a 99 bps channel.  Current spot is staying above the cloud for now.

The Eurozone continues to languish with a mix of both good and bad economic data, the reality is that the various European economies are struggling to create economic growth.

I will be coming up with some opportunistic trading strategies soon, so stay tune.

Post Bernanke………..gunz blazing…………markets still haemorrhaging………..

Was the FOMC statement and thereafter the press conference by Bernanke………..staged?!

Why was the FOMC statement so lethargic and uninspiring, and then, the monumental statement by Bernanke where he for the first time announced timelines for the tapering of the QE; beginning year end and into 2014 with full withdrawal by mid 2014.

Wow………what an aggressive statement by the Fed Chairman when all previous times, he was skirting the issue.  Of course, he tried to culture the statement by saying that it is all data dependent.  Kind of like shooting someone first and then saying, let’s send him to the hospital so that he may or may not have a chance to live.

What is interesting is that the Fed also decided to change their two loved targets of inflation and unemployment.  Previously, the Fed had definitive targets of 2% for inflation and 6% unemployment rate before triggering tapering QE.

Now, they have changed specific targets to range targets; inflation has changed to 1.4% to 2% and unemployment rate 6.5% to 7%.  Let’s not forget that inflation is now at 1.1% and unemployment at 7.6%, so we are not so far from the range targets.

Is the Federal Reserve orchestrating the imminent tapering of QE because they are now worried about the fact that liquidity is not sufficiently moving into the real economy but instead is fueling real estate, equities and bond markets.

If the last three days was not a taste of the carnage to happen when the first installment of the cut in QE happens in October, we will definitely see widespread bloodshed at that time.

Thoughts: Possible 1 month GBPUSD Put Option

Strike at 1.5660, breakeven at 1.5506and premium is 149bps.

61.8% ~ 1.5751

50% ~ 1.5587

38.2% ~ 1.5424, difference is 82bps and payout is 0.55X

0% ~ 1.4894, difference is 612bps and payout is 4.1X

Thoughts: Potential AUDUSD 1 month or 2 months call option

Option expiring 15 July or 15 August.

1 month; Strike 0.9600, Breakeven 0.9715, premium payable is 115bps.

38% target at 1.0027, difference is 312bps, payout is 2.7X.

50% target at 1.0137, difference is 422bps, payout is 3.67X

 

2 months; Srike 0.9600, Breakeven 0.9785, premium payable is 185bps.

38% target at 1.0027, difference is 242bps and payout is 1.30X

50% target at 1.0137, difference is 352bps and payout is 1.90X.

Thoughts: USDJPY @ Possible 1 month Call Option

Tenure: 1 month expiring 15 July 2013.

Strike 94.90, BE 96.79, premium is 1.89

Target; 100.38, difference is 3.59 or payout ration of 1.89X.

Looks good, need to consider quickly and execute the trade.

Thought: Overview of the FX market

EURUSD

———–

The EURUSD is currently trading above the 61.8% level of 1.3321, the 76.4% is at 1.3437 and the 100% is at 1.3640 established on 1 February 2013.

Last night’s high was at 1.3385and the low was at 1.3282.

 

GBPUSD

———–

The GBPUSD is presently trading above the 61.8% level of 1.5754 with the 76.4% at 1.5957 and the 100% at 1.686 established on 21 December 2013

Last night’s high was at 1.5723 and the low was at 1.5650.

 

AUDUSD

————

The AUD is a currency that really begs to be thrashed.  The current spot is trading below the 0% level of 0.9671, the 23.6% is at 0.9891, 38.2% is at 1.0027 and the 50% at 1.0137.  How much will it take to drive the AUDUSD to the 50% level, I don’t think alot.  Home loans is down, consumer sentiment is down, however, employment is up and unemployment is down.

Let’s look at this more closely.

 

My hunch tells me that there is opportunity in the following: –

Call option on the AUDUSD

Call option on the USDJPY

Put option on the GBPUSD

Right now, we need to do a cost benefit analysis to determine which strategy is cost efficient and profit effective.

 

Market movers tonight!

US Retail Sales and Unemployment Claim at 8:30pm Singapore time or 8:30am NY time.

I have a hunch retail sales will be good and unemployment claims will edge higher.

It just feels like the market is waiting for this tonight.

Happy trading everyone.

Trade: Quick Scalp; LONG USDJPY at 0.9415 and squared at 0.9434

Quick scalp, long USDJPY at 0.9415 baed on fast and slow stochastic and squared at 0.9434 for a 19bps trading profit.

Both quiick scalps paid for today’s expenses.

Trade: Quick Scalp; SHORT AUDUSD at 0.9485 and squared at 0.9460

Quick scalp, short AUDUSD at 0.9485 based on stochastic fast/slow and squared at 0.9460 for a 25bps trading profit.

Done for the day and night

Ladies and Gentlemen, I am done for today.  Waited the whole day to capture some trading opportunity, was disappointed earlier today, however, in the past hour, I am a happy camper.

Will be out playing golf during the first half of the day and will be back online in the afternoon.

Good trading to all and have yourself a great day ahead in the U.S.