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Monthly Archives: September 2013

Again, I felt that the strength in the AUD was unwarranted given the state of its economy compared to the US.  However, I also respect that the AUD is a safe haven currency and also because of the positive carry trade.

However, when the Ichimoku; Tenkan cut down on the Kinjun from the top at 0.9500, I decided to Buy a Put Option for 1 month at the money spot, breakeven at 0.9400 and a premium of 100bps.

I felt that the majors thrashing of the USD was overdone post FOMC and when the Ichimoku; Tenkan cut down on the Kinjun from the top at 1.6115, I decided to Buy a Put Option for 1 month at the money spot; premium of 125bps, breakeven at 1.5990.

I was watching the fx rates the 15 minutes prior to the 2am FOMC announcement, rates were holding steady in a very tight 5 bps range.

While it is near impossible to guesstimate what Bernanke is going to do, the general consensus in the marketplace is that he will make some ‘light’ tapering so as to follow through with what he has been saying the past two months.

I placed a total of 4 trades: –

AUDUSD  –  Buy Stop if Offered at 0.9388, spot was 0.9368

EURUSD  –  Buy Stop if Offered at 1.3395, spot was 1.3372

USDJPY  –  Sell Stop if Bid at 99.10, spot was 98.85

GBPUSD  –  Sell Stop if Bid at 1.5950, spot was 1.5971

Then at 2am, Bernanke shocked the financial markets with ZERO tapering!  All the majors jumped against the USD, I was triggered on my AUDUSD and EURUSD.

I squared the AUDUSD at 0.9460 and the EURUSD at 1.3455 when I saw that the momentum was flattening out, then again, half an hour later, the majors resumed their torture on the USD.  Trading profit on the AUD was 72bps and on the EUR it was 60bps.

Today, Asian afternoon and London morning, AUDUSD is at 0.9507 and EURUSD is at 1.3567.  Oh well, one can’t capture the maximum move, I am happy with what I made in 15 minutes last night.

I was out playing golf this morning and got home early afternoon.

Today, I bought a GBPUSD Put Option expiring 27 September 2013, at the strike of 1.5915, breakeven of 1.5826, premium of 88bps.

We are 100bps higher because of Summer’s exit from the running for the Chairmanship of the Federal Reserve.  Inspite of the recent better economic data, I believe the UK cannot afford to bear with the current exchange levels as it may prove to be rather painful and counterproductive to the economic growth for the country.

Let’s not forget that only on September 2nd, the GBP was trading at about 1.5550.

The 76% retracement level based on the 4H chart is 1.5692, this is about 134bps from the current spot rate and against the cost of the option, it is a 1.52X payout probability.

GBPUSD was holding at spot of 1.5760, I decided to do a spread trade; 20bps either side of the fence, stop if bid and stop if offered.

Data came out much better -32 versus forecast of -21, GBP popped up to 1.5820.

It triggered my Buy Stop if Offered at 1.5780 and I squared at 1.5815 for a trading profit of 35bps.

Now, GBPUSD spot is back down to 1.5773.

On September 4th; the 4H chart was illuminating as the spot rate cut above the 200 day moving average of 0.9063.

More importantly, was the fact that the Ichimoku showed a cut up on September 3rd at 0.8986.

So we had the first confirmation from Ichimoku and then the second confirmation from the cut up of the MA, I should have done this analysis back on September 3rd when I did the spot trade and also the 2 day call option.  Had I done a longer dated analysis, I would have paid the higher premium to capture the BIG move.

Looking at the Daily chart the next critical level is 0.9321, if the spot level breaks the Ichimoku cloud on the upper side, then, we have a new bull trend in the AUD.

What’s important now is to learn from hindsight so that going forward we do not lose the potential opportunity if it presents itself again.  Believe you me, the opportunity will come again, this is the wold of FX.

On September 4th, I executed a spot trade by going Short EURUSD at 1.3200 and squared at 1.3170 for a 30bps trading profit.

On the same day of September 3rd, I bought a call option on the AUDUSD for two days expiring September 5th.  The spot was 0.8982, breakeven was 0.9032 and the premium was 50bps.

On September 4th about 11pm Singapore time or 11am NY time, I decided to sell the option as the spot was at 0.9180, I made a yum yum profit of 148bps or a 2.96X payout, not bad at all.  My initial expectation was between 2X to 2.2X.

I executed a Buy on AUDUSD at 0.8985 as I felt that it was basing at that level based on Ichimoku and Stochastics.

Took profit at 0.9035 for a trading profit of 50bps.

August was a busy month for me as I needed to spend time on another business involved in tocotrienol, so I didn’t really have time to trade, nonetheless, I managed to do three trades through the month and won on all three trades.

Absolute performance for the month was 10.6% and the total absolute performance year to date is now 199.1%.

Next month is going to be a crazy and volatile month with the QE tapering question being answered during the third week of September; is Bernanke going to or not going to initiate the start of the tapering exercise?

Well, let’s see, certainly September is going to be an exciting month and I will make sure I am there to capture opportunities in the marketplace.