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Category Archives: Thoughts

This is where we share all our thoughts relating to the foreign exchange markets.

Thoughts; GBPUSD

The daily chart shows a double bottom or a ‘W’, one leg in March and the other leg in July, affirming that for the near term, the bottom is well supported at about 1.4875.  Recent top at 1.6225.

gbpusd daily chart 16 oct

The 4 hourly chart is trending sideways just above the 200 day MA of 1.5942 and currently trading below the cloud.  Bollinger bands are squeezed indicating a possible breakout.

gbpusd 4 hourly chart 16 oct

The technicals tend to indicate a potential softening in the GBP, however, all bets are off the table because of the US crisis and the debt ceiling deadline tomorrow.

Making a calculated risk trade based on fundamentals or technicals is fine, as there is rationality and logic involved in the process, whether we win or lose will depend on how good our analysis was.

However, betting against politicians is always a losing proposition.  Politicians cannot be trusted and are double headed snakes.  Nonetheless, like Hollywood, the Americans love the melodramatic and I believe they will some relief to the financial markets when they announce a positive outcome at the 23rd hour 59th minute………….they usually do, just check back on the two previous times when they increased the debt ceiling limit within the past 14 months.

Thoughts; EURUSD

In the daily chart, recent highs in the EUR was at 1.3645 in February this year and the lows was in July at 1.27790 and the 200 day moving average at 1.3142.

Bollinger bands are squeezing into a bottleneck…………ready to burst…………and then again………..burst up or burst down??

Looking at the 4H chart, the signs are more compelling that the EUR may be at the start of another down trend, towards the low established in early September of 1.3110.

eurusd 4 hourly chart 16 oct

 

Could possibly be a good option trade, but I am just not comfortable with the US crisis and the debt ceiling deadline on Thursday.  I really don’t want to lose bullets buying options only to give it up because the markets went crazy.

eurusd daily 16 oct

Thoughts; Gold maybe on the way down to last low of $1,198

I was just studying the 4H and Daily charts on gold, and everything from; Ichimoku to fast and slow stochastic is showing me that there is possibly more weakness in the gold with chance of moving back to the last low of $1,198.

Then, again what’s happening in the US may whack everything out the window.

Hindsight Analysis on the AUDUSD

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.

Sneaky USD………..the night of Tuesday, 2 July 2013

The USD isn’t waiting for the nonfarm payroll numbers this friday, it has already staged a move against the majors.

USD moved against the EUR at 1am, dropped by 89bps.

USD moved against the GBP at 7:15pm, dropped 75bps.

USD  moved against the JPY at 8:30pm, dropped by 89bps

USD moved against the AUD at 6;45pm, dropped by 29bps

So, it appears that the AUD has been the most resilient against the onslaught of the USD.  Maybe the market if waiting for Governor Steven’s speech later this morning to get a confirmation of the RBA statement published earlier yesterday.  You will recall; RBA held rates at 2.75%, felt that the drop in the AUD is helping the economy, feels that the economy is continuing to adjust to a different business model and less reliant on mining and resources, felt that housing is holding steady, felt that borrowing is coming back, and felt that there could be more room for currency to weaken which would help the economy

Unusual Wednesday, June 26th 2013

Not much in data except for US GDP and that came in weaker and the market hardly reacted to it.

In fact, the USD moved against the other majors right after Draghi’s speech at about 2:30pm Singapore time.

And the majors fell against the USD again at about 10pm, based on ‘nothing really’…………that’s strange.

All in all the majors lost about 80bps to 100bps against the USD.  So we are now below the trading bar, we’re not at the bottom of the last Fibonacci yet and I do not believe it will get there as there isn’t anything drastic coming out from Europe.

One hour after Durable Goods Orders………..

One hour after the announcement of better numbers for the US durable goods orders, the current spot rates are as follows: –

EURUSD  1.3109

GBPUSD  1.5444

USDJPY  97.61

AUDUSD  0.9274

 

Basically, except for the EUR which continues to hold a weaker position down by 20bps from the time of announcement, the rest, that is, the GBP and JPY are flat and the AUD is 5bps higher than at 8:30pm.

Seems like the European and US markets are losing confidence in the US Dollar.  However, the Dow Jones is up 96 points this morning in New York.

I believe some calm or rationale has come back to the marketplace for now.

Potential call options discussed on June 14th before Bernanke’s June 20th whack in the head!

I was considering three call options in the AUDUSD, GBPUSD and USDJPY.

In hindsight after the ‘whack’ from Bernanke, it now appears that of the three possibilities, only the USDJPY would have worked out well.

You will remember that the possible call option on the USDJPY was at a strike of 94.90 with a breakeven at 96.99 and a heavy premium of 1.89.  The current spot is at 97.57 and it looks like there is a fair chance that it could go higher by the end of the week, if more positive US data is announced.

Follow up on the thoughts for EUR, JPY and the AUD

The EUR at 1.3090 has broken through the short term channel of 1.3164 and 1.3267.

The JPY at 97.64 is staying within the short term band of 96.21 and 98.25.

The AUD at 0.9260 appears to be quite resilient, staying above the 61.8% retracement level of 0.9230.

The US Durable Goods Orders came in better than forecast and the USD clawed an average of about 30bps from the majors.  I was expecting a bigger move.

Watch to watch out for next week

Monday

———–

4pm  ~  EUR  ~  IFO Business Climate

 

Tuestday

————

8:30pm  ~  USD  ~  Durable Goods Orders

10pm  ~  USD  ~  New Home Sales

 

Wednesday

————–

5pm  ~  GBP  ~  Inflation Report

8:30pm  ~  USD  ~  Finalized GDP

 

Thursday

————

4:30pm  ~  GBP  ~  Current Account and GDP

8:30pm  ~  USD  ~  Unemployment Claims

10pm  ~  USD  ~  Pending Home Sales

 

I believe Tuesday and Thursday will be market moving days, so let’s get ready for it and make decent trading profits out of these opportunities.

Let’s not forget to do our homework.

Here’s wishing all a great weekend.