Forgot to mention the EurChf full size still running from 1.2035, I consider as a core position.
Neither Tech nor Macro
- Thread starter fxintruder
- Start date
As said in the week 41 intentions I am now pending to buy EurUsd at 1.2820. Market is over reacting to riots in Greece and IMF ugly growth revision. I also played a quicky short on AudUsd looking for liquidity near 1.0116. If it get there Iâll decide what do with it. Meaning whether targeting parity or not. This AudUsd short is also due to my old reminiscences as a former scalper who canât stay quiet.
The AudUsd chart.
Probabilities are high now that the â¬uro will continue to fall below 1.28. Reason to this are the political inertia about the Spanish bailout which the market is waiting for, the S&P two notches downgrade of Spain debt and the awaited one from Fitch that could bring it to the junk status. These developments and by correlation the EurChf now below 1.21 (tail risk indicator) , made me rethink the positioning of the pending EurUsd long mentioned here, from 1.2820 to 1.2756. I still believe that the announcement of Spain asking for a bailout, triggering OMT purchases by ECB, will push the pair around 1.33, this in turn could imply substantial short covering hitting the stacked stops from 1.33 to 1.35 (Orders dynamics).
The AudUsd quicky posted here was closed at BE because all the rare quickies I still take are monitored closely in real time and locked at BE + commissions. Concerning the current up-move in AudUsd, this is due to 1: Iron Ore price that took +6% yesterday. 2: The employment numbers , above expectations, that were released this night GMT even though the unemployment rate was higher but explained by an increase in the labor force. I still think that RBA is going to cut 25 bp in its rate in November, and this is going to continue until the Chinese economy is out of the wood. Therefore I am looking at some higher levels to fade from. Yet not sure where, may be around 1.032. More on this later.
The AudUsd quicky posted here was closed at BE because all the rare quickies I still take are monitored closely in real time and locked at BE + commissions. Concerning the current up-move in AudUsd, this is due to 1: Iron Ore price that took +6% yesterday. 2: The employment numbers , above expectations, that were released this night GMT even though the unemployment rate was higher but explained by an increase in the labor force. I still think that RBA is going to cut 25 bp in its rate in November, and this is going to continue until the Chinese economy is out of the wood. Therefore I am looking at some higher levels to fade from. Yet not sure where, may be around 1.032. More on this later.
I explained above why I moved my pending order from 1.2820 to 1.2756. Now, why these levels precisely ?
When I look at the daily chart, the only time-frame I base my levels on, I see the famous 200DMA at 1.2820 along with a 50%fib. This 200DMA has been pierced once and if it is pierced again Techs will reposition for a big south move according to their beliefs. Therefore bulls will reverse and bears will add while neutrals will become bearish. From a market dynamics view (how fast and wide market orders are feeding limit orders), the bull stops below the 200DMA will accelerate the down move when tripped. But a 200DMA alone, that is, techs alone, are not able to push the price more than 50-100 pips (depending on the prevailing sentiment) if there are no other catalysts (e.g: news, events, rumors..). Though this can be use by Specs who, without any conviction but the need to buy at the lowest price, use the techs to push more than 100p. For me in the current situation, Specs joining the Techs is not likely, because market knows that sovereigns (BIS) are buying the Euro to feed foreign reserves for several central banks. That is why I give to the 200DMA breakout a maximum amplitude of 100 pips with a position at 1.2756 I limit my draw-down to less than 50pips. But of course this is just the way I see it.
When I look at the daily chart, the only time-frame I base my levels on, I see the famous 200DMA at 1.2820 along with a 50%fib. This 200DMA has been pierced once and if it is pierced again Techs will reposition for a big south move according to their beliefs. Therefore bulls will reverse and bears will add while neutrals will become bearish. From a market dynamics view (how fast and wide market orders are feeding limit orders), the bull stops below the 200DMA will accelerate the down move when tripped. But a 200DMA alone, that is, techs alone, are not able to push the price more than 50-100 pips (depending on the prevailing sentiment) if there are no other catalysts (e.g: news, events, rumors..). Though this can be use by Specs who, without any conviction but the need to buy at the lowest price, use the techs to push more than 100p. For me in the current situation, Specs joining the Techs is not likely, because market knows that sovereigns (BIS) are buying the Euro to feed foreign reserves for several central banks. That is why I give to the 200DMA breakout a maximum amplitude of 100 pips with a position at 1.2756 I limit my draw-down to less than 50pips. But of course this is just the way I see it.
Quote from fxintruder:
As I mentioned in week#40 intentions, I am looking at shorting Gbp. The cable is a strange beast with erratic behavior mainly because its lacking liquidity. I started doing it on EurGbp, I closed with +48pips here because it was positioned too high in the range and could be hurt during the NFP.
The incentives behind this are quite clear:
1: GBP played the role of an opportunistic European not â¬uro based safe haven during the Euro Zone crisis. Draghiâs OMT is eliminating the tail risk, hence no need for a safe haven based on an unstable and inflationary economic outlook (UK that is).
2: This thing is overbought.
3: Nice techs levels are not far, around 1.6250-1.6280 and above.
Risks to the trade:
UK is tightly linked to EMU, same thing for both currencies. Anything pushing the EurUsd higher can by correlation attract the cable on the same path. Though this is attenuated by the recent EurGbp flows.
Conclusion I am pending at 1.6265 if it goes there (with the help of the NFP dynamics). I wouldnât short it unless it get there, to fully profit from its stretched positioning.
Those who didn't miss this move as I did, should take a partial profit since the pair is going to price in some good numbers on the US employment front. 1.6085 seems a good place to add after the release.
An illustration of market fearing BOJ. This move occured after this newswire on Reuters:
"Japan Econ Min Maehara: Japan May Intervene In FX Alone Without US Consent"
"Japan Econ Min Maehara: Japan May Intervene In FX Alone Without US Consent"
Some concepts I'd like to share far from any Guru mode:
Market concepts: Timing
You must know when the market is wrong and wait for him to start understanding he's wrong. Then you enter. If you do it too early, the majority who is still wrong will take your stop. If you do it too late it's those who need liquidity who will take it. Without a good timing you'll find yourself badly positioned, that is , you are a weak hand.
Market concepts: Timing
You must know when the market is wrong and wait for him to start understanding he's wrong. Then you enter. If you do it too early, the majority who is still wrong will take your stop. If you do it too late it's those who need liquidity who will take it. Without a good timing you'll find yourself badly positioned, that is , you are a weak hand.
Remember that post above were I put a buy limit at 1.2820. The price reached 1.2824 on the 200DMA and reversed softly missing my order by 4 pips. Against all the intuitions Iâve decided here to lower the pending level at 1.2756. Just after that the pair with no clear reason went north more than 100 pips from my initial position. In these moments you wish your initial position had been filled, but since there are no clear reasons to that move, Iâd rather find why itâs moving then trying to catch the train. So why that move:
1: Rebound on the 200DMA? Not likely seeing how small is the initial move after touching it.
2: Unexpected News? Not on the wires so far, at the contrary the spanish yields are getting bigger during the move. And all we are hearing is risk averse.
3:Is it the USD? Nope DX is ticking down.
I would say itâs suspicious,Itâs surely sovereigns buying in the liquidity provided by the 200DMA a bit late though. But it can also be some insiders already knowing that Spain is about to ask for a bailout. Most important is knowing what to do when you miss the train, mainly when you were anticipating the move for weeks now as explained here. Do I have to jump in ? Surely not, never, furthermore massive headwinds are looming mainly around 1.3000-1.3050, and this move being sustained by sovereigns (BIS) will not resist any substantial shift in sentiment or even any lose lips questioning the Spanish bailout. Let it retrace and gather momentum from Techs and Specs before buying, otherwise chances are we will find ourselves among the weak hands already jumping in. But of course missing a long time anticipated move is frustrating, and frustration leads to psyche distortions like the lack of discipline.
When I review why I moved my pending to 1.2756, all the incentives were there to justify it. But sentiment driven by news flow can quickly turn out to be wrong and this is when mistakes are done, like jumping in or catching falling knives.
1: Rebound on the 200DMA? Not likely seeing how small is the initial move after touching it.
2: Unexpected News? Not on the wires so far, at the contrary the spanish yields are getting bigger during the move. And all we are hearing is risk averse.
3:Is it the USD? Nope DX is ticking down.
I would say itâs suspicious,Itâs surely sovereigns buying in the liquidity provided by the 200DMA a bit late though. But it can also be some insiders already knowing that Spain is about to ask for a bailout. Most important is knowing what to do when you miss the train, mainly when you were anticipating the move for weeks now as explained here. Do I have to jump in ? Surely not, never, furthermore massive headwinds are looming mainly around 1.3000-1.3050, and this move being sustained by sovereigns (BIS) will not resist any substantial shift in sentiment or even any lose lips questioning the Spanish bailout. Let it retrace and gather momentum from Techs and Specs before buying, otherwise chances are we will find ourselves among the weak hands already jumping in. But of course missing a long time anticipated move is frustrating, and frustration leads to psyche distortions like the lack of discipline.
When I review why I moved my pending to 1.2756, all the incentives were there to justify it. But sentiment driven by news flow can quickly turn out to be wrong and this is when mistakes are done, like jumping in or catching falling knives.
Just a precision, the momentum mentioned in the quote above, is not about the price but about pending interests gathering around a new level, like e.g. 1.2920 or even 1.2825. or something forming after 1.30 is broken out.