Neither Tech nor Macro

[contra]

Quote from fxintruder:

Market is going to start pricing in the likeley easing from BOJ on October 30.

The reason I got long cross/JPY and USD/JPY was because of this almost 2 weeks ago, plus the technicals were screaming it. So I think a lot has been priced already (depending on how much), careful up here. I was actually thinking of a tactical sell on profit taking... watching this 80.25 barrier.

the 80.62 level was the anticipated target after 80. Still trending strong but we'll see what happens.

 

[gmst]

fxintruder,

just saw this journal. Have read through first few pages, happy to see a quality journal. Commendable effort - and I like your thoughts and style. Its clear that you have been trained in a bank. I am bookmarking your thread for continued reading. Seems like you are moving some serious size as well.

 

[fxintruder]

Quote from fxintruder:

On this one I have split in 3 the normal position size on the pair, compounding an averaged position at 1.2982 as explained here.

Now what?

The Ifo and Pmi’s were really ugly. The main core economy, Germany, is hit and now paying its inertia and austerity stance taken during the crisis. Now Germany have no choice but to support ”what ever it takes” to help her customers (EZ members) and her skin. The elections are due in 10 months and Merkel is not going to accept any further deterioration in the economy until then. Therefore we will probably see a more flexible Germany on the debt front, although this needs some political talent, since the German people are not keen to pay for the others. This means to me that we must in the future differentiate between the political rhetoric and the real decisions.

About this trade, as I said, I was looking for a position on the €uro ”What ever it takes”, I’ve got it averaged below 1.30 but near 1.29 would’ve been better indeed. In intraday I don’t see the pair going farther south, because the Draghi speech and the Fomc meeting is capping the downside, while better Chinese numbers stopped the sell off on risk that was triggered by the quarter disappointing earnings.

To summarize the incentives are still the same:

1: Rumors and news likely to grow about an imminent Spanish request seeing the Ifo/Pmi very bad signal and the Spanish yield now returning back to the unbearable 6%.

2: Market expectations pricing in north the Spanish bailout request; cautiously. Price popping up at the announcement, since it wouldn’t have been priced fully because of the “cautiously”.

3: Draghi /FOMC likely going to UP easing rhetoric and size this will likely bring it back above 1.30.

One must keep in mind that this a grid of reading; the way I see the likely market behavior in the coming days. The downside risk is huge because of the nervousness of the market, and one of the main initial incentive which is real money re-balancing its portfolios is probably going to be delayed seeing the German Econ developments.

An important question remains though, what if it continues to fall?

Well, I’ll take my losses, but remember it just one normal size compounded to get a better price. After that I will retry near other liquidity clusters, unless my views are changing. In terms of conviction I am not €uro bullish, it’s just a tactical trade explained several times in several posts. Actually I think the real value of the € is near parity with a slight bonus to the €uro because of the ECB traditional higher rate policy, like 1.15 or 1.20. Furthermore a weaker €uro is mandatory to lessen the crisis damages, mainly on the current account front.

Ok let’s take a look at that badly timed EurUsd long bought on impulse ahead of well know bearish catalyst. The compounded position is at 1.2982 and I have a pending one for the day in negative territory at 1.2967, I don't see it filled though. On the chart I have pointed to the areas where I will add, taking the timinig into account this time. You can be very good at anticipating market behavior, but its useless and even dangerous if you ignore the timing. The incentives behind this trade have been restated in the quoted post.


Ps: Interesting to see how the price re-bounces each time on my entry levels, no magic here just classic S/R.

 

[fxintruder]

Quote from contra:

The reason I got long cross/JPY and USD/JPY was because of this almost 2 weeks ago, plus the technicals were screaming it. So I think a lot has been priced already (depending on how much), careful up here. I was actually thinking of a tactical sell on profit taking... watching this 80.25 barrier.

the 80.62 level was the anticipated target after 80. Still trending strong but we'll see what happens.

Hi Bro, yeah profit taking after the fact. I see that remaining move to the fact as a way to see the price far from my last add on at a fast speed, giving room to significant pull back. I think also that what was already priced in is the likely easing not it's scope and size, at least not fully. But you're right for the higher add_ons it's tricky, since we see now on the wires the FT saying that the size of the easing is going to be huge, hence any disappointment can make it plummet.
On the other hand I am keepin this leg, because of the conviction that Japan is in need of a way weaker Yen "what ever it takes".
Give some news to the friends if you come across some of them.

 

[contra]

Quote from fxintruder:

Hi Bro, yeah profit taking after the fact. I see that remaining move to the fact as a way to see the price far from my last add on at a fast speed, giving room to significant pull back. I think also that what was already priced in is the likely easing not it's scope and size, at least not fully. But you're right for the higher add_ons it's tricky, since we see now on the wires the FT saying that the size of the easing is going to be huge, hence any disappointment can make it plummet.
On the other hand I am keepin this leg, because of the conviction that Japan is in need of a way weaker Yen "what ever it takes".
Give some news to the friends if you come across some of them.

Yea, at the time I got long they were expecting around 10trln Yen, which it still is according to RTRS (slim chance of 20trln yen). If they signal open-ended bond buying then I don't know. If we see disappointment or just 10trln... I can see some profit taking for sure.

Anyway nice trading on the pair.

after I got out of these yen trades I have avoided the dollar exposure for this week. I took eur/aud and eur/gbp trades.

 

[fxintruder]

A week like a random walk in a mine field.

I think a trading journal is not only about the positioning and analysis, it is also about the psychology which is as every trader knows, experimented or not , a big piece in the trading process. I will post my thoughts on the subject each time I face a psychological flaw in the way I am conducting a trade. Here is my first post on this:

Week 43 psyche mess.

Looking at this week retroactively, I would say it was like a random walk inside a mine field.

Driven by the irresistible need to get a too long awaited position on Eurusd, I didin't find better moment than the carpet bombing week of corporate earnings, German Ifo/PMI releases, and advance US GDP to compound the trade. All this based on the idea that Rajoy, after the Oct 21st elections, was going to ask about the bailout request. Now I find myself positioned in the middle of an unstable range. To make things worst, I even had a long ES filled in the upper level of the range ahead of the earnings announcements from corporates that represent 80% of the index. Although that pending was a bit forgotten, and filled more or less by accident, I should have closed at the next broken level or so since I knew that headwinds were not over.

Avoiding all this is easy, and I can say I am rather good at it as any trader can be. I usually take the week calendar and estimate the instability due to heavy catalysts. If they are spread over all the week I sit on my hands, reading and learning. If they are localized I estimate their impact and bias and use them to time my positions. So, what is the problem?

The problem is, despite knowing the mine field topology as I clearly pointed at it in this week intentions post, I couldn't keep from buying that €uro. I was focusing on having something below the 1.30 psychological level, while knowing that this week bias will bring it lower . It's like the fear to miss a train you're waiting for since a month ago and have missed several times already, ignoring that in terms of trading you didn't miss anything since the price was pulling back. Even though the compounding as explained in the related post was done inside my risk limits, even though the potential loss is insignificant, this is no good behavior for the mind. Risk is always bigger when it doesn't worth it. This feeds an impulsive random psyche mainly when you didn't get punished by losing money.

One can be very good at deciphering the current market drivers; unfortunately it is not enough to make consistent profits. Timing among other things is as much important and respecting it is all about discipline, which must be in this job a permanent state of mind.

 

[contra]

Quote from fxintruder:


Driven by the irresistible need to get a too long awaited position on Eurusd, I didin't find better moment than the carpet bombing week of corporate earnings, German Ifo/PMI releases, and advance US GDP to compound the trade. All this based on the idea that Rajoy, after the Oct 21st elections, was going to ask about the bailout request. Now I find myself positioned in the middle of an unstable range.

it can be deadly to be so dead set on something at the top of a range that is not even certain and quite frankly not the only driver even for just the Euro. It clouds judgement on the other drivers effecting the market such as equities sentiment, which we knew what the expectations were for earnings so the risk was poor earnings. German data was actually pretty damn poor, surprise poor. So now, say he did request a bailout this week... now what? It's month end, next week is NFP week, after probably the biggest data release of this week set for today as far as FX.

Just like the yen it was already traded into with expectations of easing... now we're at the 80 level and the BOJ is next week.. could say maybe getting a bit ahead of itself ahead of that, especially if they are pricing in more the 10trln yen. Exporters were reported heavy up here as one would expect.

Euro broke out of the pattern on dailies then failed with expectations. In your positions I probably would have held until yesterdays close as that was just poor after the retest from under 1.3. Not only that, we are at the top of a downtrend on weeklies (with last weeks close not that great, back in the range) so even if we did break out, there is no rush you would have been able to get in had your scenario played out as expected, however I would have played it as a sell the fact, but the fact is mad delayed.

Only one thing I would maybe suggest is instead of trying to get fills on retraces when the market is getting hit, is wait for a bullish signal first on dailies from the area you intend. But hey that's your call bro.

good luck, no worries. Always next week. Biggest thing here is limit losses don't get married to macro calls, or atleast tunnel vision on just a sole driver of many. AND, never disregard the technicals, sometimes its just so in your face.. cause this week, technicals gave me the signal before the data at decent levels. The biggest thing in trading for me is reading the grey area, things in context, positioning, expectations etc... and waiting for the signal to print.

enjoying your views here on FX macro.

 

[contra]

by the way, what is your average hold time on these plays these days?

 

[fxintruder]

Yeah Bro i tend to neglect the tech side in terms of timing.
I closed that EU pos at 1.2920 with -58 pips . I am keepin the UsdJpy and want to add after the GDP since I am seeing the current downside move as specs looking for a better price before discounting the meeting. Although I am going to close the add ons around 80.50-60 if it goes there (stop below 200DMA). I gonna keep the core cos structurally the Yen can't stay that high. But as you know it's not the first time the Gov and the BOJ try to weaken it with no success so far. In terms of pips this week is ending positively. The second loss was on the crazy ES taken in the middle of the earnings , lol, like -32 points, this one is heavier. But net net it's only the 4th loser since early September. What is hurting is going against what you clearly knew is going to happen and asking yourself if you're going to stop repeating this.

 

[fxintruder]

Quote from contra:

by the way, what is your average hold time on these plays these days?

On the YEN from September 28th,
EurChf 6th September, long stuck around 1.21
ES_f july 9th @1325, with loads at 1340 and 1380, thinking to close the loads at 1390 if it pull back that low, targeting 1500 and above.
I don't have a real hold time, I exit when my views are changing, this is not always compatible with the big tech levels.