China stocks and Reid are heavy weights.
Hi, didnât trade yesterday as I was setting up a new trading station. So where are we?
Seems that Mr Reid comments on the Fiscal cliff and China stocks making a new 4 years low drove the markets down, despite strong US data and the Greek deal. I think that we have 2 pictures superimposed, one is the constantly improving US economy going with a Fed dovish tone, the other is the looming fiscal cliff weighting not on fundamentals but on the current near and medium term sentiment. These 2 conflicting pictures are likely going to limit both sides movements, while the latter is increasing sensitivity to headlines and rumors. Simply put, we are going to range though with a high sensitivity to the downside bias until some agreement on the fiscal cliff is found. We are in this uncertainty for a while now and and I see 2 ways on how dealing with it:
1: A conservative approach, that is, you stay on the sidelines until the picture clears.
2: You profit from the current ranging bias to build new positions at a lower price, targeting the market beyond the near/medium term distortion.
Of course the second option is full of risk. It needs a real good grasp of whatâs behind the scene to be efficiently implemented and avoid gambling or astrology like predictions. Sometimes I take the second way if and only if, my directional view is based on an almost mandatory outcome and I am already positively positioned far enough from the current price. My current positioning is a good illustration of the both ways.
EurUsd long: The one taken here targeting the 1.30 barrier for half size worked as expected on the first part of the plan not the second. The barrier was taken out and I took half profit there as planned (+30 pips). The Eurogroup and the IMF found an agreement on the Greek debt but this didnât maintain the price above 1.30 and I was stopped out at 1.2960 for a net net of +20 pips. Funny that Iâve tilted the post about the trade âWaiting for Godot againâ, Godot, the one who had never shown up in Becket play, being Rajoy. I am now flat and neutral on the pair.
UsdJpy long: 2 add ons in red so far, but the whole position is still positive. I am not going to add at lower levels as I am already loaded. As explained in the post about the trade here, I was expecting the pair to pull back from around 83.00 and Iâ am still not sure if the pair have bottomed yet. Since I think that a weaker Yen is almost mandatory and knowing the upcoming very dovish political developments in Japan, I am keeping all the positions until something really big or new makes me change my mind. Furthermore I intend to add in a retrace if we break above 83.00.
Aud combo long:
AudUsd : still holding until just before the RBA meeting. No intention to add.
AudJpy: same strategy, but Iâll use this one to add. I have now a second position at 85.70.
ES_F long: Added as said in this week intentions at 1398.00. I can easily do that as I am holding from around 1.300 from last June. This is a core trade based on the US improving fundamentals while the Fed is engaged in an open ended policy. Many add-ons have been closed during the last pull back covering largely the risk premium and I am now rebuilding the position.
Hi, didnât trade yesterday as I was setting up a new trading station. So where are we?
Seems that Mr Reid comments on the Fiscal cliff and China stocks making a new 4 years low drove the markets down, despite strong US data and the Greek deal. I think that we have 2 pictures superimposed, one is the constantly improving US economy going with a Fed dovish tone, the other is the looming fiscal cliff weighting not on fundamentals but on the current near and medium term sentiment. These 2 conflicting pictures are likely going to limit both sides movements, while the latter is increasing sensitivity to headlines and rumors. Simply put, we are going to range though with a high sensitivity to the downside bias until some agreement on the fiscal cliff is found. We are in this uncertainty for a while now and and I see 2 ways on how dealing with it:
1: A conservative approach, that is, you stay on the sidelines until the picture clears.
2: You profit from the current ranging bias to build new positions at a lower price, targeting the market beyond the near/medium term distortion.
Of course the second option is full of risk. It needs a real good grasp of whatâs behind the scene to be efficiently implemented and avoid gambling or astrology like predictions. Sometimes I take the second way if and only if, my directional view is based on an almost mandatory outcome and I am already positively positioned far enough from the current price. My current positioning is a good illustration of the both ways.
EurUsd long: The one taken here targeting the 1.30 barrier for half size worked as expected on the first part of the plan not the second. The barrier was taken out and I took half profit there as planned (+30 pips). The Eurogroup and the IMF found an agreement on the Greek debt but this didnât maintain the price above 1.30 and I was stopped out at 1.2960 for a net net of +20 pips. Funny that Iâve tilted the post about the trade âWaiting for Godot againâ, Godot, the one who had never shown up in Becket play, being Rajoy. I am now flat and neutral on the pair.
UsdJpy long: 2 add ons in red so far, but the whole position is still positive. I am not going to add at lower levels as I am already loaded. As explained in the post about the trade here, I was expecting the pair to pull back from around 83.00 and Iâ am still not sure if the pair have bottomed yet. Since I think that a weaker Yen is almost mandatory and knowing the upcoming very dovish political developments in Japan, I am keeping all the positions until something really big or new makes me change my mind. Furthermore I intend to add in a retrace if we break above 83.00.
Aud combo long:
AudUsd : still holding until just before the RBA meeting. No intention to add.
AudJpy: same strategy, but Iâll use this one to add. I have now a second position at 85.70.
ES_F long: Added as said in this week intentions at 1398.00. I can easily do that as I am holding from around 1.300 from last June. This is a core trade based on the US improving fundamentals while the Fed is engaged in an open ended policy. Many add-ons have been closed during the last pull back covering largely the risk premium and I am now rebuilding the position.