The monthly A up in Crude btw was 101.73.
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The ACD Method
- Thread starter sbrowne126
- Start date
Quote from Maverick74:
BTW, the other thing I love about this Yen trade is that nobody else on ET is talking about it. Last July when I was on this very thread pounding the table to buy Bonds right before the critical debt ceiling raise in July, nobody on ET was even talking about Bonds, let alone buying them. It turned out to be the trade of the year. Same here. You know, the FX threads are pretty active here and I am shocked at the lack of actual content on them. Other then guys bitching that nobody makes money trading FX, not one solid idea has come out of those threads. The fact that those guys are not even watching the Yen and even discussing what could be perhaps the biggest FX trade in a decade, tells me that this is the trade to watch.
BTW, the Yen is getting absolutely crushed once again all across the board. Does ET even know the Yen exists? I wonder sometimes. Anyway, the breakout continues.
Quote from Maverick74:
BTW, the Yen is getting absolutely crushed once again all across the board. Does ET even know the Yen exists? I wonder sometimes. Anyway, the breakout continues.
I've been watching USD/JPY today. Do you have a daily A level that you're using for it? I'm very green with FX, but starting to pay more attention to it. I know domicile market is one of the biggest considerations as per Fish, but are there any standard primers that you can recommend Mav?
Quote from Quon:
I've been watching USD/JPY today. Do you have a daily A level that you're using for it? I'm very green with FX, but starting to pay more attention to it. I know domicile market is one of the biggest considerations as per Fish, but are there any standard primers that you can recommend Mav?
I use the London and US hours for all the FX stuff. London being the most important.
Quote from Maverick74:
Yeah great spread today. Just to gain some insight here, choppy and range bound days create the smoothest spreads and biggest spread moves. Strong or weak trending days produce choppy spreads. There is an inverse relationship. Since the market chops 80% of the time, spread trading trends 80% of the time. You can see now why so many people like spreads.
I have noted this myself in my very limited experience of following spreads. 3 cheers for writing it out clearly. You are good Mav.
Quote from Maverick74:
Let me further add here, I've always talked about the significance of clean moves and the concept of rarity. What this means is, when you see a clean breakout in an instrument that has not broken out for several months, the likelihood of the move being sustainable is rather large. In this case, the Yen has not broken down in most of these pairs in over a year! This is VERY significant. I cannot stress this enough. The upside potential in these trades is huge at this time. Might possibly be the biggest trade of the year. Book mark this post.
Bingo. I will be going long usdjpy - hoping to get a price around 79. This move has been unthinkable over the last 1.5 yrs. From 2008 itself, usdjpy has been just going down and down. The breakout looks clean, and over the next few months won't surprise me if it touches 90 - but resistance would be huge there.
Thinking of putting a stop below 78 - a retrace so hard would likely invalidate the trade.
Of all the Yen pairs, I think I like the CHF/JPY the best. I think CHF will outperform the dollar over the next year and the Swissy is a defensive currency. Meaning, the fact that it's breaking out on this risk rally is really impressive. If we get a sharp correction in equities, this baby is going to fly. In August, this pair spiked just shy of 109. Really, really like this trade.
Quote from Maverick74:
Of all the Yen pairs, I think I like the CHF/JPY the best. I think CHF will outperform the dollar over the next year and the Swissy is a defensive currency. Meaning, the fact that it's breaking out on this risk rally is really impressive. If we get a sharp correction in equities, this baby is going to fly. In August, this pair spiked just shy of 109. Really, really like this trade.
If equities have a sharp correction (say 5-7%%), eurusd will fall say 5-7 big figures, add in some Europe and eurusd will fall 8-9 big figures. To maintain the peg, usdchf will move higher 5-7 big figures. In this scenario of equity correction, the chfjpy trade will most likely go against you, unless usdjpy moves to 90 by that time.
For otherwise, you are basically saying that peg will not hold.
Quote from gmst:
If equities have a sharp correction (say 5-7%%), eurusd will fall say 5-7 big figures, add in some Europe and eurusd will fall 8-9 big figures. To maintain the peg, usdchf will move higher 5-7 big figures. In this scenario of equity correction, the chfjpy trade will most likely go against you, unless usdjpy moves to 90 by that time.
For otherwise, you are basically saying that peg will not hold.
Well, for starters, I don't think 5% to 7% is a correction. To me a correction is 10% or greater. Next, I'm not even sure the Euro will fall that much against the dollar on an equity correction. I just think the Euro is too heavily shorted. In a sharp correction, USD/CHF will get crushed. Not sure why you think it will rally, it hasn't during the last 10 selloffs. And I'm not even sure what "peg" you are referring to. The only "peg" I was aware of was SNB was selling francs to support the Euro. I'm aware of no such action against the Yen.
Quote from Maverick74:
Well, for starters, I don't think 5% to 7% is a correction. To me a correction is 10% or greater. Next, I'm not even sure the Euro will fall that much against the dollar on an equity correction. I just think the Euro is too heavily shorted. In a sharp correction, USD/CHF will get crushed. Not sure why you think it will rally, it hasn't during the last 10 selloffs. And I'm not even sure what "peg" you are referring to. The only "peg" I was aware of was SNB was selling francs to support the Euro. I'm aware of no such action against the Yen.
yes correction is typically minimum of 10% agreed. Also agree that SNB is not taking any direct action against yen. The peg I am referring to is Eurchf peg only. Following is what I am saying.
Long Chfjpy position is synthetic long Usdjpy and short Usdchf position. If Eurusd falls, to maintain the Eurchf peg, Usdchf will have to rise. You are synthetically short Usdchf, so you will take heat on that part. This heat will be balanced only if Usdjpy rallies hard, then the trade will be close to breakeven trade. In this scenario, you are better off taking a direct long in Usdjpy rather than long Chfjpy.
However, if if Eurusd rallies up, then above scenario will not work. In this case, to maintain the peg, Usdchf will most likely go down or worst case will stay where it is (thus pushing up eurchf). In such a scenario you are better off going long Eurjpy instead of Chfjpy.
So in both the above scenarios, you are better off taking short Jpy exposure through some other way rather than long Chfjpy position.
The case of Usdchf going down during last 10 market corrections is not applicable here - because that was pre-peg world. Post-peg world, rules of game are different. Going forward, peg will 'force' usdchf to rally, it was by the way the reason why usdchf rallied from 0.71 to 0.95 last August.
All ears if you can punch holes in my analysis above.