April 25 - April 30

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April 25 - April 30

Post  Levaz on Sun Apr 25, 2010 1:04 pm

Last week, we advised you not to short the Euro at such low level, and it is a good thing we did not. Now, the Euro is approaching levels where it is more comfortable to short it again. Let us see how high it will go before it all blows up. We are anticipating 1.36 - 1.37, which is where we would love to short the Eruo. It just may fizzle out at 1.3500 because the retrace is euphoria on disaster avoidance, nothing more.

We choose to stay out of these markets due to the uncertainty of the reaction to the Greek Bail-out request.

On one hand, it means that Greece will NOT default in the short term, and this in turns bolsters the confidence in the Euro that they will support their weaker partners.

Conversely, this is a fundamental disaster in the making for several reasons:
- The problem has not been solved or even addressed. Greek deficit actually increased!!
- There is growing consensus that the EUR 45 Billion is not enough anyway.
- The Eurozone is now doing what the US has been doing since they dropped the Gold standard - printing worthless pieces of paper (well, once down this road, it is too easy not to stop).
- Italy, Ireland, Portugal, and Spain now may not bother curtailing their budget deficits as there is now a bail-out process for sovereign debt.

Another consideration is that many US Banks purchased the Euro Bonds en-mass in recent months, and are now heavily exposed. Once their traders/analysts recognize the long term issues, they are apt to drop the Euro like a hot potato. They may have purchased 1, 3, 5 and 10 year bonds, but they Discount the bonds (like shorting the currency) and those that buy the bonds, try to obtain fire-sale rates so they can flip it immediately for a small profit. The way these transactions affect us - we see a steady trending down as the bonds are traded, and then we see a retrace as the bonds are resold as a slightly higher price.

In view of this, I am seriously looking at Euro shorts all the way down to 1.1000 in the next 9 - 12 months.

Levaz
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Re: April 25 - April 30

Post  Levaz on Mon Apr 26, 2010 7:18 pm

As mentioned above, we are waiting for the Euro to reach a decent level where we can safely short it back down to 1.33 or lower perhaps.

Several days ago, we felt that the GBP would either hold ground or gain as a result of the Euro problems, and it seems that we may have been on to something there.

GBPUSD long at 1.5415 SL 1.5300 TP 1.5550

The 4H stochastic charts (setting 9-3-3) show that there will be a retrace of sorts, which may even take us close to our SL. That said, we are still going ahead with our trade as we are more inclined to follow our initial findings that the GBP will get a bit stronger.

If the downturn based on the stochastic charts reverse early or midway, then we are more assured of the GBP strength, and in this ONE case, we may want to chase the trade on the breakout, say above 1.5550 - 1.5600 ish and lock in 100 pips as soon as possible.

If our trade does get picked at our desired location, use a 50 pip trailing stop. And if you will be using the trailing stop, then once we have at least 75 pips locked in profit and change the TP to say 1.5900 and change the trailing stop to 150 - 200 pips leaving the SL locking in the 75 pips of profits.
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Re: April 25 - April 30

Post  Levaz on Mon Apr 26, 2010 7:29 pm

It may be a bit early, but it seems that the USDCHF is also regrouping,

USDCHF short 1.0731 SL 1.0800 TP 1.0631 use a 50 pip trailing stop.

CHFJPY long at 87.32 SL 86.50 TP 88.32
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Re: April 25 - April 30

Post  Levaz on Tue Apr 27, 2010 7:20 pm

Sorry about the call from yesterday - the double whammy from S&P downgrading both Portugal from A+ to A-, AND the downgrade of Greek bonds to junk status down from BB+ to BB- did not give the Euro any chance. That killed most of the risk sentiment in the stock and commodity markets, and mostly re-creating the flight to safety in the USD.

We anticipate more uncertainty for the next 24 - 48 hours. We will be more enlightened as we get closer to the May 19th Greek bond deadline of Euro 8.5 Billion.

We will stay out of the market for a while.

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Re: April 25 - April 30

Post  Levaz on Wed Apr 28, 2010 7:05 pm

While our preference is to stay out of the markets during "panic" days, we see an opportunity to get a good entry point to short the EURGBP.

EURGBP short at 0.8745 SL 0.8775 TP 0.8650

We have placed a very small stoploss as the entry is a critical pivot point according to our analysis. We feel the Euro will continue its slight retrace, and bounce off of that level.

We are also looking to short the EURUSD either at 1.3331 or 1.3406. Chances are more likely though that 1.3250 will prove to be the best location to short. It is very difficult to pick entry points when technical indicators are completely overridden by fundamentals AND panic, a combination of which tends to skew the markets.

Note that the Greek bail-out tag has now risen from Euro 45 Billion to approx. 120 Billion!!! Portugal Spain, Ireland, and Italy are next in line, and I believe in that order too.
EURUSD 1.1000 is looking more like "when and not if".

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Re: April 25 - April 30

Post  Levaz on Thu Apr 29, 2010 7:59 am

I have decided to take a risk and short the Euro ar current levels

EURUSD short at 1.3260 SL 1.3360 TP 1.3150

The better entry point is 1.3331 with a 100 pip SL. We have the critical pivot at 1.3406, so our SL is about 25 pips above that area. Since the Germans are trying to push the vote before the May 9 elections, this date is expected to be a critical date as well. There may be a bounce off the 1.3000 level around this time. After which, we expect that the German loan will be passed, and opening the flood gates below 1.3000.

The Greek problem is turning out to be much much bigger than any analysis I have seen publicly broadcast. I am guessing the surprises will be released AFTER the bail-out has been confirmed, so then it will look like they have no choice but to continue the drain to "save" the Euro!!

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Re: April 25 - April 30

Post  Levaz on Thu Apr 29, 2010 7:18 pm

The Euro trade above is exactly where we started earlier today.

Greece has just agreed to a Euro 24 Billion program with strict austerity measures to reduce the deficit by 11% within 3 years.

This will certainly cause us concern with our above trade. We will stick it out as the problems are not really resolved. This retrace may simply be just that - a retrace. This may give us a better position to short. We need to see the Euro cross 2 important levels - 1.3330 and then 1.3400.
Once these two levels are cleared, then we can consider the possibility of a short - medium term change in trend, however, unlikely that may be, considering the downgrade of both Portuguese and Spanish debt. Italy and Ireland have been cleared by both Fitch and S&P as being of no concern - FOR NOW!! ha ha!

In our arena of trading, a rumor is just that - a rumor - UNTIL it is officially denied. Then, at that point, there may be actually something to worry about!!!

Levaz
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Re: April 25 - April 30

Post  Levaz on Thu Apr 29, 2010 7:21 pm

For those of you that do not see the benefit of our signals, as of Monday, you will no longer be able to see this thread.

We wish you well in your endeavors, and hope you choose to join us down the line.

Levaz
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Re: April 25 - April 30

Post  Levaz on Fri Apr 30, 2010 8:10 am

The EURUSD has come to our first critical pivot point, and we have taken a short position at 1.3330 (with a 100 pips SL) and kept our order at 1.3260 open as well, as it has not hit the SL of 100 pips as yet.

Today's surge is the end of month EURGBP transfer from UK to EU to meet its monthly commitments.

In either event, 1.3406 should be a much bigger resistance than the last two areas identified.

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Re: April 25 - April 30

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