June 20 - June 25 2010

While we wait to see how much of a come back is in store for the Euro, let us try an take advantage of the sudden love of the Euro.

EURUSD long at 1.2335 SL 1.2235 TP 1.2495

Some of you may want to test your patience and try to go long at 1.2242 when there may be a test of the 18 day eMA. If you do choose to wait for the trade here, use a 100 pip SL (1.2142)

Levaz

We have a potential long term trade evolving. The 200sMA has crossed the 300sMA on the Daily charts 4 days ago, while the Euro has still been growing in strength. Right now the nearest Simple Moving Average on the Daily chart is the 50sMA at 1.2669 as of today. As all the sMA are moving down, this number will be reduced on a daily basis. The risk to us is that we need a huge SL to work this trade, as we are dealing with averages, which like large ships need time to slow down and turn around.

I have entered a short at 1.2669 SL 1.3130 TP 1.1669

The Stop loss is set at the next higher sMA which is the 100sMA.
The TP is based on previous movement on similar occurrences of the 200sMA crossing the 300sMA with the 50sMA serving as the pivot point.

If this does turn out to be the right entry point, then we will start adding positions as the move gathers momentum. So start small with only 1% - 2% risk per trade.

If we are wrong, i.e., if the price hovers around the 50sMA for too long without being rejected, we will close the trade much earlier than the current 450 or so pips allocated. I just want to give it some room so as not to avoid being taken out too early. Such areas tend to be very volatile and 100 pip Stops can get taken out rather easily. We need to gauge what the market does when ti is around this area and get a feel of the environment at that time to make a proper judgment.

Also note that our normal trade listed earlier - long EURUSD will serve as our hedge provided we get picked up before the short order is filled. This also extends our TP target for that trade

Levaz

The market has just picked up our order in the late afternoon trading, but it appears that risk-off sentiment is picking up steam. It just may be that the market is ahead of us by about 200 pips (our sell order of 1.2669), so we have two options with our existing trade.

Either close it right now for a small loss of 10 pips or so. Or wait for our revised short to be picked up and close the buy order at that time. I have closed my order for a 7 pip loss and placed the following order

EURUSD short at 1.2345 SL 1.2445 TP 1.2200 (use a 50 pip trailing stop if you want)

FYI, I am not using a trailing stop.

Levaz

Levaz wrote:While we wait to see how much of a come back is in store for the Euro, let us try an take advantage of the sudden love of the Euro.

EURUSD long at 1.2335 SL 1.2235 TP 1.2495

Some of you may want to test your patience and try to go long at 1.2242 when there may be a test of the 18 day eMA. If you do choose to wait for the trade here, use a 100 pip SL (1.2142)

Levaz

Levaz wrote:EURUSD short at 1.2345 SL 1.2445 TP 1.2200 (use a 50 pip trailing stop if you want)

Our short trade is in play, and we are currently holding a small profit of about 70 pips, having peaked at 1.2250 (approx. 95 pips). We will continue holding this trade and look to add positions using (risking) the profits from this trade to build our position. Please do not rush to add positions, we need to pass some key pivot points before we start building our profits. I will advise you when the time is right. Remember, I am still looking to short the Euro around 1.2669/1.2700 area. So this (the current run) could just be test of the bottom scenario.

The expected range for today is high of 1.2349 to a low of 1.2196 with all indicators - short, medium and long term - showing more downside. Typically, we can expect some support at the following key areas - 1.2280 and 1.2228. We are already below 1.2280 which is a good sign. So if there is any upward movement, we would like to see it restricted to 1.2300 and not much more.

For those of you interested in making some additional pips on the side, you can always short the EURCHF pair. The best way is to use the hourly charts and sell on the rallies. Take a quick 20 - 50 pips and bail out. Wait for the next rally, and short again. Since the SNB has decided NOT to intervene until 1.3000 level, that will be the obvious target.

Another possible short trade is the EURJPY which looks like it may want to establish a double bottom around 108.00. The ideal entry points are 111.80, 111.65 and 111.33 in that order. Your stops should be around 112.50 (remember that this is a volatile pair, so this will be considered a very tight stop). If you really want to play it safe, you need to set your stop above the recent highs of 113.40, so another 100 pips, but that is too much exposure for my taste. If I am wrong, I would much rather take my medicine at 100 pips or less

One thing to note is that these are ALL Euro shorts, so that would be considered over-exposure.

Levaz

Levaz wrote:EURUSD short at 1.2345 SL 1.2445 TP 1.2200 (use a 50 pip trailing stop if you want)

As of 9:46ASM, our trade is doing quite well, and looks like it will touch our expected low or come close. We are just over 100 pips on this trade.

Another possible short trade is the EURJPY which looks like it may want to establish a double bottom around 108.00. The ideal entry points are 111.80, 111.65 and 111.33 in that order.

If you took this trade, you should be sitting on another 100 pips as well. It touched our lowest preferred entry point at 111.33 and went straight down after that.

Levaz

Levaz wrote:EURUSD short at 1.2345 SL 1.2445 TP 1.2200 (use a 50 pip trailing stop if you want)

Move the Stop loss to break even on this trade. There is a possibility that our original short position may come into play. While it was good to see the entry level tested and promptly rejected today, there has been a lot of short covering on the EURCAD and EURAUD pairings - this may give strength to the Euro in general.

For today, we have the following trades:

GBPUSD long at 1.4864 SL 1.4764 TP 1.4990
GBPCHF long at 1.6465 SL 1.6300 TP 1.6590

Levaz

Levaz wrote:EURUSD short at 1.2345 SL 1.2445 TP 1.2200 (use a 50 pip trailing stop if you want)

I am hoping that some of you were better traders then I yesterday and took some profits. I closed out at the break even level only to see the pair fall down once again. It was very frustrating not knowing where the market was going.

Although we have a buy signal tonight at 1.2315, I am going to stay out of it and wait for the short that we have been talking about for so long. Note that the Moving average has come down considerably from 1.2669 to 1.2564 and closing in the the trend line which is around 1.2450. I believe we will find our short withing this range 1.2450 - 1.2550 - we will find out shortly.

Some of you may be wondering why the Euro is climbing when everyone and their uncle is saying that the Euro is dying, if not already dead. The reason is short coverings in the crosses - EURCAD and ERUAUD. Both these currencies offered much higher rates than the Euro for the longest time. And many hedge funds were short on these pairs - making money on swap AND on the short. If Europe and USA are in trouble, then these commodity / export oriented economies have not demand for their products, so the thinking is that even though the Euro is falling, it may not fall as fast as these commodity country's currencies. So they close their shorts, leading to huge buying in the market, so as to maximize the losses to the hedge funds, which makes the pair mvoe up even faster - a vicious self-feeding cycle.

Added to this is the major austerity programs by Germany, France, and UK - this guarantees no growth for years to come in their respective economies. This in turn, will make the general merchandise market a buyers market which surely only the lean producers will win - a.k.a. Germany, Japan, and now the USA. All those parasite economies, baring China, will face huge unemployment as no one will buy their over-priced products.

In short, we wait for our short position to come to us.

GBPUSD long at 1.4864 SL 1.4764 TP 1.4990

This one did not even come close to picking us up. Note that 1.500 was broken in London trading and yet, we are below. Look for a major drop if London trading does not take the GBP to safety above 1.5100 or higher.

GBPCHF long at 1.6465 SL 1.6300 TP 1.6590

My order was just picked up this afternoon. We will let it ride. If we see a lot of resistance at 1.6550, book your profits and get out. I am going to see how this one pans out - so it is either TP or SL for me.

Other than that, we stay out of the market.

Levaz