May 23 - May 28

FYI, we have achieved our monthly target already. You can see our Trade Performance for May 2010. We have 80% for the month with a floating loss of 35%, so that is still a decent 45% in the bag. Note that the loss is hedged, so we will be closing our orders when the trend resumes it course down to parity. Since March 2010, we stand at approx. 120% in the bank.

The last week of May should be an interesting one. this week should set a precedence of what awaits us for the next few weeks. With both Europe and Britain announcing extensive austerity programs, along with the extravagant QE (but not really QE as per ECB), we should expect the markets to retreat some more against the overall trend.

Trades for today:

EURUSD long at 1.2465 SL 1.2365 TP 1.3100

Notes:
We may not really see a drop to 1.2465, as 1.2500 proved to be a formidable support on Friday. Also, the anticipated ECB intervention may not allow this to happen. We plan to enter our trades at any point between 1.2525 - 1.2550.

Please use a MANUAL trail on the order, as we are not really sure how far this retrace will go. We anticipate at least 1.2900, and a max of 1.3300. Realistically, 1.3100 may prove the point at which it will resume the down trend. But we will see what the markets have in mind as things progress.

Levaz

Few more possible trades for tonight/tomorrow.

GBPCHF long at 1.6524 SL 1.6424 TP 1.6750

You may want to increase the SL to 1.6300 to be safer, but that does not make it very interesting risk:reward trade. Also, if we are wrong, then we would much rather cut our losses early and move on!

EURGBP buy at 0.8666 SL 0.8566 TP 0.8750

GBPUSD long at 1.4424 SL 1.4300 TP 1.4620 (could target 1.4900 - 1.5000 as a possibility)

We have entered the above EURUSD trade at 1.2465, but we will see how Asian market starts off. If we do not see much down side to the stock markets, it may be safe to get in at 1.2525'ish area.

Levaz

Betrayed by the SNB, they were apparently selling their Euros to "diversify" - does not make much sense as they have accumulated Billions upon Billions of Euros in the past 24 months. Maybe they know something that we do not - and that is the scary part.

The signals account at Zulu took a massive beating as a result, but we will persevere. Of course, we were heavily exposed on the Euro longs, expecting that ECB intervention to come through. We do run into these market bending issues from time to time.

Levaz

We are going to stay out of the markets for a day or so.

As a general idea, plan to short the Euro around 1.2450 levels, and keep you stops tight - around 1.2480 (30 pips). Target 30-70 pips.

Even though, it is due to over trading on my part, I am at a critical loss level for the month. The demo account is down 12%, which is very close to the 15% cut-off limit per month. So I need to tread cautiously. We have the open GBPUSD trade, which we will allow to run its course.

Levaz

Sorry for the midday entry guys, but it looks like the ECB intervention is currently going on. Last week they purchased close to 10Billion in Euro Bonds that no one else would touch and then drained the additional liquidity form the markets. Considering that the market is facing a liquidity shortage, that caused a lot more panic, which weirdly enough led to a revival of sorts on the EURUSD pair. It looks like there may be a repeat of the same, as the ECB tries again to get a grip on the fast looming disaster. They tried to buy a couple of years to fix the problems, looks like it worked for approximately 2 weeks.

That said, I am ready to short the Euro at 1.2345 with a SL at 1.2345 TP 1.2100.

If the options barrier at 1.2100 does break, then, technically, that opens the flood gates right up to 1.18 and beyond. We have hit the 50% Fibo line of the Euro absolute peak to valley trading range which is at 1.2132 - we came as low as 1.2142. If you draw the fibo extensions at 161% - that line falls right around 1.18.

This does not mean it will go right there immediately (could happen, but we need to see), but with the circuit breaker trip this morning at the NYSE, this could be the sign that the proverbial socks is going to hit the fan and hard.

I really hope I am wrong about this

Levaz

Sorry about the typo - SL should be 100 pips - at 1.2445

You may want to hold off on this trade, as we have what appears to be a double bottom. While it is NOT one, too many people misinterpret a double bottom, enough to cause an impact the markets.

We came very close, within 1 pip. I still feel I am right about the trade, nothing has changed really, just being extra cautious in view of our recent losses.

Levaz

Levaz wrote:Sorry for the midday entry guys, but it looks like the ECB intervention is currently going on. Last week they purchased close to 10Billion in Euro Bonds that no one else would touch and then drained the additional liquidity form the markets. Considering that the market is facing a liquidity shortage, that caused a lot more panic, which weirdly enough led to a revival of sorts on the EURUSD pair. It looks like there may be a repeat of the same, as the ECB tries again to get a grip on the fast looming disaster. They tried to buy a couple of years to fix the problems, looks like it worked for approximately 2 weeks.

That said, I am ready to short the Euro at 1.2345 with a SL at 1.2345 TP 1.2100.

If the options barrier at 1.2100 does break, then, technically, that opens the flood gates right up to 1.18 and beyond. We have hit the 50% Fibo line of the Euro absolute peak to valley trading range which is at 1.2132 - we came as low as 1.2142. If you draw the fibo extensions at 161% - that line falls right around 1.18.

This does not mean it will go right there immediately (could happen, but we need to see), but with the circuit breaker trip this morning at the NYSE, this could be the sign that the proverbial socks is going to hit the fan and hard.

I really hope I am wrong about this

Levaz

We will continue to tend to our existing trades, The EURUSD short was picked up earlier in the after hours surge, which must have obviously been the ECB buying. We will get a confirmation of this in a few hours or so. The stock markets closed in negative, and the Korean situation is just getting worse. So this should continue to bear heavily on the Asian markets, which should take us int eh right direction.

The GBPCHF trade is alive and kicking, all indicators are still consistent with a 1.6800 target.

Keep an eye out for the following over the next few days:

USDCAD - get into a long position either at 1.0560 or 1.0400 with SL 1.0300 TP 1.0900
USDCHF - also long at 1.1465 or 1.1291 with SL 1.1150 TP 1.1900

Note that the SL and TP remain the same no matter which entry point we choose (get).

Levaz

Looks like the bottom held yet again for the Euro, for now at least. I hope you guys got the 100 off pips from this trade.

Time to close the GBPCHF as well. We are in profit also - another 150 pips or so.

Dont know if any of you picked up the USDCAD trade, at the higher entry point, but it is currently around 20 pips down, went as far as 80 pips down. Let us see how that pans out.

I am waiting of the lower entry points for both USDCAD as well as the USDCHF. That would prove to be a nice 500 - 700 pip trade, if it ever does go that low.

Levaz

Looks like the European Sh*t has hit the fan (or it will shortly, anyways). short of a direct intervention into the forex markets, the Euro should break the bottom of 1.2142 tonight.

EURUSD short at 1.2296 (1.2348) SL 1.2396 TP 1.2000

While I feel it is unlikely that we will get either of our preferred entry points listed above due to the current shedding of the Euro by almost everyone and their uncles, we have several other options.

This will only work if you eye the Asian market tonight, as they are most likely to take the lead and drop the Euro. Unless there is some terrible disaster in Japan, Australia, New Zealand, (you get my point), it is almost a given that the Euro is going down. Tonight is as good as any other night.

Even China has decided to demand austerity from the erstwhile Rulers of the World. They have decided to rebalance their bonds portfolio, currently worth about USD 640 Billion (equal in Euros).
All Asian exporters have been buying their own currencies to shore up the value, and then turning around and selling the Euro. Even the SNB has been selling the Euros a little at a time. There are apparently no buyers!!

Coming to the point, you want to watch the pair and short it when it has comfortably crossed the "defined" low. So I would suggest that you get ready to place market orders at 1.2130'ish - DO not place pending orders. Keep your Stops VERY tight if you do this, you will have to risk an immediate comeback or two to 1.2142 FOR SURE. So go tot he lower Time Frames, and sell at the first instance it crosses 1.2130, set you SL to 1.2150 or 1.2155 and target is the same at 1.2000 The Signal to sell will be an official DENIAL from the Chinese that they are looking to re-balance their bonds portfolio.

There is a large option barrier there, so that will be the obvious target of the big players. Once accomplished, there may be a comeback (as they will withdraw their weapons as soon as they taste victory).

Levaz

The official denial was done last night (during London trading) by both - China's SAFE (official USD 2.4 Trillion investment arm of the Chinese govt.) and CIC (China's aggressive USD 300 Billion Sovereign hedge fund). This was also followed by similar verbiage from KIA (Kuwait Investment Authority) which is Kuwait's Sovereign Wealth fund estimated at USD 200 - 500 Billion.

Such denials gave the EURUSD the extra room to push almost to our second Short around 1.2348 (actual came at 1.2344) and now languishing at the support line once again.

What does this mean - short of a guarantee, it means that the EURUSD is more likely than not headed down to 1.16-1.18 area in the next few weeks.

We are still hopeful for a retrace to the 1.2700 - 1.300 area - a short squeeze to get the smaller traders out and probably going long - before the big boys decide they have had enough fun and let the trend continue.

Levaz

Wow, did you guys see the recovery of the RISK pairs. All this ONLY because China said they would still buy Euro bonds. They are quite a power house.

Based on the Daily charts and using the Trend line from peak 1.5140 on Dec 3, 2009 to 1.3678 on April 14, 2010, we arrive at a possible peak of 1.3200.

Using the 25, 50 and 100 day Moving Averages, we get a possible 1.3100 as of today. that will move based on the current prices until they eventually make contact.

The reason I mention these numbers is that these areas will be the critical positions to short the Euro and hold on to those shorts till it hits 1.1000 (predicted by others to occur before year end!!).

Start with small positions, using 100 pip Stop loss settings, and add positions every 200 pips ONLY on confirmation that there are no reversals due.

There are bound to be some losing trades with those first shorts, but that is the price you will have to pay in order to get in at the correct entry.

In the interim, we should be able to short the Euro again around 1.2750'sh, make a couple of bucks and see if it will go higher to meet the trend line and the MA.

Levaz

The GBPCHF trade finally hit the target. Sadly, I believe it may have some more room, but we will wait for the turn around.

Levaz wrote:
The GBPCHF trade is alive and kicking, all indicators are still consistent with a 1.6800 target.

Looks like we will be waiting for these two to come into play soon. Do not use these levels as they are a day old already. Just be ready to get in on them around the demarcated area, +/- 50 pips or so. I will give you the signals when the time is right.

We will also be looking to short the Euro. I am considering 1.2500 - 1.2600 area for now. We need to see how strong this retrace proves to be. And the reaction to any further bad news.

As mentioned earlier, SAFE, CIC, KIA, etc. have all officially denied that they are re-evaluating their Euro positions/holdings/future investments - That is our SELL signal. "It is not really official till the first denial" I truly believe that the current surge in the Euro is a short squeeze, as as happened with the EURAUD and EURCAD last week. It is meant to shake out the weaker players, the smaller accounts, and even get those people to go int he new "trending" direction.

Remember, nothing has changed in the fundamentals - USD, EUR, GBP and JPY are all disasters that have only been postponed. The USD is not strong so much as the Euro / GBP are weak. The Yen has still not recovered from the 1980's bubble. And guess what lessons were learned from their mistakes and NOT repeated by both the US and ECB policy makers ??

Levaz wrote:
Keep an eye out for the following over the next few days:

USDCAD - get into a long position either at 1.0560 or 1.0400 with SL 1.0300 TP 1.0900
USDCHF - also long at 1.1465 or 1.1291 with SL 1.1150 TP 1.1900

Note that the SL and TP remain the same no matter which entry point we choose (get).

Levaz

Meanwhile for today, you can try either
EURUSD long at 1.2228 SL 1.2128 TP 1.2500 (you may want to get in earlier1.2310'ish, but risky)
GBPUSD long at 1.4488 SL 1.4388 TP 1.4750 (again, get in earlier, but that increases the risk)

I wait for the optimum entry points as specified. If i do not get picked up, I will wait for another chance which will come soon enough.

Levaz

Hope that those of you that took the 1.2308 trade got your 100 pips and left.
I am still waiting for the 1.2228 entry, may revise that lower once I study the numbers tonight.

The GBPUSD trade has been picked up, and now we wait. Note that the 100 sMA has been providing us support at the current levels.

Have a good weekend guys!

Levaz

Levaz wrote:
Meanwhile for today, you can try either
EURUSD long at 1.2228 SL 1.2128 TP 1.2500 (you may want to get in earlier1.2310'ish, but risky)
GBPUSD long at 1.4488 SL 1.4388 TP 1.4750 (again, get in earlier, but that increases the risk)

I wait for the optimum entry points as specified. If i do not get picked up, I will wait for another chance which will come soon enough.

Levaz