June 12 2010 - June 18 2010

I will be away for the market opening today, so I may not be able to make any of the trades listed below.

Also, we have had a very good start for this month, so we will now be extremely patient and look for only the best of the best possible opportunities, rather than the usual 80% probability of winners.

EURUSD short at 1.2225 SL 1.3225 TP 1.1850

We are already at a possible top due to the resistance at 1.2150, however, we also have a long term Daily 2400sMA (right now the Daily 50sMA is at the same exact spot and moving down fast) which places the possible top at 1.2325. While it is NOT necessary that the market touches the MA lines, they are important lines none-the-less and the market typically tries to at least come very close to the lines. We are now very close, so any kind of negative news will prove enough to melt the market down and away from that line. In our case, negative for Europe AND negative for the stock markets too (risk off scenario).

Along the same lines, we also have the EURJPY which I have been waiting for since last week:

EURJPY short at 111.50 SL 112.50 TP 110.50

We came very close last week - 111.38 - without getting the right impetus to cross that barrier.
My indicators show a divergence - indicators show that the pair is recovering since May 14, whereas the pair has actually been moving further down (from a high of 117 to a low of 108). Therefore, my expectation is that we are already at a top or a push further to 114.00 may prove to be the top.

GBPUSD short at 1.4650 SL 1.4750 TP 1.4450

You may want to consider exiting at 1.4500 if the momentum slows down.

Levaz

EURUSD - still in trade
EURJPY - loss of 100 pips
GBPUSD - loss of 100 pips

Net pips for the month now down to 1300+ pips
If the EURUSD does not break 1.2300, which served as ceiling today, then we should be good.

Levaz wrote:
EURUSD short at 1.2225 SL 1.3225 TP 1.1850
EURJPY short at 111.50 SL 112.50 TP 110.50
GBPUSD short at 1.4650 SL 1.4750 TP 1.4450

No new trades as we still have the one still open. Also, market is digesting conflicting information from last week - increased US consumer confidence, yet lower consumer spending. Market decided to focus on the risk-on news hoping that consumer spending will increase this month (June) based on their increased confidence last month. Also, Greek bonds have been reduced to Junk status. Spain is apparently on the verge of bankruptcy (vehemently denied by EU Officials). China has been signing Billion $ currency swap agreements with countries that the Feds and ECB do not want to deal with - not good for the USD.

We need to see a clear winner in all this political positioning in order to determine to go long or short.

Levaz

Looks like we were on the wrong side of the trade for the last EURUSD as well. The short coverings is going a long way to bring the Euro up quite a bit. We are now looking at two possible levels - 1.2750 and 1.320 for our next shorts, which represent the 50sMA and 100sMA respectively as plotted on the daily charts.

We are still looking to short because nothing has changed in the fundamentals - none of Europe's issues have really gone away yet and they have not even been addressed. All the austerity regiments by the power houses, Germany and France, do not change the facts - they are still NET importers and China, Korea, Japan and India are STILL the beneficiary of massive Trade deficits. The base jobs are still exported, and as one news paper article pointed out - While Far East (China, S.Korea, Malaysia, Indonesia and India) are building cities and infrastructure, The West is building blogs, facebook profiles and debt. None of which add any REAL value.

In this scenario, USD and Yen are still king (only for lack of choice), Gold is likely to keep rallying, risk currencies do not stand a chance.

We will wait and act when the next short presents itself.

Levaz

We will stay out of the market for today to get a gauge of the strength of the recent movements.

Levaz

We will observe the market yet another day. With the exception of the EURGBP pair, none of the other made any moves at all - pretty much where they started. We need to see market sentiment after this consolidation is over.

The spreads in the bond markets are rearing up again - the ECB is buying Billions of these unwanted bonds - sort of like the blind leading the blind - eventually one has to give in. The GBP crashed late afternoon for these reasons - BoE governor spoke about the state of UK finances and tried to convince the market why they need to keep rates low for yest some more time. BP canceled an already announced dividend and scratched dividends for the next two quarters as well. Last and more importantly the FSA will be broken into three distinct entities, one of which will be now directly controlled by the BoE.

Levaz

Today's trading showed us two things - we have a close of the EURUSD on the Daily chart above the 2400sMA AND the pair successfully touched and bounced off from the the 18 day eMA. this is enough for us to be long on the Euro for the near term, but remember that nothing fundamental has really changed as yet. No steps have been taken to effectively counter the Trade deficits and the much advertised austerity programs will only lead to slowing down of the GDP's and more likely than not political unrest among the general populace who know that they have been taken for a ride.

We have to be ready for a sudden change in market sentiment as soon as reality hits - so these trades will be considered counter-trend trades.

EURUSD long at 1.2336 SL 1.2200 TP 1.2495

As a footnote, my managed accounts WILL NOT be taking this trade (justification is that we have already achieved our 10%+ for the month, so we do not RISK). However, I will be trading it on my personal account just to test the veracity of my calls

Another point that I want to mention is that my short term indicators have already crossed the medium and long term indicators towards the downside. This crossing typically gives me an advance notice of a potential change in direction (typically a change in trend may appear within 24 - 72 hours or at the very least a test of the nearest major support line). So beware, I would use a very small lot size on the above trade.

Levaz