Aug 15 - Aug 20, 2010

The European debt crisis has resurfaced, yet again. Bond spreads have been increasing, and this means more pressure on the Euro. Therefore, we will be shorting everything Euro and GBP.

The risks to our trade:
- sudden shift in risk-off sentiment
- confirmed BoJ intervention in FX markets (they meet this week, again!!)

The trades:
We want to short GBPJPY at the range highs of 137.00-137.50 with a 100 pip stop (no more), and target at least 200 - 300 pips
Same with EURJPY - short at the range highs of 110.50 - 111.00, 100 pip stop, target 108.00

Watch for BoJ calling to check rates, that will cause a 40 - 80 pips move, enough to get the big boys out stop hunting with the dealers.

EURUSD short at 1.2775 SL 1.2875 TP 1.2550

This pair has proven to be extremely volatile in recent months - so 100 pips may prove to be a bit less than required, however, I am not willing to risk any more on my own trades, and thus, do not recommend that you place more than 100 pips on the line either. If our stops do get taken out, we are looking for the pair to peak at 1.3000'ish and then return.

The action of QE (recently announced by the Fed) may cause the Euro to rise against the USD, but it will not so much Euro strength as it will be USD weakness against the Yen and Franc.

I am still long on the USDCHF, with the cross over to the upside just touching as of Fridays numbers. While I like to see a sharp cross to show strength in the upward move, there is a good possibility that the EURCHF and GBPCHF may cause USDCHF to test my Stop loss.

Yet again, while I do not recommend this to you guys, I will be removing my stop loss on the USDCHF trade and replacing it with a hedge. this decision will be based on my interpretation of the three CHF pairing AND the performance of CHFJPY. I will also have my ear to the ground as to SNB preemptive action or possible reaction to these conditions. Since these actions are impromptu and based on a feel of the market, it may be too late to warn you guys on my course of action. This is one of the reasons I did not list it as a trade but only mentioned it to be fair to you since I did take the trade.

The safest trades may be to buy CHF, i.e., short GBPCHF, EURCHF and USDCHF. You may be confused as to why I list shorting the USDCHF when I actually have an active long. (My USDCHF is a long term trade and I am ready to hedge to protect my account).

The USDJPY is currently stuck just under one of my critical pivot pivot points at 86.31. The pair managed to edge higher up to 86.38, but eventually closed lower at 86.23. These critical levels are trending up (for now) so it may be that a bottom is forming. Note that we have a double bottom from Nov 26 2009 and August 11 2010. There is a good possibility that if this pair clears the sell orders that are sitting at the current level and another big bunch of sell orders at 86.80 then it may head towards 90.00 in the next quarter. The weight on this trade will be the heavy Chinese purchases of JPY bonds at current levels between 87 and 89, so it is in their interest to keep the JPY at these high rates (from a Yen perspective).

GBPUSD has recently broken my critical pivot level at 1.5650. The market has their eye on 1.550 as major support, so a sustained break of this level could indicate a downside to 1.4750, yet again. However, the GBP being the "ball-breaker" that it always is, I am not ready to short it yet. This pair will relate directly to what happens with the GBPJPY pair, which has just broken to the down side, but appears to be recovering. A sustained reversal above 135.00 could mean that both the GBPJPY and GBPUSD could move higher. Expect lots of volatility here.

Well, that is a bunch of trades of for you to chew on.

Levaz

[quote="Levaz"]The European debt crisis has resurfaced, yet again. Bond spreads have been increasing, and this means more pressure on the Euro. Therefore, we will be shorting everything Euro and GBP.

We want to short GBPJPY at the range highs of 137.00-137.50 with a 100 pip stop (no more), and target at least 200 - 300 pips

Pair did not reach that high.

Same with EURJPY - short at the range highs of 110.50 - 111.00, 100 pip stop, target 108.00

Hoping you shorted this when it did not go as high as anticipated, now sitting at 35+ pips

EURUSD short at 1.2775 SL 1.2875 TP 1.2550

Order picked up, currently down 35 pips from a peak of almost -100 pips.

The safest trades may be to buy CHF, i.e., short GBPCHF, EURCHF and USDCHF.

USDCHF moved down to the base almost 200 pips before hitting the daily trend line and retracing some. EURCHF and GBPCHF moved 180 and 260 pips. Hoping you guys picked up some pips there.

It looks like more of the same for now. The market is very worried about the Eurozone debt, worsening US, Euro and now even Asian economic data. I dont know if you guys ever heard of this one, but there is an indicator called the "Hindenburg Omen" which predicts upcoming stock market disasters - and it did so accurately for the Sept 2008 GFC. I do remember having a conversation with a broker back in June about an impending disaster due in Sept. around the Jewish new year - Yom Kippur!! Food for thought!!

This article is a good read. While this is just a possibility, one must not write off such warnings and keep your eyes open.

Levaz

EURUSD short at 1.2775 SL 1.2875 TP 1.2550

This one also stopped out.

The safest trades may be to buy CHF, i.e., short GBPCHF, EURCHF and USDCHF.

There was a Euro short squeeze yesterday, with ERUCHF leading the charge rising 250 pips.

For tonight, we have the following trades:

ERUUSD long at 1.2855 SL 1.2755 TP 1.3000
USDCAD short at 1.0350 SL 1.0450 TP 1.0180

This is a just in case we get real lucky:
GBPCHF long at 1.5850 SL 1.5800 TP 1.6650

We may have to wait a while for the last one, but that area is a nice bottom, which should hold well. Even so, it is a nice risk:reward setup. You may want to simply keep an eye on the charts and get in when the pair is rising after hitting the lows.

Levaz

ERUUSD long at 1.2855 SL 1.2755 TP 1.3000

Trade picked up, we may have to lower the TP to 1.2920 as it appears that we have solid Sell orders at this level. Must be SNB off loading some of those Euros they accumulated over the past two years.

USDCAD short at 1.0350 SL 1.0450 TP 1.0180

Missed by 11 pips - damn, it was a nice trade!!

GBPCHF long at 1.5850 SL 1.5800 TP 1.6650

This one will be a long wait but may be worth hanging on to for some time.

Levaz

For the EURUSD, the expected range is 1.2790 - 1.2931. However, we do not have all indicators showing upward movement, which means more consolidation for the interim.

The market is more risk-on due to the level of Mergers & Acquisitions going on. Please note that the European Forex market is off for the summer holidays, and things will become "normal" come September. I say "normal" because I really do not believe the the level of interventions from various Central banks are likely to stop. Asian economies have a vested interest in a strong USD against their local currencies. Unlike the SNB, however, they immediately dump their USD and buy EUR, GBP or JPY - which ever happens to be the cheapest at the time. This is why we see such volatility for no apparent reason.

It appears that a solid bottom has formed for the GBPUSD at the 1.5500 level with a relatively safe 100 pip stop. These would be the level to buy GBPUSD.

GBPUSD long at 1.5550 SL 1.5450 TP 1.5680

This seems to be the "happy zone" for the market players. Middle East and Asian CB's sell at the high, while the UK market and European interests buy at the lows.

Levaz

ERUUSD long at 1.2855 SL 1.2755 TP 1.3000

Get ready to book profits or move your SL to break even.

GBPUSD long at 1.5550 SL 1.5450 TP 1.5680

Book your profits at 1.5650 if you want or move your Stop loss to 1.5600 and wait for 1.5680

Levaz

We will stay out for tomorrow. Our indicators are not showing consistent directions, so it is best to wait until they realign.

Levaz