Trade opp

AUDUSD

RBA rate cut is out of the way now and USD in general has a pretty bearish bias (EU,GU,Uchf,UJ). So keep an eye on AU and see how much we can go down this week.

If we see the price holding onto the current price zone around 1.0300 in next 24 hrs than its a good opportunity for a "Sell The Rumor Buy The News" trade.

EURGBP

Is in a decent down trend and today we are turning down again after a test of the 4H trendline. So could be decent opportunity to get in with a stop around 8210.

IFR - Buzz on Eurusd and Gbpusd

EURUSD

Euro zone banks have been under pressure to improve capital ratios. The thinking is that this is being done partly by selling foreign assets and taking the money home - probably one reason for euro resilience. The extent to which that has happened and how much more needs to be done may become clear later this week. French banks Societe Generale and BNP Paribas report results on Thursday and Friday respectively.

GBPUSD


Tuesday's manufacturing PMI may briefly halt flows into sterling. But some investors are using sterling as a substitute for Swiss francs. If the euro zone's economic and financial troubles escalate, then flows into sterling are likely to accelerate. The UK's AAA rating also means that most of the 160 bln-plus pounds of government debt due to be issued this financial year is likely to be bought by overseas investors.The idea that the BoE will hold off on further QE and reserve diversification by central banks in emerging markets are also pluses.    


Copyright (c) 2012 Thomson Reuters - IFRMarkets     

SNB update 2

Following up on the previous post on SNB and its peg.

Wont say much but just quoting a piece from a WSJ article,

As one trader put it, the EUR/CHF cross seems to sum up what is wrong with foreign-exchange trading these days.
The cross goes nowhere, so it isn’t worth the cost of capital to put on a trade in lieu of something else. This is all because the Swiss National Bank , in an attempt to weaken its currency against the euro, has instituted a floor of CHF1.2000. Though that is far above what the current anti-euro mood would suggest as fair value, the market doesn’t dare challenge the SNB edict, so the pair simply stagnates just above CHF1.2000 and has all but ceased to trade.

Here is the complete article. 

Order board

* USD/JPY bid again, stays near 81.49 high seen earlier, some eye topside stops.
* USD/JPY stops above 81.60-70, 82.00, 82.20.
* Bids seen firm from ahead of 81.00, trail down to 80.80, stops below.  
* Downside stops sub-80.80. 

* EUR/JPY bias still to sell rallies but resilient today, topside stops too.
* EUR/JPY offers ahead of 108.00 still but some stops mixed in above 107.80, 108.00.

* EUR/GBP stops seen building sub-0.8190.  

(IFR)  


USDCAD
Good real money, talks of reserve managers, sovereigns offers above 0.9900/ 0.9950/ Parity. Bids at 0.9850-60, stops below 0.9850/30.

NZD/USD
at 0.8110-15, interest from funds, interbanks, US houses to sell on rallies for break of 0.8080/ 0,8050 and key 0.8000. Real money, local corporates, exporters and Asian bids on dips to 0.8080-90, but vulnerable to stoploss below 0.8080.

GBPUSD
Offers 1.6150/1.6200, by US funds, UK clearers, stops below 1.6080, but UK clearers, divdend related, M.E, Asian bids on dips to 1.6050/1.6000.

(4CAST)




Nothing on EURUSD yet but looking at the chart stops seems to hide above 3215 and 3230.
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Order board

EURUSD

Offers from 1.3140-50 and 1.3160

Stops 1.3155, 1.3170 and 1.3220

Bids 1.3080 and 1.3060, larger demand 1.3000-20 area

USDJPY/EURJPY

Bids continue to build at and around the 80.00 level
Talk of a large bid at 80.30, Japanese corporate name
Offers 8060 through 80.80
EUR/JPY Bids 105.00 and 104.60-70, offers 105.70-80 area

GBPUSD

1.5905 was today's Asian session top, 1.5911 was yesterday's high
Bids are tipped at 1.5840, 1.5820 & 1.5800

EURGBP
0.8269 was yesterday's high & Apr 12 high, 0.8268 was Apr 13 high
Bids tipped ahead of 0.8200 (option barrier level) 

 
AUDUSD

AUD softer overnight on RBA minutes, now looking to Q1 infl. report Apr 24
AUD/USD bids 1.0300, stops below, better bids 1.0270 and 1.0230-40
AUD/JPY support noted 82.80 and 82.50, offers 83.30, larger 83.50 and 83.70

USDCHF/EURCHF

Offers 0.9200-10 and 0.9240-50
Bids 0.9140-50 and 0.9090-00
EUR/CHF bids 1.2010-15, offers 1.2035-40, stops above 1.2050 

 
(Thomson Reuters - IFRMarkets)

SNB update

Continuing from the previous post on SNB,


Now the question i have is why SNB's is not doing what is was expected to do and why its doing what its doing.

and the conclusion i am reaching is that,

What happens if SNB never intervenes and just defends the peg?

After some weeks or say a month or so speculators on the bulls side will slowly move out of this pair to free up their margin and reducing the risk of what happened last week.

from the bulls side,

negative in this case of course is that's gonna generate more sell orderflow for SNB to hold back but positive's are that Stops below will start to get lightened and WHEN/IF SNB ever intervene they wont have to fill bulls TP's.

from the bears side,

Well with bulls moving out it will seem easier than before to break 2000 but also there wont be that much liquidity (stops) below the level too. Now people who are selling Echf are not like retail traders they have got balls, bills and brains on their side so they wont give up that much easily. I dont know whats gonna happen here cause i cant say how long SNB will have to hold 2000 before bears give up on it.

SNB,

Well from what it seems to me the plane could be to just defend 2000 and never intervene to draw out the buyers in anticipation for an intervention and they want same for the bears to who give up on trying to break the peg. So for a bank like SNB what could better than a currency which Specs dont wanna touch.

What SNB also can do from time to time is to spike it up like 30-70 pips every now than to further damage the bears confidence.

In between SNB could sell the Volatile option to help them generate money to fund the interventions though money is not big problem for SNB as they going through some deflationary cycles (so can print). Also there not just holding the riskt euro in their  reserves they keep re-balancing buy selling the like's of Eurusd and Eurgbp.

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Eu Ej shorts

Following up on the previous post. Went short @ 148/39/20*2 also did an Ej short. More details are in tweets.

http://twitter.com/ForexOandS/status/190145782941368320

http://twitter.com/ForexOandS/status/190146213230809088

A lot of stops

It seems as if those stops above 100 DMA is are now in the play Italian auction was not really good and Eu spiked up before coming down.

The are a lot of stops above that DMA, MA traders, Range traders, Trailing stops from short's from high's and ofcourse the stops you normally find above 50's.

So these can be target and a fake breakout could occur.

I will be fading that breakout but may could go long to takeout those stops.

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Looking forward

Eurusd has been very resilient looking at the risk sentiment we have these days, Spanish and Italian bond yields are rising Stocks are falling and Eu is still sitting where it was this morning. The reason behind it are 1) Huge barrier defense at 3000 2) An interesting viewpoint from Forexlive  on repatriation  flows behind the bid tone of Eu.

The second half of the pair i.e USD rallied strongly last week after Fed changed turned to a more Hawkish stance (no QE3). But on the last day of the week NFP once again changed all of that.

Now going forward we will have to have to closely follow Fed's monetary policy and Eurozone's debt situation.

NFP was just one figure so also would have to keep taking notice that what is upcoming Eco data tells us about the economy. Central banks don't change their stance based on just one number they looks at the trend of numbers in past 3-6 months.

Gauging the sentiment in Eurozone is easy you can just simply look at the bond yields and stocks read the headlines and you know whats going on but tricky part is when someone comes out on the news wire's says  something against the current sentiment and that changes whole thing price reverses in seconds and starts taking out trailing stops and depending on WHO is saying WHAT the move could be from 10 pips to more than a 100 pips.


One trade that i am looking for is Eu's reaction to the news.

If it dont go up on good news from here than i will be shorting near the upper boundry of the range and if it's not able to get though the barrier on rising yeilds and tension in Spain than it means it will bounce hard.
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Why my trades failed, Fundamental picture until now

This week has't been going well, first i was stopped out on Eu shorts from Friday for -100 pips. Next were the 3 trades for Bernanke's speech, although He dint say what i expected him to say the trades dint disappoint. In the end there was the eu long i did today which also was stopped out.

But by taking a closer look at all those trades i realised that none of those trades would've turned red if had been more professional with my trade management. The first eu shorts showed a profit around 130 pips before it spike up to hit my SL, UJ short only went past my SL for 13 odd pips and now its down in my direction for over 70 pips and Uchf short and eu long also went up for 50 pips combined just after i closed them at BE. In the end EU longs stop again proved to be too small (15) and price only went past my SL for 9 pips before it shoot up for 50 pips from my entry.

The reason why i let those potential winners turn into losses was that i failed to realise that the sentiment was totally changed from what it was the last week when we saw price's moving  in straight lines.

The sell-off (USD rally) started with Fed turning more hawkish and continued until Friday when NFP came out worst than expected and now the confusion is back in the minds of every one over what Fed will do next.

On the other hand nothing had changed regarding EU debt crisis and it only got worst with Spanish and Italian bond yields kept rising.

So in simple words last week USD had the reason to go up and EURO had the reason to go down,

This week USD no longer has that reason on its back and EURO's reason has been getting stronger (though surprisingly it has't fallen much see next line for a possible reason).

Couple this fundamental picture with the barrier defense @ 3000 and you have a ranging market on your hands. Of course i would not normally say that a barrier can stop the orderflow driven by string sentiment but 3000 is a very big number so defense is alot bigger than what you experience on 100's and 500's. 

and i failed to realise that kept my trades open for too long hoping to see the moves resembling the one from the last week also this is not only week i failed on gauging sentiment. Last week i jumped in and out too much when i should have hold onto my trades.

Ok that's all for this rant but this post continues explore the potential fundamental shifts that occur in coming days/weeks...