Selling in Yen crosses coming out of Tokyo
I thought it might be early hedge funds out of Switzerland who've hit the Yen crosses in the last 30 minutes or so but it seems that most of the heavy selling is coming out of Tokyo.
The threat of any G20 statements regarding Japanese policy towards the Yen seems to have abated, based on what Treasury Secretary Lew had to say, but it's risk-aversion which is driving these flows I suspect. Commodity and precious metal prices are around 2% lower and regional equity markets are also lower.
Big hedge funds playing ranges in Asian session
I've just met up with an old friend who works with one of the big banks locally and he says that, reminiscent of the 1990's, some of the bigger hedge funds are range trading the Asian session particularly in the AUD and the NZD. They trade one side heavily in the morning, get the market tilted oneway then reverse the trade catching the market off guard.
You can do this if you're big enough.
They slammed the AUD earlier and then bought it back, catching many intraday traders by surprise.
Interesting to see how many professional operators are in the market using disparate strategies to make a buck!
AUD/JPY: Trading with soft tone in early Tokyo
Personally I can't see any reason to be bullish this pair at current levels given the upcoming G20, soft equity and commodity markets, and the fact that it's come so far so fast.
I prefer to be short and the obvious places to have stops now are above 101.35 and 102.10 (chart in members).
EUR/USD: Expect 1.2950/1.3150 range trading
- I'm maintaining my bearish bias overall but the market is still short so I don't expect any collapses.
- Heavy trailing stops were triggered yesterday below 1.3150 so that becomes the initial resistance point.
- Some of the less volatile crosses like EUR/GBP and EUR/AUD have pulled back closer to technical support levels.
- This should give the EUR/USD some support soon and I'd expect to see short-covering near 1.2950 at the latest.
USD/JPY: Volatility to remain high; up-trend versus risk events
- This pair is still definitely still in a bull trend.
- There are big risk events looming such as the G20, souring sentiment in equities/commodities, and Softbank/Sprint.
- Short-term charts look reasonably stable so no need just yet to doubt the dominant bull trend.
- Nevertheless, the daily chart shows that pull-backs towards 94.00 are still quite possible.
- I'm suggesting 97.25/98.75 as short-term parameters with a buy-dip bias for now.
AUD/USD: Still looking very soft
- Risk sentiment turned south again overnight with equity and commodity markets leading the way.
- Marginal new short-term lows were made in AUD/USD below 1.0290.
- AUD/JPY topped out yesterday at a 50% retracement level near 102.10.
- I favour a move lower to test recent lows at 1.0125 in coming sessions.
EUR/GBP: Plenty of buyers reported in early London trade
EUR/GBP is possibly my favourite pair to trade, having cut my teeth in the interbank market as a GBP/DMK dealer back in the 1980's. It usually trades with a reliable swing pattern and once you get into the rhythm, it's relatively easy to trade.
I haven't been watching it all that closely in recent weeks so I don't have any very strong views at the moment. Two of the bigger banks are reporting plentiful buying interest through .8600 this morning but personally I would not chase this higher, preferring to sit on the bid down near .8525/30 in the hope of a sharp dip.
My thoughts on what you need in order to be a successful retail FX trader
I've just been asked the question and as I've been doing it for over 10 years myself, I feel that I'm qualified to give some sort of an answer so here goes: You will need at least a
- A $50k trading account.
- A good understanding of how the market works and a broad network of information.
- A very responsible bank/broker who offers fair pricing and doesn't only make money when you lose.
- Intraday leverage use of around 10:1 increasing very occasionally to around 25:1 on the few occasions in a year when you are 98% sure.
- Medium-term positional leverage of between 3:1 and 5:1 (probably should add here that this will increase once the position is in profit and can afford more).
- Monthly risk should not exceed $20k (really shouldn't even get close!).
- Daily risk depends to large extent on how the month has been going; risk more if you're in profit, risk very little if you're losing.
- The ability to think like a trader.
The last is the most important. If you get that then all else will come naturally. Getting trades right doesn't matter much (well obviously it does if you get them all wrong!), what's important is what you do with good and bad trades.
Do all this correctly and you should be able to make $200k per annum from your trading.
EUR: Still looking bullish on the crosses
- EUR/JPY looks like its entered another consolidation phase, this time between 125/131, but the trend is undoubtedly bullish.
- EUR/AUD is supported by strong technicals, a double-bottom on the 4-hour chart, and strong flows closely related to the precious metals.
- EUR/GBP is starting to build a constructive short-term bull-trend after basing near .8400.
- EUR/CHF is supported by the SNB.
The recent moves in EUR/USD have been a little bit confusing but when you look at the crosses and overall EUR positioning, it's probably not all that surprising to see EUR/USD trading close to 1.3200.
Sell orders close by in Yen crosses
- GBP/JPY: Sell orders reported 151.05/20.
- EUR/JPY: Decent selling interest near 130.00/10.
AUD/JPY resistance levels at 102.10 and 102.85
The market is currently stalling at a 50% retracement level near 102.10 but there is a much stronger level near 102.85 which is a 61.8% and a previous low (see members).
USD/JPY heading into European open near session highs
Obviously the up-trend is very strong yet I'm slightly surprised to see USD/JPY holding up so well heading into a G20 conference where Japanese tactics are likely to be questioned. It's a lot of kettle-calling-pot-black especially if the criticism is coming from the US Treasury.
Nevertheless I'm expecting wide range trading for the rest of the week and I'm happy to sell any big rallies in GBP/JPY and AUD/JPY.
Last time EUR/JPY had big dip it rallied 500 pips initially
Just thinking back to when EURJPY dipped from 125 to 119, it managed to rally back to 124 before dipping again. Wouldn't surprise me if something similar happened this time ahead of G20?
Gold: Bulls turn bearish so soon time to buy!
I've read reports from 2 analysts who've been so consistently wrong on this entire Gold move over the last 10 years that I've got to go with the trend and presume that they will be equally wrong this time around. They've turned super-bearish after the break below $1500. A few months ago it was headed for $3,000 and now its going to $0. I don't think so.
I guess its human nature to be bullish at the top and bearish at the bottom, but good traders don't think that way; they are always looking for opportunities when everyone else is bailing out. Warren Buffet made his fortune that way by waiting for the correct timing.
Gold fundamentals haven't changed; central banks continue to print Fiat currency at breakneck speeds and much of this excess paper will eventually find its way to developing economies in Asia and South America. These people have a much different relationship with Gold and the Fiat system than do western economies who've been so well served by the latter. Don't look at the futures market, look instead at what happens in the physical market where Chinese, Indian, Brazilian interests continue to buy in size.
What we are currently seeing is the typical excesses of hedge funds trading with other people's money. That will equalise sooner rather than later and then the real bull trend will emerge once again. I suspect that there are still a few nervous longs to get squeezed, and we may even see prices dip below $1,000, but I doubt it.
AUD/USD: Minor technical resistance at 1.0400
- The 38.2% retracement of 1.0580/1.0290 is at 1.0400.
- EUR/AUD continues to rally which should generate more downside pressure on the Aussie.
- AUD/JPY remains wickedly volatile but upcoming G20 is likely to encourage last-minute profit taking by Yen shorts.
EUR/CHF: Surely must start to rise soon
Perhaps I'm being very stubborn on my CHF view, and I did get stopped out of 1/2 my USD/CHF longs overnight, but for most of the reasons outlined below in EUR/AUD I feel that EUR/CHF must surely soon catch a serious updraught? Add in the fact that the SNB have a base in place at 1.2000 and a set-and-forget long trade makes a lot of sense to me.