EUR/CHF: Lot less risky to go long this morning
The cross has only risen by around 20 pips this morning after the Gold referendum was rejected in Switzerland. This could be a sign that the referendum result was fully priced in but it does also give the SNB a continued mandate to carry on with existing policies.
Let's put it this way, it's a lot less risky to go long EUR/CHF this morning at 1.2040 than it was to go long on Friday at 1.2020.
EUR/GBP: Sticking with short position for now
It's the end of the month which usually means that the Buba will buy their big tranche of EUR/GBP, so this is something for shorts like me to be wary of. The falling oil price usually affects the GBP to a modest degree, another factor to keep in mind.
I haven't traded this position very well so far, and its hard to go from bad-trading to good-trading of a position overnight. I'm short at close to current levels and will persist for now but I'll exit at the first sign of a base forming on the short-term charts.
CAD/JPY: Looking to add to shorts on rallies
This pair hasn't yet had a major reaction to events in the oil market but if/when it turns, there will be a big run for the exits. Even a relatively modest 38.2% retracement of the vertical move from 93 to 105 would take prices back towards 100. CAD/JPY has traditionally been the proxy spot FX market trade for exposure to the oil market and with crude prices tumbling, adding to shorts on rallies back towards my 104.50 entry level makes good sense (at the moment at least).
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CAD/JPY: Easing into market with small short position
The big fall in oil prices hasn't washed through into the traditional FX proxy, CAD/JPY, but maybe it still will. The daily chart looks very bullish and it's certainly hazardous trying to pick a top but I guess we are in a risky business.
I've sold smalls at 104.48 and will sit and watch for a session or two.
Career objectives for retail traders
The retail FX industry continues to grow and the career opportunities for passionate and talented traders are certainly plentiful. Last year's lull seems to have weeded out many of the less-competitive market participants leaving us with a much stronger base. This is badly needed, as we know that the next generation of traders, market-makers, commentators, strategists etc will come from this base.
From what I can gather, most of the retail market's current full-time participants are still ex-interbank employees. But with an average age of 50+, it's obvious that hedge funds will have to find fresh trading talent, Algos will need new maths geniuses, blogs will need new commentators etc.
So if you think you are a talented trader and you are looking for a full-time career in the FX space, which direction should you be looking?
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- Signal-selling has become a huge part of the retail industry over the last 2 years and this offers the talented strategist an opportunity to earn income off their good calls without actually needing to be a capable trader. Most banks (when they were still actively prop trading) employed big teams of analysts/strategists in order to provide trading ideas to their trading teams. The skill sets are actually completely different. Maths students, number crunchers, or simply those who are lacking the physical and mental energy required to be a trader, might be better suited to this avenue.
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Switching long cable into short EUR/GBP position
I'm still of the view that cable will bottom out sometime soon but whether that's at 1.5600 or 1.5450, I really cannot tell. EUR/USD looks terrible and with the ECB flagging more easing measures, the downside pressure is only going to increase. I missed the boat on Friday afternoon and we are now significantly lower, so selling EUR on the crosses looks like a better proposition.
EUR/CHF is another variable, and as the pressure on the 1.2000 floor increases, so also will the SNB sales of EUR/GBP, EUR/JPY etc as they sanitise their purchases.
I'm switching from a long cable to a short EUR/GBP position, keeping my stops well above .8050 for now and with an open downside target. If this pair accelerates lower, we could see a very quick 5% move.
Risk-off Friday in Asia again
Usual Friday rules in Asia with the trend for the week reversing somewhat amid positional reduction ahead of the weekend.
USD/JPY support levels will be much firmer towards 117.00.
Cable resistance also firm near 1.5730.
EUR/CHF: Best left alone until after the Gold referendum
I'm not a believer in central bank market intervention after seeing it end in tears on too many occasions. The very strong comments from the SNB's Zurbruegg (copied below from the FXWW chatroom) would normally cause more of a spike than they did which suggests to me that the SNB is in for a long hard battle.
*ZURBRUEGG SAYS SNB CAN BUY FX IN UNLIMITED QUANTITY : *ZURBRUEGG SAYS SNB WILL ENFORCE CAP WITH UTMOST DETERMINATION
*ZURBRUEGG SAYS GOLD INITIATIVE IS HARMFUL TO SNB... all bbg
Yes the SNB can buy FX in unlimited amounts but the distortions that this would create across all markets would make this totally unpalateable for other central banks.
Cable: Short-term levels becoming obvious, 1.5590/1.5730
Prices have bottomed out on 2 occasions now near 1.5590 whilst 1.5720/30 has proven to be solid resistance on the topside. I'm maintaining my bullish bias for now and at least it's becoming very clear where my stop-loss order should be! I will continue to build my long position inside of this range and hope that I get my timing right on the 'turn'.
Today's price action will be determined by what happens in GBP/JPY and the break above 184.60 would suggest that more topside is likely.
USD/JPY: Significant optionality at 117.50 should provide solid resistance first up
Normally these big optionality levels prove solid on the first test at least and I've been hearing for the last week or so that 117.50 is the next big level.
Cable: Hanging onto long position for now
Prices are back near my entry levels and the sideways price action in cable is starting to look consolidative (and therefore bearish). EUR/GBP has been the main problem with short positions starting to reduce or exit completely. The SNB support in EUR/CHF should be bearish for EUR/GBP (as they sanitise their EUR purchases) but as yet we have seen no sign of this.
I will stick with my cable long position for now and see how the market develops but if we start to spend some time around 1.5550 levels, then I will need to reconsider very quickly indeed.
AUD/NZD: Consolidation range 1.09/1.13 still in control
Nice call in AUD/NZD from Morgan Stanley last night to buy the dip ahead of the milk auction, and it turned out nicely with prices bottoming ahead of the consolidation-range base at 1.0900. The overnight lows were around 1.0935 and buying dips back towards this level over the next few sessions makes good sense, with technical and fundamental factors playing in your favour.
As we know, the trade idea itself is much less important that how you trade it but if you can enter the market at the correct levels, it does make life a lot easier.
RBA minutes set for release today
The minutes from the November meeting of the RBA will be released at 11.30 am Sydney time and they will be followed by some remarks from Governor Glenn Stevens. The market will be looking out for any mention of the AUD level.
Any rallies towards .8800 will run into heavy selling interest and dips to .8650 will be similarly well supported. Range trading is the likely order of the day, barring any unexpected comments from Mr Stevens.
AUD/NZD is also worth watching as it slips toward the lower end of its 1.09/1.13 consolidation range.
Cable: Long position looking more secure
I started building a long position on Friday and managed to get into the market at some favourable levels, albeit with a fairly small position. I'm hoping that the market will consolidate now above 1.5650 and that we get an initial sharp short-covering rally towards 1.5950. I will look to trade the edges of this range with a bullish bias.
EUR/GBP may have a bit more topside if it can break above .8000, 40/50 pips maximum imho, and once this pair tops out we should see the cable topside acceleration gather pace.
SNB Jordan: Gold referendum threatens CHF cap
Jordan also renewed the SNB's criticism of the proposal, which he said would fuel unemployment, increase the risk of recession and threaten the bank's efforts to keep the Swiss franc capped against the euro