Another excruciatingly quiet start in Asia
Just like yesterday morning, absolutely nothing moving in Asia, apart from a 20 pip drop oin the NZD/USD. Go do those chores you've been putting off.
(Big move in Bitcoins overnight).
EUR/JPY: 135.50 still key level amongst major pairs
At first glance, it would seem that very little happened overnight. The EUR has strengthened marginally on the crosses from European opening levels but there is little or no momentum in any direction.
- EUR/JPY resistance at 135.50 remains a key level and a break above there will certainly change the nature of the market in all major pairs;
- AUD/NZD support at 1.1190 is another important level to watch;
- Latest minutes from the RBA will be released this morning and could generate some short-term momentum.
AUD intraday outlook; plenty of mixed signals
- AUD/NZD- important technical support close-by at 1.1190
- AUD/JPY- needs to break above 94.10 in order to increase short-term bullish momentum
- AUD/USD- short-term technical resistance should be solid near .9385 (see chart).
There will be some intraday opportunities for sure in the AUD but first we must wait and see what happens at some of these big cross-levels. The clearest strategy in AUD/USD in my view is to buy big dips towards .9225 so patience is required.
EUR/JPY: Keep short stops above 135.70
- It's Monday morning so we may get some silly moves but the fact that it hasn't happened yet suggests that there are sell orders ahead of any stops;
- Technical resistance should be strong at 135.50 (see chart) but a clean break above there targets 139.00
USD/JPY: Market long and bullish
I have no idea where USD/JPY is headed in the shortish-term. The market is quite long yet it looks comfortable with the position so we may indeed see further gains. I'm a non-believer but there is little point in getting in the way of the market at these levels. If the Yen crosses like GBP/JPY continue to generate bullish momentum then USD/JPY may indeed be headed for 110.
Regarding GBP/JPY, if it breaks above 162.80 then the next technical target is at 168.15 (see chart).
Quiet start to the interbank trading week
- Market remains moderately bullish for USD according to latest CFTC positioning data;
- Prime brokers report that long USD/JPY is still the speculators favourite position;
- Market still doesn't believe the long cable story, making me even more convinced that we go higher;
- EUR/JPY resistance looming at 135.50 (see chart);
- Short-term AUD/USD resistance also looming at .9385
- No change to majors from Friday night, with USD/JPY at 100.30, EUR/USD at 1.3490, cable at 1.6120 and AUD/USD at .9375.
Cable: False break makes me even more committed to buy-dip strategy
The bears showed their weakness yesterday, unable to hold below 1.5900 after an important technical break (see chart) and this pair is headed much higher in the medium term. The market remains moderately bullish USD in the short-term so we still may see one exhaustive sell off towards my ideal entry level near 1.5775 but all dips are buying opportunities in my very biased view.
I'm small long of cable, looking to add on dips, and I'm still running a core short in EUR/GBP. I cut my AUD/CHF for a small loss as it was proving a distraction from the main event.
AUD/USD Techs: Strong support .9220/35
I favour buying a bounce out of .9220/35 technical support (see chart) which is where a 61.8% retracement and prior highs sit.
NZD/USD Techs: Very important support at .8190
There is some very important technical support at .8190 in the NZD/USD (see chart).
It might be worthwhile buying a dip to .8200 with a tight stop/reverse below .8180? I personally don't trade the NZD as it owes me enough already :(
EUR/JPY: Looking to enter short position near 133.80
This pair has come a long way over the past 12 months and I feel we are soon going to see a sharp retracement lower towards 120.00 perhaps. Most of this move is likely to come from an overly long USD/JPY market in my opinion, but I prefer the technical set-up in EUR/JPY.
Corporate sell orders will be very solid towards 100.00 in USD/JPY and I expect technical resistance in the cross to be very strong between 134/135. Sentiment, especially amongst retail players, seems to be quite bullish so I think we will probably see another 75/100 pips at least on topside before the momentum wanes.
I will start selling near 133.80 and will look to build on this position ahead of 135.00. Obviously I need to keep my initial stop above 135.50 so I'm starting out with a smaller position.
EUR/JPY: Selling big rallies looks like play here
Good afternoon from cold and wintry London and I'm taking a badly needed break from back-to-back meetings to check on my trades. Not much going on with my 2 cross positions in EUR/GBP (short) and AUD/CHF (long but not overly convinced). I will stick with these for now as both are well in the money.
Cable looks like it will have another go at 1.5900 in coming sessions and may well even break but I have my buy-orders set at 1.5785; I think this is the last sell-off before the bull train takes off.
One pair which does look interesting is EUR/JPY. We may have a head-and-shoulders developing on the daily chart so sell any silly rallies back towards 134.75.
By the way, London in November is an excellent advertisement for living in Sydney :)
AUD/CHF: Still looks like a reasonable buy-on-dips play
Talking my book as always. I took this trade on because cleverer traders than me were recommending it and now it becomes a matter of trying to trade it properly. This pair could easily trade 10% higher and still be inside well-worn ranges, and they are the kinds of trades I like (no new territory needs to be broken).
I like the idea of being long one of the risk pairs, like AUD/JPY for instance, but I sense that the market is already overly short of Yen and hence I'm more comfortable with AUD/CHF.
The daily chart is building a nice constructive trendline and I will try to be patient and wait for exit levels towards stronger resistance levels at 94.00.
EUR/GBP: Sell rallies but .8300 looks cheap-ish in short term
I'm not able to post charts at the moment but a quick view at the weekly chart confirms to me that EUR/GBP is near the bottom of a downward sloping channel; the trend is bearish and I still expect to see prices below .80 early next year but this pair doesn't move fast so patience is required.
I'd suggest that .83/.85 will contain for the next few weeks and as we know, this pair will edge higher as CB buying kicks in towards the end of the month.
No change to medium term bearish USD view
It's good sometimes to be able to sit back and look at the market with more objective eyes rather than constantly poring over every pip. I'm running 2 cross positions still, a longer-term EUR/GBP short from .8535 and an AUD/CHF long from .8580 (which was looking a lot better before my jet-lagged sleep). I still think both of these trades are potentially good ones, although I'm much more convinced by the EUR/GBP trade (I took the AUD/CHF more on the say of others).
I also see absolutely no reason to discard my bearish USD stance and I still believe that cable is the best way of playing this view. Whether or not I get a chance to buy at 1.5750 remains to be seen but I'm happy to sit on the sidelines while I'm travelling.
I will report from the Forex Magnates conference on Monday and Tuesday, with updates on all the latest cool technology and funds management developments. Those who are planning on catching up on Tuesdya evening will receive an email with details over the weekend.
Some having issues with Blue Sky email address
If you are having issues accessing the email address provided by Blue Sky in this morning's mail-out, simply write the given incubation@ address into the "To" bar of your email rather than clicking on the link. This will take care of the problem. The address is the right one, the underlying link is mid-directed.
Thanks.
Forex Magnates London conference November 11/12
I will be travelling for the next 2 weeks and will be attending the Forex Magnates conference in London next Monday and Tuesday. If you are planning on being there, let me know and I will look you up.
Our 'blogger' drinks are still planned for next Tuesday evening and I will send you details via email.
Update on opportunities in the funds management industry
As we all know, there are very few traders being trained in the institutional space and in fact the preponderance of electronic pricing systems is making the job of the interbank dealer and/or prop trader almost redundant. That means that most of the new talent must come from the ranks of the retail trader.
- FX as a pure asset class has not really come to pass like many had expected but there is still a vast amount of institutional money around the globe which will look to invest in FX-only funds/managers. I am noticing once again a lift in demand for multi-manager systematic programs (after a noticeable drop-off post-2008). Individual discretionary managers still have their followers but with a maximum capacity of around $500 million (at the most), these managers are quickly filled. Industry guidelines in terms of compliance and regulation have also become much stricter making it harder for a single manager to operate in the space. The bigger funds continue to get bigger and as I've said many times before, they have taken over from the banks as the gatekeepers of the institutional war-chest. They have now become accumulators of other smaller managers, acquiring them in return for allocations and resources.
- Managed accounts and signal services in the retail space are very fast-growing segments of the FX industry. There are some new brokers which specialise purely in managed accounts and have 5 or 6 managers each with assets under management of between $10/$50 million. The advantages for managers in this space is the ease of entry and the large sales-force (ie brokers) who will promote you aggressively. The dis-advantage is the fickleness of retail investors who could withdraw all their funds almost instantaneously for little reason whatsoever. Signal services are also very popular but are more attractive for the 'trade picker' rather than the pure trader. Here you just need to be able to pick more winners than losers with a slightly positive risk-reward ratio and you could have 500 followers at $50pm. Not a bad little earner :)
All FXWW registrants will get an email in the next 12/15 hours outlining an incubation opportunity with an emerging hedge fund. If you are serious about a career in the FX industry, then you must treat all of these opportunities as job interviews and present yourself accordingly.
AUD/CHF update: Looking better post retail-sales
This isn't the easiest pair to get the timing right with, but levels back near .8550 certainly look like good-value buys in the short-term (see chart). As I wrote last week when taking this trade on, prices could easily rise by 10% without the need for any major technical developments and those types of trades are usually the ones to look out for.
There will obviously be stops above .8740 but leaving a 'silly' take profit order above .8900 is the best way to play this in my view. Then of course look to re-load on dips.