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FX market open, week November 4th: Still looking to sell USD rallies
My opinion hasn't changed and I'm still looking to sell medium-term USD rallies in preparation for the next big greenback sell-off. Cable is still my trade of choice and without gloating too much, I do feel that I've been trading it well and picking the right levels (at least eventually :) ).
We've been looking at the two 'double' formations in cable in recent times, the big double-bottom with a neckline at 1.5750 (see chart) and a possible double-top forming at 1.6260 (but it first needs to break back below 1.5900). I'm still anticipating a break below 1.5900 in the shortish-term (so intraday bears can look to sell rallies with stops cleanly above 1.6070) but I think the bearish break will fail at 1.5750 and that's when the next big bull move will begin.
USD/JPY is way too hard to trade at the moment in my view so I'm leaving it completely alone. EUR/USD can be put in a similar basket; I'm quite bearish on some of the EUR crosses, EUR/GBP in particular, and we might well get an extended period of range trading in EUR/USD.
AUD/USD is a clear buy-dips trade in my view and any levels now near .9225/50 are the right place to be building medium-term longs for a test of parity in coming months.
On the day, USD bulls are in control of the short-term momentum and selling EUR/USD rallies looks like the most popular way of playing this sentiment. But be wary, there is strong support at 1.3460 which must be respected (see chart).
USD/JPY: Approaching short-term support levels between 97.50/70
Typical Friday trade, squeezing out the least committed positions. USD/JPY and EUR/JPY have been heading lower for the entire session and USD/JPY (see chart) is approaching short-term support levels between 97.50/70.
AUD/CHF trade looking more promising
The break above .8600 has my long trade from yesterday looking slightly more promising (see chart) and any dips towards .8540 look like good dip-buying opportunities.
EUR/USD technicals: Clear target at 1.3420
- 5-wave up-move is currently retracing;
- Stalling for now at a minor Fibo but obvious support at prior highs and 38.2% at 1.3420 (see chart);
- Daily lows at 1.3470 ahead of there and resistance now starts at 1.3645;
- I'd trade with s/t bearish bias but expect prices to stay in broad 1.3420/1.3650 range.
Cable technicals: Double Trouble
Two big possible scenarios here and we need to wait and see which one plays out (see chart).
- There is a big double-bottom in place and prices need to break back below 1.5700 to neutralise this;
- There is a possible double-top at 1.6260 but prices need to break and hold below 1.5900 to confirm this.
I'm still in buy-big-dips camp with bids ready at 1.5750, and I do think that we will see this level in the next week or so.
Market staying in cross-trading mode
- Higher than expected EZ unemployment and lower than expected CPI put more easing measures back on the table;
- EUR crosses got smashed with EUR/CAD and EUR/GBP leading the way;
- Today's focus will be on a faltering EUR/JPY but longer term bulls will be eyeing a strong trend-line near 132.40/50 (see chart).
AUD/CHF: Small longs in play
I have not been particularly good at picking trades in recent days so I'm keeping positions light until the fog clears.
I'm small long at .8580 with a stop below .8500. The big Swiss accounts have reportedly been buying this pair in recent days and I hope they are right.
Most flows in crosses during Asian trade
- The AUD has been well supported on the crosses with solid demand from a number of big Asian accounts;
- EUR/JPY and GBP/JPY have seen modest selling flows, also from some of the more prominent Asian traders;
- The NZD was well bid directly after the RBNZ but AUD/NZD demand in particular was quite solid;
- Traders are expecting stops below 1.6000 in the cable.
AUD/USD: Favours a .9420/.9520 trading range
- Previous highs turned pivot at .9520 should offer solid resistance;
- Sovereign bids expected .9410/20;
- Crosses look mixed but AUD does seem to be nearing better value levels, especially against the EUR where resistance 1.4560 should be solid (see chart);
- Minor Australian economic data today, business confidence and building permits;
- I don't think the present market has the momentum to break new ground so range trading is preferred.
NZD jumps after RBNZ
The no-change decision was expected but the language is more hawkish than many had anticipated and the NZD has jumped 30 pips against the USD
USD/JPY: Stops triggered above 98.40 post-FOMC
It's also interesting to note that many of the big sell orders from Japanese banks are reported to have been moved higher towards 100.00.
I've still got no strong view here and am stumbling around in the dark hoping the lights come on soon.
Moody's considered cutting New Zealand from AAA
These are the reports just going through the market. The NZD/USD has dropped sharply from .8265 to .8210. There is important technical support at .8160/80.
No change in early Asian trade but some orders to report
- Worth noting that some of the big USD/JPY sell orders have reportedly moved higher, closer to 100.00;
- Stops reported in USD/JPY now above 98.40;
- Technical resistance at 1.2375 in EUR/CHF; stops expected above.
Asian market open, Wednesday October 30th
The USD has made more ground overnight, breaking through short-term resistance against the Yen after bullish moves yesterday against the AUD and the GBP. The economic calendar is again pretty bare and much depends on whether the market can be convinced to go looking for a trend in the lead-up to Christmas.
- AUD: The AUD/USD is sitting near Fibo support at .9460 (see chart) but a clean break below there will target levels around .9300. The failure at the 200-dma near .9740 and the break below .9520 certainly gives the daily chart a bearish feel. AUD/JPY has started to lose some of its bullish momentum and this could spell trouble for the Aussie. Conclusion; play an intraday range of .9460/.9530 with a sell-rally bias.
- JPY: The break above 97.80 has given the short-term bulls some momentum but the Yen crosses haven't joined in which obviously implies that this is a USD move. I'm still hearing reports that one big Japanese player is selling large amounts of USD/JPY at regular intervals on rallies. Conclusion; too choppy for mine and I think there are better opportunities elsewhere. In fact, I might consider looking for selling opportunities in some Yen crosses, probably EUR/JPY, but I'll have to wait as the technical picture doesn't support it yet.
- GBP: I'm still bullish on cable and will look for deep dips to re-instate my medium-term long position. I think EUR/GBP will struggle to break above .8600 and will be significantly lower early next year but timing is everything as we know. The 4-hr cable chart has turned quite bearish (see chart) and a break below 1.5900 will have the bears salivating at the thought of a double-top. My scenario here is that we break below 1.5900 and test important support at 1.5750, which is where I would hope to buy. Then if we break back above 1.5900, I can add to the position. Well you gotta have a plan.
- EUR: In short, no idea. I'm bearish on the crosses like EUR/GBP and EUR/JPY but demand particularly out of China has been very strong in recent times and I'm loathe to take those guys on. Support levels start around 1.3690 and if you were lucky (good) enough to pick the top then I'd start booking some P around there. Rallies to 1.3800 will attract top-pickers but there will be stops galore above 1.3830.
Good luck today.
USD starting to look stronger but needs to break up against the EUR and JPY
- AUD/USD has managed to break back below strong technical support at .9520 and cable has formed a short-term topping pattern. But some of the other major pairs are still undecided.
- USD/CHF has some interesting support nearby between .8860/90 but if that breaks, dont be caught long.
- USD/JPY has been holding back above its 200-dma at 97.38 but a daily close below will seriously undermine the bulls argument.
- EUR/USD doesn't seem to want to fall, despite all that's happening around it.
Heavy turnover as stops triggered across the board
- Heavy selling across all GBP pairs with stops triggered below 1.6100 in cable and above .8550 in EUR/GBP;
- Model funds also noted sellers of GBP/CAD
- Stops triggered in GBP/JPY also
- Heavy bids reported in EUR/USD near 1.3770
AUD/JPY testing short-term support levels near 93.00
There might be some stop-loss orders directly below a recent low at 92.95. This is all about probing for the market's weak side and nearby stops rather than any fundamental change.
AUD/USD technical support at .9520, previous highs and a 50% Fibo (see chart).