It’s been an interesting week. And one that sends a strong message to all traders, but moreso to those in the retail sector who are trying to understand ‘what’s what’!
Certainly one to teach the great lesson of flexibility. Not a week to be married to a trade, or even a perceived trend, it would seem.
I guess, like marriage, keeping the focus and the faith is what keeps the romance alive!
‘Looks a little different from here!’
A professional trader friend (no names here!) was firmly committed earlier in the week to a bullish view in USDJPY. At 103.80! Romance was in the air! However, no sooner had he held hands and indulged in a quick ‘testing’ peck on the cheek, the tongue was at the ready and an impertinent hand was on the thigh. The slap came quickly and he took it like a man.
It was not a good week. Flowers were sent as an apology for misreading the signs. I await the news to see if they were enough? Perhaps chocolates, as well? After all, it wasn’t as if he was up for a one night stand: he was (almost) in love and ready for the ‘real deal’.
I should, though, own up to the truth and admit that he’s a somewhat serial dater – I gave it one week at best!
But what happened to cause such rejection?
Text messages suggested ‘BOJ, FOMC, ECB. OMG’
First it would seem that Kuroda (of the BOJ) acting like a cautious father, declared, at the close of the two-day monthly pow-wow, that there would be no policy changes. No mention of ‘home before midnight’ though.
The synopsis was essentially:
• No need for change as the economy is in steady recovery
• This being the case no need for further easing measures at the moment
• Corporate confidence is growing but cautious.
The market in many sectors, although especially the speculative market, has been long USD expecting further news to weaken the Yen; it will happen in due course undoubtedly.
However you may recall my credo for considering market positioning before jumping in – what position has the market got?
Next up, to dampen the remaining libido of my trading pal, was the dovish FOMC report.
And, in between these (as if the smart money was expecting the Fed’s comments), the market had started to sell the bejesus out of Nikkei futures with the ensuing fall in USDJPY albeit with reported very large two-way volumes going through.
Real money sellers were the key: when real money comes out, the speccies follow…and so it did. 103 gave way and even my professional contacts were starting to wonder why…has anything changed? Strong mooted support at 102.60 gave way, and the break lower let further waters flow.
As I am writing this we are toying with the 101.60-70 level, currently seeing some support (but tellingly, it is not bouncing at all); the bigger level is 101.20.
So here we are. 104 down to 101.65 in less than a week! We are at precarious levels in both the Nikkei and the USDJPY as you will see from the daily charts.
Of course the technical guys amongst you will have no truck with the rationale and trade what the charts say.
The long term daily supports speak for themselves; there will be those who will see this opportunity to buy with equally obvious stop loss levels on a clear break of the trend lines.
Others may choose to wait and follow a break and go short.
Either way, flexibility is the key.
Now for a brief follow-up of recent trade suggestions.
I have reverted to the coffee trade where the Arabica futures have seen prices buoyed back up to $200 or so; I am going to watch and see whether we make a new high and maybe sell a failure. We may be looking to set up a double top (or have we seen a double bottom?).
Tops and Bottoms? Anyone?
Now for the Euro! The daily chart shows the close above the channel.
EURUSD has just closed overnight above the channel however I am not a convinced euro bull and will watch to see if we can maintain momentum. I expect verbal rhetoric from the ECB to ‘talk it down’.
The S&P continues to tease me. Top-picking is a frustrating game!
I believe that in one of my recent ‘blurts’ in the last three weeks I mentioned my target for US Oil being 104-105? And I got stopped (in profit) on my long when I used a trailing stop….well today we are trading at 103.70 after a high minutes ago at 103.85.
Life’s a $%^$£!!!
Meanwhile, I am providing a shoulder to the wounded: the life of a lothario is not an easy one. He’s rather bloodied and bruised. Alas the path of true love does not always run smoothly.
He will be back for more, though perhaps he should try dating girls next time.
Author: David Horton is a partner in Market Tutors Ltd in the city (markettutors.com). He has had a significant career in financial markets; he is a trader and trainer with a passion for coaching and mentoring with a good dose of humour.
davidhorton@markettutors.com
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