Even I think this rally in equities will be short lived and now is the an excellent time to enter saf haven positions such as the dollar and the chf. The Eur/Usd just seems a little funky lately and I did not wish to take further loss. The GBP/USD on the other hand has me up still 6 pips from my re-entry last night even though the dow is up about 300 points. The GBP is just so weak it is an excellent play right now. Still targeting 1.35.
All my options expire tomorrow and I can finally rake in the dough. Today was huge and completely unexpected. The Fed has shown just how far they are willing to take quantitative easing today. In all they are basically injecting 1 trillion U.S. dollars into the market. Increased supply equals lower price. Key levels were taken out in the Eur/USD pair. I think that is the best pair to take advantage of the dollar weakness since the euro has been acting more as an antidollar currency than anything else, and that they are extremely averse to quantitative easing in comparison to the UK and the U.S. Since the 1.33-50 resistance level was taken out on the eur/usd. I am long targeting 1.41. Good trading to all.
Maxsmart - how do you manage swing trading with options considering the spot is 24hrs but options arent. I have experience trading options and am thinkng about getting into Forex options on the EUI, BPX etc (not to day trade though as dont have >25k).
Im just thinking if i trade the daily candle i need to then wait 18 hrs top ut on the trade but the currency will have moved by the,
Actually my broker offers options trading 24/7 and custom options. My only complaint it there is a bit of delay sunday before you can start trading options. It's a couple hours after the market opens. And second, When the pay the money into your account for selling an option. It is a couple hours late showing up on your spot trading platform although it registers right away on your options platform. So basically you can't trade off of your new equity in the spot for a couple of hours. Of course you shouldn't be trading your whole account anyways, so that shouldn't really matter all that much. But yeah, my broker lets me get in and out of options trades 24/7.
I've been in since 1.3133 and targeting 1.40. But I won't include it in the money made so far since I didn't post that trade here in this forum. At the time I went long it was because of the break of 1.3070 and I was still slightly bearish untill 1.33 was taken out. Now everyone is jumping on the tank the dollar bandwagon. And the countries that hate the U.S. are pushing to drop the dollar as a reserve currency once again.
If the Eur/Jpy finishes the day and closes above 131.04 which I believe it will. I will buy a call and target the 145-150 yen region. As you can see a break above 131.04 will validate a double bottom on the daily chart for the lows at 112 in October of last year and January of this year. When forming a price target you take the height of the double bottom and apply it to the break out point. So 131.04 minus 112 gives us about 1,900 pips. So after breaking 131.04 we should have a upside potential of about 1,900 pips putting us at about 150 yen. I will have a "modest" target of 145 however.
The reason why I'm backing away from your usual eur/usd, and gbp/usd pairs. Is that there are alot of factors, and politics at work right now on those pairs. For instance, it still is uncertain if a rally in equities will result in the dumping of the dollar as risk appetite returns or if it will actually cause the dollar to strengthen since they will be the first out of this global recession. Or has the recent rally against the dollar been overreaction to the news of the fed injecting roughly 1 trillion dollars into the financial system. China and Russia want the dollar dumped as the reserve currency for the U.N. Technically as long as we are above 1.33 I am bullish. Traders are arguing for critical resistance at the 1.3825-1.40 level as well. But with all these uncertainties why not go some place where things are trending. The Jpy has lost its correlation to risk aversion for the time being and is no longer being revered as safe haven currency. Also It's imports are down due to the global recession. Traders are building long positions and on the EUR/JPY technically we have a double bottom formation targeting 1.50. As long as the Yen continues to not have a correlation to risk aversion, I think its a good idea to buy at the dips on yen crossess.
With the extreme weakness in the eur/jpy today in comparison to the other Yen crosess, and this common thought that the U.S. Is going to lead us out of the recession. I'm buying a put with a strike price @ 1.3450. Premium payed: $2,270 to expire on the 16the of April.
I was stopped out of Eur/JPY spot positions at 1.29 for about -$4,300. I'm leaving my call option open however. I still see some support at around the 1.27-1.28 region on the daily chart. However, I don't like the Yen strengthening with risk aversion. It seems to be regaining its correlation which is very dangerous to trade against. I entered the trade in the beginning since I thought the correlation had disolved. But if its back you wont see me building any short yen positions for a while.
For the put that I have on the EUR/USD I am targeting support at 1.25. I think the EUR/USD put does a good job offsetting the EUR/JPY call. And since I can't lose more than the premium payed this should work out well. If support around 1.27-1.28 is taken out on the EUR/JPY I will exit my call position with the remaining time value. Looking at the Weekly chart and the daily chart for the EUR/USD. We look set to hit support at 1.25 within the next two weeks as we are in a descending triangle. However, the uncertainties are the ECB and the G20 meeting. I am expecting failure from the G20 meeting because of the many disagreements between countries, but the ECB is truly a wild card to me and the markets response to their stance.
I expect big losses on the GBP/USD and the EUR/USD tonight during the london session. I think we will see 1.31 on the EURO and a testing of 1.40 for the Pound.
Here is the descending triange on the weekly chart. I will be watching for breaks. So much politics. Hopefully we don't get a whipsaw like it appears we may have gotten on the EUR/JPY. Analysts are saying that the next few weeks could be the make it break it weeks for the dollar and looking it this pattern it looks like that may indeed be so.
Forgive the quality of this chart, I just noticed it on marketwatch.com while reading an article and I noticed the technical diverence on this chart. I went ahead and drew in the lines and as you can see the Volume was increasing and peaked when the dow hit its low around 6,400. Since this rally has ensued the volume has been on a downtrend. In addition, we are now at a resistance zone on the Dow at around the 8,000 mark. According to volume, we should see another fall lower in the Dow and see the 8,000 resistance zone stand strong. How does this relate to currencies. Well I am anticipating a move back down to 1.25 on the Euro and 1.37 on the GBP on risk aversion and globally deepening recession. The Yen has gained the most since the opening which may mean that it has returned as a safe haven currency and will strengthen during times of risk aversion. This may be a result of the recent dollar attacks as the global reserve currency. In any case, I don't think this is the time to short the yen if this correlation comes into play again as there are more bumps in the road for the global economy.
I'm long eur/usd @ 1.3427. Im targeting 1.3640 with stop loss at 1.33. Will keep Eur/usd put running in case risk aversion kicks back into gear since we are at the 8,000 resistance zone on the dow.
