Sounds as if the crowd are getting a bit greedy on there shorts here, and from what i'v heard short to long ratio is around 2.2-1 here. won't be surprised to see risk rally across the board this week. 'sell in may and go away' has worked on risk assets but we are now at the end of may and a lot of people will be coming back to cover shorts. We have broken through year's lows on Eur/Usd but its found a huge amount of support almost straight after it broke the lows forming a large area of consolidation which isn't what you want to see if your playing short at this point. these messy consolidation patterns often signal trend change and from what i see there is better risk/reward from going long from here. 1.3000 looks like the first good solid target with stops at 1.247x area. CCI on the daily is in oversold levels and creating divergence.
News will just say its a "short squeeze" that will turn into a much larger rally in my opinion. but we have some big numbers out this week including NFP and a Italian 10 year bond auction so watch out. we might be in this area for the next few days. Gold looks good for a long and should hit 1.640 area at weeks end and we should see a high SP500 (formed double bottom off very large resistance turned support) which would support a weak dollar stronger euro.
if i was anyone still with trades playing short, stops should be above today's high and closing out half at these lows and add to short at top of range or at brake of bottom. always good to think about what both sides of the trade are doing then take your position. i could well be very wrong and the exact opposite happens, it will mean i will just re-evaluate both sides of the story and take a new position but i will always feel safer taking the other side of the trade from the crowd. anyway good luck to all this week as it will be very pivotal!
News will just say its a "short squeeze" that will turn into a much larger rally in my opinion. but we have some big numbers out this week including NFP and a Italian 10 year bond auction so watch out. we might be in this area for the next few days. Gold looks good for a long and should hit 1.640 area at weeks end and we should see a high SP500 (formed double bottom off very large resistance turned support) which would support a weak dollar stronger euro.
if i was anyone still with trades playing short, stops should be above today's high and closing out half at these lows and add to short at top of range or at brake of bottom. always good to think about what both sides of the trade are doing then take your position. i could well be very wrong and the exact opposite happens, it will mean i will just re-evaluate both sides of the story and take a new position but i will always feel safer taking the other side of the trade from the crowd. anyway good luck to all this week as it will be very pivotal!
