Shorter-Term Trades You Can Stalk
While I was watching TV
this weekend I came across an infomercial for a commonly known
brokerage firm. I know nothing about the firm, and for alI know they may be all
right, however, their previous commercials have always seemed, well, just a bit
late to the party. One year it was heating oil futures due to record cold
temps, this year it appears that the Euro is their recommendation du jour. Call
options on the EUR, as they say could lead to significant gains in the year
ahead due to weakness in the dollar and the looming budget deficit.
While that all sounds like some reasonable logic
to me, I think they may have missed the boat. Call me a contrarian. Sure, I am
concerned about the above mentioned ills, however, I think the easy money has
been made in long EUR. The chart below, while encouraging, is not demonstrating
the parabolic move of 2003. With time decay a major factor in options, that is
one trade that seems a bit risky to me.
As I have often stated in this column, long-term
trades are a moving target, your analysis today needs to be re-evaluated
periodically to make sure that all is well. Let’s focus a bit more on some
shorter-term trades we can stalk as a way to play on technical patterns, rather
than macro analysis. Friday’s reversal in most of the major currency pairs
should once again provide an opportunity to get short the EUR, CHF and GBP as a
swing trade (several hours to several days). At present it is too early to
identify the exact entry point (if they even set-up), but you will want to be
aware of the following levels as a barometer for support and resistance.
EUR:
1.2581 1.2363 1.2328
CHF:
1.2625 1.2538
GBP:
1.8229 1.8152
AUD:
.75
EUR/JPY:
130.92**
As always, I welcome your
comments and questions. If you would like to have your email address added to
my FX Mailing List for actual trade recommendations ahead of my FX
Service through TM in mid-February; simply send me your name and
email address to: aspendave@yahoo.com.
Dave