Consider These 3 Shorts
Until the market can
break the downtrend it is in, it is best to trade lightly. Yesterday
was very quiet relative to Monday’s session. It was truly a case of knowing
when to simply sit on the sidelines. The strength in the Dollar overnight has
begun to stir things up in the FX markets. You will recall from Monday’s column
that I am expecting the Dollar to remain firm and move higher near-term. As of
now that is occurring, but the path is erratic.
Based on the above assumption, I suggest that you
consider short positions in the EUR,
AUD & NZD.
While these trades will not be set-ups that are designed for a quick “scalp”,
the charts as well as the macro picture provide a solid “story” for a trade that
may last several weeks. Comments last night from European Central Bank (ECB)
official Trichet lend further support to a short in the
EUR.
“In case our expectations for
strong household consumption and overall domestic demand were not to
materialize, we would work out our assessment accordingly, fully in line with
our strategy.” He also says that “consumer confidence today is not necessarily
at the level that would be justified by the basic economic data.”
The 1.2150 level in the
EUR is key support.
The rally in the Dollar overnight might dampen
the recent rally in some of the gold mining stocks. The daily charts of
NEM and others were starting to shape up for
long entries, I will keep you posted.
As always, feel free to send me your comments and
questions.