Here’s Where We’re Looking to Lock In Profits On The USD/CHF
FX: Well, well well. Our
long dollar forecast seemed a shot in the dark last week, but it seems the
market has again revolted against the euro after a massive short
squeeze just three weeks ago propelled the euro to the “No Vote Gap” at 1.25
which we said would need to be filled. Following that rally, we got contrarian
and went long USD/CHF at 1.2485. Then we added to our dollar position yesterday
by going long USD/JPY at 109.65 (see Special Update).
Recall that we said USDX would encounter resistance at 88.30, which was
reached this morning. Therefore, we think traders could easily take some profits
right now as USD/CHF has also reached our target level of 1.2700/50. This gives
traders a nice 200+ pip profit from our call last Friday for an explosive rally.
As such, we look to take profits on half our position this morning and have
moved our trailing stops on USD/CHF up to this morning’s lows at 1.2885 to
ensure a 100 pip profit on the remainder. We moved stops up from our long USD/JPY
to our entry level of 109.65 and may decide to take profits today if we sense a
reversal in the making.
Stocks: No change: The August-October months are historically the worst and
considering that the S&P500 reached our key Fibonacci target of 1245 this month
suggests to us a downturn lies dead ahead. Meanwhile, the VIX continues to climb
since we added to our position over two weeks ago – making for a nice 20% gain
so far.
Bonds: No change: Last week we said, “The impulsive looking decline in yields
from key resistance in the 10 and 30 year contracts suggests a move back to 4.2%
for the 10 year. This level needs to hold to stave off further decline in yields
(rally in bonds).” We reached the 4.2% level on Tuesday and bounced off of this
level. If this area holds there is a good chance for a renewed advance to the
key 4.6% level. But if stocks decline over the coming months (as we expect) then
yields may decline.
Regards,
Jes Black
FX Money Trends
613 4th St Suite 505
Hoboken, NJ 07030
Tel: 646.229.5401
Jes
Black is the fund manager at Black Flag Capital Partners and Chairman of
the firm’s Investment Committee, which oversees research, investment and
trading strategies. You can find out more about Jes at
BlackFlagForex.com.
Prior
to organizing the hedge fund he was hired by MG Financial Group to help
run their flagship news and analysis department,
Forexnews.com. After four
years as a senior currency strategist he went on to found
FxMoneyTrends.com – a research firm catering to professional traders.
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Jes
Black’s opinions are often featured in the Wall Street Journal, Barrons,
Financial Times and Reuters. He has also written numerous strategy pieces
for Futures magazine and regularly attends industry conferences to speak
about the currency markets.