Solid Scenario Developing In FX
It was another bleak day
for the bulls of this market as no rally was able to be mounted on
the heels of Friday’s sell-off which many talking heads attributed to options
expiration. Perhaps, perhaps not, it really does not matter. In fact one
so-called expert on Fox News said that this sell-off was healthy. Given that
she was smartly dressed and rather articulate it was obvious she had never
visited or spent time on a trading desk. Nonetheless, let’s face it, nobody
knows; however, I still continue to feel the risk is to the downside, a market
priced for perfection rarely gives off gains in an easy manner.
Ironically (and thanks to the infinite wisdom of
the SEC in banning bullets) all my stock trades were to the long side
yesterday. As mentioned yesterday, stocks that are in play or overly active are
where I have found fertile ground in recent weeks. Myself as well as those in
my
Trading Room found some solid long HVT set-ups in CCL, APC and
later in the day STJ. For the day I believe I cranked out a whole 5 or 6
trades, but walked away with something to show for my efforts.
So try not to get too hung up on market
direction. Know your key levels in the stocks you trade as well as the major
future indices and let price action dictate what you should do. The path of
least resistance is the one that is not cluttered with opinions and
over-analyzed.
FX:
While on the surface the FX market looks rather
boring, albeit wild one-off moves, I am sensing that a solid scenario is
developing in here. In fact, the way the Dollar is trading is indicative of it
sorting out the recent move off the lows before it starts another leg higher.Â
This is my conclusion, and for all I know I could be completely wrong. However,
my level of conviction is such that when and if that move occurs, I have all my
ducks lined up and know exactly what to do. I have already started to build
some short positions in the AUD and
JPY, with specific entry point in the wings for
the EUR, EUR/JPY
and EUR/GBP.
Key FX Levels:
EUR/JPY:Â
key resistance into 200 ema and Fib levels at 133
AUD/USD:Â
key resistance at .7575, bear trend channel was broken on 3/18, but Fib levels
still blocking further rise.
GBP/USD:
a strong currency in the last few sessions, needs to
overcome 1.8525 to extend gains
As always, feel free to send me your comments and
questions.