This Long Position Is Great, But That’s About All I See
While yesterday’s
session saw the Dollar begin to lose some downside momentum, it was
clear that the technical damage down ahead of the London opening on Tuesday
night was not to be recovered. Most of the major pairs stopped at clearly
defined resistance areas and continue to hover there. EUR @ 1.2390-1.2410, GBP
@ 1.8580. The JPY continues to range trade in the 108.50 level. For now, the JPY
remains a currency I would avoid as rumors of the BoJ intervening keep swirling
around. It is quite likely the JPY will eventually break, and when it does, it
will break hard. That level is 107.85.
Turning to the one open position I have, a long
in the NZD/USD (from .6425) is performing
quite well; the bad news is, I do not see much else at this time. However with
the Dollar breaking down last night (Tuesday), the opening of Asia then London
may invite some more selling in the Dollar which may get me interested in the
EUR.
As of now I am still a bit hesitant to pull the trigger. The stochastics on the
daily chart are getting quite high and the result is a decreased rate of success
on the trade. In addition, I see 1.2410 as pretty solid resistance as of now. I
am still of the mind-set that buying a pull-back would be the better trade.
The Swiss Franc (CHF), one that I do not
mention too often, is also intriguing and from a technical viewpoint a bit
better. A break of 1.2250 should set the stage for a move towards 1.22.
Either of these trades however will require another round of heavy selling in
the Dollar, which for now is tough to gauge. With no major data points other
than jobless claims this morning, range trading may be the only game in town.
Next week starts a whole host of inflation data, not only here in the US, but
also overseas. It is becoming increasingly clear that inflation and not things
like GDP, retail sales and jobless claims is becoming more of the focus for
traders. So, be happy with the gains we have locked in thus far. Trading is
a game of who has the most dollars, not who does the most trades.
As always, I welcome your comments and questions.