Why It’s Time To Lock In Profits On Our Dollar Position
FX: It has been a profitable week with our long USD/CHF
trade gaining 275 pips and our long USD/JPY up 80 pips since we first
recommended it to subscribers earlier this week.
Below we show our forecast from last Friday and this weeks
action. Note that the dollar index rallied right past initial resistance at
88.30 this week and has stalled at 88.80, which marks the 50% retracement of the
90.79 to 86.73 decline. The strength of the advance suggests that there should
be more to come. Nevertheless, we feel the 89 level should provide some deal of
resistance and will take 1/2 profits from our USD/CHF trade if we reach that
level today. If not, we’ll hold the position over the weekend to collect the
interest. Meanwhile, we are comfortable letting USD/JPY ride higher.
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Stocks: The SP500 threatened to break below 1220 yesterday but the bulls are
again holding this market up. The VIX is trying to overcome the 13 level,
affording us ample room in our long position from 10.50. Only a move above this
month’s highs would suggest that historical trends will not hold sway. Recall
that 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.
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.
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.
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