Take What You Can Get


TRADING THE EURO - I generally don't get right to the trades, but today I won't waste any time. I have been quite active this week with the trading. For the most part, I am on the sidelines, and whenever I do take a position, it is usually a position that I will sit on for a good many days, weeks or even months. But the markets have really picked up, and with the pick up has come some shorter-term set ups that simply can't be ignored. Whether these plays work out or not is a completely different story. But the trades have been compelling nonetheless. The first short-term trade I took was last week, when the Euro broke down below 1.3200. I ended up building a long position at 1.3165, which is currently underwater at the time of the Wednesday New York close. Still, with daily studies so stretched and with the market poised for some position squaring ahead of the ECB rate decision, I really liked the idea of the trade. I will continue to hold into later today and wait to see what type of reaction we get from the ECB. There has been so much dovishness built in of late, that it would seem to me the risks are for a move the other way.

TRADING THE YEN - The second trade I took was USD/JPY on Tuesday. The push over the past several sessions has been rather intense, and with the market finally getting up above 105.00, the idea of a counter trend play was highly attractive. While I ultimately believe USD/JPY should head much higher over the medium and longer-term, once again, short-term technical studies were through the roof ahead of the critical January peak at 105.45, and when I entered the trade around 105.10, the hourly RSI reading was 90! The idea of USD/JPY exploding through 105.45 didn't seem realistic to me with so much momentum already used up, and playing the short-side for a quick pullback felt right. I have since taken profit on the trade on the Wednesday New York close at 104.75 for a nice little bite. I still believe we could head a good deal lower in the sessions ahead, but didn't pack a suitcase for this one and am happy with the day trip. Sometimes the day trips are the best ones.

TRADNG THE POUND - The third trade taken was earlier today with GBP/USD dropping down to the March base at 1.6460. The market was already looking quite stretched after taking out support at 1.6535, and then fell off a cliff down to 1.6460 and below. However, once again, Cable has been under pressure for so many days, it feels like this market should find a bit of demand here. Technically, 1.6450 represents the 78.6% fib retrace of the yearly move, so if we are going to have a shot at a little bit of a bounce, now would be a good time. I am not looking to hold onto this one for too long, but just as with the Euro trade, I believe we could see some position squaring into today's central bank event risk. The Bank of England is also scheduled for a policy decision, although no change is expected.

Emotional victories are great, but they don't pay the bills. Via @joelkruger

OTHER SIDE OF THE FENCE - But I guess the real takeaway from today's report is that you need to trade with an open mind and take what the market gives you. Right now, the market is giving me some great short-term set-ups, and I am happy to take my shots , whatever the result. The other interesting thing about these trades is that each one goes against my core bias. For all three I am a US Dollar bull over the medium-term. But unless we are talking US equities, no market moves one way forever. So for the minute, I am feeling what it's like to be on the other side of the fence. Let's see how it plays out. At least if I am wrong and the Dollar rips, it will be an emotional victory :). But yes - it's true - I won't lie - The emotional victories are always terribly unfulfilling in this game of markets and certainly don't pay the bills.


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