FX thoughts

Settled all positions, its looking like a decent month.  For the coming week i'm looking to enter the following as opportunity permits:

NZD/USD: Short

EUR/USD: Short

USD/JPY: Short

AUD/NZD: Long

EUR/USD

Nice pull back from the euro into resistance around 1.109.  Looks like a good short term buy setup, i'll be eyeing in closely for the next few days...


Edit: Entered trade and quickly was forced to exit once the economic data blew through my stop!

Pressing passed pivot points I took a short postion in EUR/USD and a long position in GBP/JPY, both in the money by ~100 pips currently.

The Fundamentals of Technicals

I've often found myself questioning practical knowledge on what defines resistance and support in trading. Surely if there is formula for determination of technical levels then the market is more than beatable, and the few winners with the technical understanding stand to profit immensely. However the reality is that these winners can never continue profiting with the same formula week after week. What we call "technicals" is the ever changing science of figuring out the majority perception. In the end it is traders that move the market, fundamentally via supply and demand for an asset. Strong resistance and support levels are merely points at which a high volume of traders determine the asset is likely to reverse course. To complicate matters, what one knows of the market's perception changes one's own strategy for entering or exiting a trade.  This is to say that if the market perceives strong resistance at a level, say 1.002, most traders would opt to sell prior to 1.002 as opposed to exactly at 1.002.  This provides some cushion and leaves room to mitigate errors in judgement. In itself this drives the resistance level lower as more and more traders determine selling prior to 1.002 is the best course of action. It's a recursive, ever evolving loop that intrinsically muddles with any technical levels that are predictable and unchallenged.

Lay Low

Just closed EUR/USD postition for a moderate gain. My entry was well timed and and the pair may have even "over-corrected" in the short term. Thus I think its best to take profit and exit on the technical outlook and re-evaluate as it plays out in the next week.

Japanese Debt

I used to think numbers as high as quadrillion were made up merely for the sake of convention, since its nearly impossible to quantify anything at a non-microscopic level in the quadrillions...and lets face it, microscopic level quantities are better suited for expression in scientific notation.

Today we have a reason to use the term, because something quantifiable of importance has just surpassed 1 quadrillion: Japanese debt.  I use the word importance with a bit of sarcasm, because at this level the currency's demise is a foregone conclusion and an increase in the number of 0's is hardly important. The worst part is that the farce has life; this has not been and will not be a fast meltdown.  It's a smoked brisket, which can get infinitely more tender until someone decides that its time to take it off the grill.

That all being said I have no doubt I will be long USD/JPY again... although I feel no rush to enter the trade as this will be a long, dreadful, winding road which I am sure will present many opportunities along the way.

AUD/NZD

Going up!

After hovering around my price target most of yesterday AUD/NZD opened up with a screaming start today blowing through my target and continuing for another 100 pips. Economic data and a seeming reflation of commodity prices seems to be the culprit. With 0 open positions now I'll sit sidelined and peruse the next opportunity.

Edit: Expected rate cuts from RBNZ driving this thing, economic data just a catalyst. 

FX Update

My AUD/NZD long (entry at 1.008) is approaching my initial price target of 1.051.  While I can see this pair reaching for 1.08 in the coming months, I think it may be best to book some profit and re-evaluate short term before re-entering the trade.  

In equities...

Gazprom continues to be the best buy of the year: the Russian titan of a stock has been soaring since the media frenzy over Russian geopolitics mostly subsided over spring. I am long VIRT, because HFT futures  manipulation is a very profitable game and as long as the Navinder Sarao trial is ongoing I find it difficult to believe the crackdown will escalate; looking forward to the first earnings report.

I remain long a couple gold/metals stocks and miners, specifically NEM & NGD.  Both of which were beaten to a pulp going into 2015 but are showing signs of normalcy as of recent. I believe both of these remain outstanding value buys and as long as Jim Grant remains bullish, I too will remain bullish.

Happy tuesday.