Trade from the week of 9 November
Posted by The Lonely Trader on November 16, 2008
Only one trade from last week – a short EURGBP trade from 8390. This is a long term trade taken from weekly and monthly charts, with orders above at 8690 (x2) and 8980 (x4). (See monthly chart at right.) My uncle point is 9300. Overall risk on this idea is just over 3%. I expect a lot of resistance up to and above 9015, as interest rates continue to converge and institutional positioning and hedging kick in. I’ll be looking at EURGBP a bit more closely over the coming days, while trading the majors on shorter time horizons.
Spreads were looking normal on Thursday and Friday, but have returned to where they have been for the past couple of weeks. CurrencyThoughts has written up a good post on this week’s event risks, and the crew over at DailyFX is putting out some interesting big picture analysis. I suppose I could write something up here as well, but why parrot other (smarter) bloggers for the sake of filling whitespace?
I’ll personally be keeping an eye out for who will be appointed to Treasury and State. Wednesday will be a big data day, with FOMC minutes and US inflation numbers due for release.
EURGBP: Trend is up, with near term support at 8401 and resistance at 8665. Further out, expect resistance at 8700 up to 9790. If my second entry target isn’t hit before the pair prints in the low 8400s, I may exit for a small loss. 8500 currently under pressure. (2052 PST, 16 November.)
Good luck everyone.
Larry Greenberg said
Your endorsement of Currencythoughts is very appreciated, and I just posted a link back to your site. The content of “Next Week” had previously been buried within the Weekly Foreign Exchange Insights that I post each Friday. To shorten the length of Insights and to give more prominience to coming data releases, I decided to separate out “next week.” The change has been well-received by yourself and others.
Moyo said
What are your thoughts on the current USD rally, and the current downtrend of the BP? How much steam do you think is left in those 2 engines?
The Lonely Trader said
LG, it’s very convenient that way for someone with a schedule on Sunday night — i.e. getting ready for the week ahead. But the other stuff is good, too!
Moyo, I hesitate to offer any currency-specific views outside of what I define in my trading process — and I think there are better resources for that view. Have a look at Lloyds TSB. They are primarily concerned with the GBP, but they are also focused on the USD in their analysis.
I’ll post the EURGBP “pretrade context” and “pretrade structure” paragraphs when I get home tonight — to give you a more accurate view of what my analysis and thoughts were at the time I entered.
Moyo said
np…look forward to it