DOLLAR GETTING KILLED AGAIN BY THE FED

Last week's FOMC indicated that the FED is planning to keep rates extremely low until 2014. This announcement gave big boost to the gold . Also crosses like AUDUSD,GBPUSD and EURUSD rose taking advantage of the weak dollar.

At the moment i am short in GBPUSD and long in AUDUSD(i have also a long EURCHF strategic position which i will discussed in another article). I believe that GBPUSD will go higher so i wont wait to get stopped. Instead i will take advatage of any pullbacks and try to close it around 1.56. As it concer AUDUSD i will close at 1.07 only the one that i have opened at market around 1.03. The second i will leave it running.The only worrying thing as it concerns AUD is that BOA will announce rate this week and market anticipates a cut. I willl pay great attention on this and wait to see how the currency reacts after the announcement.

I will also go long this week in EURUSD at 1.3150 with a s/l 1.29 and t/p 1.35. I believe that EURUSd is getting ready for a nice short squeeze rally.

TRADING IDEAS FOR THIS WEEK 1)LONG AUDUSD 2)SHORT GBPUSD

Last week's close was a bit dramatically after the downgrade of many European countries with the downgrade of France being the most serious but also anticipated event.

As a result we should enter a buy AUDUSD position in the opening at the market and add to this position with a stop buy order after a break of 1.0430. S/l is 1.0120.At 1.07 we close half of the position and move our stop loss to break even

As it concern now the GBPUSD is   very close to break a key resistance of 1.5310 (which has been broken only for shortly after the European downgrades). There are two entries for this trade: The first is a stop sell at  1.5270 and the second is a limit sell at 1.5490. In both position the s/l is 1.5800 . Although the s/l is quite large we anticipate a move to 1.4600 first and 1.4200

In all the positions that we suggested we will enter with the amount of 10,000 each.

ASSET 1- EURCHF LONG

Last September SNB has introduced a peg between the swiss franc and the euro at 1.20 level stating that it will protect it with unlimited ammounts. Immediately after the announcement the market explode from 1.10 to 1.21. Since then it has been trading  higher. Many asset managers are scepticals about  the peg and express the belief that the market will break it very soon. Their main arguments are:

1. Every Central Bank that has introduced a peg on its base currency has been violated by the market.(see Bank of England, Thailand, Argentina) 
2. SNB has failed to weaken  the Franc decisevely  in all previous interventions that has made(the same example also applies for the Bank of Japan) 
3. If SNB continue to print money will very soon have to face inflation threat.

My personal opinion however is totally different. I believe that SNB will manage to defend its peg succesfully. It has done it before during the late seventies  when swiss franc was also facing the same threats

As a result none of the above arguments are risght in my opinion and i will explain:

"Every Central Bank that has introduced a peg on its base currency has been violated by the market.(see Bank of England, Thailand, Argentina)".   WRONG!- SNB has introduced a peg during late 70s and was able to defend it sucessfully and break the back bone of the swiss franc -bulls. The main diference compared to all the other failed intervention is that SNB is faced with an increased demand for its currency compared to the other who were faced with an increased supply.

"SNB has failed to weaken  the Franc decisevely  in all previous interventions that has made" -TRUE However in none of the previous attempts the SNB had gave a specific target taht was defending.

 

"If SNB continue to print money will very soon have to face inflation threat"- TRUE -However this will come very late since in the following months seems to be facing with deflationary pressures. Also this is something that came across duriing the first attmpt in the 70's and did not affect the currency directly

As a result  i will add as my first asset in my portfolio long 40,000 EURCHF @ 1.2160 and leave an option to buy some more if goes around the 1.2050-1.21 level. My stop loss is 1.20 and my first  target is 1.3200 and then 1.3800.I have no problem with the carry as it is positive. So as long as i dont get stopped i dont mind to hold the position. Below is the weekly graph of EURCHF

HAPPY NEW YEAR

Hi 

I would like to wish you all a happy new year. This is my first blog in this new project that i am starting  aiming to improve my skills as a currency trader and analyst. The context of this blog will include analysis of the major currencies  as well as a management of a hypothetical portfolio which will start with 10,000 usd (leveraged 1:100). The trades that  will be undertook will represent 0.1 lot . i will express my profit and losses in pips so i dont confuse the readers.

The main goal is to provide a return of more of 10% annually and illustrate that i am a capable currency manager. I will publish the valuation of my portfolio at the end of its month