My Life My Trade » Currencies Update

It is All About the Buck

mylifemytrade — Fri, 26 Jun 2009 14:46:50 +0000

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EUR/USD melting up all night. It is in a narrow up channel, which if busted to the downside will cause equities to go down. If 1.4100 is busted to the upside, bear case is over IMO, and a revisit to 930-934 is definitely on the cards.

Chart That I Will be Watching Tonight

mylifemytrade — Thu, 25 Jun 2009 00:19:26 +0000

The inverse correlation between the US dollar and the US equities has been a bit out of whack for past couple of days. These correlations are not universal and work until they stop working. One must keep an eye out for the fact that this correlation that has existed for such a long time might now be coming to an end.

At the same time, I am not assuming that it has come to an end. I will let the market tell me. I will once again reiterate “Wise is not the one know what is coming. Wise is the one know whats that he CANNOT know what is coming and keeps his mind, eyes and ears open”.

The chart that I will be watching a close eye on tonight is the EUR/USD chart. Euro currency fell in a waterfall fashion all day long only to reverse slightly – it has bounced back up from 1.3900 mark. I expect this bounce to be short lived and the downdraft to resume. Usually the trend of Euro is set for the night soon after the European markets open at 3AM ET.

I am sorry to disappoint you that I don’t have any bold forecasts here. I will however say that I am positioned for a downside move tomorrow (Thursday) and possibly a test of May lows either tomorrow or on Friday. Should we start moving down, I will close 50% of my short positions at Monday’s lows and the remaining 50% at SPX 875-880 region.

EUR/USD Update – Globex Sunday Night Session

mylifemytrade — Mon, 22 Jun 2009 01:33:54 +0000

Interesting stuff happening in EUR/USD. We are still within the small uptrending channel within the big downtrending channel. However, we are at a point where decision needs to be made soon. The upper line of the downtrending channel and the lower line of the uptrending channel are about to intersect creating a squeeze. As a result, one of those two lines gets busted. Which one is it going to be – being the wise one, I DO NOT KNOW. However, we should have a resolution soon after trading starts in Europe.

This is what the hourly chart of EUR/USD looks like:

If we zoom into the portion on the right, this is what we can see. We have had a small breach of the uptrending channel – let us see if this breach holds. If it holds, then the next key level n the downside is 1.3800. If the small big channel gets busted to the upside, then the key level is 1.4100. If you liked what you saw, please do share some love

UPDATE Jun 21, 2009 6:30PM PT: As I fight with my internet connection, I can see on my cell phone that EUR/USD has dipped another 20 pips taking ES and NQ into red.

UPDATE Jun 21, 2009 7:00PM PT: Someone pointed out to me that the mini uptrending channel could be drawn with a less steep angle. Here is what the chart looks like if that channel is drawn in the alternate manner. In fact I like this less steep channel as it has less breaches to the upside and the downside. However, this does not change the big picture, which is that we are at a point where we are about to see a resolution one way or the other… Of course, one has got to watch out for head-fakes.

UPDATE Jun 21, 2009 11:17PM PT: As of this moment, EUR/USD is down 81 pips, GBP/USD is down 45 pips and the dollar index /DX is still down – I don’t get this ????