Aug 7 – Market Analysis

Open Positions (short AUDCHF, short GBPCHF)

Today we have had some news out already – CHF CPI – little impact.  At 10.30 will be the UK inflation report so that should have a significant impact on GBPCHF.  Further, impacting on the AUDCHF position, there is the Australian employment report (Thurday) and RBA monetary policy statement (Friday) – it would be good to have the stop moved to break-even ahead of those AUD news items.  How should I manage the stops on these trades? Regarding GBPCHF I do want to lower my stop here – looking at the W chart, if price goes above 4300 then my trade no longer looks good, but at the same time I don’t want to be taken out by some shakiness at the time of the inflation report – so I will change my stop to 4315 (thus lowering my initial stop of 120 pips to 80 pips).  I am mainly moving this because of the news items – because to be honest the trade has only gone very slightly in my direction.  Same with the AUDCHF trade – it’s only done about 40 pips thus far, whilst I am targeting 110 on the first target and 310 on the second target.

General comments

  • Equity Markets – Equity Markets have given up some decent gains over Monday and Tuesday.  What triggered that?  Oil and gold are holding.
  • Huge Yen strength across the board.  Yen is gaining significantly against all other currencies in the past 24 hours.
  • Technically the matrix has not changed.  EUR and CHF are the strongest pairs, and AUD and JPY are the weakest.  However, as discussed, Yen is putting in a huge move – I do not want to step in its way.  So for example I would be keen to trade the AUDJPY pair, even though JPY is currently listed as weak – that’s because it is becoming very strong.
  • Momentum is still looking to change on three GBP pairs, all in favour of GBP.

Pairs with S1/S2 setups and strength/weakness combinations:

  • EURJPY – there is no way that I would be willing to short Yen here. 
  • EURAUD – here we could have a corn-trade setup on the 4H chart – the retracement has occurred (as noted yesterday) of about 250 pips –and now we have bullish PA in the form of a corn-trade – looks like good buying pressure – target previous high of 4980.  Use only ½ unit of R (£500) as I am already short AUD on the AUDCHF position.  Stop below the first buy candle – this had a low of 4825 – so place stop at 4815  – when is the next 4H bar going to close? Though the candle to close next must be convincingly bush – there’s already a bit of a low wick on the candle – I would want to see a clean breakthrough – and would then potentially target the 4980 area or less – I might not need to shoot that high if the stop loss size is not overly great.  The next 4H candle will close at 11am, so that’s when I will decide whether there is a trade or not.  Update (9.38am): It looks like EURAUD has already taken off on me!  But I am not going to buy in – I am going to wait to 11am and see how things look then.
  • GBPCHF – already have an open position, though this position will no longer be S1S if the weekly momentum changes
  • AUDCHF – already have an open position here.

In summary – wow! What a day – lots of stuff going on.

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