Neither Tech nor Macro

Discussion in 'Journals' started by fxintruder, Sep 12, 2012.

  1. Finally I've got a long position on the EurUsd, filled during this morning GMT sell off. I was pending at 1.3024 and still at 1.2995. If it goes below 1.30 I would consider adding on the down move at 1.2995 and around 1.2950. One must be careful with these pyramiding since you can find yourself adding to a growing loser. In terms of risk, the first entry is half sized, the other half will be used for the add ons in negative territory. Why would the price goes below the 1.30 ?

    The focus is on Spain bailout request and there are possibilities for the pair to plummet intraday, mainly if some news are against the anticipated bailout request:

    1: Rajoy wins the regional election but still no sign of bailout request.

    2: Intraday the Spanish yields are getting higher, and today's auctions are not doing well, sign of impatience and uncertainty that can trigger further sell off.

    3:Regional downgrades by Moody's

    But as I was saying for awhile now I wanted a long position on the €uro, targeting at least 1.3300.

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    #101     Oct 23, 2012
  2. contra

    contra

    Rajoy winning the election is taken by some to mean a possible longer delay for a bailout request.

    France putting out some bad data along with banks borrowing more from the ECB overnight didn't bode well along with sovereign yields and CDS.

    Lots of vanillas around here and a bunch of data Wed. for EZ along with Draghi meeting in Germany with a press conference to follow. Technically looking a lilttle heavy after failing to get back above this S-T up-TL.


    EUR/JPY hit a big weekly downtrend line yesterday. I got flat on Yen now, looks pretty risk off we'll see how US goes. As far as USD/JPY gotta keep your eye on US treasuries as well along with BOJ expectations.

    I'll probably trade USD/CAD in NY on the BOC. Also keeping my eye on EUR/AUD now again.

    good luck with your trades bro.
     
    #102     Oct 23, 2012
  3. This trading plan started like one month ago here on 2 pairs UsdJpy and EurJpy; the latter was fully closed with lot of pips before target since I was heavily positioned on UsdJpy based on the same incentives. I've added on UsdJpy 6 times so far, 2 are still running plus the sexy core position at 77.46. Today the target was hit (80s) and I am waiting as stated here for 80.600 to decide whether I am going to keep it or not. I would say I am keeping it, though I don't have a clear new target area. The risk to the plan could come from the looming fiscal cliff, but even in that case returning below 78.00 seems unlikely. The best exit strategy is to wait for an answer to what have driven the trading plan, that is, the Gov and BoJ easing size and scope. I have added the 6th position after the 80 pull back as planned here at 79.85. We will probably have an exotic around 80.50 with new opportunities, though not documented yet.
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    #103     Oct 23, 2012
  4. Hi bro, nice analysis, as usual, good luck to you too.
     
    #104     Oct 23, 2012

  5. Follow ups 1.2995 filled 1.2950 not far.
    Risk is that macroeconomics news are due tomorrow along with Draghi speech. This is what is explaining the current south positioning partially with the silence from Spain and the discount of a bad german Ifo number to which you add the market dynamics after the 1.30 breakout.
    Edit: keep in mind that the 3 orders are worth one normal position size as explained in the quote : no pyramiding.
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    #105     Oct 23, 2012

  6. Repositioned at 1.2930-1.2900 after ugly German Pmi ahead of Ifo climate index.

    Why:

    1: The Draghi speech is capping the downside and will very likely bring it back above 1.30 .

    2: Rajoy waiting for the green light from Germany to request the bailout, the worst are the German fundamentals the quicker they will consent. Actually it seems Berlin is seeking for a way to avoid any Bundestag vote for the Spanish request. This could explain why Spain is waiting.

    [​IMG]
     
    #106     Oct 24, 2012
  7. On this one I have split in 3 the normal position size on the pair, compounding an averaged position at 1.2982 as explained here.

    Now what?

    The Ifo and Pmi’s were really ugly. The main core economy, Germany, is hit and now paying its inertia and austerity stance taken during the crisis. Now Germany have no choice but to support ”what ever it takes” to help her customers (EZ members) and her skin. The elections are due in 10 months and Merkel is not going to accept any further deterioration in the economy until then. Therefore we will probably see a more flexible Germany on the debt front, although this needs some political talent, since the German people are not keen to pay for the others. This means to me that we must in the future differentiate between the political rhetoric and the real decisions.

    About this trade, as I said, I was looking for a position on the €uro ”What ever it takes”, I’ve got it averaged below 1.30 but near 1.29 would’ve been better indeed. In intraday I don’t see the pair going farther south, because the Draghi speech and the Fomc meeting is capping the downside, while better Chinese numbers stopped the sell off on risk that was triggered by the quarter disappointing earnings.

    To summarize the incentives are still the same:

    1: Rumors and news likely to grow about an imminent Spanish request seeing the Ifo/Pmi very bad signal and the Spanish yield now returning back to the unbearable 6%.

    2: Market expectations pricing in north the Spanish bailout request; cautiously. Price popping up at the announcement, since it wouldn’t have been priced fully because of the “cautiously”.

    3: Draghi /FOMC likely going to UP easing rhetoric and size this will likely bring it back above 1.30.

    One must keep in mind that this a grid of reading; the way I see the likely market behavior in the coming days. The downside risk is huge because of the nervousness of the market, and one of the main initial incentive which is real money re-balancing its portfolios is probably going to be delayed seeing the German Econ developments.

    An important question remains though, what if it continues to fall?

    Well, I’ll take my losses, but remember it just one normal size compounded to get a better price. After that I will retry near other liquidity clusters, unless my views are changing. In terms of conviction I am not €uro bullish, it’s just a tactical trade explained several times in several posts. Actually I think the real value of the € is near parity with a slight bonus to the €uro because of the ECB traditional higher rate policy, like 1.15 or 1.20. Furthermore a weaker €uro is mandatory to lessen the crisis damages, mainly on the current account front.
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    #107     Oct 24, 2012
  8. One of the most important value of a trading journal or a trading blog is to keep track track of what has been said and what you're doing. If we look at this trade on EurUsd above and to what I have planned in week 43 intentions, it is easy to see the widening spread between the plan and what was done.

    E.G . the quote here posted on monday:
    This week 43 can bring some nice opportunities in terms of positioning. Wednesday we have some heavy news on the €uro and the Dollar, from central banks (Draghi, FOMC) and macro Data (German IFO / PMIs). We can assist to some participants looking to position themselves and probably bringing the price to nice levels we can buy/sell.

    Why on earth didn't I stick to the plan and waited for at least the Draghi speech before buying the €uro? I even knew that the PMI's and the IFO were going to be very bad, rather there were no reason for them to be good.

    I have the answer: Its linked to the trader psyche loop. If you read all the posts about EurUsd since more than a month you'd see that I tried to enter several times and missed by 3_5 pips or so. I even mentioned somewhere that my plan was running out of time, hence this rush despite knowing that catalyst likely very bearish were coming. Furthermore I have replicated the same behavior on ES I was trying to buy for awhile. By not waiting for the end of the corporates earning announcements (80% of SPX) and the FOMC, I bought too high in the range. That's the way it is, discipline is not easy to maintain in all the conditions. But we learn from every mistake, even though it's not easy when it's about the psyche.
     
    #108     Oct 24, 2012
  9. The relatively good Hsbc Chinese PMI, though below 50, is giving wings to risk on addicts. I am not going to play against this kind of addiction mainly when it is used by some to liquidate before a carry traders catalyst, thats is RBA rate decision on early November. Consensus is still expecting 25bp cut, but so far market is just shrugging it off. This won't last and we will probably start to see soon price reversing ahead of the RBA decision.

    It's a tactical trade for me with a sell intention, around 1.0450-1.0470 , I am going to look at after the Chinese official PMI due on Nov 1st while monitoring the Australian PPI the day after. Although this indicator is known to be fake, any number above the 50 can push the price way above the first liquidity area. That is is why its better to wait for the Chinese release before deciding on the entry level and the higher the better. A more conservative approach is to enter after the Australian PPI only if it is below expectations or in line. The same way since we are trading the discount of the 25bp cut, we have to exit or lock just before the RBA decision.

    Risk to the trade:

    1: Addiction to AUD bullishness is strong, and the cut can just simply be shrugged off, mainly if the Chinese PMI is above the 50s.

    2: If the Australian PPI is showing some inflation risks, the market can consider there will be no cut, and continue to go higher.

    3: Any risk on mood can hinder the south move.

    [​IMG]
     
    #109     Oct 25, 2012
  10. Added a seventh position to the UsdJpy explained in several posts . Market is going to start pricing in the likeley easing from BOJ on October 30. After having hit the 80's decision area with a massive size (TP add-ons 2-3-4-5 ), I am deciding to follow this leg until my conviction of a way weaker Yen is questioned. The Core position at 77.46 is indeed still running.

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    #110     Oct 25, 2012