Sir Pipsalot
Former FPA Special Consultant
- Messages
- 511
Hey folks,
The shift in risk sentiment stemming from the RBA interest rate hike and many other factors I think has really turned our position trade biases around on their heels, and I chose to exit all of of my long term trades today (Short silver, EU (long USD), and stocks). All in all, stocks broke even for me, and the EUR/USD I got just under even overall, but I took a moderate loss on silver and a reasonable loss on USD/CAD; however, the damage is quite small compared to hanging on and hitting big SL's on everything. It's of course possible I'm just getting shaken out of the market and we resume the downtrend, but if that's the case, we'll have plenty more opportunities to jump in if/when the odds shift in favor of a short.
In the meantime, the odds short to medium term have shifted towards a rally to new highs on stocks (S&P 1090-1100 at least), new highs on the EUR/USD (1.5000?) and in metals, I'm not so sure, so I'm standing aside for a better opportunity. Long term, I think we're still very much poised for a big reversal lower, but I think the recent top was not THE top. I still very much like the strategy of getting long term short at the next potential top as we did this time, because the rewards of catching a major top like what we're looking for far outweigh the risks. As with this "failed" position trade, oftentimes the exits are not nearly as bad as the planned stop losses as long as you don't fall so in love with the trade that you ignore evidence to the contrary.
One great silver lining to all of this is that we have a good chance to flip long for some swing trades. I'm looking to buy any decent 3 wave dips on the EUR/USD or stocks looking to snag 50-100 pips or 10-20 points here and there. I think going long on EUR/USD on a pullback to the 1.4650 to 1.4690area is an ok early shot at a long. A tighter SL could be had at 1.4640 while a safer SL would be around 1.4580. A break below 1.4580 would make me re-examine the structure on the Euro and might mean we were just shaken out (happens to the best of us) and the downtrend is still intact. It might be a bit early to get in long since we could have some short term pullbacks, but I still think it's worth taking a shot. We called another aggresive position trade short a couple of months back, and when we exited, I flipped long on swing trades and made a good amount of money the other direction, so I'm looking to do the same here. We can't control the markets, but we can control our money management to make money with our edge in any market over time.
We had some great news trades yesterday that certainly created some wonderful moves. UK Industrial Production came out abysmally low and the GU tumbled 70 pips in the first 10 minutes, and ultimately 130 pips within a few hours. CAD Ivey PMI came out very high, and the USD/CAD steadily over the course of 15 minutes worked lower to a 50 pip move (only 10 pips of it was in the first minute) and even broke fresh 2009 lows. In news Wednesday:
2030 AU Employment Change (-10K expected) - With the rate hike, people are likely going to lean towards a positive surprise here, so we may see AUD relative strength in anticipation of this number. Also look closely at the Unemployment Rate (6.0% expected) and make sure the deviation there compliments the Employment Change release. A conflict could be messy, so I'd stay out if that's the case.
If it comes out at 10K or higher, AUD/USD should rally 35+ pips.
If it comes out at -30K or lower, AUD/USD should fall 35+ pips.
The shift in risk sentiment stemming from the RBA interest rate hike and many other factors I think has really turned our position trade biases around on their heels, and I chose to exit all of of my long term trades today (Short silver, EU (long USD), and stocks). All in all, stocks broke even for me, and the EUR/USD I got just under even overall, but I took a moderate loss on silver and a reasonable loss on USD/CAD; however, the damage is quite small compared to hanging on and hitting big SL's on everything. It's of course possible I'm just getting shaken out of the market and we resume the downtrend, but if that's the case, we'll have plenty more opportunities to jump in if/when the odds shift in favor of a short.
In the meantime, the odds short to medium term have shifted towards a rally to new highs on stocks (S&P 1090-1100 at least), new highs on the EUR/USD (1.5000?) and in metals, I'm not so sure, so I'm standing aside for a better opportunity. Long term, I think we're still very much poised for a big reversal lower, but I think the recent top was not THE top. I still very much like the strategy of getting long term short at the next potential top as we did this time, because the rewards of catching a major top like what we're looking for far outweigh the risks. As with this "failed" position trade, oftentimes the exits are not nearly as bad as the planned stop losses as long as you don't fall so in love with the trade that you ignore evidence to the contrary.
One great silver lining to all of this is that we have a good chance to flip long for some swing trades. I'm looking to buy any decent 3 wave dips on the EUR/USD or stocks looking to snag 50-100 pips or 10-20 points here and there. I think going long on EUR/USD on a pullback to the 1.4650 to 1.4690area is an ok early shot at a long. A tighter SL could be had at 1.4640 while a safer SL would be around 1.4580. A break below 1.4580 would make me re-examine the structure on the Euro and might mean we were just shaken out (happens to the best of us) and the downtrend is still intact. It might be a bit early to get in long since we could have some short term pullbacks, but I still think it's worth taking a shot. We called another aggresive position trade short a couple of months back, and when we exited, I flipped long on swing trades and made a good amount of money the other direction, so I'm looking to do the same here. We can't control the markets, but we can control our money management to make money with our edge in any market over time.
We had some great news trades yesterday that certainly created some wonderful moves. UK Industrial Production came out abysmally low and the GU tumbled 70 pips in the first 10 minutes, and ultimately 130 pips within a few hours. CAD Ivey PMI came out very high, and the USD/CAD steadily over the course of 15 minutes worked lower to a 50 pip move (only 10 pips of it was in the first minute) and even broke fresh 2009 lows. In news Wednesday:
2030 AU Employment Change (-10K expected) - With the rate hike, people are likely going to lean towards a positive surprise here, so we may see AUD relative strength in anticipation of this number. Also look closely at the Unemployment Rate (6.0% expected) and make sure the deviation there compliments the Employment Change release. A conflict could be messy, so I'd stay out if that's the case.
If it comes out at 10K or higher, AUD/USD should rally 35+ pips.
If it comes out at -30K or lower, AUD/USD should fall 35+ pips.
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