Daily Briefing 100524

1.  Review.

I said “More downside is expected for the EURUSD (1.22 level); I would expect here a correction to 1.32 (adding a long). In the long run EURUSD is expected to go back to 1.18 levels, reselling then at 1.32-4 levels. I would expect risk off remaining low for the next week, but not deteriorate. I will see the risk asset rally at attractive levels, adding positions to risk asset exposure.” It was instead a mess week and risk off deteriorate heavily. Risk assets were heavily sold off and USD and JPY gained as non safe heaven currencies. Gold was sold off too.
Trades
My plan was to close risk assets longs on rally but I decided to change bias end of the week, cashing the short I placed almost mid-grid. This change of plan was a complete disaster. Now I hedged my high grid level JPY short with very low level JPY long. EIUNOK lose 4 month gains in a couple of days.

2.  Analysis.

"Fundamental analysis"
Last week data were all in red. Sentiment was bad and numbers too. Next week data will be very important, especially US durable goods, consumer confidence both US and EZ. EZ economic is underperforming, interest rate differentials and repricing will weight on the EUR in mid-term view. I said “Oil would be a better risk sentiment indicator, and it is pointing low” and I should have listened. Commodities were sold off too and some concern about China growth is there. But it looks like that AUD, NOK and CAD looks sounds even with those sell off. Obliviously if it is a temporary correction or not is still a bet

"Technical analysis"
EURUSD broke 36 month low at 1.2150, and it looks like ahead to lower levels in the mid-term. It would be a short on rallies. EUR COT short are again at the historical lows (-107k), USD long are the same (+23k), JPY short are still there (-34k). USDJPY after hitting 88 level, back to 93, Is trading back in the 89 area. It is dangerous to a buy on these dips. US futures were sold off, hitting the 06 low. AUD long decreased (+38k). GOLD/Oil ratio is going higher from a 13 in the last months to 16.7 and VIX is jumped at 43, pointing for a risk off sentiment.

"Market dynamics".
More downside is expected for the EURUSD in the long run; the 1.2150 level hold and I would expect here a correction to 1.32 (adding a long in a south dip). In the long run EURUSD is expected to go back to 1.18 levels, reselling then at 1.32-4 levels. I would expect risk off remaining to this low for the next week, but not deteriorate. I see the risk asset rally at attractive levels, but too risky to add positions to risk asset exposure.
Basically I have to decide if to stay with the long and close the shorts with a loss or stay with the short and close the long with a huge loss, hoping to have something back with the shorts.

Median grid
EURUSD GRID 1.2300 - 1.30, short bias
USDJPY GRID 88.00-92.00, neutral bias
AUDJPY GRID 78.00-86.00, neutral bias

Basically still a risk-off bias, but pausing risk

Prices
US down at 1084, (Q1-)
GOLD up at 1176 (Q1)
Crude 70
EURUSD 1.2543 (Q3)
USDJPY 89.43 (Q1-)

3.  Plan
I already added new trades; I will try to work out of the money positions for JPY longs;.

EURUSD
Stay with this short
Comment:< >

USDJPY
Hold and see
Comment:< >

AUDJPY
Hold and see
Comment:< >

EURNOK
Hold and see
Comment:< I did anything of the “Take profit, at 7.74 level and add more shorts at pullback “. Shit…>

4.  Trades
4.1 open trades, their type & their value:

2 Open 13-apr-10 USDJPY L 93.2400 Q3 1:1 toe-in 89.3900 -385.0000 -358.974
6 Open 05-mag-10 USDJPY L 94.5900 Q2 1:1 toe-in 89.3900 -520.0000 -491.868 Buy a dip
10 Open 06-mag-10 USDJPY L 93.8600 Q3 1:1 Panic 89.3900 -447.0000 -419.5542 Buy a dip
13 Open 07-mag-10 USDJPY S 91.3600 Q1- 1:1 Hedge 89.3900 197.0000 179.9792
14 Open 07-mag-10 USDJPY S 91.0700 Q1- 1:1 Hedge 89.3900 168.0000 152.9976
16 Open 14-mag-10 USDJPY L 92.3000 Q1 1:1 B&B 92.4700 17.0000 15.691
17 Open 14-mag-10 USDJPY S 89.1300 Q1- 1:1 Hedge 89.3900 -26.0000 -23.1738
6 Open 04-mag-10 AUDJPY L 86.0500 Q4 1:1 toe-in 81.9000 -415.0000 -357.1075 Normal long bias
7 Open 06-mag-10 AUDJPY L 85.1300 Q4 1:1 toe-in 81.9000 -323.0000 -274.9699 Buying a dip
15 Open 20-mag-10 AUDJPY S 72.8700 Q1- 1:1 Hedge 74.7500 -188.0000 -136.9956 Open 6
16 Open 20-mag-10 AUDJPY S 72.8800 Q1- 1:1 Hedge 74.7500 -187.0000 -136.2856 Open 7

4.2 Leverage

Aggregate position size expressed as a gearing ratio (Ex = 4:1)

Total positions per currency:
USDJPY +4,-3
EURUSD 0
AUDJPY +2,-2
Position
USDJPY -385, -520,-447, 17, (197,168,-26)
EURUSD 0

AUDJPY -415, -323, 13 (-188, -187)

4.3  Effect of planned trades

Account summary:
ActivTrades live account
Starting date: 1/4/2010
Starting capital: 1366
Line in the sand level:  750

1.  Account balance (Settled trades) and growth as a percentage.  (1469= 7%)
2.  Account equity (Including open positions) .  (1270= -7%)
3.  Account equity if planned trades go wrong
4.  Pip distance to line in the sand level.  5270, with gear (1) 5270