Daily Briefing 100726

1.  Review.

I wrote “EURUSD rally seems to be likely a short sell covering… Dirk’s views is instead bullish on EURUSD … bank stress should not cause more stress. So it looks like that the EURUSD downtrend is broken and the EURUSD bias is to be set to long”. Bank test were issued and they did not caused much stress, EURUSD is still 1.2910. US data was confirming weakness in recovery. EU data instead confirmed an unexpected strong rise in economy.
Trades
Holding the “only” -472€ at the end of the week , looking for the expected risk on increase to decrease the drawdown.

2.  Analysis.

"Fundamental analysis"
Last week was characterized again by a dollar weakness, undermined by a potential slow down in the recovery. with no really good fundamentals data. EURUSD recovery, risk currency as AUDJPY and EURNOK gained; gold din not surged despite USD loss and JPY loose a little versus the dollar too. Fed said that economy may not regain its path until 2016, calling for more QE and moving forward rate hikes expectances.

"Technical analysis"
EURUSD stayed around 1.3 levels. It would be anymore short on rallies but long positions could be taken on dips. EUR COT short decreased again (-24k), USD long are stable (+14k), showing the big divergence is finally converging and USD index is pointing to the 80 support area; JPY is now big long (+40k). USDJPY traded in the 87 area. Probably is staying down here in these dips. US futures retested the 1100 highs. AUD are little increasing (32k), showing again the end of the unwinding of the risk on positions. GOLD/Oil ratio is stalling at 15 since begging of July; but VIX is still quite volatile now at 23, pointing for a small risk off decreasing. Gold after the double top time at 1266 high is now at 1188, pointing to test the 1166 low.

"Market dynamics”
EURUSD rally seems to be likely to stay at the 1.3 levels, as median (1.25 and 1.32 levels would be the range); bank stress failed to drain out uncertainness and to be a strong reversal turnaround (UBS fail to say). It looks like that the EURUSD downtrend is broken and the EURUSD bias is to be set to long and I will enter on long on dips below the 1.3 level. No big releases this week and I will look on that as confirmation about EZ strength and US weakness. High uncertainty is still alive and short term view should be taken. JPY lost against risk currency, and USD too. I will expect a strong JPY against US; BoJ intervention is expected below 85. I will enter a very quick short trade at 88 looking to reverse for a long term long position from the 85/86 levels. Long term outlook is anyway positive for AUD and CAD. Weakness of JPY cross are more for risk off view (JPY as safe heaven) then for bad foundamentals.

Median grid
EURUSD GRID 1.250 - 1.320, (grid change), long bias
USDJPY GRID 88.00-92.00, neutral bias
AUDJPY GRID 73.00-81.00, short bias

Basically still a risk-on bias by the end of week

Prices
US up at 1100, (Q4)
GOLD down at 1188 (Q2)
Crude 78.5
EURUSD 1.2910 (Q1+)
USDJPY 87.5 (Q1-)

3.  Plan
I will try again to work out of the money positions for JPY longs (too bad);

EURUSD
I will enter a long B&B on the yob level (1.2558) as retracement; I will hedge on a couple of level down (-100 pips). I can open a new toe in long same level. I will take profit at 50-100 pips
Comment:< >

USDJPY
Already too many positions (+5)
Comment:< >

AUDJPY
Close the shorts on a dip (75)
Comment:< >

EURNOK
Hold short positions
Comment:< >

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

2 Open 13-apr-10 USDJPY L 93.2400 Q3 1:1 toe-in 87.45 -579.0000
6 Open 05-mag-10 USDJPY L 94.5900 Q2 1:1 toe-in 87.45 -714.0000
10 Open 06-mag-10 USDJPY L 93.8600 Q3 1:1 Panic 87.45 -641.0000
16 Open 14-mag-10 USDJPY L 92.3000 Q1 1:1 B&B 87.45 -485.0000

18 Open 02-giu-10 USDJPY L 92.2100 Q2 1:1 B&B 87.45 -476.0000
6 Open 04-mag-10 AUDJPY L 86.0500 Q4 1:1 toe-in 78.13 -774.0000
7 Open 06-mag-10 AUDJPY L 85.1300 Q4 1:1 toe-in 78.13 -662.0000
17 Open 03-giu-10 AUDJPY L 78.8500 Q1- 1:1 Hedge 78.13 -64.0000

4.2 Leverage

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

Total positions per currency:
USDJPY +5
EURUSD 0
AUDJPY +3
Position
USDJPY -579, -714,-641, -485, -476
EURUSD 0

AUDJPY -774, -662, -64

4.3  Effect of planned trades

Account summary:
ActivTrades live account
682Starting capital: 1366
Line in the sand level:  750

1.  Account balance (Settled trades) and growth as a percentage.  (1445=5%)
2.  Account equity (Including open positions) .  (10413= -24%)
3.  Account equity if planned trades go wrong: 1000
4.  Pip distance to line in the sand level.  2913, with gear (8) 364