Performance this week and market analysis

November 1, 2013 in Forex Analysis

The dollar finally rallied after a less dovish than expected FOMC meeting on Wednesday. As I pointed out last week USDCHF was likely to stage a big rally and it did. I caught most of the move and still have half of my position on anticipating it has more room to run. There is a lot of event risk on the docket next week so it will really be a question of whether the news continues to be dollar favorable or not.
Performance this week was 0.3% on Pepperstone and 1.4% on the AVA account. Showed a small loss on the Shelbourne Markets account this week as a couple of my positions EURGBP & GBPUSD hit stops. Of course, as soon as EURGBP hit my stop it had a huge reversal. Hmm! However, the open positions on that account are trending my way now.
EURUSD – Massive move this week. I put a short on late Wed but took it off before I left the desk as sentiment indicator SSI showed that traders were still massively short the euro at about a 4:1 ratio and these traders have been getting squeezed out lately as the pair went higher & higher. After FOMC the big boys decided to let it go and it fell like a stone with its biggest one day move in over a year, 1.1%. This move looks like it has conviction and if EURUSD rotates around the 1.35 area without rejecting this price zone then it should move lower to the 1.3250 zone. I would like to get short but do not have a good entry point right now. News out of Greece and other data are providing the fundamental backdrop for this weakness. ECB has a policy meeting next week.
GBPUSD- In contrast to EURUSD this pair stayed in a chop zone this week. If the dollar index continues to rally, then I am looking for a move to the bottom of the 4 hour chart range at 1.5900. As I write, this move seems to be getting underway. If it breaks 1.5900, 1.5750 is a big support area on the charts.
USDJPY – No change from last week. THE BOJ has not been clear in its recent announcements so the market does not have a clear bias here.
AUDUSD – I am short here and if we continue to see dollar strength then a multi-handled move back to the 0.900 zone could be on the cards which is a good risk reward scenario. RBA interest rate decision is on the calendar next week so will need a cushion on the trade before then.

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