This text is from blog famous currency strategist Joel Kruger .
THURSDAY, OCTOBER 18, 2012 – SO WHAT’S THE STORY JOEL? – You say risk correlated assets are expected to come under intensified pressure and right now they are not. You say the US Dollar is going to outperform and right now it is doing anything but. You say the Yen will depreciate significantly going forward and it has barely moved. So what’s up brotha? Well, all I can say is “all in good time.” The truth is, trading currencies requires a lot of patience, and though it might seem like nothing is going on, sometimes you just need an enhanced level of focus to realize that things are actually moving in the right direction…albeit slowly. So, I’d like to take the opportunity today to talk my book. While I have fully disclosed my positions over the past few months, I would like to offer a more comprehensive overview. Perhaps this may shed further light on the situation and offer some form of enlightenment.
Forex trchnical analysis video :
IN THE BEGINNING – My very first order of business when I started trading full-time back in July was the establishment of a long position on the EUR/AUD cross at 1.2000. Technically, the trade set up beautifully, and fundamentally, the position made perfect sense. The worst case in the Eurozone needed to be priced out, while a whole lot of downside risk had yet to be priced into Australia. So beyond the compelling chart, the major driver of this trade for me was the macro view that indeed, risk correlated currencies would start to relatively underperform against the major currencies…..And this is precisely how things have played out. EUR/AUD has since broken well over 1.2500, and looks like it could be in the process of consolidating ahead of an eventual surge through 1.3000. I am targeting 1.4000 over the coming weeks and months. As a side note, I did book some profit at 1.2300, but am still holding the core position.
EVERYTHING IN PROPER CONTEXT – Moving on, I have said that I believe the US Dollar will emerge as a major outperformer in the latter half of 2012 and throughout 2013. I have also taken a position to exercise this view through USD/CAD, and am long this pair from 0.9800. While it may appear that the trade hasn’t done all that much over the past few weeks, I would urge that you look at the trade in the context of broader market price action. While EUR/USD has been pressing higher on a daily basis over the past several weeks, USD/CAD has not participated with the same level of intensity, and has managed to hold up relatively well considering. I consider this to be a huge comfort to the position. So when EUR/USD finally does come back under pressure as I suspect it soon will, USD/CAD should start to really get going to the upside. Earlier this week, I formally established a short EUR/USD position at 1.3095 (78.6% fib retrace of 1.3175-1.2800).
YEN AND NOW – Finally, I have been very outspoken with my views on the Yen and how I believe USD/JPY is in the process of carving a major longer-term base. I established a long USD/JPY position weeks back at 78.50 and am looking forward to holding this position for a retest and break of the 2012 highs at 84.20 over the coming weeks. Since establishing the position, I have warned that this trade would probably take a good deal of time to actually play out, and for the most part, USD/JPY has been confined to the 78.00’s. However, in recent trade, there have been some extremely encouraging signs, and should we put in a daily close above 78.00 on Thursday, I believe this could act as the catalyst for the highly anticipated bullish break. A close above 78.00 on Thursday would be the first close above the daily Ichimoku in months. Then throw in the drastic reduction in retail long positions and I think we really could be on the verge of something big.
NOT SO BAD AFTER ALL – So at the end of the day, I am feeling pretty good right now. Even though the core positions have not built a tremendous amount of momentum at this point, net-net, my book is in the money and I feel quite confident that things will start to really move in the desired direction over the coming days. Until then, I remain paient. Other positions of note are a long EUR/CHF position at 1.2080, a long USD/INR position at 52.30, and a short GOLD/OIL ratio play (equal exposure long gold and short oil at the same time on the view that oil outperforms gold. This short-term position has done well and I will be looking to book profit soon).
