The London Open - page 144
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Hi
Thanks Dan for all your posts.
RS
The rally monkey having been on a sabbatical for the past couple ofmonths was back in employment today. The great thing about rallies isthat it gives you a good idea to how people are positioned. The answeris long CDS and long cash (Turkey CDS -70, cash -30bp) so I guess youwon't have to ask me what happened today. Ok just in case you areunsure CDS massively outperformed cash and although there were plenty ofcds sellers out there, real money cash buyers were non existent. BeforeI say this is not a proper rally it's a squeeze, we all have to realisethat there is a huge amount of bad news in the price and squeezes canlast anything from 3 hours to 3 months. Do I think that the market isnow rallying in anticipation of a turnaround of the global economy in 6months time, absolutely 100% no. Can we rally for a few weeks or longerabsolutely yes, however in my opinion because of the awful marketliquidity rallies are an opportunity to sell paper rather than look fora quick buck by going long. You only need to take a glance at the IPdata out of the UK or France today to remind yourself what a mess we arein and assuming a turnaround in this data in 6 months is extremelyoptimistic although I honestly hope I am wrong as an economic recoveryis in all of our interests right now! As I am writing the rally feelsas though it has legs and if it continues cash laggards will startplaying catch up and the CDS squeeze will continue. More of the sametomorrow!
Mr P........
Hi Thanks Dan for all your posts. RS
Nice Pic RS.
D
GOLD, AUSUSD, USDCAD - Wednesday 11th March
Morning all,
USDCAD:
• Boxed in on the hourly chart between the 4 hourly 20 and 50 MA’s the 21cci is now positi
• 15 minute chart is creating higher lows and we might find and opportunity on the break of 1.2870 to play up to the figure and depending on the strength
• If we fail to break look for the upward sloping support level connecting the lows and wait for a break of this.
AUDUSD:
• Failed to break the MP and has fully retraced to the 4 hourly MA
• Difficult to short here with the hourly 50 just below us
• However a break of 0.6385 could signal a further move down.
• For a move up we would need to see a break and then 123 onto the 60 minute 20 M
GOLD:
• With indices likely to rally again today it would be no surprise to see gold falling off again
• 60 minute is within range of a safe trade but we would need to see a break back through the 15 minute 20 and 50 MA for a clear entry targeting the previous lows around 892.50
• One major concern is that we are back on a major technical support level so trading around here will be very jumpy
JPY Desk Notes - Wednesday 11th March
Good morning London….
USDJPY-
• Looking reasonably weak again now after falling back beneath the averages
• Short position favoured at the moment
• Main line of support is weekly pivot at 98.10
• Play from here at 98.35 with tight 25 pip stop and see what happens at the support or look for break of support
GBPJPY-
• In no-mans-land at present & having fallen so far it’s really difficult to get into this market at the moment
• Waiting for a pullback on 60m chart and may look for short entry from monthly pivot at 135.50
EURJPY-
• Looks weak and IF EURUSD falls through into the 1.25’s then this should push lower
• Has the 4hr 50 and weekly pivot below but room to manouver
• Keep an eye on USDJPY. That needs to fall too
Verdict…
Not overly keen on any of these 3 pairs at the moment although I do prefer USDJPY short. Here it’s right below the pivot and all the m.a’s having just popped up a tiny bit.
Stop would now need to be just 20 pips at .70
Have a good morning.
London Open Notes - Wednesday 11th March
Good morning all
Its mid week and we have chipped away at our weekly target in the London Open.
Let’s see if we can add to those 40 – 50 pips from yesterday morning.
CABLE
• GBP remains weak across the board and is below the 60min 20ma on all 3 of our GBP currency pairs.
• Yesterdays low has been broken at 1.3685 and the new low is 1.3665 level.
• Look at 1.3665 as 1st level of support now and resistance at 1.3735.
• Use these support and resistance levels for breakout levels.
• Look at GBPCHF and GBPJPY to break support levels for GBP to show signs of weakness this am.
EURUSD
• Watch EURJPY for help with EUR weakness this am. If EURJPY breaks the WP at 123.90 EURUSD should weaken.
• EURUSD has broken WP as we speak and looks weak.
• Use the 60min 20ma as resistance here and only play short if you are within reasonable distance to the 60min 20ma.
EURGBP
• The EUR (against GBP) is strong however I do wonder how long this will last for.
• Hard to trade EURGBP at this level as the risk of a pullback is imminent with EURUSD weakening.
• Yes you can buy off the 60min 20ma with the trend but any break back through will be met with sellers looking to push the price back to the 91.50 level.
• I would be patient with this currency.
GOLD, AUDUSD, USDCAD New York - Wednesday 11th March
Afternoon all
USDCAD:
• Failed to break the level discussed this morning. Hit upon it and immediately failed.
• It has now broken out of the support line we were talking about
• If you are not now short wait for a small pull back before a continuation of the downward move.
• Use the 15 minute for entry and the hourly for holding.
USDAUD:
• No 123 sadly this morning to allow us to enter.
• This afternoon 0.65 should act as a resistance level and our hourly trigger is starting to slow
• If we get a pull back towards our 15 minute 20 there could be another opportunity to enter.
Gold:
• With indices coming back to find support we could see Gold starting to break back through the 60 minute 20 MA
• 15 minute chart shows clear support level running up a break could be significant.
• To the upside we would need to see a clear break of DP and 904.00
Verdict
On CAD retracement we could see another entry to the south side. AUD to over bought.
Breaks on Gold could be good depending on the indices. If indices fall gold up, indices rise gold down.
New York Open Notes - Wednesday 11th March
Good afternoon guys.
USDJPY-
• Now at last this looks like it’s going to break the level mentioned in this mornings notes.
• That .30 is the 4hr 50 so may well hold but does look weak so expecting it lower this afternoon
EURJPY-
• Having a tug of war between a falling UJ and a rising EU
• Can’t go long prior to a break of DP at 125.50
• Wait to see what UJ does. If it bounces then EURJPY will move up with EURUSD
GBPJPY-
• Needs to break north of DP at 136.25 if it wants to push higher
• Needs UJ to find support off new session low of 98.00 to help
• A break of 135.00 might see it lower
Verdict…..
We’re at a perculiar point here with USDJPY travelling in one direction and GBPUSD/EURUSD travelling in opposite diections.
IF USDJPY bounces off the weekly pivot then I will look for a long position on EURJPY on break of .55 but should USDJPY retrace to 98.45 then turn back down I’ll be looking for a short USDJPY
Disappointed once again with chopping my AM position on UJ but that’s the way it goes sometimes. We pick ourselves up and move on.
Have a good afternoon.
The day after the rally and I am pleased to report that we are still intact. Sovereign cash spreads 15-40bp tighter, corps underperforming10-20bp better. Flow was predictable Asia continue to be a seller andthis does not change in spite of a 6% rally in stocks and they willcontinue to be sellers even if this rally holds. Europe and US was moreof a mixed bag with some profit taking and a little momentum buying. Iam also pleased to report a little buying interest in Allibk and Bta inpart thanks to the old Sberru stories doing the rounds again and in partdue to the absence of forced sellers.I have done some good reading and listening these past few days and myview is the same despite the rally. I asked this question many monthsago, what is different now to what has been going on in Japan for thelast 20 years? Japan mistakenly bailed out its banks, Japan introducedquantitative easing, Japan has a huge debt/gdp ratio and yet have JGB'ssold off aggressively in the past 15 years? Not only are we bailing outbanks, but if you add Insurance and Car companies the arguments can beeven worse for what's happening in the world right now. Everyone isbanging on about inflationary concerns, later on down the line, well Ihave my doubts. I am speaking to many people from different walks oflife all having the same problems ie they are long assets and short ofcash flow (sound familiar). Well you don't have to be a rocketscientist to work out what is going to happen when they need to raisecash. In addition the job market is in tatters, salary cuts are beingwhispered, unemployed people are applying for jobs at a huge discount totheir old salary. On top of the all that we have the small matter ofcredit card debt, store card debt, mortgage debt, pension deficits etcto pay down. My point is that I believe the power of deflation to bemuch greater than inflation any time soon and that is bad for riskyassets and good for govys. This rally is welcome for all of us however I just don't "buy" it andwill continue to look to lighten up into further strength if we holdhere or rally further.
Mr P.....
London Open Notes - Thursday 12th March
Good morning
USDJPY has driven GBPJPY lower but GBPUSD managed to hold strong with GBPCHF holding the 1.6000 level.
Slightly mixed views again in GBP
CABLE
Broken the DP on the upside at 1.3790 and will be 1st level of support now.
The 60min 20ma is above the 60min 50ma suggesting small signs of support in GBPUSD around the 1.3790 level
However if the 60min 20ma breaks there could be a cheeky gap trade down to the DP.
1.3920 is resistance and any break back below the 60min MAs and DP would signal weakness in GBP.
If it breaks the DP we should look at short plays to retest the lows.
Verdict look for break of the 60min 20ma for now.ç
EURUSD
The 60min chart suggests a push higher with support around the 4hr 20ma.
The MP and DP will be key support levels around the 1.2750 level.
The technical support line is at 1.2650 and any break below the WP would signal further EUR weakness.
At present the EUR is trying to hold the 60min 20ma.
Verdict look for break of the 60min 20ma for now.
EURGBP
60min chart looks a little tired up here (I keep saying that!)
Weakness will only be confirmed if we see a golden cross of the 60min 20ma and 50ma on the 15min chart to the downside.
Any break back above the 0.9270 level would signal further strength in the EUR.
The 60min 50ma is holding as we speak but would prefer to see a confirmed 123 play for any short
Verdict
60min 20mas are key again and watch DP on EURUSD and CABLE for signs of support.