Swinging markets

I know you all missed me yesterday, but don’t worry I’m back today 🙂  Let’s check what happened the last two days. The US Dollar took a beating at the end of last week, and horrific jobs numbers combined with a thin market Friday simply added fuel to the fire. On Monday, most of the currencies were at their highest levels against the Buck. Then uproar on Monday afternoon; both the Euro and GBP lost about 200 pips against the USD until Tuesday evening. Even USD/JPY shot up more than 150 pips! Naturally, this should be the start of an uptrend, and a downtrend for USD. 

Today, we can see that this assumption is justified – the USD is slightly higher against most of the other currencies. But it wasn´t that straightforward for the GBP/USD pair. Following the downtrend that took place Monday and Tuesday, it would be logical to sell any retraces on this pair, but to be cautious we left a pending order at 1.4890 on Tuesday evening until this pair retraced about 80-90 pips. When we turned the screens on yesterday morning, the sell pending order was triggered. So we thought that the retrace was over and the price would turn down… clearly that was not meant to be, as the GBP/USD kept marching higher and we added another sell signal at 1.4940. It continued to stretch until both those signals hit the stop loss. 

The FED member Dudley held a press conference yesterday at around 13:30 GMT and GBP/USD started to turn down. We opened another short term sell signal near the top, securing 30 pips from it; I am still beating myself up for not opening a long term sell signal, which would have accounted for more than 100 pips! We find this pair about 200 pips lower this morning and most of the other currencies are down against the USD as well. So today we are planning to buy the USD on any retraces, but we´ll keep clear of GBP/USD because it’s see-saw manner these last 4-5 trading days. The pair which has the best probability is EUR/GBP which we already sold this morning. The Euro has been really weak since topping at 1.1050 and the retrace of the EUR/GBP downtrend seems to be over. These are the reasons we decided to sell this pair. We will also be opening a sell signal on EUR/USD if this pair moves up to the 20 MA which comes at 1.0780 at the moment. The only event which might change our opinion is the US unemployment claims data this afternoon, and I will be keeping a close eye on that.