Monday, May 15, 2006

+100 pips: TIC data far below consensus, Euro rally ends?

Every Monday seems like a boring trading day. After a 5-weeks rally of EUR/USD today will be seen as a retracement day for many, leaving traders undecided whether to continue the rally or the reverse. All possible technicals showed a retracement for today and it DID happened as I expected, a 100-pip drop from the high of the EUR/USD. I left 1 position unclosed which I positioned earlier @ 1.2960 and it was taken this morning on the opening market of the new week. After the observations, I've positioned a trade at 1.2860 which is the support for the EUR/USD. It was taken as well. With the 100-pip dropped, I took profit on 2 of my USD/CHF trades @ 1.2050 and 1.2100 respectively, knowing that this retracement won't last long as the bias is still the EUR/USD long. It's been reported as well that the the central banks except the BOJ are still selling the dollars. While anticipating the release of the TIC data at 9 pm EST, the market was making minor movements leaving the prices trading in a tight range, which will leave us trading in range bound. After this a big breakout will in play, either a BIG way up, or a BIG way down.During the New York session, the capital flows into the United States (TIC) fell to a significant low of $ 69.8 billion which is a major improvement for the USD, another sign of USD bull. The market trading quietly and a battle between EUR and USD took place and there's no apparent winner yet. I have placed a position for USD/CHF @ 1.2140 which is above the 200 SMA on the 1-hour chart. I think we will see more range bound trading in the following days to come, another indication of a breakout in play.

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Completed/Closed Trades
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Long USD/CHF @ 1.2000, TP @ 1.2050 ( +50 pips )

Long USD/CHF @ 1.2050, TP @ 1.2100 ( +50 pips )

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Existing Trades
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Long EUR/USD @ 1.2860

Long EUR/USD @ 1.2960, TP @ 1.3010

Long USD/CHF @ 1.2280, TP @ 1.2330

Long USD/CHF @ 1.2380, TP @ 1.2430

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Trades I'm Waiting For
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Long EUR/USD @ 1.2760 ( This will become my position trade when taken )

Long EUR/USD @ 1.2910, TP @ 1.2960

Long USD/CHF @ 1.2140 ( This will become position trade if reversal )

My view is still EUR bias until the end of the year with the ECB still raising rates AT LEAST 3 more times and the Fed is planning to pause the rates. I am beginning to worry that if the greenback lose too much ground too fast, they might call for an unexpected hike in June FOMC Meeting. This will KILL alot of Short Dollar traders IMMEDIATELY. So a retracement for the day is actually healthy. Hoping to see a better and clearer day tomorrow.

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