Yesterday we looked for Euro to run higher to around 1.2940, and we have come a good distance already. Today we have the FOMC rate decision at 2.15pm NY Time. If you have a good broker, then leave sell orders at 1.2935 with a stop at 1.2950. (There is a minor resistance at 1.2960, and I would hate for us to be stopped at 1.2950 only to see it pop up to 1.2965 and come down fast, but we need to control our risk in this business). A safer trade will be to watch what happens at 1.2940 and sell if it fails. After all we are looking for 200 points on the way down! Alternately, if you see a fast paced move higher, wait for 1.3030 and sell somewhere there. See chart. Good luck! Ramki
It looks like short-covering is a bit overdue in EUR/USD. Any fast break above the triple top at 1.2585 should easily take us to the mid 1.27s. But the fun will start up there. Stops will really kick in if the Euro breaks above 1.2750 by more than a few points. As a low-risk trader, we should wait for such an event and place our carefully chosen sell order somewhere near 1.2940. (This level will change if the Euro doesnt get to our sell level by London noon time tomorrow). Our stops need not be to far away, lets agree on 15 pips. If it works out, then we should be richer by about 200 pips. That’s a nice juicy risk-reward ratio, but don’t get emotional now! Only money in the bank is real money. We could still end up losing those 15 pips, but unless we are willing to take SOME chance, we should not even be in the trading game. Enjoy! Ramki
A lot of Sovereign wealth funds have invested in Citi around $40 per share, and a whole bunch of impatient investors have gotten long at various levels on the way down. But we identified long back that a reasonable level to buy this banking giant will be below $11.80, perhaps down till $10.40. Yesterday the stock closed at $11.73. There is no point in doing all this analysis if we don’t act when the targets are reached. So let us start buying in stages from here. Remember that this is a medium-term investment, not a one-night stand! We are seeking to DOUBLE our money, and that takes time. Also, we should only commit an amount that will not bother us in the night should the stock price drop to say $8. (anything is possible these days, but I dont think they will allow any big bank to go bankrupt now). So let us join the sheiks, princes, kings, monarchs and sundry billionaires and throw inour weight behind Citi.
Here is your chart! Ramki
See how the price has come down like I suggested a few days back.
This is going to be brief, folks. A safe sell level over the next two trading sessions will be at 95.55 with a stop at 96.85. Further out there is some more resistance at 97.11, but at present even a move to 96.55 looks remote. Be patient. Remember we only want low-risk trades. If the move doesn’t come within our time frame, we simply forget the idea and look elsewhere.
P.S. My web-host reported that the server where this Blog is stored had come under some virus attack. Some of you might have experienced error messages , and now you know the reason.
I have been looking for Sterling to find support around 1.5850 because that area (as marked in this chart) was respected several times in the past 20 years. But today is a different story. Incredible as it seems, we were at 1.75 just 4 days back, and today’s low was 1.5260. That is a cool 22 BIG FIGURES down. It reminds me of Black Wednesday. As I was repeatedly saying, buying at 1.5850 is not a recommendation for short term traders. It is a recommendation for corporate managers because they have hedging needs, and have a longer term perspective. Even for them, the damage is severe, and if they have not already locked into a trade at that level, they are better advised to wait. As I have explained in the attached chart, getting above 1.5850 now needs help from the Central Bank.
- Sterling in a free fall
Here is yesterday’s chart!