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发表于 2009-4-6 17:16
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April 1st, 2009 at 9:42 am
Financial Fool’s Day.in: General, Trades
April the First, traditional day for pranks and jokes, hasn’t been that funny for some. World leaders, gathering in London for the G20 summit, were greeted by protests and riots. An angry crowd clashed with riot police in central London on Wednesday, breaking into the heavily guarded Royal Bank of Scotland and smashing its windows. They also tried to storm the Bank of England and pelted police with eggs and other objects of that nature. Protesters focused the Royal Bank of Scotland because it was bailed out by the British government after a series of disastrous deals brought it to the brink of bankruptcy. Today’s protests were named “Financial Fool’s day”, which I think is a right on, given both timing and circumstances.
It is estimated that crowds numbered about 4000, most of them anarchists, anti-capitalists and environmentalists. I’m sure you could find all of anti-??? groups being represented there. Let’s not forget people few soccer hooligans practicing for next weekend, some unemployed without any anti-??? affiliation and surely couple of guys who simply had nothing better to do. I’m sure this will be the picture throughout the meeting. Still, given general poor state of world’s economy, I must say these protests were mild. Ten years ago WTO meeting in Seattle was a witness to far worse riots, hopefully something that will not happen in London. From now on news from the summit should get more serious and to the point.
Trading was good today. EUR-GBP sell order was triggered and met its objective.
Entry was at 0.9227 and target at 0.9160. Everything happened fast, trade brought 67 pips. Now, another sell order is waiting as explained in a post Special Drawing Rights. I’m using 4H chart for that one, but depending on how the market behaves, hourly trades could be included. That post also covers EUR-PLN and a potential short trade. This happened and I’m already out of it with decent profit of 1250 pips. I’ll go over the details tomorrow, since the trade just closed and don’t have the chart ready.
Swiss Franc looks weak and getting weaker so I’m placing couple of buy orders here. One is at 0.9090, the other if there is a pullback to about 0.9010. The cross is CAD-CHF. I will also try to show something on EUR-CHF chart tomorrow. Seems like a busy agenda for next post, I’d better get rested.
Mike K.
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March 31st, 2009 at 10:15 am
Bracing for the summit.in: General, Trades
Since this is my blog, I’ll start with minor personal updates. Trip to Mazatlan was great, just what I needed. Few days of warm weather made for a nice change from our prolonged winter. And, really, it was just warm, not hot. Temperatures no higher than low 80’s, very enjoyable. I don’t even look like a lobster or feel extra crispy. On the way back plane was almost empty, guess people didn’t want to go back to work. At any rate, one of the stewardesses (Alaska Airlines) was telling me how unpredictable their job is now, if they fly to Anchorage. Mount Redoubt volcano is blowing ash every other day, so flights are cancelled, rerouted and what have you. This brought back a lot of memories of this very same volcano active in 1989( can’t believe it’s been 20 years) and me stuck in in Dutch Harbor trying to make it home for Christmas. Some people were there for a few weeks not able to get out, courtesy of Mount Redoubt. Good times…
This week is going to be dominated with news from G20 summit in London. It starts on the 2nd of April, but most of the movers and shakers are already there. We all know agenda is heavy and stakes are high. Last meeting was in November and set lofty goals for international cooperation. Unfortunately, the world economy is in far worse shape now with all the goals from previous summit missed. Trade is deteriorating, protectionism is on the march and joblessness is rising. Street demonstrations have increased and widespread protests in London are predicted. On the same token, the usual declarations of unity and cooperation are also expected. There will be a lot of smaller meetings among world’s leaders. I expect a barrage of news, deals and rumors over next few days, most of them will not amount to much. But, whatever happens there has very good chance to move markets, if only temporarily, so it’s better to pay attention. Besides all the issues are important, so I think it is in everybody’s interest to follow the developments there.
Not much trading last night, breaking myself in slowly. I’m placing additional order to the set up from .
Trade based on 4H chart is still valid, but there is also room for a smaller trade. I’m using hourly chart and look for a sell. Entry is planned at 0.9227 with a target of 0.9160. Yen pairs are worth watching now. AUD-JPY, NZD-JPY and GBP-JPY rebounded strongly from the sell off. We must see continuation form current levels, but prices seem to be pausing. Could time of day(typical slowdown about now) or potential reversal. I think these pairs are at important point right now, with Yen bearish bias.
Mike K.
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March 29th, 2009 at 7:22 am
Special Drawing Rights.in: Articles, General, Longer Term Trades., Trades
Most of the time I get one or two emails after my updates here. Sometimes there’s none. Few posts, however, generate interest and I receive a fair number of questions regarding them. Such was the case with Readers were interested of how this would work, what possibly could replace the dollar. Mainstream press also picked on the subject, as was evident to me during flight here. Lady sitting next to me started a conversation about financial matters, which, ultimately, drifted to this issue, since she had just read some article about it.
What China, and supporters, are proposing is not really an introduction of any “new currency”. There would not be any coins or notes put into circulation. While details of the plan are murky, proposal is for an accounting unit based on a basket of currencies, including the USD. For those who don’t know, there is nothing new about the concept. In 1969 International Monetary Fund created just this type of “currency”, known as “Special Drawing Rights”, or SDR’s. In the original version unit of SDR was pegged to the dollar, but evolved over the years to be based on four different currencies. This new push away from dollar might bring SDR’s from obscurity. Proponents would expand the role of SDR’s to use for pricing of commodities, main converter of international trade as well as denominator of some debt.
Idea in itself has some merits, but would require world wide agreements. First, the exact composition of SDR’s, or whatever name prevails, would likely be a subject of lengthy and heated debate. Some countries will probably reject the idea outright, like USA. Adoption of a mechanism like that could make it very hard for the Treasury to finance our growing debt. Banks would have to adopt uniform accounting standards, private companies need to be willing to accept SDR’s as payments and so on. Frankly, even if the world community agreed to go along with something of this sort, it still would take years (decade?) to take full effect.
Some people fear that if this proposal is rejected, China will dump her USD holdings. Chances for it to happen are slim, as this action would severely depreciate their reserves, something Chinese officials are desperately trying to avoid. What we should expect, however, is far less money from China to fund our future debt. This is an area for concern. With other major buyers of Treasury paper, Japan, oil exporters and others, bringing less dollars from exports, it will be difficult to fill void China’s buying absence creates. I’m sure Washington is fully aware of this.
I’m not trading today or even tomorrow, still enjoying the sun, but think it is time to review a longer term trade discussed couple of weeks ago.
Currency pair in question is EUR-PLN.
This was described in . Plan was, and is, to sell it at 4.4000 with an objective of about 3000 pips. So far price is moving in opposite direction. Wit this in mind I’m considering additional sell of this cross somewhere between 4.7000 and 4.8000. This would give it a reasonably stop at 4.9500 or so. My entry will be creation of strong reversal candle on daily chart. Doji, hanging man or one of the stars are what I’m looking for. It is enough that I visit the chart once a day.
One more of “set and forget”trade.
Our old friend, EUR-GBP, which produced couple of decent trades last week. Here is 4H chart for a change. Once again I want to sell it, this time at 0.9130. Objective is large, for this pair, of 200-230 pips. Well, it is not exactly set and forget, but I can place the order and not have to worry about for a day or two(probably). Just long enough to get home.
No post tomorrow, but should be home Monday night my time, so if not too tired, I’ll update blog Tuesday at customary time.
Mike K.
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March 26th, 2009 at 9:22 am
Is protectionism always bad?in: General, Trades
Current financial crisis is often blamed on globalization, as a root of all evil. Good jobs are exported, or outsourced, to countries where labor is much cheaper. Some in the West, countries which lost most jobs, see it as exploitation of local population in countries like China and India. Inhabitants of those countries largely disagree , having seen their income, and standard of living, increase since the free trade started in earnest couple of decades ago. After being “pro” free trade, America is turning towards protectionism. At this point it is largely a grass root movement, one that has gained some political clout. In fact, it had enough support to attempt to include “Buy US” provisions into bailout legislation. Ultimately they didn’t pass. I’m all for free trade and some unwelcome consequences which go with it. However, should we outsource production of goods to countries which clearly demonstrated failure to properly produce them within their own borders? Case in point. Upon failure of the “Buy US” provision, the last remaining producer of condoms in USA is loosing contract and the manufacturing process is outsourced to… China. Now, do we have evidence that Chinese producers mastered the the intricacies of condoms? That’s debatable. After all it is the most populated country, and it is still growing at rapid pace. Clearly, the condoms are not top notch. Now, Chinese officials claim progress, citing that India’s population is growing much faster. Valid point, one shouldn’t use condoms made in India also, they seem to be of even lower standard. Personally, I think that Chinese have as much business making condoms, as we have teaching others fiscal prudence and the art of balancing the budget- none! In situations like this, isn’t protectionism excusable?
I didn’t trade a lot, besides no trade was featured yesterday, but I want to show something here. I receive large number of emails from people who ask me what system I use and so on. The trades featured here, while they have some underlying structure, don’t really fall under any system. They are mostly discretionary. It doesn’t mean they are guess work or gut feeling, but they can’t be very easily explained. Here is an example.
After the post yesterday, before computers were shut down, I went long GBP-CHF, for a number of reasons. After severe sell off price formed possible reversal pattern during the time of day at which activity usually slows down, or reverses. 4H chart(not shown) suggested possible reaction at a FIB level, but most intangible was the way price acted. There was a recognizable acceleration in price change after which it ”snapped” sharply within this hourly doji, something that can be noticed only if watched live. So, plenty of reasons, but not really molded into any set of rules- discretionary. So was the exit. Price almost touched 50% retracement of the preceding down move, as well as bounced around 100SMA for couple of hours and the gain was decent, so I pulled a plug. Hope it makes sense and demonstrates the what I mean by discretionary.
There will be no posts for a few days, I’ll be away on a trip, until Monday evening. I might refresh the blog Sunday morning, before markets open, if i feel like it, but in principle next post will be on Tuesday. Wish everybody many pips.
Mike K.
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March 25th, 2009 at 9:34 am
Road to hell.in: General, Trades
The G20 summit in London is coming pretty soon, and the normal rhetoric’s leading to the event are heating up. This one came from The president of the European Union. Czech Prime Minister Mirek Topolanek, whose country currently holds the rotating EU presidency, told the European Parliament that President Barack Obama’s massive stimulus package and banking bailout “is a road to hell”. He slammed the U.S.’ widening budget deficit and protectionist trade measures — such as the “Buy America” policies included in the stimulus bill, although Obama has said he opposes protectionism in principle. He warned that financing US spending spree, financed through sell of Treasury paper, will undermine the liquidity of the global financial markets. Topolanek said that “all of these steps, these combinations and permanency is the road to hell.”
This blunt statement came a day after Topolanek’s government collapsed because of a parliamentary vote of no-confidence in Czech Republic, which means that he will soon vacate EU president seat. Other European politicians were quick to distance themselves from his statement, but it doesn’t change the fact that a great divide exists between EU and USA on the approach to combat current crisis. America seems to be buying its way out of recession, with borrowed money, while Europe is taking more measured, wait and see course, risking being stuck in the rut much longer, should American way work. Meanwhile Japan’s economy contracted at an annual pace of 12.7 percent in the October-to-December quarter, its worst drop since the oil crisis 35 years ago, amid a record decline in exports. We all can guess what their agenda for the summit is going to be. With China and Russia discussing global currency scheme, all is pointing to a very lively G20 meeting.
Last post covered my trade in GBP-NZD. We can be certain this is not going to be on the agenda in London next week, unless they need a humorous break.
Plan was to buy at 2.6100 and sell at 2.6400. Order was filled and at some point trade was in profit for 225 pips. Unfortunately, my target proved to be overly ambitious and was not reached. Price collapsed, and I had to scramble to get out at break even. Lesson - greed doesn’t pay, just kidding. While trading GBP-NZD or GBP-AUD this is very much normal behaviour, they are not easy to trade. I know, excuses.
My other trade from these pages was in EUR-CAD.
After my price movement slowed down and started to give signs of reversing, so on my way out I just closed it. Trade ended with 86 pips gain, short of target. The chart above is from yesterday, without today’s action.
I was planning to take some time off in conjunction with Easter. It turned out, however, that somebody is coming over to see me, which means I have to stay home. This made me decide to take a trip into warmer climate for a few days, take a break, relax. So, tomorrow afternoon I’m going to Mazatlan for a long weekend. Be back Monday evening, although tomorrow an update will be posted- a look at daily chart of GBP-JPY, the beast.
Mike K.
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