Tuesday

Forex Trade: Shorting the Euro/GBP

1 Comment October 13, 2009 – 2:04 pm |   | Permalink |  Print This Post |

The best trades we find are those that are at an extreme (ie taking a position against an extreme situation) AND fundamentally aligned. There has been alot of talk about the strength of the Euro dollar - with banks stocking up on the Euro as part of reducing their exposure to the USD. The Euro seems to be in the same basket as other safe haven basket of currencies (such as the yen and swiss franc). After all the EU have not gone on a money printing spree like the US or England. That said, we believe the Euro is a flawed currency - all it needs is an Iceland within the EU group to wreak havoc within the group. More on this later on. In the mean time, have shorted the EURO/GBP at 0.937 - one mini position. Could it double peak at 0.98 or even reach parity? We are not so bearish on the sterling. The AUD/GBP is also at unprecedented levels, except this trade is not fundamentally sound since we are bullish on the Australian economy.

Meanwhile, we see a sea of red on our screen - fantastic.We will lower our stop for our short Hang Seng to 21500 ($150 locked in profits). It is now trading at 21393. All this could reverse by the end of trading so protect your profits.

Update: The Hang Seng is now 21330 and the Dax 5693. Be alert and protect your profits. This is most likely the big move we were expecting based on the small change in the McClellan Oscillator. But this could be transient. Best way to take advantage of this is to put a stop slightly below your entry (ie lock in some profits). Worse case scenario, you make less. Best case scenario the market goes down from here and retests March lows. Either way you get a good nights sleep.