Tuesday, December 15, 2009

FXE trade: jumping the gun - 12.15.09

As my friend "Sauros" <--- click here pointed out; I am playing a dangerous game. I am trying to catch the whipsaw while long on the EUR.

It seems for 3 straight trading days FXE has gaped down against me. Luckily I am not using a leveraged FX pair and only exposed to the general trend so my lost is at a minimal. But, Id hate to imagine it what it would be like on an open fx leveraged trade.

It seems that the EUR participants are factoring in more US econ data, a fundamental valuation perhaps is changing. This is the third significant gap down day of dollar up SPX up.

After reviewing a long chart, Perhaps Sauros is correct in being short longer term out on the EUR. The full discussion can be found here: " THE LORD OF TRADING <----

Looking at the first 3 year chart we see 50 support on the RSI has held throughout this entire rally. Perhaps this is a foreshadowing that equities are due for a correction? But ... Perhaps not, as we have been seeing dollar up/down and SPX still goes up. There is an inherent bias for us equity markets. And what is this underlying factor?

USD safe haven and confidence and that the US Fed will back up the US if the safe haven fails.

Either way my trading notes can be found on the charts above...

I am expecting a retrace back to 1.48 range and will reassess the fundamental factors to see if this is indeed a long term trend change or if this is just an interim correction.


Alexander Lê
Analyze Capital LLC
Managing Partner


  1. Nice analysis. Let's see what happens after the Christmas. I assume FX markets will slow during the holiday break? Great charts though. I really appreciate the clarity, helps me interpret better. Currently I'm short UNG at 10.08 about 2000 shares

  2. Are you also trying to catch a whipsaw? I thought you were long nat gas according to your Q1 2010 play as stated in the TLOT forums?

  3. Yup...short then long. My short position is on a weekly basis, if it doesn't move I'm out.


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