Right now I am preparing and waiting on a weekly basis to short the EURO, CRUDE and the AUSSIE. It’s all in many ways about going long the dollar. The BIG EXCEPTION is the Japanese YEN. I keep fretting about “risk off” and what could happen with YEN, so I’m holding off until I can see what to do. CAUTION, I use weekly price bars, I’m not pulling any triggers…yet but it’s coming I think and it sucks, I was hoping to go long instead and pyramid up.
You can say short commodities, crude oil, the Aussie, or the Euro but it’s all about buying greenbacks. NO, that does NOT mean I’m expecting a rate hike. I mentioned in an earlier post, if all the runners in a race are going slower than you or sprinting backwards, you can stand perfectly still. The rest of the world has issues and they might well fight each other off to keep exporting and propping up local economies by cutting the cost of credit locally. The emerging markets are effectively short the dollar via dollar denominated debt. That appears to be part of the demand underlying dollar bids.
Yes, it’s a cliche that the USD is still a safe haven but that doesn’t make it less true, particularly at the moment. Gold might be the disaster preppers’ favorite and it’s a nonelectronic way to go hide, I mean save, some money but it’s cash money that everyone is still using. If something else was the world’s current reserve currency then you and I would be going long or hoarding that instead.
I am feeling out the following potential trades, and it might happen within the next few weeks. If the weekly price action and averages follow suit, these trades will be triggered after the turkey is served and before presents are refunded at the mall or shipped back to Amazon.
Watch ADX in the charts below. Once the lines flatten and turn, that’s it, go long the dollar. IF NOT, then we are in the clear to seriously think about going long raw materials.
It’s almost time to roll to March 2016 contracts. (I am working with wide price ranges but with these weekly price bars, it’s to be expected).
$6E_F @ 1.075 +/- 0.02 becomes resistance. In plain english this darn thing could bounce up and down around 1.075. I mean PAR as resistance? It’s crazy but the markets have been indeed filled with surprises.
$CL_F, $QM_F @as 42.5 +/- 2.5 per barrel becomes resistance. Same here, in coming weeks it could be 42.5/barrel with back & forth driving short term traders nuts and still be a valid sell. Round numbers, can be scary as well exhilarating, and $40 could turn into a horrific ceiling for those looking to go long. Personally, I was hoping for the beginnings of going long the most destroyed oil service plays that had the most leverage to oil but that is not the case right now. Maybe someday I can get to build a decent trade in Seadrill or some other play.
$6A_F as 0.70 +/-.0 2 cents become resistance. Last one, yes, this could be 0.70 cents and go back and forth. Since markets are obsessed with round numbers, it could break 0.70 decisively and plow straight to 0.69, 0.68, 0.67, etc and not look back but we’ll see.
I am also looking at 2016 PUTS as an alternative to trading forex or futures.
$FXE MARCH 2016 PUTS, with strikes above 105+ @ about $5 per contract
$USO APRIL 2016 PUTS, with strikes above 14+ @ about $2 per contract
$FXA MARCH 2016 PUTS, with strikes above 70+ @ about 2 per contract
These are all approximations at this time. We won’t know where the trades take place but these are decent estimates and give a feel for what will be put to risk per trade.
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