Yellowlion's EURUSD Trading Journal

[yellowlion]

07/30/09 04:30 gmt

Good Morning All,

Something's amiss in the land. It's one thing to beat the bubble drum and expect a correction, it's absolutely another when every market marches to the beat but one stands firm. I would like to see what happens next. Will the overall market shove the rebel in line or will the rebel signal that the overall market is mistaken?

Check the lower support level posted here all this week on the 1hr chart. Hope it helped.

1hr

 

[yellowlion]

07/31/09 05:30 gmt

Good Morning All and Happy Friday,

Well the mid-summer chop has worn me out. Since it's the last day of the month, and I'm not understanding the market right now, I'm gonna book it, get some sleep, wash the boat, and have a weekend.

Lots of small wins in the chop. One got away from me but I was able to remediate it for a reasonable loss. 44 for 57 +15% for the month.

 

[yellowlion]

Weekend COT...

Happy Saturday All,

Doing the COT analysis for the weekend edition newsletter and just wanted to post something here.

The left side is an 8p SMA of EUR Commercial longs/shorts and the right side is an 8P SMA of EUR Spec longs/shorts.

You can see the commercials reducing longs into the current rally which is normal behavior but the rate of decline of longs is steep (and probably the reason for the sharp countertrend moves seen this week too.) Conversely, the opposite side of the trade, Spec Longs, are rising in a comparatively shallow slope. This suggests the longs are not so enthusiastic about this Euro strength.

These two charts are 2 of 16 COT studies I do for each product, every weekend for EURUSD, US Dollar Index, NYMEX Crude, COMEX Gold, 10yr US T-Notes, and the S&P 500.​

 

[yellowlion]

08/03/09 05:30 gmt

Good Morning All,

Well the dog days are upon us here in the Northern Hemisphere.

US financial industry takes the last 2 weeks in August for vacation and I may also participate in that tradition. It may also make for a thin, choppy month.

The markets are a bit confusing for me right now and I'm taking a sit back and watch attitude until something concrete materializes for me.

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Knowns:

*US GDP came in better than expected.

*Equities were flat on the day.

Gold and Oil rallied sharply.

10yr US rates fell sharply.

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Thoughts:

* I don't trust the US GDP number and I expect the final figure to be revised lower.

*The bond traders don't trust it either.

*Equities came in flat but may not quickly sell on the news. If they don't, I'm even more convinced of a downward GDP revision.

*Gold is itching to go to +$1000.00oz and may get there of it's own independent volition. GC is a more realistic forcast for the conditions existent in an improving global economy. The only caveat to the inflation trade is that the consumer is overextended now. If the consumer is left behind in a recovery, there will be little money to chase goods and inflation may not occur. Hmmmm...

I think the goods and services world is sweating it. I think this better than expected advance GDP number is a fact finding expedition. I think that the US financial wizards who have structured this recovery would not to spend time on the weekend news programs telling everyone how things are improving - if they really were.

Ummm...where are the lenders to support this recovery? If things look so much better, why are the banks still hoarding cash?

It's the stimulus that's working...and that well will dry up or a peanut will cost $8.00

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I don't have a trade right now. I have ideas and I've got technical analysis but I want a little time early here to see if something crystallizes.

For the EURUSD - Let's keep it simple today, The June 3 high was 1.4337, we printed a fresh high off the June 16 low this morning, August 3 at 1.4309. The move to that level was a classic impulse so the short-term outlook is for a correction possibly to 1.4156. A break above .4337 looks at .4384/98.

That's enough to make a little money in an uncertain environment.

 

[yellowlion]

08/05/09 04:45 gmt

Good Morning All,

Hope everyone is having a good week.

I'm just watching and keeping my EURUSD powder dry right now.

My favorite long is gold with a target of 1030.00. It's acting well but I'm cautious against resistance here and I'm wary of it's lack of autonomy if equities pull back. It would be great to see it go on it's own. So I've come up tight against any selling.

I want to get long treasuries; the time may come soon. I'll get long dollars at the same time.

Anyway,
Here's my EURUSD for today.

Daily

 

[yellowlion]

08/06/09 05:00 gmt

Good Morning All,

ECB press conference today.
Sturgeon moon in the sky.
Summer's on the wane.
I'm sensing a hint of change in character in the markets.

1hr

 

[yellowlion]

08/07/09 05:00 gmt

Good Morning All and Happy Friday,

Well the ECB certainly was a non-event and with the market expecting weak payrolls to continue into the forseeable future, this afternoon may be a non-event too. There has been some noticeable lightening of positions the past couple sessions giving EURUSD a slightly softer tone. It's a tough call and I'm not getting in the way of this one. All I know is there has been a hint of a change of character the past couple days.

Weekly

 

[yellowlion]

08/09/09 17:00 gmt

Hi All,

Just a bit of the weekend COT study for EURUSD.

Last week's analysis suggested a lack of enthusiasm of Spec longs into the rally. This was confirmed by a consolidative pattern last week punctuated by some distributive behavior during the second half and finally the breakdown on Friday after the US payrolls number.

Once again, however, US equities failed to sell the news and this time treasuries are supporting the continued equity strength. Oil and gold both sold Friday but not enough to break the uptrend. The dollar struck out on it's own. Will the dollar hold sway and turn the market, or will this turn out to be a shakout correction for a push to new highs. Euro COT shows a lack of enthusiasm into the rally. My bet is with the dollar.

 

[yellowlion]

08/10/09 05:15 gmt

Good Morning All,

Well the soft bias going into Friday turned into a 200 pip EURUSD selloff on the US payrolls release. The overall market is very difficult to gauge right now. Forex sold the news, commodities did too (to a minor extent), but equities and treasuries traded with the news. Treasuries are now trading with equities and Forex is not (which is the opposite of two weeks ago). It is difficult to find a leader in this market. The one thing that has remained constant is equities are firm. The only other market making new highs (or lows) is the dollar and that reversed into the news. Summer may have something to do with it but volumes in the equity and bond markets are good. Forex is a bit thin but commodities aren't. I'm just treading lightly right now if at all.

A bit of the full newsletter COT analysis is in the post below.

1hr

 

[yellowlion]

08/11/09 04:45 gmt

Good Morning All,

Unenthusiastic bid occurring in EURUSD over the last 8 hours or so. We have a bit of an oversold condition but it looks like we may have to get lower to find some real buying interest. Volume in the US Treasury and Forex market is really thinning out. This Friday is the start of the traditional Wall Street vacation lasting through the end of the month into Labor Day. FOMC tomorrow, EZ GDP Thursday, and Prices data on Friday. That may wrap it up for the summer. That's ok with me. Let's take a break and start back in September.

I'm looking for long entries. Took one just off 1.4104 for a quick 1% looking for a re-entry pullback which after two hours never came and I lost interest. It took 6 1/2 hours to bid 50 pips so no big miss.

This month has not been an easy market for me. It's not clear to me and I've been sleeping through the active periods. If I can't get something going this week I may get on board the vacation bus. I've put near 92% into the account since April 15 so I probably should take a break.

1hr

 

[gus]

Nice to read an intelligent analysis............

 

[tryingtobeslavik]

Hi Yellowlion, great analysis and very nice for newbies looking to get their feet wet! I was wondering if it would be possible, in addition to your commentary, for you to go into more detail on how you decide your entries and exit points, what technical indicators you use, what fundamental news you expect to drive EUR as well as positions you're looking to put on?

I know those might be difficult requests for what is essentially a free, albeit very useful blog but was hoping to throw one in there for those of us who are new but looking very eagerly to get better and hoping for direction from some of the experienced traders.

Cheers!

 

[yellowlion]

08/13/09 05:30 gmt

Sometimes there's no bandwidth at all on the boat. I've been trying to publish for an hour.

I was wondering if it would be possible, in addition to your commentary, for you to go into more detail on how you decide your entries and exit points, what technical indicators you use, what fundamental news you expect to drive EUR as well as positions you're looking to put on?

Thanks gus and tryingtobeslavik for the kind remarks. Slavik, if you click on my name above my avatar and then go to my homepage, you may find what you are looking for.

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I mentioned in Tuesday morning's post that we may have to get a bit lower to find supportive bids. That happened yesterday morning with 1.4086 finding bid to 1.4246. I also mentioned that weird stuff can happen in thin conditions like the mad hour late yesterday afternoon on the FOMC statement. Tread lightly in thin conditions.

Anyway nothing in the near term analysis has really changed since Tuesday morning.
The dollar has not broken the downtrend so a fresh low is still entirely possible. Those of you who follow this post know I have been saying that since Monday morning.

I will say this about that. Although the downtrend is still in place, I bet they sell equities like mad on Friday after the price data. That could break the dollar downtrend.

I'm looking to nibble short above 1.4275. Tread lightly.

Hourly

 

[gus]

Sometimes there's no bandwidth at all on the boat. I've been trying to publish for an hour.

It's just been a couple months that I've had a good connection off a cell tower with Millenicom

4280 was my chart high, that 15 min bar was a tom demark bar 13

 

[yellowlion]

08/14/09 05:00 gmt

Good Morning All and Happy Friday,

Well I think they're gonna sell 'em hard today but I'm not betting the farm on it.

Bandwidth is tight right now in the harbor so the newsletter may be delayed for an hour or two until things ease up. It's always tight right about now. I'm near the port and the connection is wireless T1 from the hill so my guess is the commercial guys use it for EOD stuff. It's 10pm here. Things ease up by 11 or so.

For the guys who contacted me via e-mail this week I'll be sending you something today and we can chat further over the weekend if you're interested.

Have a great weekend all. Sell 'em.

We'll stick with the hourly

 

[yellowlion]

08/17/09 04:20 gmt

Good Morning All,

Hope everyone had a terrific weekend.

Well they did sell 'em on Friday but the end of the US equity session cut the losses in half. I think we can see more downside this week. Lots of financial folks are on vacation here in the US so the markets may be thin and subject to easy manipulation. Tread lightly.

There's a minor oversold condition in EURUSD and they are trying to work it off but the pair remains under pressure and is having a difficult time making any upside.

I took a bit over 1% with a long on the first test at 45 as a nice way to start the week.

We'll stick with the same hourly since last Monday because it's still working

 

[yellowlion]

08/18/09 05:00 gmt

Morning All,

"Logistics" day every 1st and 3rd Monday of the month to keep my personal life in order. No analysis for tonight except to say that dollar strength has been expected but unimpressive. Not immediately, but going foward I expect the dollar to lose a chunk of it's "safe haven" status. For today...I'd like to see how it looks at .4200.

 

[yellowlion]

08/19/09 04:45 gmt

Good Morning All,

Markets opened firm this morning. EURUSD could be headed higher but the pattern does look corrective. I had a strong short level at .4166/86 that only gave up 42 pips early in Asia. The current near term trend is up and the commodity market's noticable firm open could be a harbinger for the day.

Monthly

 

[gus]

Hey Lion.

Took a breakout of the 4hr chart & passed up b/e at 1am **** stop'd out -37pips
Bed calls.............night boys.

 

[yellowlion]

08/20/09 05:00 gmt

Gus Wrote,

Took a breakout of the 4hr chart & passed up b/e at 1am **** stop'd out -37pips

I didn't see the breakout but the selling had me worried too. The .4069 low was the key.

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Good Morning All,

Well we did get higher as expected after some early London selling. As it stands, EURUSD looks to test into .4300 today but I would be on the lookout for a dollar bull defense of Index level 78.31/18 (see DX analysis below). The rally in EURUSD could be truncated below .4327.

Note - The newsletter will be delayed by an hour while I add the US PPI and Wednesday's EIA data. Thanks.

New Hourly