Ths second half of this past week was rough for me. I was positioning for risk aversion - perhaps in too large of a size given the correlation between the pairs - and the second half rebound in sentiment triggered a number of stops. The most sensitive were my NZDJPY, a smaller size NZDUSD and USDCAD exposures. Taking too many positions sensitive to risk trends is an issue, but it is especially bad practice when we are still young in a the prevailing risk aversion trend. In other words, I was positioning too heavily with a trend that has yet to establish itself as dominant.
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In the meantime, I head into the weekend with some expsoure to risk trends, but it is far more balanced. The most blatant was the short AUDJPY trade I took after the disappointing Chinese GDP figures and technical hold below 85. The initial entry of 84.25 carries a 110 pip stop and first target. I had a critical eye on this for time frame, but it is showing some progress so I will carry it forward.
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With a natural curb on risk trends, I have further offset CAD exposure with a AUDCAD short on the retest of its long-term trendline support as new resistance (entry 1.0355) and a long NZDCAD position on the break of range resistance (entry 0.8220).
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The only other position I have on at the moment is the patience-required EURCHF long. We have bounce around at 1.2000 and briefly dipped below the SNB-defined floor a few times. The longer we stay down there and the greater the risk of a Euro-region financial situation, the more likely it is that the central bank is forced to act (lift the floor, introduce capital curbs, etc) in order to fortify their commitment.
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As for pendings, there are a lot of trades that look good from a medium-term perspective. However, I will run through those when they come closer to technical and fundamental fruition. Keep an eye on the Real Time News feed for the most timely updates. In the meantime, I am keeping a close eye on EURUSD as a benchmark. As it rushes back down to 1.3000 congesiton support, we have a chance to enforce a strong bounce or major break. I think the latter is the greater potential and more likely, so I'll run with that as my baseline expectations. But, I have to see that break (and the reasoning for it to continue) if I am to jump in.
