This week saw plenty of turbulence as well as a capitulation sell-off in the British Pound Sterling which saw its exchange rate tumbling to multi-month lows (What happened to the British Pound Exchange Rate?). The GBP was forced lower by twin-negative minutes out of the Bank of England which struck a more dovish tone as well as the U.S. Federal Reserve which temporarily sounded more hawkish. We expect to witness a rebound after the capitulation sell-off.
The European Commission revised its 2013 growth estimates lower and now expects the Eurozone to contract by 0.3% while unemployment is expected to rise to 12.2% (Eurozone Contraction, where will Euro Exchange Rate go?). Overall the EU is expected to manage a 0.1% economic expansion. Either scenario paints a very bleak economic picture for Europe which will see an increase in its Eurozone debt contagion this spring and through summer into fall.
Overview of profits for the week which ended February 22nd
EURGBP: 328 pips
USDCHF: 40 pips
AUDUSD: 144 pips
NZDUSD: 144 pips
Total: 656 pips
Monday, February 18th
USDCAD Short Recommendation
We recommended a short position at 1.0075 with a take profit level of 1.0000 (USDCAD Forms Double Top). This pair rallied further and approaches out stop buy level. We advise clients to execute the trade as recommended. We currently carry a floating trading loss of 140 pips.
Tuesday, February 19th
EURAUD Long Recommendation
We recommended a long position at 1.2900 with a take profit level of 1.2960 (EURAUD Ready for Micro-Rally). This pair corrected further and triggered out stop sell order. We recommend traders to exit the stop sell order and add another long position to the trade around 1.2750. We currently carry a floating trading loss of 59 pips.
Thursday, February 20th
EURCHF Long Recommendation
We recommended a long position at 1.2285 with a take profit level of 1.2380 (EURCHF Hovers at Support Zone). This pair corrected slightly lower, but has not approached our stop sell level. We recommend traders execute this trade as recommended. We currently carry a floating trading loss of 203 pips.
NZDUSD Long Recommendation
We recommended a long position at 0.8340 with a take profit level of 0.8455 (NZDUSD Creeps around Support Zone). This pair has moved higher, but remains off our take profit target. We recommend traders will execute this trade as recommended. We currently carry a floating trading loss of 115 pips.
Exit from trades of previous weeks
EURGBP Hedge
We closed our EURGBP hedge on February 19th for a profit of 328 pips. We opened the hedge on February 8th at 0.84781.
USDCHF Hedge
We closed our USDCHF hedge on February 21st for a profit of 40 pips. We opened the hedge on February 18th at 0.92500.
AUDUSD Hedge
We closed our AUDUSD hedge on February 21st for a profit of 144 pips. We opened the hedge on February 5th at 1.03975.
NZDUSD Hedge
We closed our NZDUSD hedge on February 21st for a profit of 144 pips. We opened the hedge on February 14th at 0.84819.
We had a total of four trading recommendations this week. Two were add-on positions to trades from previous weeks and carry a floating trading loss of 318 pips and two were new positions which carry a floating trading loss of 199 pips. We closed four hedges for a profit of 656 pips which equals our total weekly profits.
Besides the two new open positions from this week we have ten positions from previous weeks. We currently have two open USDJPY positions, one short and one long hedge, which carry a floating trading loss of 37 pips, equal to the previous week.
We have one open USDCHF short positions which carries a floating trading loss of 98 pips. This represents an increase of 77 pips compared to last week. We took 40 pips in profits from the exit of our hedge and advise traders to set a take profit level of 0.9200 for the remaining short positions.
We mentioned our two open NZDUSD short positions which carry a floating trading loss of 115 pips, up 62 pips compared to last week. We have set a take profit level of 0.8455 for the short positions after reaping 144 pips in profits from the exit of our hedge.
We have two open GBPUSD long positions which carry a floating trading loss of 2,590 pips. This represents an increase of 1,065 pips compared to last week. We plan to add a final long position at 1.5000 and have adjusted our take profit level to 1.5900.
We have two open GBPCHF long positions which carry a floating trading loss of 1,763 pips. This represents an increase of 617 pips compared to last week. We will continue to hold on to this trade with our take profit level set at 1.4700.
We have two open GBPCAD positions, one long position and ne short hedge, which carry a floating trading loss of 76 pips, equal to the previous week. We will attempt to break the hedge next week and exit this trade at a profit.
We have three open EURGBP short positions which carry a floating trading loss of 1,976 pips. This represents an increase of 706 pips compared to last week. We will continue to hold on to this trade with our take profit level of 0.82750 after adding 328 pips in profits to our portfolio from the exit of our hedge.
We mentioned our two open USDCHF short positions which carry a floating trading loss of 203 pips, up 182 pips compared to last week. We have set a take profit level of 1.2380 for the short positions after we reaped 40 pips in profits from the exit of our hedge.
We have two open AUDUSD long positions which carry a floating trading loss of 339 pips. This represents an increase of 46 pips compared to last week. We reaped 144 pips in profits from the exit of our short hedge and will maintain our two long positions with a take profit level of 1.0450.
We have two open AUDCHF positions, one short positions and a long hedge, which carry a floating trading loss of 55 pips, equal to last week. We will attempt to break the hedge next week and exit this trade at a profit.
Our total floating trading loss at the end of the trading week stood at 7,451 pips. This represents an increase of 2,856 pips or 62.16%. GBP related trades accounted for 6,405 pips or 85.96% of all losses. We witnessed unexpected GBP weakness which moved as further away from our target to decrease all floating trading losses to 2,574 pips.
We hope you enjoy your weekend and that we will see you back on Monday.
