Posts by "rezz"

Oanda provides an interesting window into its clients positioning at at what levels... http://fxtrade.oanda.com/analysis/forex-order-book#EUR/USD

You can view it for other pairs as well.

What is revealed is what intuitively should be clear, but its nice to see quantification of open positions and also open orders. For EURUSD over 68% are short and there is a lot of density of open buy orders (open states in FX universe) at various levels below current market. This could be new money ready to buy plus it could be the out of money shorts (seen clearly in the distribution graph) deciding to close their positions by buying back, which gives the pair its buoyancy. In short term it will take alot of "energy" to break through these levels it seems.

EURAUD did hold support at 1.3610 area and broke above 1.38 resistance area, now at 1.3865, probably targeting higher? Thats why I stayed away from trying to find a top in EURUSD, and stayed with AUDUSD short.. AUDUSD still looks like it may break further to downside with risk coming off.

But time for caution.. JP Morgan will announce results tomorrow morning which could lift markets for the day (Risk positive, USD negative?), but countering that Obama is supposed to talk about a deficit reduction plan which could impact markets too, and be dollar positive for a change?

Predicting what the EUR will do from here is tricky. Read an article a few days ago on cnbc saying that additional windfall profits from oil sales is leading middle eastern fund managers to diversify and buy euros. Of course if i were them I would wait for a pull back at least for a bit before continuing to buy, but then who am i to argue lol... At the same time when everyone begins to talk about a target zone as being a new resistance zone in EUR (based on top rising channels), my initial experience in FX is assume the worst. I feel with so much liquidity due to us retail investors, the pros refrain from selling into what may be a generally perceived resistance area just because they feel the subsequent nervousness of retail (if it doesnt go in their direction quickly) will cause panic covering adding fuel to the fire. It seems FX is getting harder because the money printing in japan is adding extra punch (to the feds QE2) with people willing to take more carry trades with confidence. On the flip side it could all end badly for the long carry traders. In these times we can only wait for the market to show its hand with a good sell off and a partial retracement before new shorts can be taken at a good risk reward.

If the Yen corrected back up with such rigor without the the central banks putting money to work, then the question is: Is it new capital going long Yen, or is it the speculators going for the exits and unwinding positions that were not part of a carry trade!!
Ironic that everyone was blaming the retail investors who were supposedly unwinding their positions to fund their construction projects back home. Well did they change their minds and go back to long US dollars!! I think not.
This just proves that Hedge funds are quite nasty.. preying on the japanese in light of what happened. Lost my respect for them.