What can i say about Trichet other than it is breath of fresh air to have at least one central banker in the world who is both not afraid to speak his mind and does it very clearly too boot!  Trichet has told us exactly what he intends to do in the near future which is NOTHING!  So he is telling us that he is done moving rates in any direction in the near term.  What a wise man!  This will effectively put a bottom in on the EURO for the near term.  In my recent posts I mentioned that we are looking for the Dollar to begin weakening again and this is the Fundamental catalyst that will facilitate this next wave down in the Dollar.  This will not be a one way street of course, it never is, but overall we expect that the Euro will hold above the 1.25 level.  We continue to buy major dips in most of the majors against the Dollar.  Even though the US has rates at zero we can still go lower!  How you ask?  The same way we got here in the first place…simply by printing more money!  While rate will not actually go below zero the effective rate can and as it does we will see the Euro continue to appreciate against the Dollar.   

Yesterday I mentioned that i expected the curriencies that recieved rate cuts would respond to those cuts by rallying.  A counter intuitive idea of course.  We have seen that play out as expected now.  However, there is an overwhelming amount of preasure still on these currencies.  Triche’s comments clearly left the door open to more cuts to come so that idea will act as a wall in the way of rallies in the near term.  NFP remains a wild card tomorrow so continued caution is advised.  We do expect the tone that ends this week will carry over and set the new tone for next week.   

Our AUD/NZD trade is now closed.  If you took this trade, you made over 100 pips.  My calculations show that it should be closer to 120 pips, but your final result will depend on where you entered.

The pair has hit the green BaseLine and that’s our call to exit.

The EUR/USD fell outside the channel and hit the first Winnipeg level.

Here is the original trade idea.

Here is the current chart:

The trade opened at 1.5777 when it closed below the bottom of the channel.

The trade closed at 1.5586 when the pair hit the first dashed red Winnipeg line (an extension outside the channel).

I’ve been looking at a EUR/USD trade for a few days now and I’m finally ready to give up on the trade.  The pair did not fall to the green baseline.  And it’s nearly the weekend.  So I am closing the trade.

Here is a link to the last EUR/USD update and the original trade idea.

The EUR/USD has been wild lately, and it’s no secret that 99% of the human population sold the EUR/USD on Monday.  This includes my payroll guy; he called me today and wanted to know how he could sell US Dollars.  Well, the money has been in counter-trend trading for the last 24 hours, folks.

Here is the original trade idea.

And here is the update: the pair has fallen and it’s getting closer and closer to the green BaseLine.  I am happy to stay in the trade with my stop on the position at break even.

Our Gungan Jar Jar trade got wiped out like a planet by the Death Star.  You can see the original trade idea here, and my update on the trade here.

You can see the trade stopped out here:

I love it when a plan comes together!

Here is the original trade idea. 

And here is the updated chart:

The EUR/AUD trade (see the previous post and the original trade idea here) did work out nicely until we got close to our green Baseline.  The pair then was rejected early (kind of like me in high school).

Here is the chart:

Now, what would we do here?  It’s my opinion that there are two acceptable ways to deal with this trade:

1.  Leave the trade open and either close it at the trendline (profit) or get stopped out.

2.  Move the stop to break even when the pair has gone 75% of the distance to the trendline. 

It’s up to you what you do.  I am a fan of moving the stop to break even at some point — and that point is going to be different for everyone, depending on your testing.