Tuesday, October 14, 2008

The Quiet Before the Storm! -IFCN Wk 45 – Tue – Equity $1,268.56

The dollar seems to be stopped by the global recapitalization plan. Surprised?

You shouldn't be. It is the classic working out of the “Buy the news, sell the fact!” principle that works regardless of the side you happen to be on. In this case it was the foreign currencies being traded in for dollars as long as panic reigned, and now that the panic is basically over..., they're not continuing their dollar buy programs.

After Friday's tremendous currency capitulations, we sit in narrowing ranges above the lows waiting to see if there is going to be another spike.

That is why we follow our method, and FirstStrike has us long the Sterling and Gbp/Jpy, and long Usd/Jpy, the only long Dollar trade that is currently working.

I expect the dollar to lose ground from here, with intermittent foray's like a border collie in a herd of sheep. Because that is what is expected of it.

The US dollar tends to gain during times of risk – large entities feel being buried in the world's largest volume financial currency is a protection of sorts. That perception is a reality we have to accept. For now.

That perception will not likely last forever.

Werewolf Alert! The XAG (silver) is looking like it may have stopped going down too. This is a very good area to pick some up for the long haul - if you can handle the risk holding it to below $8.00. On Friday it got as low as $9.40 before it recoiled back up. Panic did a number on some large hedge funds. Now that the price is down here it is up to us to pick up what we can afford.


This week's current, working FirstStrike trades:
  • Gbp/Jpy: Long @ 171.74, stop 169.94.
  • Gbp/Usd: Long @ 1.7119, stop 1.6999.
  • Usd/Jpy: Long @ 101.02, stop 99.82.
FirstStrike trades not stopped out before Friday-- exit on Friday just before 15:00 CST.

Current trade equity is: $1,268.56.

Have a good day.

Joel Rensink

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