Risk On Risk Off

I think everyone is feeling a bit like Karate Kid today – first risk was on, then risk was off again. Sometimes I almost feel sorry for anyone even glancing at the news in the context of trading this market – well, I said almost.

However, if you fade out the noise then you’ll see that we are still knocking at resistance – so we’ve seen a lot of gyrations but unless we close above 1356 the easy ride stops right here.

Obviously we still have a bit of tape on the roll until the close and I wouldn’t discount a final push higher after some obligatory hemming or hawing. However, if we for some reason drop from here it may lead into what we have been waiting for:

We actually did get a close inside the BB yesterday – who would have thunk? For a while we were looking at third candle confirmation today but then Merkel comes around with her fat ass and has to trample all over my VIX sell signal. Based on an almost 15% drop in IV within one candle today I think the odds for confirmation are pretty meager but one can dream, right? Seeing a sell signal right here at the 100-day SMA would be quite a treat. Well, if not then we simply reset – so we may miss this bus but possibly may hitch a ride on the next one.

Now let’s revisit some of our setups in progress. Yesterday’s inside day candle on the ZB contract gave us a clear short entry. So far so good – and I really enjoy the entry coinciding with a breach of the 25-day SMA. That however also introduces the possibility of a ‘last kiss goodbye’ candle, so be prepared for that. If it happens then you may have a second chance to get into this one – or add another contract. Of course a breach above that SMA would be our stop out.

Crude – nice slice through both the lower trigger and NLSL. Obviously we want this one to continue lower but we still need confirmation in the form of a breach through 81.07.

NZD/USD – you may recall that NLBL entry about two weeks ago. We are getting closer to our first target and you may start taking a few contracts off the table.

We enjoyed the same type of entry on AUD/USD – also time to start scaling out – it’s been a good ride.

AUD/JPY – same entry type but this one is still in motion and just pushed above potential resistance in the form of that upper 25-day standard deviation. I would hold on to this one for now.

A new contender is CAD/JPY – just triggered an entry today and there’s nothing to do until we either get near the target area or are stopped out.

Even though it’s been a crazy day I was able to dig up two goodies for my intrepid subs – please step into my official summer lair:

Soybeans is looking very interesting. Not only do we have a NLBL breach but we also seem to be painting an inverse H&S. This particular pattern seems to be very popular among traders but many don’t seem to know that we often get a final fake out dip back below the neckline. So if you take this entry then be prepared for that. If you are really conservative you may actually wait for that and then take your entry. IMNSHO trading an H&S (regular or inverse) is actually quite difficult unless you wait for the obligatory shake out. And if there is none – well, then of course she’ll run off without you. Hey, I never said trading was easy, did I? 😉

Much easier setup however on ole’ bucky – we’ve got an inside day + NR4. Could be fun, so watch for a breach in either direction. I hate to say that a short trade may resolve faster and cleaner than a long breach. So I find myself conflicted – if we breach below I’ll be happy as a trader but at the same lose money as I’m earning in Dollars and at the same time have to pay in Euros these days. I know – I have no idea how I live with myself – being stuck in sunny Spain and all.

Cheers,