Investors fear being caught flat footed with the current developments and that is why holding a trade for no more than 3 hours looks like a long term strategy. Indeed, the Feds minutes were studiously ambiguous and full of double talk. There was obviously a consensus on the need to raise rates but “when” was the answer that wasn’t answered. Dealers who were long USD as a result headed to the exits after this obfuscation and the Yen, Euro, Gold rose. We were anticipating that the FED to lay down something clear on the table but that wasn’t the case. The Euro on the other hand got some reprieve from NY session sell off. Le Pen anti-Euro threats are real and after labeling the common currency the “the bankers” money, there wasn’t something that could pivot the Euro other than news of a coalition that seeks to defeat her in the coming election. Emmanuel Macron and Francois Bayrou decided to form an alliance, which is positive to the Euro and the general investment community. AUD on the other hand nipped higher as RBA chair Lowe continues to raise standards for circumstances which shall necessitate them to cut rates. We expect AUD to be strong in the short term because of supportive prices and definitely the carry trade advantage it has in the face of continuously fragile markets.
For this pair, I will look to offload the Yen and go short today. Technicals and fundamentals are against the Pound and we saw what happened yesterday, the UK economy expanded beyond expectations but the GBP continued to tank. I will look to target 50-100 pips today and therefore my entry will be in the 15 min chart.
Look to trade as follows looking at the daily chart as a trend confirmation bar. Already there is a price overextension in the 15 min chart with a whole candlestick forming outside the BB band. There is also an overbought stochastics and a couple of confirming bear candles.
Remember the rule of thumb is to trade in the European session only when doing intraday.
Trade as follows:
Stop Loss: 141.60
Take Profit: 140.10-below yesterday’s lows.