Friday, June 04, 2010

Currency Report

Regular readers know the drill by now on this free e-magazine. Of particular note in this month's issue are the lead article on the global currency situation suggesting gold may actually be the trading vehicle of choice, an echo of my previous post considering gold as a currency. Also a clever analysis of the Asian session (11pm to 7 am GMT) and a tactical ATR approach to skimming some low risk gains. Worth a closer look for currency and FX traders or those considering these unique trading vehicles. Thursday's Rotator looks like it made a liar out of me regarding the NEM, but one day does not a market make. This relates directly to the article in Currency Trader that I mentioned above and I'll not waste space reciting that argument favoring gold. Regarding the UUP, it may be instructive to look at some of the additional metrics. Although UUP has a low to medium trending value, Price as a % of the 30 day high (last column on right....also see blog side panel) has the highest value of any of the Rotator components. Just as a cautionary note, these extreme values typically lead to at least a short term retracement. This is not to say that UUP won't continue to climb, just that there may well be a lower price entry in the near future for those who want to chase it.
Maybe it's helpful to look at the losers as well as the leaders on the Rotator and from this perspective the Euro continues it's deterioration. As long as debt default concerns continue to overshadow that continent FXE remains an unlikely rally candidate while the dollar continues to make headway.
Below is Project Z's position on UUP, currently Long but with the Z value reaching short term potential overhead resistance an exit may be fast approaching. Project Z has an 85% reliability with the UPP with very little drawdown so place your bets accordingly. The fixed bar exit on UUP is ten days, which will actually fire today at the close unless a /13 ATR stop is violated intraday.

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