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Jay Norris
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Jay Norris is a 20-year CBOT floor veteran, author of the Best Seller "The Secret to Trading Forex, Futures, and ETFs: Risk Tolerance Threshold Theory", "Mastering the Currency Market", McGraw-Hill, 2009, and "Mastering Trade Selection and Management", McGraw-Hill,... More
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The Secret to Trading Forex, Futures, and ETF's: Risk Tolerance Threshold
  • Aussie & Euro Currency Forecasts For May / June 2 comments
    May 10, 2012 8:52 PM

    The Aussie has retraced over 50% of the previous 5-month rally, and finds itself just above the par level -- 100.00. While I don't see an immediate turn-around at 100.00, I would not be pressing shorts much below that level. The Aussie has been such an attractive trading vehicle these past few years because it shows good two-way trade thanks of its healthy yield. The yield will stay healthy relative to the other major economies and the Aussie will remain a good trading vehicle because it will continue to see regular institutional inflows. The Aussie also benefits from NOT being in the U.S. Dollar index. Aussie bears like to point to an eventual Chinese slow down. From our perspective China already did slow down - all the way down to just 8% GDP growth. AUDUSD, AUDJPY. & AUDCAD may have a little more downside left, but I'd start to watch for sideways action before a recovery rally in early June.

    It's a bear. But it's M.O. - modus operandi - is that of having nearly perfected the short squeeze. The ECB - European Central Bank --as the rumor goes, has gotten quite adept at picking-off both weak and strong handed shorts with those 300 to 400 pip rallies on the heels of terrible news. The ECB and the Bundesbank have no choice but to prop up the Euro because any depreciation comes right off the bottom line of already strapped lenders as borrowers pay back loans at depressed levels - very bad for Euro money centers. There is a strategy to make money from this bear market squeeze box though: sell rallies. The Euro is currently sitting on big support at 129-20, and you just can't overlook another short-covering squeeze. A couple of daily closes below 129.20 however opens the door to a much anticipated trip down to 119.00.

    To see Jay Norris point out trade signals in live markets on the London/U.S. overlap every Monday & Friday go to: Live Market Exercise Workshop. Jay is the best-selling author of Mastering the Currency Market, McGraw-Hill 2009

    Trading involves risk of loss and is not suitable for all investors!

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

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  • Mad Hedge Fund Trader
    , contributor
    Comments (4980) | Send Message
    The Euro went through the old 2012 low at $1.260 like a hot knife through butter. On the breach, a lot of momentum programs automatically kicked in and doubled up their short positions. That is what has taken us all the way down to the high $124 handle in the cash. Let’s see how the market digests this breakdown. The commitment of traders report out on Friday should be exciting, as we already have all-time highs in short positions in the beleaguered European currency.


    The problem is that any good news whispers or accidental tweets on the sovereign debt crisis could trigger ferocious short covering and gap openings which the continental traders will get a head start on. So again, this is not the low risk trade that it was months ago.


    Still, the 2010 lows at $1.18 are now on the menu. I would sell all the “good news” rallies from here two cents higher. Aggressive traders might consider selling penny rallies, like the one we got today. Notice that the Euro is rallying into the US close every day. This is caused by American traders covering shorts, not wishing to run them into any overnight surprises.


    The Mad Hedge Fund Trader
    24 May 2012, 10:35 PM Reply Like
  • Jay Norris
    , contributor
    Comments (221) | Send Message
    Author’s reply » Good Stuff MHFT, thanks!
    25 May 2012, 10:23 AM Reply Like
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