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Terence Chan
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I am a professional trader with 10 years experience in trading US and Hong Kong stocks. I believe in combining fundamental analysis and technical analysis. Swing trading is my primary trading strategy.
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  • Yen Correction A Catalyst For US Dollar Rally? 1 comment
    Oct 2, 2009 12:06 PM | about stocks: YCS, UUP

    While I am an equity bull, the possible rally of the US dollar from its lows makes me nervous about stocks in the short-term. The dollar is in its churning area (blue circle) and seems like it wants to make a push up. The bullish MACD divergence is also a telltale sign. Now what could be the catalyst for a US dollar rally?


    Looking at the Japanese Yen, one could see a potential reason for a US dollar rally. The Yen in the form of FXY, has just made a one-day-reversal (ODR) chart pattern today. This traps a lot of buyers at the top. With similarly low three month LIBORS for both currencies, traders would rather borrow or short the currency that has more room to move down which is the Yen, given how overbought it is. An unwinding of the US dollar carry trade (to shift borrowing to the Yen) could be the catalyst for the dollar rally.

    I have decided to trade this by going long at the money calls on UUP (December expiry) and buying the Yen UltraShort ETF YCS for the model portfolio. Let's see how this goes the next few days.

    Disclosure: Long YCS, UUP calls

    Stocks: YCS, UUP
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  • WM Analytica
    , contributor
    Comments (7) | Send Message
     
    i have been looking at the same thing and coming to same conclusion although the noise or news is not dollar friendly ...Dollar weakness has been written in stone as far as every strategist and moneyman is concerned ...thats why i think it time to be a little contrarian ..
    Long UUP..
    3 Oct 2009, 03:30 AM Reply Like
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