In a fortunate turn (for the speculative crowd), the new trading week has started off with a bang. The broader currency market is showing considerable volatility; and to further add to the mix, there are stand out moves from a number of specific currencies. The most active majors this morning happen to be the British pound and US dollar – two currencies that I have carried exposure in for a little time now. On the whole, this opening move is favorable to my existing exposure; but the question now is whether we will find meaningful follow through. If the momentum this morning was founded on one or two primary drivers (like investor sentiment or growth forecasts), then I would be more confident that the market is working towards more meaningful follow through. Yet, that isn’t the case today. Risk appetite seems to generally be on the rise (equities are up across the board), the dollar is advancing at an impressive clip, while the pound and euro are tumbling. Such an ecclectic mix will struggle to sustain momentum.
As for my positions, I’m holding on to the same pairs that filled out my account last week. The best performing of the lot is my GBPUSD short. After having taken profit on half the position last week, I am letting the remaining half of this layout run. This morning’s plunge does look suspicious; but I would rather trail my stop than book profit just yet. My loose target at this point is 1.45. While the pound continues its descent, my EURUSD short looks to have the greater level of unfullfilled potential. Now eyeing the double swing low at 1.3450, this pair is the verge of finally breaking out of its tight range. Follow through here could be considrable; but I will keep my outlook limited to 1.30 for now. At the same time, I have decided to take profit on the recent upswing in USDCHF. I will reenter here should the pair overtake 1.09. And, then there is USDJPY. This is a longer-term position with plans that ential a scale in / scale out approach. For now, my reduced-size position doesn’t have a stop; but I plan to add should we reach 87.50 or surpass 90.50.