Still sniffin around

...for a good deal. No trades in the past 5 sessions. The biggest move has been the unwinding of risk-aversion trades in this time.

Markets are definitely skittish still though, you can tell from its reaction to headline that a missile was fired in the Mediterranean. Traders gave their hand away as Gold & JPY went long, but promptly reversed the next candle when Mr Market decided it was all bullshit.

Apart from that, all the dailies are looking pretty choppy with no clear theme emerging in front of me.

If war in the middle east break, buy Gold, JPY, CHF, Oil. Don't even fuckin think, just hit the button.

Trade update

Gotta admit I don't have a very strong handle on the market at the moment. The core short EURUSD position I'm running has been met with very significant headwind over the past 2 weeks. As I understand it, EURUSD has been dominated by cross flows particularly from major yen selling, and bearish news that would normally drive the pair 30, 40, 70 pips have had very little, if any, effect.

When a pair is not acting in an expected manner (i.e. trade lower on a combination of news & data that is clearly EURUSD bearish) despite having the kitchen sink being thrown at it, then this is a clear warning that its very likely to head the other way. My suspicions were later confirmed when the market took EURUSD up to the 3200 handle on Tuesday night.

Admittedly, this was a moment that was starting to get me hot under the collar. From a technical perspective this is where the weekly kijun resides along with a number of confluence factors. Unable to convincingly crack it, the pair reversed in early Europe yesterday, and was given a second wind triggered by ECB's Weidmann who signalled ECB preparedness to adjust interest rates further.

Now, I don't think there is much to be read from the reversal at 3200 (apart from being an attractive place for long term shorts) or that there are any significant long-term implications from Weidmann's comments. What has happened is that a whole bunch of short-term bears have been cleared out by the rush up to 3200, and now bullish breakout traders will be under the pump given that EURUSD currently trades 3050. From an orderflow perspective the bullish stops underneath the range will be getting huge, and now that we are not that far off from them, they are the obvious next target.

Position wise, my average EURUSD entry sits around the 3100 handle. I'm also trapped in a light gold position at $1480 and will forget about it because it looks like staying this way for a very long time.

And so, to another day of trading...

EDIT: I've let go of the short at breakeven during the Friday night session. This trade has had 2 weeks to breath and the most its done is around 70 pips. Think I have to wait for better levels, and when sentiment really turns...  Maybe better to look elsewhere for the time being.

Gold crashes 10%

The big market mover has been gold, which dropped an incredible 10% over the last 3 trading days (and the most in 30 years of trading - lots of charts showing the spread to other markets).

This morning XAUUSD traded $1325, but has since staged a mini comeback to $1375.

The big question is why has gold dropped so sharply? The article offers the following theories:

• withdrawal of QE due to expected US recovery?
• expected forced sale of gold due to Cyprus (and soon after, other troubled EZ countries)?
• unfulfilled expectations of hyperinflation from QE?
• Gold is not an investment, and hence is a greater fool trade....and its finally collapsed?
• manipulation by the Fed reserve, hedge funds, bullion banks and other players?