Daily Plan

Strategy – BOE Carney, ECB Draghi Speech, US Pending Home sales, Crude Inventories

Strategy

Yesterdays Session and Overnight:

Yesterday we saw a huge move in Eur/USD after ECB’s Draghi speech. He was particularity hawkish and said that European recovery is going very well and that we have moved from deflationary pressures to an reflationary environment. I managed to get in on the move early however got stopped out on the initial vol, so missed the move. I could have re-entered at r2, but hesitated for some reason.

Oil API data shows a build of hence a sell off overnight, I took the short trade strategy at 44 handle at 44.27, got stopped out twice on the two way trade. The market eventually trade lower at exactly 5:10pm passed my trade-able hours so no way to enter again.

Overnight US equities sold off heavy and I am interested to see if the bottom of the range holds, if it cracks, we might see a nice downside and a 5-10% correction in the S&P500.

Day ahead:

Prominent speeches coming up from ECBs Draghi and BOE Carney. If Draghi softens tone could look for a nice retracement to the top of the previous range for a long. There are no concrete rate hikes in focus and current stimulus is widely supported this move may well be over extended, so depending by how much the tone softens we may just re-enter the previous range.

UK is a mixed bag although we have had a change of sentiment regarding possible rate hike in august the undertone of UK conservative political risk is weighing the pound down. The recent rally in Sterling can be attributed to the dollar weakness and current euro strength.

US data is of real importants at the moment, as we have continued negative misses on expectations which could effect the long term view of the US economy and the rate hike cycle.

Important data and speeches.

  • 12:00 US mortgage applications approvals and trade balance
  • 12:00 US Trade Balance
  • 14:30 BOE Carney speech
  • 14:30 ECB Draghi speech
  • 15:00 Pending Home Sales
  • 15:30 Crude Oil DOE

Trades

Eurstoxx 50 Long

May have already missed the entry, due to my recent losses I am nervous to take on trades, silly as I have had the level in mind for over a week now. If we start trading and testing the s1 level again this session may take the long.

Eustx50Long.png

Euro Long

Bullish on euro on solid retracement back down to previous range high at 1.3400 no acting as support. I have been watching the current range from 1.4000 for possible entries long however I feel that we are over extended and the market may start trading lower towards 1.3400 ahead the 2:30pm speeches as people unwind the longs from yesterday and look to position long at more attractive risk averse prices.

Alternative view would be a fade at r1 or r2, I do however feel that would be a dangerous trade looking at my current pnl would be much better to be conservative with my trade placement and contract size.

EURlong.png

Sterling Short

Looking to short Sterling at r1 initially, however best risk reward lies a little higher up at R2 with the 1.3000 as added resistance where longs will look to cover and additional sellers might step in. I will need to gauge Carney’s speech for sentimental change and the volatility it brings.

Alternatively, dovish communication by Carney and we get an aggressive break of pivot, which I will be all over.

GBPShort.png

WTI Short

I have been caught a few times trading crude, with my greatest losses stemming from trading the instrument, very nervous at the moment ahead of DOE, so will most definitely not be trading the release. I am looking for shorts higher up at the 45 handle with added r2 confluence. If we get mixed data and we spike higher will take the short, for example if we get a draw in crude inventories but US output increases. The spike in volatility could setup the short, but again unlikely to trade the release.

Short R1 looks interesting before the release to trade the current range, I have been contemplating taking position short at the high of the day but the risk and my current account standing doesn’t support the trade.

OilShort.png


Disclaimer: There is substantial risk in trading. A loss incurred in connection with futures trading be significant. Target Alpha Trading makes no claims whatsoever regarding passed or future performance. Any Strategy is for educational purposes only.

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