Currency forecast, June 13th

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Currency forecast, June 25th
Currency forecast, June 25th

Markets in general ended up in the red zone yesterday, as market participants were worried about that the central banks could stop their easing policy. This fear moved the USDJPY and stocks a lot lower and there is no end in sight unless some officials from the FED or ECB would tell us that they will keep doing that (buying bonds).

There is also in Germany the rumor that the government will collapse if the ECB-actions are allowed or not (to endlessly buy bonds from Greece, Spain, Portugal, Italy, etc. ) – Should the result be that it they are not allowed to do so, because it would be against the German law, then we have the next big crisis in front of us.

My opinion is that they will decide that the ECB is allowed to do their program and I guess we will hear someone official from the FED too, saying that the FED will keep buying bonds to stimulate the market.

If you agree with me here, the best way to play it is to be long on the USDJPY. If you think this is really the end of the easing policy of the central banks, then buy Put-Options for the stock market, as it would decrease at a minimum of 5%.

As there is currently a 50/50 chance, if the rumor is right or not that they stop their easing policy, it is like a bet at the moment as the whole market is trading only this story currently. So it depends what your opinion about this story is. Mine is that we will see a complete turnaround soon.

Current trades, positions and levels:

Just for info: The P/L (because there were some questions how this gets calculated), is always calculated with the size of 1. So if the position is 1 and it makes a profit of 100 pips, the P/L would be +100 pips. If the position is 2 and it makes a profit of 100 pips, the P/L would be +200 pips of course – so to say it the easy way – it is always calculated with the position size of 1. The possible position could go up to 3, if the system has a strong view (that is the maximum size by now)

EURUSD
(Entry lvl):
Current position: flat
Target:
Stop lvl:
Last trade: B 1 @ 1,3350
P/L (ytd): -100 pips

USDJPY
(Entry lvl):
Current position: flat
Target:
Stop lvl:
Last trade:S 2 @ 95,90
P/L (ytd): +380 pips

EURJPY
(Entry lvl):
Current position: flat
Target:
Stop lvl:
Last trade:
P/L (ytd): +230 pips

USDCHF
(Entry lvl):
Current position: flat
Target:
Stop lvl:
Last trade:S 2 @ 0,9180
P/L (ytd): -240 pips

EURCHF
(Entry lvl):
Current position: flat
Target:
Stop lvl:
Last trade:
P/L (ytd):

EURHUF
(Entry lvl):
Current position: Short 2 @ 299,90
Target: 287,00
Stop lvl: 304,00
Last trade: Sold 2 @ 299,90
P/L (ytd):

USDCAD
(Entry lvl):
Current position: flat
Target:
Stop lvl:
Last trade:
P/L (ytd):

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Samuel Rae is an active retail trader across a variety of assets, including currencies, stocks and commodities and the author of Diary of a Currency Trader (Harriman House). His personal strategy focuses primarily on classical technical charting patterns with a fundamentally supportive bias, combined with a strict, risk management-driven approach to entries and exits. He is an Economics graduate from Manchester University, UK.