This week we saw a renewed call for a fully Cypriot financial bailout as its banking system is pressured and the Cypriot government is out of cash (Cyprus Banking System Needs Second Bailout). Russia gave Cyprus a €2.5 Billion loan in order to be able to restructure its financial system which attracted vast amounts of foreign capital, especially from Russian oligarchs. Now Cyprus needs a second bailout and there is a rift between the Troika as of the terms for the bailout. Germany is reluctant to agree to a bailout without Russian assistance and all parties battle it out while Cyprus is out of time.
British Prime Minister David Cameron gave his long awaited speech in central London about the UK’s future in Europe and promised voters that he will put a referendum up for vote after terms with the EU have been renegotiated (UK seeks Referendum). Cameron said that he is not a British isolationist and is prime objective is to remain part of the EU should the terms be adopted to reflect a modern Europe and if UK voters agree to remain part of the union.
Japan decided to ring in the next round of global currency wars and Deputy Economy Minister Nishimura hinted that Japan wants the USDJPY to trade around 100 Yen (Japan rings in new era of currency wars). The return of new old Prime Minister Abe and his ‘Abenomics’ have added to the deterioration of the Yen against major currencies and will face heavy opposition from the G-20 which will be ignored by Japan.
Overview of profits which ended January 25th
EURUSD: 82 pips
GBPUSD: 72 pips
EURGBP: 61 pips
USDCHF: 68 pips
Total: 283 pips
Monday, January 21st
GBPUSD Long Recommendation
We recommended a long position at 1.5875 with a take profit level of 1.6100 (GBPUSD Poised for Breakout). This pair moved lower and we maintain both our open long positions while our short hedge was exited after reaching its take profit level and we profited 72 pips from it. We recommend traders to maintain their long positions with a take profit level of 1.6100.
EURGBP Short Recommendation
We recommended a short position at 0.8385 with a take profit level of 0.8200 (EURGBP prepared for Breakdown). This pair has surged due to bad UK economic data, but we recommend traders to maintain their short positions with a take profit level of 0.8200. We did close our open long hedge for a profit of 61 pips.
Tuesday, January 22nd
GBPCHF Long Recommendation
We recommended a long position at 1.4760 with a take profit level of 1.4810 (GBPCHF breathes at Bottom). This pair has reached our second entry level of 1.4660 and we recommend traders to maintain their long positions with a take profit level of 1.4810.
Thursday, January 24th
AUDUSD Long Recommendation
We recommended a long position at 1.0490 with a take profit level of 1.0540 (AUDUSD poised for Rebound). This pair is approaching our second entry level of 1.0400 and we recommend traders to execute it and maintain open long positions with a take profit level of 1.0540.
EURAUD Short Recommendation
We recommended a short position at 1.2705 with a take profit level of 1.2600 (EURAUD Head-and-Shoulders Pattern). The EURAUD reached its second entry level and we recommend traders to maintain both short positions with a take profit level of 1.2600.
Exit from trades of previous weeks
EURUSD Short Position
We closed our one open EURUSD short position for a profit of 82 pips on January 23rd. We opened this position on January 14th at 1.3358.
USDCHF Short position
We closed our one open USDCHF short position for a profit of 68 pips on January 25th. We opened this position on January 15th at 0.9293.
We had a total of five trading recommendations this week which all remain open. We closed two hedges for a profit of 133 pips. We closed two positions from previous weeks for a profit of 150 pips which bring our total profits for the week to 283 pips.
We closed all our older positions for profits except for our two open GBPUSD long positions which currently carry a floating trading loss of 677 pips. This represents an increase of 221 pips compared to last week and is due to unexpected weak economic data out of the UK. We believe the GBP will start to strengthen over the course of the next four weeks against the USD and maintain our take profit level of 1.6100.
We also carry three open EURGBP short positions which currently carry a floating trading loss of 1,077 pips which represent an increase of 184 pips compared to last week. Technically this move has been far overstretched and we believe this pair will enter a correction which should take it below the 0.8300 mark.
We expect to lower our floating trading losses throughout the rest of January and cut them by over 50% in the next two weeks. Our hedges in both trades have been exited for profits and the technical picture started to turn favorable over the past two trading sessions.
We hope that you enjoyed your weekend and that we will see you back on Monday.