The “Short Squeeze” of the Decade…
This week we are already seeing what I talked about in last week’s newsletter. I will say it again…The short squeeze of the decade has begun! Selling Dollars now is like buying Pets.com in 1999. Remember I am very bearish Dollars longer term, but near term the stage is more than set for yet another “surprise”…lol. The only one’s who are surprised are those not reading this newsletter. I was lucky enough to be mentored by one of the most successful traders ever and he taught me a very valuable saying, one that I recall daily. It is nothing short of both mathematically correct and psychologically correct. It simply says: “Markets almost always move in the direction that HURTS the most people”.
And since we all know that the majority of investors lose, not just in FX by the way, but in ALL markets, stocks, bonds, commodities, Forex, you name it. In all of them the losers out number the winners. Always have and frankly always will. And that is great news for those of us who win so do not be bothered by that reality.
My point is this. If the entire world thinks Dollars are going lower and we already know that markets do in fact move in the direction that hurts the most people, then how can a sane person want to go short Dollars here given that logic? If most people are now short who is long? Remember there is always someone on the other side. The crowd is almost always wrong. So even from that overly simplistic view, I hope you can begin to see why I am calling this the short squeeze of the decade.
EUR/USD:
We got the entries we looked for last week and did well with them. I am looking for this week being a bit more mixed. We do not have as clear a picture as we did last week, but the overall picture and story remains the same. We want to be buying Dollars on dips but at least in the first half of this week we want to be patient. We see a two sided market this week with increasing range so extra caution is advised. Any rallies back near the 1.40 levels should be solid medium term entry points for shorts.
GBP/USD:
This pair has also respected the resistance levels we forecasted in past issues. We are looking to sell rallies near the 1.64 level or higher this week while targeting a move back to the mid 1.50’s at least.
USD/CHF:
This pair remains a buy close to the 1.08 level. This pair could see a move back into the low teens before this rally stalls.
USD/JPY:
This pair is another that played out almost exactly as we forecasted in past issues…and please don’t take my word for it go back and look at the comments that were posted and when they were posted and you can clearly see the accuracy. At current levels, however I have little desire to trade this pair. If we see rallies back near or above the 97 level I would again become an interested seller.
AUD/USD:
Another one that has played out as forecasted. I am not trying to brag or boast but simply point out that none of these moves should be a “surprise” to readers of this newsletter. Anyway this pair is very dangerous right now and I am advising anyone that is still short to protect as much of the gains as they are comfortable doing. We are seeing ever increasing possibility that we still see another spike to retest and possibly break the recent highs above 82 so again be warned. Strong support lies near the .7850 level and is likely to hold at least on the first test.
USD/CAD:
Last week I forecasted that Oil would hit 55 before it hit 75 while it was trading at 72. Many of you commented that I was krazy…well who’s crying now?! Oil will continue to fall but the path down is not going to be quick or easy. We expect to see at least 70 retested once more before a real move into the lower 60’s. So that will bread volatility in the Canadian but we are comfortable shorting above 1.15 and holding for most of the week.
