We are knee deep into the traditional summer doldrums. This year we have seen a slow start to the hurricane season so far. However markets seem to making waves where hurricanes are not. We have seen the beginning of the short squeeze on the Dollar I have been warning about for some time. We have had an incredible summer here in my trading room. We are now up over 3,000 pips since June 1st! So I am officially calling this the new summer of love. I hope all of you have gotten at least some of this money. If you are a regular reader of this newsletter then none of what has been happening should have come as a surprise. The events before us are unfolding very much the way we are forecasting. This is not always the case but when it is “make hay when the sun shines” it is often said.
EUR/USD:
We will now look to begin covering some of the shorts we have been taking and looking for some near term strength in this pair. Strength that we will want to sell into more than buy. Overall we are looking for this pair to move back towards 1.25 by years end if not sooner.
GBP/USD:
This pair is also likely to see some rather violent bounces this week and we are looking to also cover shorts here that were taken above 1.65. As this pair spikes back up we will again look to sell into those.
USD/CHF:
I mentioned that this pair would move from below 1.07 back to above 1.10, we are now half way there but I am seeing signs that the second half of this move will be much “harder” than the first so we want to protect the profits we have and look for near term rallies to partially exit.
USD/JPY:
This is the one pair as I have mentioned in the past that will not move according to the Dollar but rather the S&P500. We have seen this pair turn down with stocks and expect that relationship to continue for at least the near term. We are looking for a bounce early this week in stocks but once again we want to sell the rally and be patient. Stocks as well as this pair are going MUCH lower. Don’t be another moron who drinks the Kool-Aid!
AUD/USD:
This pair has been slower to respond to Dollar strength but over the next few weeks you will see it go from laggard to leader.
USD/CAD:
This pair is also looking for a strong move back up. We are and have been buyers of dips here and will continue to be so all the way up to 1.20 which is where we expect this pair to trade by years end.
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