Gary Comey / Profile

I don't care what the E.C.B says if you reduce the amount of monthly stimulus you are tapering which in theory should strengthen the Euro. It didn't, perhaps against Sterling Lagarde's dovish talk was just too much to let that pair go higher. How long you can go on reducing your asset purchases and say you are not tapering is probably an academic question more suited to academics than I. In the meantime the U.K balance of trade was slightly worse than expected this morning. So having gone stop hunting below 0.8540 which I said last week was support the market is now back at circa 0.8540 this evening, hardly a panic. In the meantime we've had a little success with EURUSD, EURCHF and am long AUDNZD tonight again so the cash continues to go higher.

Having broken higher out of the descending trend EURGBP is finding support at circa 0.8540 and resistance at 0.86 in a daily flag pattern which typically would break higher after a period of consolidating. A break of 0.86 would make July's 0.8670 the next higher target. By my calculations just under 0.87 is breakeven but when you include SWAPS it's closer to 0.8790 however there is no point in worrying too much about that for now. We need to get closer first and I may still add another EURGBP trade. The cash grew by 3.78% in August which as I usually say is downside protection at worst.

After last weeks bullish weekly candle that took us through resistance and finished on the highs this week appears to be more about consolidating the gains. Set backs should be supported in the 0.8550's range whereas a break of the psychological 0.86 mark would be self-evidently encouraging. At this point I would have a bullish lean towards the Euro versus the buck and a bearish lean against the Pound versus the dollar. So Euro bullish and Pound bearish would definitely suit our long suffering EURGBP trade. All the while other trades are working out okay and the cash in the high risk account is 3.6 % higher in August so far with a few days to go. All improvements in cash naturally improve safety/profits.

Reasonable progress with our EURGBP long position which has yet again broken out of the descending trend. As short term oscillators are over bought I’m not likely to add a final position yet indeed adding a final position is only likely to improve the average entry by 10 pips so I’m not sure if I will yet. It would have the benefit of paying for a lot of SWAPS though risk goes up a little too. We’ve had some quick action with our Kiwi positions and our latest AUDCHF is very oversold giving me quite a bit of confidence on this trade. Also the SWAPS on AUDCHF are actually positive.

The value of your investments may go up as well as down. The last two days have seen a nice EURGBP rally however it is still in an otherwise downtrend that began in April. Actually we did take out the April '21 low of 0.8471 going as low as 0.8450 this week. I wonder is this a double bottom I mentioned a few weeks ago with a lower low and finishing the week fairly strong which is usually bullish! As is always the case...I don't know! Support is now at circa 0.8450 but we'd obviously like to see it clear resistance at circa 0.8550. The market will finish the week somewhere in between those two figures at 0.85ish. My own personal DD when you add the three accounts is in monetary terms is about $70K which is not that uncomfortable for me. I think I will win. I sometimes get a little anxious and then recall the other times I got anxious in 2015, 2016, 2017, 2018, 2019 and 2020. It's more important to me to play the game well, the market tends to reward players with patience and punish those who freak out about money. Position size means I haven't been "taken out to the woodshed and beaten" since 2014. The cash is higher in the high risk client account by 1.24% so far in August.

The EURUSD drop on Friday has kept EURGBP firmly in this LONG downtrend. Resistance at circa 0.8550 and support down at circa 0.8455. The DD is stressful but with the cash growing it does help a little. Looking at the Alpine managed account in total it's about $400K higher than it was when this bloody EURGBP trade began. As I said last week people tend to give more weight to recent events and assume EURGBP will drop forever but when we look back at the months and years we send trend changes everywhere. The issue to having enough equity to tolerate an extended move against your position. Our position sizes and our ability to continue to grow the cash is our insurance policy on this. Obviously even that has it's limits but it's about trying to stack the odds more in your favour.

Eurozone QoQ GDP actually beat expectations this morning but as I suspected yesterday the lead into the August bank holiday is quiet. EURGBP has traded in a very tight range within the medium term downtrend. Resistance at the upper end of this downtrend is at approx 0.8560 which is not that far away. In terms of safety features I have traded the cash a little higher again which as I've said before "all other things being equal" this reduces the DD. It's 3.28% higher for July. Bare with me! EURUSD is trading within the appex of a shorter term wedge formation. I need to be careful here not to load up too early in case there is a major break out of the wedge to the upside, which if it did happen will likely help the EURGBP long basket. Anyway I am not that comfortable with the DD but that said all systems have their issues. I could trade fibonacci with a tight stop loss and hand you 15 small losers in a row (plus heart burn) and yet be profitable in the long term. This is the most prolonged DD I have ever had. People have wondered weather my issue is trading Sterling pairs but BREXIT was hugely profitable. I think for those people it's a case of giving more weight to recent events which is a natural human and trading bias.

Beginning with EURGBP Monday was definitely interesting given the Euro rally both against the Pound and the Dollar however the E.C.B took away the punch bowl with fairly dovish statements later in the week. That said it has made the picture more complicated and hopefully given EURGBP an upside bias going into next week which will include a Fed rate decision, FOMC and US GDP. With EURUSD itself sitting at medium term support it could be that these events become important given the correlation between EURUSD and EURGBP on short/medium term timeframes. From a more fundamental perspective most Delta variant news out of the U.K is tending to hurt the Pound which frankly is good for us.

Just as I was getting ready for the double bottom formation taking out the April lows at 0.8471 we get a decent up day and if the market closes up around here a weekly hammer formation which is sort of bullish though realistically we need to break out of the declining trend, which now sits about 20 pips higher in the 0.8580's to begin our rally, so I'm cautious about today's positive price action as officially it's a good day but still in a down trend. Today Sterling is weaker against the dollar too so today's move is Sterling specific whereas earlier in the week the weakness of EURGBP was actually down to dollar strength against the Euro driven by US Inflation and yield differentials. When you are in a position for this length of time the original idea behind the trade has long since passed and therefore we fall back on the strategy. Some strategies say "get out". Our strategy calls for two baskets at most and our second baskets have been increasing the cash all the while allowing us to be wrong for longer and be increasingly safe as time passes. Cash is higher by circa 2% so far in July.

With my one hand free to trade the cash advanced 1.44% this week. At least for now our EURGBP breakout has to wait for another day. After breaking out yesterday it fell back into the descending channel that it's been trading in since March/April. It's a bit disappointing though the extra trade I placed yesterday coming so long after the first trade was placed will I'm sure help pay for the SWAP's. With the cash ahead another 1.44% this week the high risk Alpine account actually hit a new all time high in terms of cash. What we are looking for is a new equity high of course because that's ultimately what we get to withdraw. In the meantime higher cash balances = more protection from EURGBP.

EURGBP remains at the upper end of it's descending channel with resistance at circa 0.8610. It has challenged that technical level over the last few days with support at 0.8565 but now we also descend into the July 4th bank holiday weekend and liquidity dries up. Managed to at least push the cash higher by 4.24% in June and the prospects for USDCHF look good this evening. At least having one hand freed the cash can continue to grow so to some extent it is business as usual but with the caveat that we are all keen to see the back of the EURGBP trade. It's been a real test. George F. Kennan the American historian says "Heroism is endurance for one moment more."

Since the break of 0.8560 EURGBP has resumed it's down trend in the channel marked "A". I said during the week that it was possible we are in for another double bottom circa 0.8471 being the previous June low, but we could easily say a break to the upside at 0.8620 and this market has broken out of it's descending channel up towards 0.87, and if it did that I wonder would one more EURGBP trade help pay for the SWAPs in addition to improving the average entry. Anyway it's officially more risk but food for thought and to quote the Federal Reserve Chairman "I will be guided by the data". In the meantime once again I have one hand free to trade other baskets and have used it to guide cash higher by 4.25% in the high risk account with all other accounts obviously higher too. I am $100K short of a new high in the cash taking account of a loss I took plus client withdrawals. $100K is less than I've made in that account in June so far so it's within reach. All other things being equal higher cash improves the DD in EURGBP, adds to the safety of that position and frankly makes us all feel good and more confident. I'm meeting an oil trader in Dublin city tonight for a pint. We met a few years ago through a mutual friend when I was giving a presentation on position size. Weather permitting I will drink Guinness outdoors as a COVID safety measure. Have a good weekend.

EURGBP WEEKLY

You can follow the latest trades;
TWITTER: https://twitter.com/BlackwaveFx

It was definitely nice to get out of the USDCAD with an okay profit. Had I given it a few more hours every trade in that basket would have closed in profit but alas it's not easy to time the perfect entry or exit hence position size is my "super power". As you know the strategy calls for no more than two baskets at any one time and getting out of USDCAD freed my hand to take profit in a few Yen pairs and to improve the cash by 2.4% this week in the high risk account. That obviously improves the DD all other things being equal. Speaking of DD EURGBP threaded support at 0.8560 on multiple occasions likely stopping out traders with tight stops using other strategies and now finishes the week close to 0.86 so today's move was useful! It would continue to be useful if next week we could take out the high of this week's weekly candle at 0.8628 and I'll be watching for that. SO, now we finish the week Long EURUSD and long EURGBP....both EURO pairs. This does not concern me too much because I notice volatility picking up a bit as the equity markets convulse so I am hopeful that this volatility will give us a nice run.

While victim to summer low volatility EURGBP continues to hold above support around 0.8560 and resistance of 0.8725 though I note it is now meeting shorter term resistance via a series of lower highs going back through May into April. Likely to help our trade we will need a fundamental development, for example a delay to the June 21st "Freedom Day" in the U.K where the newest (delta) variant of COVID-19 is now the dominant and most contagious variant to date, causing hesitation about a full reopening in spite of the very successful vaccination program https://www.bbc.com/news/health-57434493. Or a trade war with the E.U over the Northern Ireland Protocol of the BREXIT agreement https://www.irishtimes.com/news/politics/leaders-in-complete-harmony-on-belfast-agreement-says-johnson-after-biden-talks-1.4589507. Obviously Euro strength would help too but the frankly I don't know what will be a catalyst which should not surprise anyone. If I knew what would happen next I would own the world by now. So we continue with the strategy which will increase the cash and reduce the DD caused mostly tonight by EURGBP while we await an erm.... favourable wind. That opportunity to increase the cash looks better this evening than it has in some time given the developments in USDCAD. USDCAD has put in it's strongest weekly candle in ten weeks and is now in the happy position of oversold weekly but overbought hourly. This was the development I thought would come sooner given the US Dollar index has already broken out of resistance and I find it a bit odd that it didn't happen for USDCAD with yesterday's CPI data which showed hotter US inflation than expected but the market Gods obviously needed today's less significant Consumer Sentiment Index or perhaps traders woke up from their summer rest in the Hamptons or some such place and decided to buy USDCAD. Either way it's going up and I am inclined to sit tight and let it.

There is both USD and CAD data today with Non-Farm Payrolls out of the U.S being a big driver. The USD appears to be finally waking up driven by yields which are showing an increased likelihood of rate rises driven by expectations of higher inflation. I think if USDCAD can break out of it's congestion today this could be a real mover and I am comfortable to let this run a bit to make up for the extended period we are stuck in EURGBP. EURGBP itself is continuing to be lethargic and it continues into the second half of the year I may begin using profits from other trades to reduce some of the biggest losers but not for now and not using USDCAD profits. If I have to cut losers in EURGBP it would be preferable to cut at higher levels and when the cash is higher too. I think we could do with a few winners psychologically and USDCAD is looking good this morning.

It feels a bit like the summer doldrums where volatility is drying up a bit as the market settles into June long weekend mode. USDCAD will continue to be driven by inflation news and EURGBP is fairly directionless. I would not be surprised if the Fed begins hinting that they are taking inflation more seriously soon enough though hopefully USDCAD won't even wait for that. This market has made a few attempts to rally already and this weeks weekly candle is something of a doji and inside the range of last weeks candle. A bullish argument could be made of that technical development so what the market needs to show some follow through is the slightest hint that inflation is not just transitory but actually a bit of a problem. I continue to take smaller timeframe USDCAD trades in the Alpine Managed Account. That's been worth a 2.5% improvement to the cash in May while we wait for the bigger picture trades to resolve themselves. I'm afraid some of my own accounts trade FIFO (First In First out) so Alpine has a level of flexibility that some of the other accounts don't have.

My optimism around Wednesday's USDCAD move was premature. It was a weak rally and basically a false start. I am not great at picking tops or bottoms but the strategy is designed to compensate for it. The rally in EURGBP off the lows provided a bit of wiggle room to improve the cash situation and by default improve the DD situation however in order to do this I must trade and trading is more risk even while we wait to get out of EURGBP at breakeven. Again the USDCAD move remains quite extended as it meets longer term support touched in 2015 and 2017 and you can see this in the monthly graph. It would be easy to let frustration about the extended EURGBP DD spill over into the fact that USDCAD has not provided immediate psychological relief but to be fair to the strategy it never turned on a dime but always did turn. Any talk about higher inflation is good for our trade but the market owes us nothing and it is our behaviour when things get frustrating that will win or lose the day. I will be keeping an eye on Canadian retail sales at 13:30 London time. Weather it's a strong number or a weak number it will provide some visibility and either way the USDCAD move is still quite extended and I am quite comfortable with the trade even if I also wish it would hurry up and turn back towards the moving average.