Thank God, we were firm with the USDJPY Sls at 113.40. Waking up to see USDJPY in the mid 112’s this morning made me feel so much better about cutting when we did. Better to let the account take a 7K hit, which ate into profits, rather than a 20K hit which would have been annoying at the very least.
With Gold, we took a different approach instead of our earlier conviction to cut at 1220 and started hedging at 1225. Doing this we managed to close some trades with profits of ($7200, $258, $450 respectively). These hedges got SL’s in profit while gold fell again. While this does not mitigate our current unrealised losses of $8700 and $5200 respectively. It protected the account, put us in 8K in a better position and meant we could keep our gold positions open, which I believe will be supported by stronger than expected US CPI data today. I feel it will be stronger due to increased earnings and a weaker dollar (relative to previous months) and by being stronger, it will support the FED acting.
Gold is benefiting at the moment from bids due to the market expecting zero FED hikes in 2016, I expect 3. Despite employment growing, growth and nervousness, the markets seem to think that they can keep getting “cheap money” by selling off equities in spite of what the FED says. News Flash, they do not care. Despite everyone wanting rates to stay low forever, they can not. As inflation picks up, and it is, the FED will act. This feels so much like September when everyone insisted there was no way the FED would do anything in 2015 and we know how that paid off. Remember this sentence. I bet you if the US data continues in FEB like it did in JAN, all these naysayers will change their tone from a no-way in 2015 to a 50:50 in March, just like they did last year.
Active trades on HF:
Currently we are selling:
AUDUSD: To capitalize on US CPI this afternoon. Target 0.7
EURGBP: To capitalize on UK retail data. Target 0.77
Gold: Medium term, to capitalize on the market being wrong about FED motives, Target 1100. Every time this one goes against us, we will hedge for profits till we are either proven right or to minimize losses if we are proven wrong.
Wish you all a great day,