Summer volatility means rich pickings
Traders should stay disciplined to make the most of unusual summer markets, says Sandy Jadeja
With holiday season upon us, minds are turning to currencies. With the dollar so weak against the pound, a trip to the US looks like a better bet than Europe at the moment.
I am planning to take a break in a few weeks time myself, my eye is on both the Euro and the US Dollar. It looks to me that the US dollar is gaining momentum and if it breaks below 1.9650 then that tells me that the British pound is weakening. I will also look to initiate a Short position on the GBP currency on the implied weakness.
Pound/Euro
The Euro against the British pound, however, is telling a different story. After trading in a channel for several weeks it has just broken to the upside. My Long position is on at 1.2660 and I am expecting to see a move higher. Let’s see how this works out.
Meanwhile the Dow Jones trade opened at 11245 got stopped out at 11380 for a profit of £1,350 and the trade placed on Nymex Crude Oil has also been stopped out. Here too we have a profit of 995 points on £5 per point which brings in a profit of £4,975. Another good month and that’s the reward for trading with patience and discipline.
Emotional Discipline
Now my target for Nymex Crude Oil for the downside had been $123 and at the moment I have a Buy signal for a short term rally. But remember that the intermediate term trend is down so I’m going to wait patiently for another Sell signal.
It looks like if we continue higher we could be looking at $131-$134 in the next week or so but on the downside we could still look at Oil trading towards $116 per barrel.
There is quite a fair bit of volatility out there in the markets at the moment which is not typical during summer months. Of course we must remember to adhere to strict money management as well as emotional management during these shaky times.
Most people can’t see beyond the SALE signs on the highstreet. But very soon some stocks are going to be on sale and I’m looking to grab myself a bargain.
For now, though, it’s time to start thinking about the summer holidays. See you in Disneyland.