Interesting tidbit- the Parker Global Strategies LLC released results of foreign-exchange hedge funds for the month of July. The company compiles the Parker FX-Index, which tracks performance of 56 funds from across the globe managing over $36 billion in assets. For July the index showed a return of o.54%, with the best fund gaining 6.8% and the weakest losing 4.9%. Year to date the index appreciated 1.26%, probably not what one would expect from some of the best people in the business. For all practical purposes, this is a break even outcome.

Before the markets opened after the weekend, I expected continuation of Friday’s trends, with reversals few hours into the trading day. This did not apply to the major trends, rather short term reversals lasting few hours. There is always a chance for them to turn into something bigger, but for trading purposes these short term set ups, described in more details in an earlier post. Currencies opened up on a slow note, but eventually there was an acceleration, followed by reversal patterns.

For the EUR-USD,a strong hammer emerged on the hourly chart 4 hours into the trading day, as it is on most platforms. Opening of the next candle was the entry point. This trade brought 58 pips. Probably should have been held for 20 or so, but given the decreased volatility, not a bad result. Incidentally, the support from July, at 1.2730, held up, making it more important now and a candidate to sell if broken.

Trade in AUD-USD was almost identical. Later on in the day both of these pairs made more upside progress. Start to something bigger? Maybe, not convinced yet.

Another one of the pairs mentioned yesterday was EUR-CHF. Here the reversal was different, but the entry happened at the same time as the others. Smaller gains, though. It was the first closed trade, and, luckily, at the right time. Shortly after the Swiss Franc started to get stronger and didn’t look back. The EUR-CHF fell for most of the day.

The GBP-AUD is in an interesting situation. On the intermediate term chart, this pair has been moving in a well defined congestion zone about 300 pips wide. These sideways moves do not last forever and eventually there is a breakout. Current technical picture favors a move to the upside, but that could change. Given how long this pattern has been under development, something could take place soon. “Soon”, on this time scale, 4H chart, might be tomorrow, or in a few days. I will keep an eye on this chart.

 The Loonie lost some ground today in a broad move. Even against the Euro. If there is another CAD sell off, buying the EUR-CAD might not be a bad idea. I’m looking for an advance above today’s high, with a 100 pips objective and maybe 200 pips secondary target. Details will be worked out when, or if, the trade takes place. It could be 2-3 days.

Mike K.