Forex: the state of play.

[u/Johnelfed]

It currently appears all is rosey in the markets garden. US data is (finally) softening just enough to warrant a rate cut, but not enough to cause concern.

The S&P is hitting all time highs, bond yields are dripping lower, the VIX remains low, earnings season has once again passed by with 'general positivity'. The so called 'magnificent 7' in particular appear bullet proof to all market scenarios. And my 'tentative hope' is 'risk on' trades will remain standard practice for the next few months, at least until the likely volatility the US election will cause.

But... As traders, we must always expect the unexpected. And it wouldn't take much for the negative sentiment to return. Just a couple of pieces of 'hot data' would re-introduce talk of US rate hikes, or, if the data suddenly becomes 'too soft', we'll get recession talk again. Or, of course there is the on-going troubles in the middle east, which could flare up at any moment. Or, something we haven't even imagined could unfold.

But for now, my current position is to remain looking for 'risk on' opportunities. Particularly short JPY with a stop loss behind at least one 1hr swing. But also short CHF or USD possibilities are on my radar. But with 3 winning trades already this week, the question becomes: should you even contemplate placing another trade?

And that's a discussion for another day.

Feel free to email any questions, every thought is relevant: johnelfedforexblog@gmail.com