Since the break of 1.7740, the bottom of the bullish trend channel from 1.7330 in Oct, 2009, GBPAUD seems to be losing some downside momentum and one of the good trader friends in the market asked me what I think. It looks like we were looking at the same picture at the time with RSI, Slow Stochastics and Fear&Greed signaling a possible turnaround to test 1.7780ish on the topside. A daily close above 1.7405 confirms that bounce in short term.

So looking forward to buy dips around 1.7325-1.7335, tight SL at 1.7285 and take profit at 1.7750.

Under the Morning Monologue posts,

I will start talking about the previous day;  trading ideas, market talks and what I did wrong or right.

Very impressive come back of  USD bears as  Oil trading above 81.5$ and currency universe reflecting the rush to dump the greenback accordingly.

EURUSD rallied from 1.4280( 1.4267 was the low)  to 1.4455 overnight after we saw big German buying bleow 1.4300 early in London session.  AUDUSD broke 0.9010 and after squeezing up to 0.9055, managed to extend the rally up to 0.9137.  I sold small at 0.9010 as mentioned in the trading idea and added more at 0.9040 and moved the SL to 0.9055 as there was a good offer between 37-42 level with regular offers. Of course, I hit the SL on that trade but at least the projection was right on the topside. Frankly, I should have paid attention to the slow stochastics on that one as it was in bullish territory not on a sell on rally zone.  GBPAUD was the pain of the day and still suprises me how I managed to pick the currency of the day. It dropped more than 1.6% and even broke  the support of the bullish trend channel at 1.7745 and low was 1.7610.

While I was suffering from AUD related trades, paying attention to XAU and Oil while EURUSD not reflecting the whole move early in the day and going long EURUSD below 1.4300 vs. tp at 1.4450 helped me to print a black number at the end of the day.

There are two reports in the market recently regarding to CB reserve diversification by GS and Nomura. which suggests another wave to short the USD and also Agent banks were in KRW,TWD and SGD buying USD against the local currencies which means for the sake of the basket and they were supposed to buy eurusd. So all in all, that worked well for me.

I also was long USDJPY from last week  at 91.35 with a tp target at 93.55 but after pair failing to break 93.10-20 area, with as good offers appeared in the market by the help of USD dumping across the board, drifted  lower and had a smooth but painful retrace down to 92.20. I actually managed to sell long at 93.00 and re-bought at 92.40.  So that improves the mood in the long idea in USDJPY and buy on dips interest for the day.

More talk of the Kraft/Cadbury deal going through with ECB fixing interest on 31st, Dec triggered a rally for Sterling and since then significant short squeezes of Sterling took place in Cable, EURGBP and GBPJPY.

This morning the following news regarding to NAB did the rounds in Asia( National Australia Bank Ltd. (NAB.AU) is gearing up for a possible bid for U.K. lender Northern Rock, the Observer newspaper reported on its Web site on Sunday) till Howard Davies, director of the London School of Economics and a former member of the Bank of England’s monetary policy committee, said: “The major risk is the loss of confidence in the government’s ability to get the public finances back under control.” which put pressure on Sterling and we watched day lows in GBP-XXX later on.

I still think there is a good chance of Europe & NY may buy the rumour to extend the short squeeze in Sterling pairs and GBPAUD appears to be a good candidate to go long on the back of  this story.

The pair failed to break the 55 days SMAVG at 1.8010 in Asia (08 is the high print) and retraced to 1.7960s at the moment.

I prefer to buy on dips before London opening around 1.7935-1.7955 with a tight SL at  1.7890, targeting 1.8275.