Citigroup’s Taken Another Hit, Surprise, Surprise
Hardly a day goes by where we don’t hear about a bank somewhere taking huge write-downs due to their poor business decisions. It will be interesting to see how the market reacts to this morning’s news about Citigroup’s $18,100,000,000 wrtite-off. Here’s what I hope will happen: The markets will open up lower as they try to grapple with the meaning of it all. Then, as the jitters calm down and they realize that they’ve already largely discounted such news from Citigroup and thus making it not really that much of a shocker anyway, they’ll rebound and continue on with a short-term bullish correction.
As of right now though, my much anticipated Bullish correction has turned out to be a pretty boring sideways consolidation :-/ Yesterday USD popped up over 7% but that came on the heels of a 5% decline on Friday, So I’m slightly ahead on that trade. Unfortunately, yesterday’s positive day was accompanied by lower volume than what typically accompanies reversals. So if I don’t get stopped out today, and at least one of my targets is not hit, I’ll be taking a really good look at how I will need to adjust my positions heading into tomorrow.
But enough of that, let’s take a look at the FX Markets for a change.
I have been paying close attention to EUR/GBP for a while now and finally entered this Short EUR/GBP trade this morning. What has really been so eye-catching is the steep slope of that trendline, it’s practically a 45-degree angle! You might see this every once in a while on a shorter timeframe chart, or for a few days on a daily; but this has been ongoing for a month now…very impressive little run.
Usually when a pair rises gradually, you can expect it to decline gradually, with many warning signs…sort of like the rumbling earthquakes before a volcano. For EUR/GBP though, I am looking at a more abrupt turnaround than this and thus have entered on a little bit more aggressive line than I usually do. The RSI is way Overbought and has been for some time; this often means that the pair is very likely to continue to rise. It was the couple little things on the other indicators that caused me to enter.
The ADX is starting to roll over, the MACD is sporting a psuedo-divergence, and Price is in the sell zone of a mini-FFF. But what sealed the deal was when I zoomed in on the 60-minute chart and saw a very, very clear MA-crossover, the likes of which haven’t been seen in nearly a week. When the MAs last crossed, the pair saw a 200 pip pop on the heels of an already extended up-trend. I am looking for a minimum of 150 pips on this current trade and am keeping my stop tight above the most recent high.
As for the other pairs, I am really trying to stay away from the US Dollar at the moment as I can’t figure out what it’s doing. GBP/USD is in a pretty strong towntrend. USD/CHF, USD/JPY, & EUR/USD are all in a very ambiguous spot right now that could either see a divergence & reversal occur, or a breakout to new lows (or highs in the case of EUR/USD).
That’s pretty much it at the moment. It looks like the Pre-market & Overseas markets are currently starting the day a little under water. Let’s see what happens.
