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Keeping an Eye on Ireland and Risk Trends after the Critical Break has been Made

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Contributed By: DailyFx

The list keeps getting longer. I am seeing so many opportunities out there; and the greater the number of potentials, the harder it is to remain patient. However, patience is key to ensuring that good trades are taken and good entry levels are found. Simply jumping in now while ignoring the natural ebb and flow of the market can get me stopped out or drawn into bad trades that could ultimately be highly correlated (meaning I lose on an entire theme - which would deliver a far bigger loss than expected). We are one day after a critical break in risk appetite trends (as seen on the S&P 500); and the market seems to be far more quiet and making the effort to slowly correct the move. This is very common after a major breakout. A retest of former support as new resistance and vice versa is one of the foundations of trading. Yet, this time around there is a very heavy fundamental slant. We are simply waiting for many different things to fall apart. There is already more than enough there to force the swell in sentiment these past months to collapse; but it looks like we have too many hold outs that want to remain blissfully ignorant to reality.

For live position, I am still in the reduced and long-term long USDJPY position. Today's modest dollar pullback really doesn't alter the bearing on this setup because it is based heavily in fundamentals which means it will take a while to play out. Besides I'm happy to sit still while it is already well enough in the money. New to the game this morning are short AUDUSD and AUDCHF positions. AUDUSD bounced back up to test a short-term descending trendline from the past few weeks and offered me entry on a reduced short at 0.9825. I'll set the stop up 45 points and the first target at 100 (note the skew as I am comfortable with a little more risk here given my larger technical and fundamental outlook). As for AUDCHF, a very consistent falling trend of highs gives me easy entry on a reduced short from 0.9720 and allow me to put up a 50 point stop and 70 point first target.

The pendign column is still huge. It is very tempting to just jump in on a EURUSD and GBPUSD short; but I am waiting for either trend confirmation breaks or retracement to better levels on both cases. For the former I'd like to see 1.3625 and latter 1.5950. A long USDCHF trade above 1.00 is something that I would take even if I have long dollar exposure elsewhere given its fundamental winds. NZDUSD is very similar to AUDUSD; but I still want to highlight its descending trend channel these past two weeks and ptoential break of 0.7650. AUDCAD is still one of my favorite trade possiblities should it break 0.99 and confirm reversal. Then there is GBPCAD with wedge breakout potential, GBPJPY on a pull back to its channel and EURJPY and EURCHF who are staring down their respective range supports.