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July 5, 2009

FX Trends...

Hello Traders-

Nice action this Sunday PM. We are definitely seeing the process of topping patterns playing out, some of which have already begun to break significantly since their "top". All of this is relative, of course, so keep in mind your time frame, strategy, and risk parameters. The $GBPJPY is down close to 700 pips since its local top on Monday of last week, but if you are a short term guy, the trade could be over or close to over for you if. If you are a trend follower, you could just be getting a nice signal for a much longer term trade. However, whipsaw has been the characteristic of currency pairs over the last 6 months, even while trending longer term, so keep in mind that none of this ever happens in a straight line. We must respect the retraces, reversals, and continuing changes in trend. Still, it is possible that the action from last week into tonight could be signaling something larger as we are seeing these types of movements all over the board from the FX market, to the commodity market, and as well in the equity markets. I covered my shorts from last week on $GBPUSD and the $AUDUSD, and I am looking for some sort of healthy retrace before jumping back into anything. Things have been so volatile that staying on the sidelines is a very powerful tool at the moment. Cathing a nice trend, however, is also a very powerful tool for your account balance. I will be back with any setups I see, but for now I am flat and just waiting. If we see some retrace of the US equity markets last week, and some retrace in the major FX market pairs, I will consider getting short again on several of these, but if we continue down it is going to be dangerous to hop in, no chasing allowed. Hopefully I will be back with some updates later!

Happy Trading...