Just as expected, the first 24 hours of price action this week have been very restrained. With the US markets offline, there wouldn't be a significant enough group to pass the speculative torch from the European session to Tuesday's Asian trading hours; so investors restrained their expectations and eased up on taking any significant positions until things really get rolling. This downtime works for me as my existing positions are longer-term (though the drift certainly doesn't favor my existing bias) and I wasn't dependent on any short-term swings today. That being said, I won't just sit idly by and wait until the trading winds start to pick up. Today is a perfect day to gauge the confidence in bullish momentum (obviously not very robust) and start laying out the ground work for potential trades going forward.
For my existing positions, I am still net long the US dollar with the general bias that risk appetite will be stiffled in the medium-term. My initial establishment of two of these positions (EURUSD and GBPUSD short) was on the belief that we would see general progress over the span of a few weeks. Therefore, if these positions don't perform or stop me out this week; then I will exit and wait for something meaningful to develop. Nonetheless, my reduced-size positons aren't causing me much heart burn - a positive side effect of trading reduced size when my conviction isn't very high and I have correlated trades on the book. As for my USDJPY long setup - this is an expected long-term trade and my leverage is still very low. Therefore, I will let it develop as it will.
Now, for the interesting stuff. My attention or potential short-term swings as things start to pick up over the coming 24 hours and later in the week; I see a number of opportunities. Some of them are very high risk. A EURCHF break above 1.3150 on the completion of an inverse head-and-shoulders pattern would fight a very big trend and my fundamental bias; so it would have to be setup for a short-term trade and played with smaller size. Another intersting one could be GBPCHF with a consistent range; but volatility here will require good timing and positioning. I am also interested in AUDUSD as it carves a larger rising trend channel (which will likely push it through 0.92); EURAUD is still interesting near the bottom of its trend channel; and EURNZD can be giving a short-term break signal. Lot's of opportunity; but we will need to see how it develops.
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