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Daily Observations: March 22, 2013

Daily Observations: March 22, 2013

Christopher Vecchio, CFA, Senior Strategist

Current Positions:

- Short EURUSD from 1.2938, Stop at 1.3005, Target 1 at 1.2880, Target 2 at 1.2660

Typical Time Frame: 1-day to 1-week

A general note that holds true from yesterday: "This week has seen little trading activity on my end of the equation as neither of my trading systems - range trading based on 4H RSI and weekly and monthly pivots amid low volatility, or momentum trading based on 1H/4H/daily 8-/21-EMA full time frame continuity - have issued any trades. Here's why:

The range trading strategy remains inactive because volatility conditions remains too elevated in both JPY- and USD-based pairs, and quite literally, we've seen one-way direction in most currencies against the safe havens (direction: up), not quite a range bound market.

The momentum strategy for the AUDUSD, EURUSD, GBPUSD, USDCAD, and USDJPY is in flux right now because the daily time frame is thrown off on most if not all of these pairs; while I've seen numerous 1H/4H 8-/21-EMA bullish continuities against the USD, many of the daily signals remain bearish. I prefer only to trade this system when all of the conditions align."

I have taken a trade outside of the parameters of either system, a short EURUSD position amid the Cyprus situation. While there is a bit of optimism currently flourishing on hopes that a deal will be struck, I'm looking at the big picture: a deposit levy sets an undesirable precedence for the future bailouts of Italy and Spain. I'm only giving the trade room to break the weekly high/gap fill, then I'm out. Otherwise, 1.2660 is my main target.

As always, any other trade ideas and general macroeconomic musings can be found in the DailyFX Real Time News feed, or by following me on Stocktwits/Twitter @CVecchioFX.

I also host a weekly Live Trading Q&A in DailyFX Plus, on Tuesdays at 07:15 EST / 12:15 GMT, in which I delve deeper into my positions and thought processes behind my analyses.

--- Written by Christopher Vecchio, Currency Analyst

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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