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Daily Observations: October 28, 2013

Daily Observations: October 28, 2013

Christopher Vecchio, CFA, Senior Strategist

Current Positions:

- [10/25] Long AUDJPY from 93.11, Stop at 92.90, Target 1 at 94.50, Target 2 at 95.65

- [10/25] Short GBPUSD from 1.6189, Stop at 1.6260, Target 1 at 1.6030

While I was looking long risk (via AUDJPY and S&P 500) coming out of the US fiscal deal and into the September US NFPs, the Chinese liquidity concerns that evolved midweek last week knocked out any optimism in markets. Nevertheless, with the AUDJPY having traded into significant support and a Bullish Falling Wedge having formed on short-term timeframes, I took a small long position (discussed in the DailyFX RTN, chart here).

Unrelated to broader risk trends, I also took a small GBPUSD short position on Friday following the UK 3Q'13 GDP release. While the UK continues to grow and at a faster pace than in prior periods, incoming economic data had indicated strength in the report and therefore any positivity was likely priced in.

Although I think the Fed on Wednesday will hurt the US Dollar, there is scope for a short-term Double Top in GBPUSD that could see price retrace back to 1.6000/30 before the next leg up (article here).

Reminder: I host a weekly Trading Q&A in DailyFX Plus on Tuesdays at 06:00 EDT / 10:00 GMT.

Are you new to FX or curious about your trading IQ?

--- Written by Christopher Vecchio, Currency Analyst

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.