My Trades On The FTSE And The EUR/GBP Currency Pair

Equities and the Euro pushed aside appalling industrial production numbers from Germany. The Dow (^DJI) returned above 7000 and gold made a shining comeback, adding $20 to its price.

Patience paid off today (Thursday) and I used set-backs in equities and the Euro to place my bets, though to be fair, not in mouthwatering size and not at the best levels.

Trading FTSE (^FTSE) in particular is tricky as it requires a great leap of faith to back a rally given the condition of the world outside. Earlier this week I wrote that I thought we were due a rally in a bear market, but that we hadn’t bottomed yet (Have Equities Bottomed Out?). And this morning provided another ideal opportunity to get some stock on board, except that I was long and wrong in £2 from yesterday. I added a further £1 at 3655, when the market looked to be steadying, but it’s still that fine line between backing your judgment and adding to a losing position that gets me.

So now I’m long of FTSE and watching a rally back up to the 3700 level. What has been interesting to note today was the reaction to incredibly awful German industrial production numbers. Even the fatherland has stopped making things, to the tune of 15% less than a year ago. Shares were marked lower on the release, and on news that General Electric (GE) had lost its coveted AAA credit rating, but it didn’t last and now the Dow is within spitting distance of 7000 again.

The other horse I’ve been backing (against my better judgement) is the Euro. I’ve been running long of EUR/GBP, just in small amounts, and this morning’s set back allowed me to add to my position at £0.9250. Yep, I could have got a lot better, but I prefer to wait for signs that the fall is done and dusted rather than trying to guess the bottom. I don’t mind missing out on the best prices if it means putting on a higher probability trade.

Just like yesterday the Euro swept aside shocking economic numbers, preferring instead the bullish chart pattern. I part closed my EUR/GBP long at £0.9275, just in case the German data became the straw that broke the Euro-camel’s hump. It wasn’t and I closed further bets at £0.9312 and £0.9301. At the moment I’m flat in EURGBP, but looking to scale back in on a set-back. If the Bollinger band theory works I might be able to pick some Euros up at £0.9220, the level of the bottom band.

The market I’ve really missed out on is gold. It looks like a return of risk appetite and an OK Dollar is good for gold. I’m not knocking the rise in gold, just surprised (caught out) by the timing.

A combination of repatriation of assets ahead of the year-end, and a better than expected (-12%year on year) GDP number gave the Yen an overnight boost, though it lost some of those gains this afternoon. I’m not keen on playing the Yen bet in March; I’ve made a diary note to check it out at the end of the month when the year-end flows should be out the way.

If you’re wondering about the extra squiggly lines on today’s charts, they’re Bollinger bands and I wrote a piece on them today.

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