Thursday 27 August: The week so far.

Rightly or wrongly, it's been one of those weeks I haven't quite found a conviction in the direction of the currencies.

Obviously the AUD is the week's stand out performer following hot inflation data. My issue has been that...

A: Recently, I've grown a strong preference for a chart where I can place a trade following a pullback, nice swing support and a profit target below recent resistance. And aside from Yesterday's trade (which I'll discuss in a minute), I have found that everytime I look at an AUD chart with a view to placing a trade, it seems I have to commit to asking for a new high (AUD CAD / AUD NZD / AUD CHF).

Rightly or wrongly, that has put me off the trade. I would be more susceptible to placing a trade (asking for a new high) if the overall environment supported it. Which brings me on to point B.

B: The overall environment has been what I can best describe as messy. Although mildly risk on, it has just felt like the market hasn't wanted to commit. There has always been something approaching ahead .Be it CORE PCE, NVIDEA, JACKSON HOLE, all alongside back and forth war headlines, US / CANADA trade rhetoric and end of month approaching.

All in all, the price action hasn't quite aligned with my view, which remains a bias for 'risk on trades'.

Which brings me to the hear and now. The CHF has been strong today, I don't have a fundamentally solid reason why, I'm putting it down to profit taking. EUR CHF in particular has fallen quite a lot. Given there has been hawkish ECB talk only today, EUR CHF falling doesn't make sense to me.

I think this could be a very good opportunity. But it's too late in the day for me to get involved now.

Regarding Jackson Hole, historically, it has been a particularly market moving event. But given that chair WARSH'S reluctant to give forward guidence, I suspect his speech could be a damp squib.

*Yesterday's trade: My AUD NZD trade hit profit yesterday. But I count myself lucky. I stand by the reasoning. Fundamental reason to place the trade, pull-back creating support and a profit target at recent resistance.

My issue is the timing of the trade. With retrospect, I got very lucky trading through a red flag US data event. In this case specifically regarding 'spread widening'. It is standard practice that spreads widen during red flag events. It was a risk I traded through, with hindsight, I class that as a mistake. Fortunately, it was a mistake I got away with.

For now, I maintain my risk on bias. Maybe Jackson Hole will throw up a surprise. But I think it there is a very good chance I won't place another trade this week.

Please feel free to email any thoughts or questions: johnelfedforexblog@gmail.com