Tuesday 28 October: Thoughts on the current narrative

The overall positivity has continued, the AUD is currently the standout strong currency, thanks to US / CHINA de-escalation hopes and possibly anticipation of a high CPI print (due during the upcoming ASIAN session).

Barring a bout of JPY strength (possibly profit taking following positive rhetoric as Mr Trump visits Japan?). The USD and JPY have remained weak following the weekly 'opening gap'.

Regarding 'opening gaps', I personally look at the chart as if it was a single candle, which generally leads to an inclination that a pullback is due sooner rather than later.

The GBP is in the douldrums thanks to fresh fiscal concerns. Combined with last week's 'soft CPI data' there is a very strong case for short GBP, particularly AUD GBP short. Although, I hasten to add that I would still 'long the GBP' as part of a 'risk on trade', if it had the most momentum at the time, such as GBP JPY long.

Currently, my view is to continue looking for 'risk on trades'. Ideally with 'at least' a cluster of 15 min swings (ideally 1hr swing), following a pullback. JPY or USD (arguably CHF) short. Vs AUD or whichever currency you favour in the moment.

Of course, there are a plethora of events to potentially change the narrative at any moment. Earnings season, FOMC, AUD CPI, BOJ. Along with the ongoing US / CHINA narrative. Thursday's European session in particular could be interesting following the FOMC, BOJ and tech earnings all reported within a few hours of each other.

Currently, considering the shutdown, I'm content with two trades per week. It's pleasingly surprising that although I've only placed one trade so far, I am thinking that I could have placed three. (2x risk on, 1x GBP)

Please feel free to offer any thoughts or questions, you may have a different opinion than me: johnelfedforexblog@gmail.com

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