Just on the EURNZD alone, we're up well over 550 pips on our 3 short positions. This figure may possibly swell past 800 pips in the next few days as the market awaits a much anticipated December ECB, where Mario Draghi is widely expected inflate the size of the ECB's already gargantuan QE Bazooka, and push interest rates deeper into negative territory.
We've made our intentions apparently clear on these pages - that the euro will see more downside and we want to be well positioned to capitalize on this. On more of the fundamental side, read our Insight piece in which we said that whatever actions from the ECB, PBoC, and BoJ, they were most likely reactionary to the FOMC's propensity to hike rates in mid-December.
For those who haven't been keeping track of our public trade pieces, here's a little recap. You're encouraged to read through the backlog of our Trading Journal as everything has been publicly documented there.
We first went short the EURNZD on 13 December, after our call for the EURUSD to pullback before selling off materialized. In the ensuing days, we shorted EURAUD which won us 280 pips. The following week, we shorted EURNZD for the second time after the pair staged a corrective pullback into our technical selling levels.
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Throughout all of this while, we have been preempting readers to expect more weakness in the euro, and that we were going to sell into rallies, which we did. Late last week, we added to our complex of short euro positions with a third trade, completing the holy trinity and satisfying our exposure targets pre-ECB.
We are bearish EURNZD for the short, medium, and long term. A daily close beneath the lows at the 1.61 handle should exacerbate the decline. We want to see impulsive action for the follow through.
On the charts, our third short was off our "intermediate selling zone" which held up extremely well. Our entry was slightly premature but risk was contained. Bulls were never able to sustain the relatively sharp bounce from the lows, signaling that the professional flow was on the short side. You never want to bet against the professional flow, or what is also known as the 'smart money'.
We have adjusted lower our primary target, and there exists a secondary target which we only reveal to our Premium Subscribers. A lot rests on the ECB's decision this Wednesday and we'll be managing our positions accordingly. Expect volatility to increase coming out of last week's Thanksgiving lull as this week is packed with macro econ data releases.
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