Trade Team Update

We closed shorts that were in drawdown for profit, we took longs that went into drawdown and then closed those for profit, and now we're bought up for a return to test the topside. This is how the market is played... this is the game we're in and this life we lead. As I always say, this game is not for the emotionally weak and unstable and not for the mentally weak.

If you're looking for a "reason" why we moved the way we did today, don't waste you're on time overthinking those issues... today's action was very much a result of the continued shift within the underlying fundamentals of the market and the shifting monetary policy between the Fed and ECB.

The markets are nervous and jittery and these are the kinds of moves that happen when the markets are jittery and ill-liquid. U.S. banks are still in trouble -- USD fundamentals are still crap -- the Fed and ECB are sending mixed signals -- commodities are trading in a precarious spot -- the EUR/USD is trading in a precarious spot...

The market is looking for balance and equilibrium and some kind of a clear direction. What we're seeing is human emotions play out within the price action and within the price swings... we're seeing humans being humans and acting like fools to be honest... the price swings are fueled by fear, greed, anxiety, and uncertainty.

Many have asked me why I spend so much time studying human behavior, studying the body language and behavioral patterns of central bankers, and why I put so much emphesis on these factors. Well, today is a perfect example of why -- I never felt lost today and I wasn't the least bit fazed by the market's moves. I had no problems pulling the trigger on shorts and longs and letting them go into drawdown because as I factor in the human element to this market it helps give me clarity and helps make sense of the chaos.

Tomorrow:

Before we can even think about tomorrow's big data releases we still have Bernanke to contend with tonight. For me, nothing else matters until I hear what Bernanke has to say and then how the market reacts to it.

I do not like to speculate and make conjecture on what a central banker may say but I'm of the opinion Bernanke is not going to say anything too shocking or too USD+. This is just my opinion... please don't let my opinion persuade your trading because Bernanke could come out with guns blazing again. I don't see it happening, but I guess we'll find out in a few hours.

The big data tomorrow is the Trade Balance. The Trade Balance is one of the major thorns in the side of the USD... the abysmal Trade Balance is one of the main factors the USD is worthless and has persisted in being worthless. I see no relief here. I do think the continued weak dollar may cause the Trade Balance to print at or slightly above expected, but not quite enough to push the dollar up to any large degree against the euro.

That being said, should we get a big upside surprise this would come as a shock to the market and right now the market is dealing too well with shocks, so be aware of this...

In addition we'll get a speech by Dallas Fed Fisher who's more of a hawk. Fisher will be speaking about monetary policy and I'm sure he'll address the inflation issue in some form or fashion.

I sincerely hope you realize the Fed and ECB are toying with the markets... take Trichet for example... last Thursday he told the markets he was going to raise rates in July. Today, he said he's thinking about raising rates but there's really no guarantee he'll raise them in July.

Last week Bernanke came out over-the-top on inflation and talked the dollar up... well today some of the Feds were not nearly as hawkish on inflation as Bernanke was and didn't go to the lengths he did about inflation pressures.

And then today Chief Liar Hank Paulson actually came out and said that intervention was on the table...

Do you see what's happening here? These thieves and liars are toying with the markets and the markets are responding in chaotic fashion to their deception, their manipulation, and their games.

As traders in the currency market we need to realize what these price-fixers and manipulators are up to so we can beat them at their own game, we usually beat them at their game and now is not the time to get lazy but it's the time to stay smart and vigilient and methodical with how we trade this market.

EUR/USD:

I really have nothing new to say about the pair... I've been shorting the rises and buying the dips, simply following the same exact game plan that has paying me.

In the short-term I am biased euro long and believe we need to make a move back up after today's wild up and down price swings.

Many have asked, so here are my current open positions:

New Longs: 5622, 5640, 5684, 5702
New Shorts: 5810

I still have all euro swing longs from 4595 to 5389 open and I still have my euro swing short from 6011 open.

If you're having trouble making heads and tails of this market or you're scared by the volatility and the fear of the unknown, stay out. Very simple. I make sense out of chaos, so I'm going to hang on to my longs for a trip back up. And I will short again on the next rise up.

I do have some key levels to offer:

Key upside levels:

1.5652
1.5674
1.5688
1.5704
1.5726

Key downside levels:

1.5621
1.5603
1.5591
1.5582
1.5569

Short-term bias: euro long

You know the drill: be smart with trades, don't take knee-jerk trades, and manage your risk and money with precision during these times of heightened volatility.