The first two trades of the day were both sell limit orders I had left in place overnight. They get hit at the start of the London session.

Trade 1
Short EUR/USD
Entry: 1.3658
Exit: 1.3640
Pips: +18

Trade 2
Short GBP/USD
Entry: 1.7625
Exit: 1.7613
Pips: +12

Trade 3
Short EUR/JPY
Entry: 136.307
Exit: 136.193
Pips: +11.4

Trade 4
Short EUR/JPY
Entry: 136.526
Exit: 136.41
Pips: +11.6

Trade 5
Buy EUR/USD
Entry: 1.3689
Exit: 1.3695
Pips: +6

On my second GBP/USD trade of the day I hit the close button when I was 5 pips in profit. Unfortunately I was filled for a one pip loss. The markets were certainly moving today and it was very common to see multiple pip moves all over the place.

Trade 6
Short GBP/USD
Entry: 1.7312
Exit: 1.7313
Pips: -1

Trade 7
Short EUR/JPY
Entry: 136.289
Exit: 136.198
Pips: +9.1

Trade 8
Short GBP/USD
Entry: 1.7304
Exit: 1.7293
Pips: +11

Trade 9
Short EUR/USD
Entry: 1.3725
Exit: 1.3715
Pips: +10

Daily total: +88.1 pips

Today’s coordinated rate cut by the Fed, ECB, BOE and Swiss central bank resulted in a slightly positive bias for the euro over the early part of the day. Dollar strength returned after lunch during the New York session and it will be interesting to see if it picks up more or if we get a decent euro rally of some sort.

Sterling got crushed today as the British government partially nationalised all its big banks.

All three EUR/JPY trades today were continuation plays. The first and third trades were based on price gunning for 136.00, while the second was when price was looking to test 136.50. Yen strength is very much in play, although USD/JPY is tightly wound around the 100 handle for now.

Last Thursday I put my toe back into the water with a buy at 1.4250. My luck was not in and I got stopped out as price just dipped under 1.42 to make a new low for the week during Friday’s London session. It was only slightly frustrating to see that taking an entry at the same price point but at a different time would have yielded profit.

After the NFP data came out later that Friday I once again dipped my toe in, with a long market order at 1.4315. The unemployment number came out just slightly worse than expected at -84k versus a consensus number of -73k. It was the unemployment rate that was a real kicker though, with a 6.1% rate well beating the expected 5.7%.

The euro began to see some love after the data came out but it was short lived and my entry got stopped out for a 25 pip loss. Nothing seemingly can stand in the way of the dollar bull right now.

The big news over the weekend was obviously the conversatorship (i.e. nationalisation) of Fannie Mae and Freddie Mac by the US Treasury.

Sunday’s Asian session saw euro climbing out of its hole all the way up to the 1.44 handle. It looked like curtains for the dollar bulls.

On such a significant move up I thought it was worth going long on the breakout. I went long at 1.4410.

Of course, the dollar bulls came back in force during the London session, dropped euro down sharply 200 pips to once again bounce off 1.42.

Monday saw markets rallying around the world on the news that the US government was there to save the day. The New York session saw the dollar charge continue with euro almost dropping to 1.4050.

Since then it has been slightly choppy. There was a complete reversal of fortune for the equity markets today. Continued poor housing start numbers and Lehman’s stock tanking pretty much erased any gains made on the DJIA and S&P500 from yesterday.

The euro has twice tried to break above the 1.42 handle today and twice it has failed. I placed an AH trade at 1.42 on the second attempt which got stopped out for a 40 pip loss.

It definitely seems like I’m still swimming against the tide, but at the same time I’m not sure if the dollar bulls have much steam left in them after the events of the past few days.

Some data points that have my attention at the moment include:
- the 50% retracement from 1.1640 (Nov 2005) to 1.6037 (July 2008) sits at 1.3840 which I see as a potentially significant support level if we continue south in the medium term.
- it took 31 months to climb from the 1.1640 low in November 2005 to the high of 1.6037 in July 2008. It has only taken a month a half to retrace 44% of that move.

It is often said that equity markets fall a lot faster than they rise but the same is not true for currencies. O RLY? You could have fooled me with what is currently playing out.

My account balance is down 10% for the month from those four losing trades. I have two options as I see it now:
1/ Switch my bias to shorting the dollar. Look for bounces up as entry points and try to make the most of the remaining dollar bull strength.
2/ Stand aside and wait for far stronger evidence that the dollar bulls are waning.

Well there is actually a third option but I’m not quite sure if I’m over the shock of thinking and/or attempting this option to seriously consider it at this stage. It is something that I have gotten bizarrely intrigued with over the past ten days and while it seemingly goes against plenty that I hold true and self-evident about trading it still remains something that I am giving serious time and effort.

Maybe it’s just lack of discipline on my part, looking to jump ship when things are once again looking grim, or maybe it could be a perfect compliment to the way I currently trade. Time will very shortly tell.