Week 31st, 2018

The futures market closed week 31st of 2018 with top three strength in MXN, AUD, & JPY while USD, EUR, & GBP on the bottom three. This confirmed the downtrend in EUR/AUD & GBP/AUD.

WHY BANKS FAVORS THIS KIND OF FX INVESTMENTS?

Simple. Interest earnings from the carry trades. With ECB giving away free money (0% interest), the easiest way for European banks to make money, is to funnel their capital to higher yielding currency like USD (2%), NZD (1.75%), AUD (1.5%), & CAD (1.5%) in the G8 space.

WHERE TO ENTER & EXITS?

Looking at the charts above, to keep it simple, we target the neckline around 1.53 and our risk would be the high of week 31st which is 1.5820. The best entry is around the breakout 1.57-1.5720/50. Therefore the risk structure is 120/100/70 pips with 400/420/450 pips return, offering 1/3.33, 1/4.20, 1/6.42 risk/reward ratio.

That means for every 3% of equity exposed to this trade (1% at each entry), banks will make 3.33+4.2+6.42 = 13.95% over the duration of the trade.

HOW LONG TO WAIT?
We expect 5-7 weeks to reach target.

~BANKSIGNAL$~