Volatility Trades

Written by JS T. Alexander | 05 March 2010

A Scalper's Haven to Trade!

The much anticipated US Jobs report has been keeping the market at almost in a stand still after a volatile market week from other reports like the Greece announcement of selling their government bonds which was quite well accepted despite of the country's debt problems and jobless claims unexpectedly lower that prompted the USD to move higher.

The effects were felt more on the USD/JPY which was trading from a low of 88.15/28 to as high as 89.47; the GBP/USD trading range from a 1.4780 low and a high of 1.5202; EUR/USD from a 1.3433 to 1.3736 and the USD/CHF between 1.0888 high and a low of 1.0647. These trading range from the major pairs have showed a 150- 300 pips average range that can easily whipsaw in the market place for the past few days. Such volatility are more likened by the scalpers and short term traders trying to take a few pips in between at the risk of loosing.

However, for most strategist these times of increase market action has been more favorable for spread trades and hedgers in speculative positions. The technical set ups for short term trades would remain bearish for the EUR/USD and the GBP/USD with expectations that within a 24 hour trading range that a 60-75 pip range can be made trading both sides of the trade taking profitable trades in between and just consider a net percentage gain on all trades made for the day. As the most of the currency majors have already adjusted their technically oversold and overbought and each pair's percentage highs / lows.

Now, when the news comes out on the lst trading day of the week expect to build a wider range of price action starting in the European sessions towards the US sessions. As a word of caution, whatever the major sentiments of the trend it would always be logical to keep its stance, although we are expecting a continues good report for the USD that will keep allcurrency majors on a bearish tone. We have maintained a bulish tone for the USD for the first quarter since Dec. 22 of the closing year of 2009.

The Cross rate EUR/GBP has held its prices too above the 0.9000 levels where key price support to watch would be 0.8965-70 which used to be the resistance of the previous run up from the low of 0.8655 major support. Although, the longer term out look still remains on the bullish perspective as the nest leg up may be visible within the next two weeks coming. The only exception was with the USD/JPY which made a remarkable upward price action after the news while the USD/CHF followed with smaller increments.

The AUD/USD have maintained its price stability from the recent hike to 4% and the percentage increase on Australia's GDP which also gave support for a corrective Aussie Dollar. The current price of 0.9008 is steady with an initial support of 0.8855 which may be far fetch to reach unless the numbers on the USD may well be overwhelming that would lead for an AUD/USD correction. Meanwhile, the New Zealand ( Kiwi ) maintains it low price of 0.6880 as of this writing and the negative sentiments are still in place.

Good Luck and Best to your Trades!