Daily Alert – Friday 5th March 2021: Tricky week ends with small profit

Mark NugentDaily Alert, March 2021

Daily Alert – Friday 5th March 2021: Tricky week ends with small profit

What a frustrating week it has been. Outside of a small patch of risk-on sentiment on Monday afternoon, the week has been consistently indecisive.

Major risk events were as follows:

1. Biden’s Relief Package passed the House on Monday, hence the short period of risk-on sentiment.
2. OPEC+ spoke of “cooling the market” on Tuesday by implementing production hikes and then, on Thursday, announced they wouldn’t do this after all. WTI moves up and Goldman Sachs and others amended their oil price forecasts for the nth time in n weeks.
3. On Thursday, Fed Chair Powell said he was unconcerned by the rise in bond yields which caused the USD to take a step upwards which is still playing out.
4. Today, the usual first-Monday-of-the-month Non-Farm Employment Change and Unemployment Rate both beat expectations.

I placed three trades this week.

T9
Nasdaq long on Monday intra-day. (Theme – reversal of over-reaction to inflation fears the prior Thursday). Almost got to 2x risk in the money when it reversed as sentiment soured. Got out at breakeven. (Never watch a positive trade go negative. Get your stoploss to breakeven as soon as you are 1x risk in the money).

T10
AUDJPY long on Monday. (Theme – JPY sentiment-driven weakness). Again, almost got to 2x risk in the money before it too reversed, taking me out at breakeven.

T11
Last night, USDJPY long at the close. (Theme – Powell’s bond yield comments driving USD upwards). Got to almost 2.5x risk in the money earlier today. Closed half the trade at 2x risk as it came down. The remining half is still live but grinding down.

So, as I look at the weekly charts at 430pm UK time, I see equity indices down or flat, GOLD down (strong USD), oil up (general bullishness and failure to increase production). On currencies, the JPY has dropped like it has been solidly risk-on, which it has not. AUD and NZD drop on the week. CAD is up on the oil price. The GBP takes a small breather from almost two months of weekly gains and takes a leg down. The USD rises on bond yields. The EUR drops like a stone as a dreadful Retail Sales number is posted yesterday and Italy disgracefully denies AZ vaccine exports to Australia. I guess AZ will think twice before using their fill-and-pack plant in Italy from now on. State piracy has consequences.

The hindsight trade-of-the-week was probably EURUSD short but there was no earthly reason to get into it at the start of the week.

Oh well. I’ll sign-off now. I have 1% in the bag and maybe more from the second half of the USDJPY trade. Brief videos of T9 and T10 are available for members.

Have a great weekend and I’ll be back on Monday.

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