MY YEAR END PICK - AUDCAD

This is October, which is not a good month for Stocks. I don’t mind investing in Equities since with Covered Calls and my Credit Spread on indices, I have my downside covered (it’s risk management, remember). But Forex is an altogether different story, and since Currencies trend very well, the affects of time decay should not be so pronounced here. In addition, the leverage from having a spot position should give the Options a good hedge, and make us profitable if we are in the correct trend.

So it was with great interest that I read the the fundamental reason for the possible rise of the AUDCAD pair in the coming months. Click here to find out more.

So what if the USA bombs Iran? Well, then two things will happen. The price of Oil will shoot up, which is good for the CAD. But the price of Gold will also shoot up, which is good for the AUD. The markets will probably have a knee jerk reaction going down, but I think the downside is pretty much contained. So there’s my two cents worth. Lets see if the pair comes in to trigger a buy! See below for retracement to the middle of the Bollinger Band.



Another interesting pair that seems to be breaking up in EUR/GBP. Get the story here. What are the fundamentals behind this? Simply speaking, it’s the rise of the Euro as an alternative to the USD, and the potential problems of the British banks (e.g. Northern Rock). This should be able to send the EUR/GBP up. As usual, use technicals to find a good entry to this one. This pair has the advantage of not being directly tied to the Carry Trade, which can be good thing, since Carry Trades can go wild during unwinding as we saw in August.

Chief Shook