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Trade Ideas & Signals -What Is Valid And What Has Expired
We just have a quick question in the terminal from Farhah asking us whether the trade idea, the swing trading idea for the Aussie Yen on the 16th of April in the terminal is still valid?
So, to help you guys answer that question going forward, about whether a particular trade idea in the terminal is still valid, it’s simply by going over the trade ideas rationale, or the reason why analysts considered it as a potential trading opportunity. And then simply evaluating whether the current sentiment is still in line for that particular trade idea.
So let’s quickly go over the Rationale. The overall risk tone remains tentative, as increasingly weak economic data contrasts with expectations for the Coronavirus to begin peaking. That is still very much in place. With data likely to remain weak for the foreseeable future, further highs in the Aussie Yen will be an uphill battle. As such, we expect the current resistance around 69 and 69.25 to hold in the medium-term, with the area presenting an attractive level to go short.
Now, that is still very much in line just by basically reading out the Rationale, and then we can read the Trade Risks and see whether that has invalidated this idea.
The main risk to this trade would be a surprise improvement in market data, that hasn’t happened, or the economic outlook and consequent risk tone.
Now, risk tones have has rip sawing recently, economic data or outlook still very much coming in negative across the board. This would likely result from data suggesting a strong bounce back in economies can be expected, as opposed to an outright improvement in economic data, we haven’t really seen that either.
So just by reading the Rationale and the Trades Risks, we can see that that is still a valid trade idea for looking for some potential downside in the Aussie Yen. And just a quick way that you guys can use, going forward, to see whether these trade ideas are still valid, whether the Rationale still makes sense or whether the risk factor has invalidated that trade idea.