Making 99 pips of profit from the falling Gold

US Advance Retail Sales and the University of Michigan index of consumer sentiment both rose more than estimates. Dollar rose and gold fell in response to the news and I managed to make 99 pips of profit by selling gold after the retail sales report.

Euro-Zone GDP, U.S. Retail Sales, and ECB 10th Anniversary

The euro-zone officially fell in its first recession after today's reports showed that the economy contracted 0.2 percent in the third quarter, following a 0.2 percent decline in the previous quarter.

The GDP numbers turned negative in Italy and Spain, and Germany. France escaped the official recession by an anemic 0.1 percent growth which the finance minister called it a surprise. Some analysts believe that the service sector in France is also subject to downturn and getting negative GDP numbers is just a matter of time.

Today was also the 10th anniversary of European Central Bank and there was a meeting in Frankfurt with Bernanke and Trichet and also central bankers from Israel, Mexico, and deputy governor of China's People Bank of China. Ahead of the Washington states summit which officially starts tomorrow, policy makers expressed their support to help financial institutions to overcome the credit crisis.

Reactions to the economic data were somewhat limited even to the record decline in the U.S. Advanced Retail Sales which fell 2.8 percent in October. Markets welcomed the central bankers' signals for continuing easing monetary policies with optimism to have at least some fiscal policy announcements from the Washington summit.

I made about 3 percent profit from selling eurjpy.

Unusual positions and very usual losses

All recent positions resulted in heavy losses. There are clear reasons:

I was completely wrong when underestimating the possible negative effects from the US housing and credit problems especially the case of Freddie Mac and Fannie Mea. Yesterday, President G. W. Bush made a press conference explaining the government plan for supporting the two firms and the deposits of American people. At the same time, Bernanke was at the senate when repeating concerns on credit conditions and also the prospect of inflation.

I was also wrong in creating the positions. In the case of selling EURUSD there were significant errors and mismanagement:

• Although it was generally inappropriate to sell the euro at that time but considering economic data then the possible option could be EURGBP, not EURUSD.


• Also too much risk had been taken when I hold the position in a very weak technical conditions until making almost 100 pip loss.

In the case of selling GBPUSD I made the worst choice. I sold a currency when it was facing CPI data that has been its only support in recent months. Even a very armature trader doesn't make such crude decision.

The market certainly doesn't make mistake and I paid the full price of my decisions.

Taking an unusual position ahead of UK CPI

In less than 4 hours to UK CPI, GBPUSD has reached near its daily resistance. I think most of the data has been priced and it may be an opportunity to prepare for the possible reactions after the report. I decided to sell sterling against dollar and it may looks unusual but there are reasons to me:

• Inflation could support a currency from interest rate perspective, but it is usually unsuitable in a long term especially when the economy increasingly shows signs of slowdown. It may be also a chance to be in a better place before tomorrow's UK Employment report.


• After the report, the market must face economic data from US, Advanced Retail Sales and PPI which is likely to work in favor of dollar, at least in a short term.

Taking position on German ZEW survey

EURUSD may pass 1.6000 this week but I think it is unlikely to happen tomorrow when German ZEW is expected to reflect how inflation and appreciation of Euro has shacked confidence. At the same time, US Advanced Retail Sales are due to release on Tuesday which may be a little encouraging in current conditions.

So I decided to sell Euro against dollar, at 1.5905 when technical conditions look also supportive.

Taking 54 pip profit, when they are in a hurry

I decided to close my position, short on GBPUSD, taking 54 pip profit at 1.9580. About 8 hours is left until the US advanced retail sale release and I don't want to give time to this market to change its mind! However there is also another reason, the data could improve market sentiment and high yielding currencies usually benefit from that. I am thinking about tomorrow data, inflation in US and Germany, so this sooner than expected profit is a great chance to have more sleep and less stress.

Going short on GBPUSD

One position has opened just now, selling GBPUSD at 1.9634; the size of the position would increase automatically if the rate reaches the resistances.

Dollar-supportive data are in horizon

According to the estimates, US advanced retail sales on Thursday in addition to US CPI data on Friday can be act as supportive data for the dollar. British pound is the weakest competitor in my view, so I will go short on GBPUSD very soon and I will increase the size if I find the coming technical data more supportive.

Increase in retail sales, which is expected to be reflected in tomorrow report, can improve the currently battered market sentiment. So, selling the Yen is an option in the next 20 hours.

US Retail Sales, Germany CPI, Idea for the game

US advanced retail sales is to be released on Thursday, should it come as a support for the greenback it could arrange the scene for playing the Germany CPI on Friday.