Daily Observations: May 13, 2013


Current Positions:

- Short AUDUSD (1/2) from 1.0150, Stop at 1.0030 (+120-pips locked-in), Target 2 at 0.9980 HIT (+170-pips), Target 3 at 0.9900 (+250-pips), Target 4 at 0.9860 (+290-pips) [final reward:risk 1.61]

- Long USDJPY (1/2) from net 100.07, Stop at 101.10 (+103-pips locked-in), Target 2 at 102.00 (+193-pips) HIT, Target 3 at 103.20 (+313-pips) [final reward:risk 2.32]

Recently Closed Positions

- Short AUDUSD (1/2) from 1.0150 at 0.9980 for +170-pips.

- Long USDJPY (1/2) from net 100.07 at 102.00 for +193-pips.

Typical Time Frame: 1-day to 1-week

Last week I shut the book with +120-pips locked-in on the AUDUSD and +103-pips locked in on the USDJPY. Today, I closed half of each of those positions, taking in +170-pips on the AUDUSD and +193-pips on the USDJPY.

I remain bearish on AUDUSD and bullish on USDJPY, but given the recent strength of the respective moves (magnitude + speed), I won't rule out a technical correction (looking at the 4H chart); thus, I'm taking some profit. I envisage reselling the AUDUSD and rebuying the USDJPY at some point this week, especially if US data remains strong. Now that the Advance Retail Sales (APR) report has laid the groundwork for further optimism on the US economy, I'm looking to Thursday's Initial Jobless Claims (MAY 11) to spark the next leg up.

Are you new to FX or curious about your trading IQ?

As always, any other trade ideas and general macroeconomic musings can be found in the DailyFX Real Time News feed, or by following me on Stocktwits/Twitter @CVecchioFX.

I also host a weekly Live Trading Q&A in DailyFX Plus, on Tuesdays at 07:15 EST / 12:15 GMT, in which I delve deeper into my positions and thought processes behind my analyses.

--- Written by Christopher Vecchio, Currency Analyst

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