I must admit I love a crisis. From a trading perspective they are magic. It usually gives you solitary event to concentrate on and they have a habit of causing the market to seemingly forget everything else. As I always preach you need to look at the wider picture. So what is the big picture in Cyprus. The clowns politicians are fart -arsing about over 17 billion euros. Considering they’ve spent 429 bn on bailouts since 2008 it’s peanuts. The fear in the market is what a default could lead to, contagion or bank runs blah blah blah. It’s not going to happen. Draghi has said so. Just like Greece was never going to go down the pan in reality, neither is Cyprus, especially over small change.
So how do you trade it? Anyone who was with me last last night would know that I sold EUR/JPY up at 124.45 after the FOMC. The spike was reactive and I knew that Cyprus would be back in the window today. That got me a nice 145 pips as I bailed at 123.00. I’m now looking for more bad news to still come out so I can load up some longs. Ideally I want 1.2880 to break in EUR/USD and would look to start buying around 1.2850. There will be a deal done whether it’s later today, tomorrow or over the weekend. My gut feeling is that like all crisies it will go down to the wire, which in this case is Monday.
So get your plan together, get your ducks lined up and let’s try to make some money out of it.