Replacing the TRY for another risk barometer means focus on CNY, JPY and CHF and their crosses. The ...
How to Trade Bounces on the Euro
11/08/2012 3:16 pm EST
Learn how Marc Principato is making money on the euro, and also a few tips on how to use the S&P as an indicator for currency trading.
The euro has obviously been a currency that is on everybody’s mind. It has been in the news lately. We’re talking about that today with Marc Principato. Marc, you are a currency trader. What’s your view of the euro right now?”
Well, it’s been crazy, as we all know. It’s all over the place. It recently made new lows at $22.90 about a week ago and since then, it’s bounced to $26. This morning I was looking at this thing pushing just $26.20, so we’re in a bounce mode right now. This thing is working its way up. It was oversold, so we’re just seeing a bounce. I think overall it is still generally bearish, but as a short-term trader, I am looking to do whatever the market tells me to do and right now, it is pushing its way up. Until I get some solid resistance, I’m going along.
I want to talk to you also a little bit about S&P futures. I know that is also an area that you trade. What’s your thought on that right now?
Well, here’s the thing. The S&P is actually a really good indicator or filter to help me with my euro trading. I am actually not as active in the S&P, but I use it to help guide my euro decision-making intraday; so basically what will happen is S&P will make new high; euro will typically make new high, euro against dollar. If S&P does not make a new high, for example, and euro starts to struggle, I also know that there is now weakness in the euro; so again, it acts as a great filter to help me decide if I should hold this thing – my euro position – or should I get out now, or what should I do? It helps me.
So are you actually trading S&P futures or just kind of using them as a gauge?
No, I am using them as gauge. They are just simply a filter; so I have my S&P charts up right next to my euro, and it’s like I said. If S&P is pushing highs, I don’t want to sell my euro. If S&P is pushing lows, I don’t want to buy my euro; so again, it acts like a nice filter; a great guideline to go by.
Now I know that you are primarily a euro trader, but are there any other currency pairs or even with regard to the dollar; what should people be aware of right now?
Well, I mean, everything is pretty much tied with the dollar; all the majors, meaning dollar-yen, dollar-franc, pound-dollar, so there is a lot of volatility surrounding the dollar; so any of those majors. You know it’s pretty much where there is a lot of action; a lot of volume as well. As far as getting into like exotic pairs, I personally tend to stay away from them. The spreads are too high; they are just too expensive to trade, and they are just not my style. So, you know; if you’re a more conservative trader or if you’re a newer trader—in my opinion—you’re better off sticking to the majors.
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