Waiting for fresh start in February
So the month of January is behind us now and looking for a fresh start into February. It was a difficult month as what seemed to be the main event, the ECB (European Central Bank) quantitative easing program, was actually being massively overshadowed by the SNB (Swiss National Bank) dropping the peg on the EURCHF currency pair. As a result, we as traders had to deal with unprecedented conditions in terms of a market being influenced by central banks decision. Think only of the fact that the Danish national bank lowered interest rates 3 (three!) times in 10 days, and you know what I am talking about here.
Focus on four currency pairs
This week I was focusing on 4 main currency pairs: GBPUSD, EURUSD, EURGBP and USDJPY, and being a week in which the month was ended on a Friday, the majority of expiration dates were Friday, so basically the end of week or month if you want. I was bearish on the pairs above, with the exception of the USDJPY and while the GBPUSD and EURUSD showed nice profits as the majority of the options expired in the money, the USDJPY failed to break higher out of a contracting triangle and continued its consolidation despite plenty of economic releases in the United States like FOMC, GDP, Durable Goods, etc.
A difficult Month
Therefore, the call options traded on the USDJPY failed because of the triangle still consolidating but moving forward into February will look to only buy call options on the pair. The EURGBP also found a good support on the 0.75 level and with no meaningful break it lowered our profitability rate as I was mainly buying put options on spikes. All in all, a difficult January, but we survived and looking forward to a much better February.