Just yesterday I posted about a great way a technical trader can use fundamentals on certain occasions to gain a trading edge. As I said yesterday, they do not happen frequently, by Viola! – we had another occur one just today!

I has trading the 10 year USA Bond this morning and had knocked a couple of average trades (each for a profit) when I realized that today that the Treasury Department holds its auction for the 10 year bond.

A quick bit of research indicated the following:

The last auction was at a interest rate of 2.50.

The market has priced in an increase in that rate because of all the uncertainties in the world political and financial situation.

Some of those uncertainties are considered less uncertain today – Syria for example.

Given that the probability of a surprise that would cause bonds to decrease in price is therefore less than a surprise that bonds would increase in price.

Therefore a long position when the sales results are announced at 12:00 my time might make a quick profit.

I decided to go long at about 11.57 at 123’01.5.

With a stop one tick below my SRV at 122’31.5 my risk is 5 ticks.

There is no substantial resistance all the way up to 123’19.0.

The chart shown in Figure tells the story of what happened.

My first trade on this move is shown by the two green lines – long entry at 123’01.5 and an exit at 122’06.5. I only made 10 ticks on that trade but I am not a greedy person.

The blue lines indicate my attempt to make a bit more on the short side as price topped out and retreated. I entered short with an order to sell if touched at 123’15.0. I was filled at 123’14.5 – I really nailed the top of the market on that one.

I had to sell before I really wanted to as I had a appointment at 1:45, so I took a 4 tick profit and closed the short position.

I will probably be sorry that I did not just set a stop just above 123’15.0 and leave the position open. Time will tell.

 

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