Here's my trading plan for this week

FX: Because it is the end of the month we are booking profits in some of our long USDCHF positions at 1.2880 which we overweighted on Friday at 1.2720 (the same level we purchased from on an 6). This is a nice gain and we do this strictly for money management sake as we want to ensure our profits for the month of January. This is also a technical decision as we think 1.29 will prove a tough nut to crack today. So we have pared back longs at this level and look to reinitiate at the close (to collect interest over the weekend) hopefully at slightly lower levels.

Readers should recall that we said two weeks ago to expect a bottom in USDX at 88.00 as that marked key technical support. After bouncing on that level last week we said in Friday morning's report that "It will be very interesting to see where we close the day at." We said that because if it held up in light of the GDP number the dollar was poised for a key bullish weekly reversal. We identified the likelihood of a bullish weekly reversal by 9:20 AM when we began purchasing USDCHF as the dollar index proxy. That proved a wise decision.

*As explained in this weekend's report the first key level for the dollar to overcome is technical resistance at 89.50 (See below).

To clarify, we list below our trades with some updated comments.

Jan 3: Short USD/MEX @ 10.63 -- Looking to add at higher levels possibly.
Jan 3: Long AUD/USD @ 07350 -- Closed 1/2 @ 0.7525. Will buy more on the dip to 0.7450.
Jan 6: Long USD/CHF @ 1.2720 -- Taking some profits at 1.2880. Buy more on a dip to 1.2800.
Jan 9: Long USD/CAD @ 1.1660 -- Fishing for a bottom around 1.1450.
Jan 12: Long USD/JPY @ 113.70 -- Closed out at 116.30 as indicated.
Jan 27: Long GBP/USD @ 1.7825 -- Closed on Friday at cost.

Recommended longs from 88.00. Look to add on a sustained move above 89.50.

Gold: Gold looks to be gearing up for one more high which would complete a pretty clear "five wave" move from last summer's breakout move. This final rally has surpassed its technical upside targets by about 10% which makes it very overextended and ripe for a correction. We remain (as we always have been) bullish on the long term. Also note that as we have said for months we expected a top in gold to coincide with a strong rally in USD for 2006. This may be setting up as we said.

We don't ever recommend selling gold. But traders may look to buy protection from put options.

Stocks: Stocks are moving higher again after a failed attempt to take out the 1245 lows. This is major Fibonacci resistance turned support and as we have said, "For the bears to steal the ball we need to see a top in the S&P500 around current levels and a 'five wave' move down below 1275 and then key support at 1245. Once accomplished, we'd expect more selling pressure to follow." So far bounce is going strong and we think traders can still look to go short with risk limited to 1,300. But more pragmatic approach is to wait for a completed "five wave" move below 1245 to confirm a top.

Go short with risk above 1,300. Add to position on a move below 1245.

Bonds: Yields are moving higher again today which is technically a breakout of a multi-year downtrend. Notes also broke below key trendline support at 109 as expected and we have recommended shorts from 109. Key resistance at 4.5%-4.7% lines up with the key 107-108 level in notes. A move below here could really ignite some selling considering that the market is bearish on bonds but positioned the highest net long in 3 years (see this weekend's report for an explanation).

Recommended shorts from 109. Stops should be placed just above 109.15.

Crude Oil: No change: Crude oil looks like it pulled back in a minor "wave iv" correction the past few days and may be headed higher here to $70 or above. The wave count is a bit messy, but our overall outlook stands for a move to $80-$100 over the coming months.

Recommended long at $55 last November. Looking for a move to $80-$100 over the coming months.

Regards,
Jes Black

FX Money Trends
613 4th St Suite 505
Hoboken, NJ 07030
Tel: 646.229.5401
www.fxmoneytrends.com

Jes Black is the fund manager at Black Flag Capital Partners and Chairman of the firm’s Investment Committee, which oversees research, investment and trading strategies. You can find out more about Jes at BlackFlagForex.com.

Prior to organizing the hedge fund he was hired by MG Financial Group to help run their flagship news and analysis department, Forexnews.com. After four years as a senior currency strategist he went on to found FxMoneyTrends.com - a research firm catering to professional traders.

Jes Black's opinions are often featured in the Wall Street Journal, Barrons, Financial Times and Reuters. He has also written numerous strategy pieces for Futures magazine and regularly attends industry conferences to speak about the currency markets.