6-24-9
4:06a GMT – Wild day in the land of forex. The pair rose of 200 pips on very little fundamental news – in fact futures have the rates remaining completely unchaged tomorrow. It appeared to be a classic short squeeze scenario (where pair rises against positions, hitting stops and thereby causing the pair to rise even faster) that never ended. Real resistance on the charts is not seen until 1.4150, though thankfully the pair has found some resistance at 1.4100 (but it by no means fell sharply back down). Technically I am still bearish on this pair – take a look at the 4-hour or daily charts and you can easily see the downtrend is still intact.
Trading Idea: I don’t trade news. I will stay put to see where the FOMC puts the rate and what their minutes say about the future. If I ignored the event risk I would look to short around 1.4100 as resistance has been found in this area and the RSI is heavily overbought.
(click to enlarge)
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June 24, 2009 at 04:46
Wow…everything still looks uncertain. Do you mean that you are going sell at 1.4100?
June 24, 2009 at 05:26
If was trading this signal tomorrow then yes, I would look to short around 1.4100. However there is a big event-risk whenever possible rate changes are announced and the Feds have a FOMC meeting tomorrow to discuss rates, inflation, etc. It looks like they will remain unchanged but the minutes of these meetings help determine the future of the pairs interest rate – which drives forex price. Some traders trade news, I don’t.
June 24, 2009 at 05:26
And yes, overall the markets are very volatile right now, and volatility means it is harder to predict the pair in the short term
June 24, 2009 at 05:34
Ahhh, I see. I just made a buy order at 1.40973. I think I may close it…
June 24, 2009 at 05:37
Don’t let me change your mind ;). PipHut was always just meant to be another tool in your analysis, not a means to completely replace your trading. If it were me though, if I were looking to buy it would be around 1.4060, near the bottom of the range in hopes of catching it on the way up. If you buy/sell at the extremes of ranges you generally can have much tighter stops with less risk.
June 24, 2009 at 05:43
Well I’ve been having better success going by your outlook. I think that I have been trading on luck all the other times that I have made orders. Do you have any idea when it will stop going up?
June 24, 2009 at 05:48
Well you can see by looking at the charts that resistance at 1.4100 has held a few times throughout the day. This then becomes a resistance point and some traders would look to sell at that point. I probably would too if it wasn’t for the rate announcement tomorrow. News (aka event risks) can cause the markets to jump 100′s of pips in either directions – sometimes even the opposite direction you would expect it to jump. Also the market is less liquid right after a major news announcement meaning orders are filled less accurately sometimes. I just avoid trading during major event risks altogether.
June 24, 2009 at 05:53
I have made a big mistake placing a buy order at that time, as it has just dropped down and I hate sitting at the computer hoping and begging for it to change direction. I might have to take a loss.
June 24, 2009 at 05:56
sometimes it is better to take a small loss if you find yourself in a bad position than to wait and have that position get worse.
June 24, 2009 at 06:01
Thats something I keep trying to tell my wife, but she gets too greedy too often. I say to her “close the order now” and then she says “just a little bit more” and usually ends it at half the amount she could of got.
I think this pair is going to be rocky like this for the rest of this week. It always seems to jump up every time it comes time for us to go to bed. Im going to wait for that tonight at around half past midnight.
June 24, 2009 at 06:29
I’m glad I waited because it went back up. A LOT! I got 903 yen out of it. Surely thats gonna drop down now….
June 24, 2009 at 13:34
My suggestion is to trade on math, not emotion. Otherwise it just becomes gambling….and eventually you will lose everything. Sometimes it’s just best to wait it out. Our market is too volitile right now for me. I look for specific conditions and only trade then.
June 24, 2009 at 13:36
P.S. I never trade news either (like Mark).