‘The markets that are particularly difficult require approaches that are particularly creative.”
This is an update of the major movements on the markets and my thoughts about them. I trade 10 pairs, and use hourly charts for strategic analyses.
Before you declare war on the markets, note that the markets are very difficult and choppy right now. Yet the most useful idea is to trade only what you see. Being an effective trader has nothing to do with our ability to predict the markets. Speculation isn’t prediction. Remember; be courageous enough to take losses no matter what. This shouldn’t be too painful – providing that your risk is low. You don’t need to be right with every trade. The overwhelming need to be right about open positions is a factor that undermines most traders when they try to challenge the markets.
Trend: Limited bull
The bull’s power is severely limited, this pair is moving in a zigzag manner, and both buyers and sellers could be stopped out. I’m peeking at my socks and don’t even know what to do.
Now and again, many traders tried to buy this pair, only to be stopped out. It’s true this market is very much oversold. But a market can be in an overbought or oversold condition for a long time. So beware.
The bullish correction that took place last week on this pair simply created a chance for trend followers to sell and sell short. It’s another time when people are reminded by the markets that they aren’t smart after all. I know a trader who used a Fibonacci rule to pinpoint a turning point, only for this pair to disregard ‘his’ Fibonacci. In a frantic effort to be right, he cancelled his stop. He thinks that the market looks so oversold and might as well later reverse to respect the previously ignored Fibo level. The trade is -420 pips now.
Trend: limited bull
This pair is representative of a tug of war. The movement is rough and there’s no clear direction. But I think the pair could still continue its bullish journey. It bottomed out only a few weeks ago – the only problem is that CAD isn’t a weak currency. Therefore the bullish journey would be volatile.
The last week’s minor correction on this pair simply paved a way for a significant bearish dive. I expect the bearish trend to continue – with minor bullish corrections along the way. The challenge is where to enter and exit. While pivot points may help, remember that it’s also like an indicator; it has its own losing streaks.
Any bullish corrections on this pair should be seen as opportunities to go short. If you’d been doing this, you’d been winning consistently. So if you’d gained an impressive amount of pips on this pair, you should be happy. And you might also be happy to impress your date with some forex lingo.
This volatile pair has had some significant bearish movements. But there seems to be a strong support around level 108.00. Attempts to go near this level have been largely rejected. But I think if there’s going to be any move upwards, it should be temporary. The bias is still bearish.
There are slight upward movements: which have been constantly rejected by the 1.81120 resistance. Unless this resistance is broken, the bearish trend would resume. This pair is moving sideways for now.
My moving average clearly shows a bear market on NZDUSD, but both the price actions and my RSI suggest a volatile bear market. For now, any upside breakout should be seen as false – after which the bearish momentum should resume.
Trend: Slightly bearish
There seems to be a serious impediment to the southward journey of this pair. It’s already captured amid the cut-throat struggle between buyers and sellers. The probability of a southward resumption is high, but this market needs to leave the present ‘jailhouse’ called acceptance zone.
Conclusion: There’s no such thing as everlasting trend. But it’s not easy for a trend to change. While many people are anticipating significant reversals on the markets, no-one can say exactly what will happen next. But you should do everything in your capacity to avoid a margin call. You may want to stay out of the markets, but do you know what would happen at the time you think you’re ready to enter the markets (and enter)? I’d like to conclude with this quote:
‘For trading to be stable, it is better if there is a small average profit per trade combined with a large amount of trades with small spread of profits and losses, than regular ups alternated by the same dramatic downs after a large loss.” — Rashid Umaroy
©2010 FX Instructor Forex Blog - For Traders, By Traders. All Rights Reserved.