02 August 2012

EUR/USD : Spike Top

  • Patiently sitting on bad position (-1.2133 and -1.2292) still. 
  • Did not cut the position because charts are bearish this entire time ie rally is just a bear squeeze which I got caught in with my poor timing. I still want to be short regardless, until the chart formation changes.
  • Price action tonight post-ECB + Draghi inaction has made a spike high of 1.2404 ie consensus rejection of value or recognition of over-valuation near these highs.
  • Think markets' next move will be to probe for the mirror value area on the downside. Failure to establish one will mean downtrend continuation. Either way, short is good.
  • In watch mode until bad position gets in-the-money. Average in-rate is 1.2186.


Taichiseal said...

the comment that sent bond yields soaring and the euro sinking: Mr. Draghi said the European Stability Mechanism, the bloc’s permanent bailout fund, was emphatically not a “suitable counterparty” for the ECB’s refinancing operations. That is, the ESM can’t pledge government bonds that it buys as collateral for fresh cash from the ECB.

Anonymous said...

Agree with you about the spike top. its a bearish signal. If you recall, the daily chart validated a large H&S pattern on 1 June, whose target is 1.1785. Yesterday's rejection of 1.24 makes that downside target a very real possibility soon. - Pandu

FX Trader said...

I am not trying to add salt. But EURUSD long term support is at around 1.2000. Risk reward ratio favours more on the long than short.

Though I am bullish on EURUSD, I did not long EURUSD. I had shorted USDCHF instead. CHF is pegged to Euro but offers better fundamental.

Again, I am just trying to help. I was once like you, keep losing...

Anonymous said...

Hi Taichiseal,

I’m a fan. Sometimes we all need a break. But don’t let the market noise push you around! Have you considered not even looking at the daily charts? The longer-term weekly charts display cleaner moves, filter out a lot of the choppiness and market noise and the trends are much more smooth and consistent.

Here are a couple of quotes from the book 'Market Wizards' you might find interesting:

“Whenever I enter a position, I have a predetermined stop. That is the only way I can sleep. I know where I’m getting out before I get in. The position size on a trade is determined by the stop, and the stop is determined on a technical basis. For example, if the market is in the midst of a trading range, it makes no sense to put your stop within that range, since you are likely to be taken out. I always place my stop beyond some technical barrier. …the market shouldn’t go there if you’re right.” - Bruce Kovner, Market Wizards

“…in this manner Kovner maximizes the chances that he will not be stopped out of a trade that proves correct, while at the same time maintaining rigid money management discipline. The moral is: Place your stops at a point that, if reached, will reasonably indicate that the trade is wrong, not at a point determined primarily by the maximum dollar amount I’m willing to lose per contract. If the meaningful stop point implies an uncomfortable large loss per contract, trade a smaller number of contracts.” – Jack Schwager reflecting on what Kovner said, Market Wizards

Good trading and hang in there,


Taichiseal said...

Thanks Aman. Appreciate the advice.