Blaaaah...

[wolf825]

Well this has been a major turn of events in things overall in the Currencies... These huge pullback moves across the boards looks to continue a while and thensome... I had expected to see a significant consolidation and pullback like this at some point to occur after the major runs, but I was not expecting it til early or mid September...so this has taken me by surprise some. August just historically for many pairs, and usually overall, is not the time to expect to see major moves like this...usually the markets get quieter and more rangebound in August...its usually the slow month overall since many are vacationing, most government folk are on holiday and things are generally quiet overall...

Oh well... Time to re-group and re-think some trade plans and let the charts and indicators catch up to figure all this out now...

-w

[bigbull]

I agree wolf, this summer has been very unusual for all markets, wether it be currencies, equities, bonds, etc.

Their are many reasons as to why we have seen such volatile moves as you well know but two points really stand out above all, IMO:

1) We have experinced a massive dry up in liquidity in all systems after a period of abundance cash on most companies balance sheets which as you very well know drove them to the M&A bonanza(back them many stocks jumped because their were "rumors" that some of big companies would buy some of these low float/market cap stocks, obviously this drove a massive amount of global cash into these names and that alone made most companies cheap in terms of valuation(or so did many think). Some companies were trading at saturated levels according to their non-gapp EPS growth rate but rumors kept a lot of stocks afloat(many people where and are still unaware of this). One such case is WEN.

So with a dry up of liquidity markets are less leveaged and people begin to use margin money for their market needs. This money needs to be hedged further causing volatility to spike as less money is chasing greater stocks.

2) We have entered a period where global growth is about 4.5% annualized, but with increase risk and panic among investors worldwide specualtive money that was once in the market place(at least 20% of total market money 3 months back) fled the markets and are now sitting on banks gaining some nice but simple interest rate(compuond over the years).

Obviously rates, politics(which souldnt at all be in this) and other global tensions have affected markets but really much of this wild swings has been driven by fear of the unkown fear.

[bigbull]

One last thought.

This volatility has attracted many traders but spooked and frustrated many investors.

The market needs investors to hold its ground(that is the basic premise upon which the markets grow) otherwise its not going anywhere beause traders will flip and the markets will flip with them.

[wolf825]

Originally Posted by bigbull

One last thought.

This volatility has attracted many traders but spooked and frustrated many investors.

The market needs investors to hold its ground(that is the basic premise upon which the markets grow) otherwise its not going anywhere beause traders will flip and the markets will flip with them.

Most Excellent points bigbull! Thank You!

On your last point very much so--there are a lot more traders nowadays--less long term investors.. Many people put in and pull out so much. This creates the volitility and unbalances things across the board...

-w

[techno791]

I forgot it was August from a market perspective. Isn't all the markets supposed to be slow and boring this month!

[wolf825]

Originally Posted by techno791

I forgot it was August from a market perspective. Isn't all the markets supposed to be slow and boring this month!

Can't tell its august by lookin at the charts thats for sure..

-w

[techno791]

I need a word that's stronger than blah.

resistance is futile. Continuations are overextended. Follow the trend, but how long is that going to last. Out of control.

From one of those pro companies that does some analysis at the other board:
As noted yesterday, we traded very light this week due to the volatility. This has been a wise choice as many things we thought looked promising, were soured by the volatility. Thus far, we have had a total of three trades for August:

Net pip gain is 13 pips and roughly $140

Some hotshot somewhere is making BIG money out of this. Outside of a daily candle bear pattern at the peak of one of the pairs, I'm not even close to being him.

[wolf825]

Originally Posted by techno791

I need a word that's stronger than blah.

resistance is futile. Continuations are overextended. Follow the trend, but how long is that going to last. Out of control.

This doesn't appear to be a trend--this is almost an overextended panic driven move... The stock market is freaking out breaking below 13k, and its transferring on into the currencies and bonds and carry trades are bein effected.. But a few pairs have some hard support levels they seem to have hit and are holding--GBP/USD for example seemed to hit a wall at 1.9850... Just have to see how/if it holds... I'm gonna wait for some stabilization before tryin to jump in anywhere or speculate more.. I'm sure a lot of 200EMA lines are gonna be hit on charts--could be the support or bounces from those areas... (EUR/$ if I recall should be near on the 200 now--don't have the chart in front of me..)

As I said--I was expecting a reversal similar to this, but not to this extreme and not this early--I expected it to come when folks began to consider and discuss inflation and rate hike/cut possibilities around September into the Fall.. Well the Fed may end up doin its rate cut/hike sentiment news sooner now--and when they do that could very well turn this all back around. I am expecting a cut--that news alone should rebalance things to some sort of level

The bigger it falls--the bigger the bounce COULD be... IMO once this settles a bit we can see where this is all going...

Sidelined...waiting for calmer waters.

-w

[wolf825]

Well after several days of these amazing correction and reversal moves...Friday is here and I have to wonder if there will be a small rally or leveling off tomorrow for trading ahead of the weekend...or will things continue with the panic moves.. Since we all know this cannot last forever in this change--have to begin to wonder when the extreme levels for a rebound are going to happen..

Most pairs have traded back about 800-1400 pips from where they were about a week ago...but at closing today on the Daily chart of many of these pairs--the CCI indicator has given a turn to the opposite direction for the first time in days... $/CAD, a commodity pair, has turned from its initial move already...

Typically the CCI is a good early Forex indicator for changes in market sentiment and trading strength....but in such an unstable market it could be a pause before things just continue to decline. MACD indicators still show no change--but that is IMO often a slightly delayed indicator of circumstances in extreme conditions like this. So a conundrum exists...

While dangerous in such an unstable market and no "guarentee" indication of a safe or smart trade--I may try a rebound trade on one of the more extreme pairs (EUR/JPY...or GBP/USD..)from current levels and see what happens...

Could be worth a single lot 60 pip stop loss risk to see if this is a bottom..but I doubt I would hold into the weekend. I don't recommend this trading nor am I saying "bottoms here--get in now"...far from it. I just take a note of the change in an indicator for the first time this week and figured I would share some thoughts on the subject...

Comments or thoughts from anyone else looking at these charts?
-w

[wolf825]

Originally Posted by wolf825

Well after several days of these amazing correction and reversal moves...Friday is here and I have to wonder if there will be a small rally or leveling off tomorrow for trading ahead of the weekend...or will things continue with the panic moves.. Since we all know this cannot last forever in this change--have to begin to wonder when the extreme levels for a rebound are going to happen..

Most pairs have traded back about 800-1400 pips from where they were about a week ago...but at closing today on the Daily chart of many of these pairs--the CCI indicator has given a turn to the opposite direction for the first time in days... $/CAD, a commodity pair, has turned from its initial move already...

Typically the CCI is a good early Forex indicator for changes in market sentiment and trading strength....but in such an unstable market it could be a pause before things just continue to decline. MACD indicators still show no change--but that is IMO often a slightly delayed indicator of circumstances in extreme conditions like this. So a conundrum exists...

While dangerous in such an unstable market and no "guarentee" indication of a safe or smart trade--I may try a rebound trade on one of the more extreme pairs (EUR/JPY...or GBP/USD..)from current levels and see what happens...

Could be worth a single lot 60 pip stop loss risk to see if this is a bottom..but I doubt I would hold into the weekend. I don't recommend this trading nor am I saying "bottoms here--get in now"...far from it. I just take a note of the change in an indicator for the first time this week and figured I would share some thoughts on the subject...

Comments or thoughts from anyone else looking at these charts?
-w

Seems this idea has paid off nicely...and the Fed cutting rates didn't hurt either.. Was worth staying up all nite to watch the Asian and London sessions...things seemed to turn around at 3am-4am....

Today could close with a nice rebound from the weeks drops if all keeps up...

-w