As one of the most significant factor in the volume of market movement currency correlation playing big roles in movement the market unexpectedly either opposite direction or overbought oversold.
Take for example today EUR-USD and GBP-USD which their movement are very identical to each other. However the volume at how much they move is different and this is closely correlated to the EUR-GBP movement.
Today's analysis Example.
The expectation towards EUR-USD should be moving upward after reaching resistant at 1.4307 however it never happens and instead keep moving downward deep down to 1.4287. However the GBP-USD making a correct movement where it swing back to 1.5961 after reaching resistant level at 1.5836.
So at this temporary point the identical movement of EUR-USD and GBP-USD is temporary off track. This is resulted by the movement of EUR-GBP which is going down big time making the Great Britain Pound stronger than the Euro.
Therefore next time when you trade the EUR-USD and GBP-USD take note of the EUR-GBP which has the direct impact on their movement. This is one unpredictable factor.
Showing posts with label The Unpredictable. Show all posts
Showing posts with label The Unpredictable. Show all posts
Thursday, June 17, 2010
AUD-USD Technical Analysis (24 May 2009)
AUD-USD recent upward movement is one special case that we cannot predict in forex. By right based on weekly slow stochastic and candlestick counting (weekly time frame) it should move down, but in reality it chose to move up (overbought). This is where many traders can fail if they rely too much on their technical indicators and strategies to predict the market direction.
Even though this phenomena happens occasionally but the impact is like losing frequently. At this point you have no idea if the market will continue the overbought or reverse soon. Throughout my long-time observation i have encountered many situations like this and despite of my familiarity with it still i failed to avoid losses when it happens. This is because i just cannot predict when exactly the market will move.
Therefore sometimes i just use my guts feeling to trade and usually close my position if it is not moving according to my expectation after a certain period of time.
Even though this phenomena happens occasionally but the impact is like losing frequently. At this point you have no idea if the market will continue the overbought or reverse soon. Throughout my long-time observation i have encountered many situations like this and despite of my familiarity with it still i failed to avoid losses when it happens. This is because i just cannot predict when exactly the market will move.
Therefore sometimes i just use my guts feeling to trade and usually close my position if it is not moving according to my expectation after a certain period of time.
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