It certainly would have paid off nicely to anyone who decided to trade on the side of the long term up trend here. The selling that brought the market down from 1.5050 has started to dry out as we approached the red trend line.
I have to say that I was wrong. I really thought that there was a good chance that we may test 1.4500 zone from which we would bounce back – even briefly breaking the up trend line. However, this has not happened as buyers rushed in around 1.4640 and turned the day around on Tuesday.
Yesterday we witnessed the announcement from FED which produced high volatility and continuation of the trend. There was no big suprise in announcement with rates being held steady. Yet traders tried to dig deepo every single word released, trying to see if there are any signs of future rate increases. The market reacted very fast and the spreads shoot up (for example, the spreads on Oanda platform went from sub 1 pip to over 5 pips which happens often following economical news releases).
Where do we go from here? Most rational thing would be to see if we can test upper resistnace line of 1.5050. The fundamentals supporting weak dollar are not changing, so the possibility of us testing prior highs of 1.600 can only be raising.
Anyone deciding to follow this bull market has to make sure not to risk their whole house on a single trade. If you like to bet like that, you can open $20 account with many brokers and see how well you do. For those that like to play conservative, it is most rational to put stop loss below yesterday’s high and see if some profit taking will take place as the market may raise again.
Ahead of us is still unemployment number for the USA to be released on Friday at 13:30 GMT. At present state of the economy, that may as well be the most important number during the month.
Another note of caution. It seems that the market is doing exactly as the stock market does – raising as the equities are going higher, and falling as equtites fall. Yet, we are certainly not in the stock market bull – so any retracement in equtites may be followed by the streaghtening of the dollar, interupting this trend. Or we may finally see some divergence.
You Might Want To Check These Out:
- Weekly Update Sept. 14, 2009
- IGTFX Forex Broker
- How to Play Forex Trading With Ease – 4 Amazing Tips to Learn Fx Trading Fast
- Bull Flags
- Mid Week Update on EUR/USD
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