01 Feb Brief Mid Week Trading Update – 1st February 2012
I’ve been messing around with some positions since the close.
Indices have made 3 consecutive daily higher lows and higher highs. They also broke above the 61.8% retrace of the high to correction low.
EUR:USD keeps finding buyers when it sells off. Everyone is short, Retail, Hedge Funds, SNB Directors Wife. There’s no way this is gonna collapse without taking a few of those out of the equation.
Trading has been tough throughout this whole Month (January). Trading is harder when volumes are so low because price patterns get broken too easily.
Everywhere you look, the top gurus are all saying EUR:USD is a short. This is the Camp I’ve been in and although I’ve not turned bullish, I think there are too many people on the same side of the trade. The Markets rarely let the majority win.
It’s been a while since I felt this nervous about holding positions (either direction) overnight. I mean, check out the trades log so far for this year. It’s clear from the large number of trades and the large number of small wins that the market’s are not inspiring confidence for me, and looking at the choppy price action and indecision I’d say the majority are in the same boat.
DX is not a bullish looking chart.
Risk on Markets are most likely going higher. They will eventually drop and they will drop fast, that’s what makes it so difficult to buy such a low volume rally, and it really is too difficult to confidently predict when it will drop until it happens. Stick with the up trend for now and sell the first failed 61.8% retrace of a sharp leg down. That’s probably the best way of getting positioned safely and early in a trend turning situation.
Over the last fortnight I’ve seen the best part of 1000 collective pips in profits vaporise to just a couple of hundred across various positions.
Until the picture becomes clearer, whether that be tomorrow or in a few Weeks time, I’m going to stick with taking small trades and tight stops. In the end, this strategy always pays off if your patience can hold through ready for the big move.
That’s my current opinion and I’m happy to change my mind within 24 hours, but right now, I’m not trading stuff I’m really not confident about.