HLHB Weekly Update – December 16, 2011

EUR/USD 1-Hour Chart

Indeed, breaking up is hard to do. Just when I thought I was ready to say goodbye to my HLHB Trend-Catcher system, it generates a 312-pip winning trade! Only three signals materialized since my last post and here’s how each of them went:

1. Long at 1.3409, closed at 1.3332: -77 pips

I thought the Trend-Catcher System only had 8 trades last week. But as it turns out, another signal materialized just before it came to an end. Sadly, it closed with a 77-pip loss.

2. Short at 1.3351, closed at 1.3039: 312 pips

Then the EMAs crossed over at the start of the week, catching the big drop on EUR/USD. Since Average Directional Index (ADX) was above 20 and Relative Strength Index (RSI) was below 50, a short at 1.3351 would’ve been a valid trade. It wouldn’t have closed until after a couple of days at 1.3051 when another crossover materialized. That’s a whopping 312-pip win!

3. Long at 1.3039: Still open

Does this crossover signal a reversal or is it nothing more than a mere retracement? I’ll be sure to tell you what next week!

If I were to describe this week in just two words, I’d use “dollar domination.” The Greenback turned out to be the best performing currency this week due to the combination of risk aversion and a slightly positive Fed.

The fact of the matter is, despite the “plans” the European financial leaders have for the next year, the problem still remains. Greece is knee-deep in debt and the fear of contagion is present. In addition, the Fed DID NOT hint at further quantitative easing.

What we see now is a euro that has fallen briefly below 1.3000 but has manage to pull back. The question now is whether this rally has some legs behind it or it’s merely profit-taking. Ah, I guess we’ll just have to wait and see!

XOXO,

Huck

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