HLHB Weekly Update – December 17, 2012

HLHB Trend-Catcher

I definitely have a love-hate relationship with the RSI now. Although it does its job of keeping the HLHB Trend-Catcher from jumping in on fakeouts, it also keeps the system from getting in on rallies! A breakdown of the last week’s signals highlights my point.

PoD Chart

1. Invalid signal since RSI was not above 50.
2. Invalid signal since RSI was not below 50.
3. Invalid signal since RSI did not cross 50.
4. Short at 1.3065. Trailing stop hit at 1.3091. -26 pips.
5. Long at 1.3088 closed on new crossover at 1.3069. -19 pips.
6. Short at 1.3069 closed on new crossover at 1.3083. -14 pips.
7. Long at 1.3083. Trailing stop hit at 1.3070. -13 pips.
8. Short at 1.3079 closed on new crossover at 1.3109. -30 pips.
9. Long at 1.3109, still open…

The first and third signals for the week coulda-shoulda-woulda been big winners that could’ve offset the losses for the week had RSI been above 50. But it wasn’t… The Trend-Catcher missed out on all the good rallies. Grrr!

Oh well! I guess that’s the price I have to pay for using the RSI as a filter for fakeouts. I’m still a bit hopeful that the last trade for the week would turn out to be a big winner.

EUR/USD Trade

PoD Chart

Big, big, ouch on my account… But an even bigger hit to my ego… For the third straight time, my trade turned out to be a big loser. This time, it was on EUR/USD as the FOMC statement turned out very bearish for the dollar.

The FOMC, in its statement, announced an expansion of its quantitative program. The central bank said that it would expand its balance sheet by another $45 billion per month, making the total monthly increase to $85 billion.

In addition, the FOMC also said that it has moved changed the way it changes interest rates. Instead of having a date target, it will now use the state of the economy as basis. Specifically, the FOMC will only raise rates if the unemployment rate goes above 6.5% and the inflation rate is below 2.5%.

The prospect of more stimulus was bearish for the dollar. The currency fell followign the release, with EUR/USD rallying above 1.31000.

Last week was truly a sad one for me… Hopefully, the upcoming one will be better.

XOXO,

Huck

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  • Cillian Murphy

    Chin up, it’s almost Christmas :D