HLHB Weekly Update – July 1, 2011

EUR/USD 4-hour Chart

Ugh, this is getting frustrating. My HLHB system did not get a valid signal again even though the EMA crossovers that I setup keep catching the trend reversals. As you can see, there was an upward crossover this week, but my 30-pip filter and the overbought Stochastic did not let me enter.

This epic fail of a signal, together with my lost EUR/USD trade, makes Huck a very sad girl. Hmm, I think I need to blow off some steam over the weekend. I hear Transformers 3 is out. While I am a girl, I do enjoy action flicks from time to time… It gives me an outlet for my pent up trading rage. Hah!

Anyhoo, the market was pretty crazy this week. Or at least for me. Greece once again dominated the spotlight as the parliament took a vote on austerity measures. Honestly, I didn’t really keep my hopes up that Greek Prime Minister George Papandreou would be able to get enough support to pass the austerity bill. That’s why I tried to short EUR/USD.

As you probably know by now, the proposed budget cuts and tax hikes got approved. It was what the market had been anticipating and I was right about seeing a “buy the rumor, sell the news” reaction from euro pairs at the wake of the announcement. However, I got stopped out even before the pair dipped. The sell-off didn’t last long though. Thank goodness! I would’ve felt really bad if I missed the move had it lingered on.

Aside from risk appetite brought about by positive news from Europe, the dollar’s gains were also limited as concerns about the U.S. debt ceiling began to gain steam.

After my 1.0% loss, I just decided to sit in the sidelines. I didn’t want to lose any more than I already did. If I didn’t stop myself, I would’ve probably ended up trying to short the euro again and doing further damage to my account. Now at least I still have enough money to buy my Transformer 3 movie ticket and a bucket of popcorn. Ha!

So there ya go, that’s my story for this topsy turvy week in the currency market. What’s yours? Tell me how your trading was through Facebook, Twitter (@Loonieadventure), or by writing in the comment box below. That way, I’ll have something good to read after I’m done with the movie. Thank you!

  • Harry

    Stochastic in overbought can sometimes be viewed as a solid entry IF MACD confirms it, if the trend is super strong like this one Stochastic can linger in overbought state for ages.

  • Chartcatcher

    In Greek mythology, the hero, Odysseus, was able to avoid the temptation of the Sirens’ call that lure men to their death by asking his companions to tie him to the boat mast.

    Like Odysseus, we have to protect ourselves from our own temptations or biases. Your EURO/USD trade was guided by your intuition that the Greek austerity bill will not pass in parliament. Because you already formed your opinion, you will tend to find chart patterns to support your views and ignore
    other information that are contrary. This is dangerous in trading because we lose our objectivity.

    It would be better to let market prices do the talking. If the market wants to go up, we buy. If it wants to go down, we sell. Many times the market keeps its cards close to the hand and force us to guess the direction. Be patient. Wait for the market to show its hand and then jump in.

    How would I do it differently? I would formulate two game plans with different scenarios – one with the bill passing and one that it fails. And I would let the market trigger my entry points and go along with the ride.

    Going against our intuitions and emotions are the hardest part of trading. We have to learn to let go and be one with the markets.