Gosh, I wasn’t able to profit from that sharp dive in the EURUSD since I didn’t get the go signal from my HLHB mechanical system! Earlier in the week, there was a downward crossover but when I looked at the stochastics, I noticed that they were already in the oversold area. The next candle would’ve reached the 30-pip filter but I had to stick with the rules of my system so I didn’t enter a short trade. Oh well, this system has kept me from getting whipsawed back then so I guess there’s no use fretting over these could’ve-been-profits!
This week we saw how powerful risk sentiment could be. Economic data and reports took a back seat and hardly influenced price action. Heck, the US GDP report barely garnered any attention!
The story went like this…
In the beginning, the main focus was Spain’s unhealthy banking sector and the geopolitical tension going on in Korea. All the uncertainty surrounding the situation gave rise to risk aversion, causing the dollar to rally once again.
Then, come Thursday, China comes out with a statement that the rumor going around that it has been reevaluating its European debt holdings was “groundless.” This spurred a little bit of risk taking, causing a wide-reaching case of dollar and yen selling.
Despite the improvement in risk appetite, I believe the rally we saw yesterday will just serve as an opportunity for the bears to sell higher i.e. a correction! The only way for the EURUSD to sustain this rally is if it is supported by strong and positive economic fundamentals.
With that said, my fundamental bias on the global economy remains unfazed and I will continue to find trades that revolve around buying the dollar and the yen versus… well, everything else! Hah!
I’m a little bummed out after losing my recent GBPUSD trade. With the weekend fast approaching, it’s time that I take a well-deserved break and tune out of the markets for a bit. I’m planning to go on a glamorous girls’ night out with my friends to watch “Sex and the City 2” and I’m so excited. I loved the first movie and I bet this second one’s gonna get me teary-eyed again!