Trade idea: 2010-11-4 3:06
The volatility brought about by the top-tier reports for this week makes me feel uncomfortable. Every time I look at the charts I feel like I just stepped out of the salon on a windy August afternoon after getting my hair done to perfection. Ugh!
I think it would be best for me to sit on the sidelines despite USD/CHF hollering at me to go short. The trend line break makes me think that the uptrend could be over and the pair may be heading back down into the bear lair. With Stochastic being in the oversold turf and those reversal candles at 0.9700, I have a hunch that we could see USD/CHF retrace some of its losses first.
But sorry bears, I’m no hollaback girl. If I was, I’ll probably short somewhere between the 61.8% and 38.2% Fib levels where the pair has previously found support and resistance.
By now ya’ll probably have heard the Fed’s decision to expand its quantitative easing program by 600 billion USD spread out in 8 months, which was bigger than the 500 billion USD that traders were expecting.
Hmm, honestly, I don’t know whether that’s a bad thing or a good thing, but traders seem to think that it is bad. EUR/USD rose, GBP/USD rose, heck everything except the yen rose against the dollar. I may be a newbie, but I’m not crazy enough to go against the flow and NOT sell the dollar.
Now, I’m not going to jump the gun and sell right away, as upcoming NFP report has the potential to be a sentiment changer. If the report comes in better-than-expected, then that just might help the dollar recuperate its losses and blow this trade out of the water.
I’ll have to wait and see how price reacts at those Fibs before making a decision. Stay tuned!