moneySaying goes:
“History is the best teacher. Sadly, it has the worst students”.
I’ve had a very busy and satisfying week, although not necessarily on all fronts. The market I’ve been following on these pages has not cooperated, but that’s what markets do- they have a life of their own and we must adapt to them. Here is a chart of what I did in NZD-USD over last few days.
I went short just under 0.7060. That was few hours before the FED announcement. Now, that was an interesting situation. Most of the time there is some confusion, prices tend to swing wildly before a direction is set. Not this time however. Dollar got weaker across the board. Seeing what was happening I exited my position, took 30 pips loss and waited for more convincing entry. In my original analysis I didn’t expect the most recent high to be breached. As we see now, prices moved higher. Of course I don’t know if it’s a real move or a fake breakout, but it is an unwelcome development.
Regardless, I have an order to go short at 0.7090 as current chart looks promising. Daily charts were used for analysis, so S/L must be in line with that. My stop would be around 0.7250. I must note, that the number itself is not as important for me as much as a MANNER in what price gets there. It means I don’t “marry” myself to an opinion but rather adjust it as price develops.
Here is a link to the latest update of hour corporate website:
http://www.spectrumforex.com/weeklycomments/03252007.html
Time has come to raise some eyebrows and hopefully stir up some lasting controversy. Here are two daily charts of GBP-JPY. First one covers last few months. The second one illustrates what happened in 1998. It was last time the prices were at these levels.
To me they look remarkably similar. I don’t know if the events of 1998 will repeat themselves, but should that happen….
Charts have a mark which corresponds with a point when a second leg of the down move started 1998. If the history repeats itself, we are precisely at the point where prices turned then. And yes, I know in 1998 that sell off was attributed to the implosion of LTCM, but the slide began before that situation was widely known. Besides, that event is only a scapegoat, as the press likes sensational stories and explaining events AFTER they happen. If those people were that smart they wouldn’t be selling newspapers but trading.
There are some differences. If we see 222 break, next target would 211-210 with an end around 200 probably few months hence. Should this play out, as sketched, it surely would be a trade of the year if not a lifetime.
I know, I know. I’m spinning a fine yarn. But there is a lesson here. By watching what happens one might see just how valuable charts are as a predictive tool. Personally, I don’t think we’ll see a mirror image of past events. On balance, even perfunctory resemblance might be of value. So here is a bone to chew on: How often and to what degree does history repeat itself?
Husar
