Here’s A Solid Trade
Greenspan + FX = Volatility
While there were some solid trades to be had on
the release of the text of chairman Greenspan’s speech, most notably Banks,
Brokers and Gold Stocks, the continued action (key distinction) was in FX. Go
take a look at some 60-minute charts of GBP, EUR, AUD and CHF from 8 AM PST till
the close of the stock market. Let me be real clear, you could have caught all
those trades, while your duration of holding time might have varied, an entry
point was there.
So what did Greenspan say that spooked the
Dollar? You know, I do not have a clue, nor was it important at the time. All
I did was rely on instincts and simple black and white observations. Let me
explain:
1. I knew that he was doing the semi-annual
Humphrey Hawkins Testimony, this is an event all traders wait for.
2. While nobody was sure of the outcome, you
should at least know that sharp moves are tradable because it represents
comments or policy changes that the market did not factor in.
This is the best possible scenario, it unleashed
the fear and greed and as a result the volatility and range expand
exponentially. As mentioned earlier, I wish I could tell you I stayed in for
the duration of the move, but I did catch a good chunk of it.
^next^
Notice which one had the most bang for the buck?
Yep, GBP. You will recall that yesterday I pointed out to you the chart
pattern which clearly demonstrated how purely from a technical standpoint,
GBP was the strongest one. Throw a catalyst (Greenspan) on top of that, and
you have yourself a solid trade.
So now what? Well, I suspect that the charts may
need to reset a bit before we can get too excited about establishing new
positions. Most are over-bought, and sure they might continue to run, I would
rather let them come to me.
Key Levels:
EUR:
1.2865 1.2768
GBP:
1.8950 1.8842
As always, I welcome your
comments and questions. If you would like to have your email address added to
my FX Mailing List for actual trade recommendations ahead of my FX
Service through TM in mid-February; simply send me your name and
email address to: aspendave@yahoo.com.
Dave