Swing Trading Opportunities In FX
The G7
meeting in Boca Raton Florida on Friday and Saturday had the
potential to change the overall perception of the value of the dollar. Until
then, it had been accepted that the declining dollar was the best way to adjust
the imbalances in the American financial system. However, Europe was growing
very concerned that the appreciating Euro (EUR)
as a result of this week dollar was hurting their export sector.
“Excess volatility and disorderly movements in exchange rates are undesirable
for economic growth,” the Florida G7 statement
said on Saturday.
Going into the G7 meeting there
were signs that a statement regarding this scenario was in the cards. As a
result, it seemed reasonable to position for a weaker
EUR. In addition, the trade also had the characteristics of a good
reversal trade based on solid resistance and an overbought oscillator. When
there is a confluence of three indicators, and the fact that the stop loss was
locked in regardless of the price that the EUR opened, taking the trade made
sense.
As
it turns out, the comments from other G7 Ministers was rather harsh regarding a
weak dollar. The trade turned out to be a fantastic short-term opportunity with
lopsided reward relative to the risk taken. This is a trade that does not exist
in the equity markets. Regardless however, look at the two key technical
components that alerted us to the trade to begin with:
–
Fib extension
– Overbought stochastic
The G7 meeting was merely the catalyst.
So,
I think it is safe to say that this week should provide ample opportunities in
the FX market for Swing Trades. If you are on my beta test FX Email List,
you will be alerted to any trades that are setting up like the one described
above.
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