Thursday February 3, 2005 - 11:26:59 GMT
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Black Swan Capital - www.blackswantrading.com
“One sees great things from the valley; only small things from the peak.”
Range bound! Currencies have fluctuating within some unusually tight ranges lately. It’s the type of market that chops up traders. Short-term technical set-ups are stymied by the tight daily range. It’s a stalemate between buyers and sellers. There are probably plenty of “smart” people sitting on the sidelines avoiding the meat grinder. Which means when we do move above or below the existing range, we could see a powerful break on cascading stop orders and new money into the market.
On the fundamentals alone, we believe the dollar comes out ahead of the pack. But, as we’ve said, the dollar has staged a nice run since Jan 1 and a normal correction, or consolidation, would be no surprise. How’s that for commitment! I guess our own view helps in understanding why the market is ranging.
Here’s a look at the daily chart of the euro. The high side is bounded by 1.3127 and the low by 1.2923—we’ve seen 14 days of trading within that range, so far.
Euro daily chart
Is it the calm before the storm? Tomorrow we have US non-farm payrolls for January—maybe that will be the catalyst. For now, we watch and wait.
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