Tuesday October 25, 2005 - 05:45:33 GMT
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Tricom Futures and Foreign Exchange -
Forex: The market can remain irrational, longer than you can remain solvent
The US dollar was trading firmer against the euro and yen but range trading will remain until there are fresh drivers to act on.
The US dollar weakened overnight in the absence of fresh economic data, failing to gather support from the announcement that Ben Bernanke will become the Federal Reserve chairman when Alan Greenspan retires on Jan 31.
Was that the high for the week in the Euro overnight? The market remains trapped in the 1.1900-1.2100 range, and while this continues it's wise to fade the action when we approach either of these levels, with 30-50 pip stop-losses.
There's a saying in the markets which goes something like: "the market can remain irrational longer than traders remain solvent." I think it's worthwhile keeping this in mind when we get stuck in range bound, sideways trading, as we have at the moment. The only factor keeping the USD up is thoughts of further rate hikes, when the Fed signals it has adopted a neutral stance, look out for a sharp correction. As such, look to maintain some capital in the account for such a move, which is only a matter of months away i feel. That is, don't burn all your bridges in this current trend-less market.
Today’s Economic Releases:
US: Existing Home Sales
US: Consumer Sentiment
Today's Top Trades
- Buy EUR/USD around 1.1930, with stops below 1.1875
- Sell EUR/USD around 1.2030, with stops above 1.2075
For more ideas send me an email, [email protected]
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