Wednesday February 24, 2016 - 19:12:13 GMT
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Global-View Trading Technologies: Stops Matter
The earlier move higher in EURUSD was a lot stronger than many of us had thought it would be. Yes the flash Markit Service PMI was much weaker than expected, but U.S. markets usually only react strongly to the long-established ISM PMI reports. As often is the case, I think it was stops (short-covering) that drove the move. We broke decisively below EURUSD 1.1000 earlier in the day, and that move was driven by falling crude and equity prices. It looked to me as though many traders had finally thrown in the towel and gone short. A heavy overhang of EURUSD shorts fueled the EURUSD recovery, taking the pair nearly to the 1.1050 level. I don't sense there was much interest in establishing new EURUSD longs, which is why we are back to just above 1.1000 again late in the day. The bottom-line is that stops matter a lot!
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