Did you know that the Weather Channel can help you forex trading? Yes, it can. Living in South Florida means that from August to November each year my husband and I stock up on water, batteries, canned food, and an assortment of hurricane supplies that we (luckily) seldom need.
Watching hurricanes is practically the unofficial state sport.
(Source: www.weather.com)
Well Hurricane Gustav is currently over Haiti but early this morning two things were updated that forex traders, U.S. Dollar traders, and crude oil traders needed to know: Gustav was upgraded to a hurricane and the storm track was decided west bound heading for the Gulf.
(Source: www.nhc.noaa.gov)
So here’s what I did around 6:30am EST when I read this. I marked the high of the 5:00am candle on crude and the low of the 5:00am candle on the dollar and then began looking at potential scenarios for plays on dollar weakness and crude strength. (Why? Because crude rallies on Gulf-bound hurricanes and the dollar will fall on that thus marking the high and low would allow me to measure the psychology of that news!)
So here’s my red resistance line drawn across the high of the 5:00am crude oil candle…
and the green support line across the 5:00am low on the dollar.
There are two reasons for my marking these level. First, I had no idea to what degree the news had already been discounted and second, the news alone was not reason enough to buy crude and short the EUR/USD.
- Raghee