If you’re looking at the same charts I am, you’re probably reaching for a Dramamine. But understanding how to handle the chop is akin to the sage advice of looking out at the horizon when you are seasick. It’s about perspective.
Maybe it serves me right for watching this during what has to be the second biggest doldrum week of the year (second to the the week between Christmas and New Years).
When do you know to stop trading and stay on the sidelines?
(maybe more importantly. Can you!?)
I’ve been spending quite a few mornings watching and trading the range bound heights of the dollar, the chop in the Dow, even the crude oil market which I have been shorting on small bounces on the daily chart.
There are a few clues for me. One thing is certain and abundantly clear: The charts are getting a little wonky this week.
This morning Durable and Core Durables cane in much better than expected and the dollar rallied (rightfully so!) on the data. At the same time, Hurricane Gustav had the crude oil market rallying on the storm path it seems to be heading in. So what did the dollar and crude oil do? They moved together.
There is data out there deflecting off one another and skewing the typical correlation I trade. (First clue!) The week going into Labor day is a notoriously slow week. (Second clue!) There is a storm that has barely cleared Cuba, has been downgraded to a tropical storm (as often is the case when going over land) but yet is already being compared to Katrina! (Extreme emotion! Third clue!)
What more do I need to walk away for a few days?
The charts tell the story.
The dollar needs to makes up its mind before I start to make up my mind about making my next forex trade.
– Raghee
{ 3 comments… read them below or add one }
Hello Raghee, Just came upon your blog and really loving it. A quick mention here, none of the hyperlinks works on the right hand column and gives an error message. There seems to be a space in the URL and this could be causing the problem
Fibonacci based moving averages
http://tinyurl.com/5hlch6 2008/08/29
Swing trade
http://tinyurl.com/6xqfkb 2008/08/22
Can you please into it. Thanks
Linda
Thanks for the feedback Linda. I really appreciate it!
As for the links…don’t copy the date. The links are
http://tinyurl.com/5hlch6
http://tinyurl.com/6xqfkb
The numbers after it are the date that Twitter assigns to the update.
I think if you stuck to the 15 min charts on this one you could’ve benefited nicely from the swing up and swing down then swing up again the daily chart doesn’t look to tradeable to me though until late Jult on the up move looks dead in mid to late August which would got me out on a time stop becuase I hate it when price shows me no direction at all that s when it can slamm down all the way to your entry on a paroblic move in just one or two days or it could run up like a rocket but when price does nothing I’m out and on the side lines till it starts to move again one thing I learned in football a non moving target can take you off gaurd once it gets moving in rapid fasion again and you can get burnt to a crisp if you wait for that object to move again just tackle it wait for the change in downs and on to the next play