Are you swimming upstream?
- Posted by Raghee Horner
- on February 18th, 2013
SALMON HAVE TAUGHT US all we need to know about trading: You can’t fight the stream forever, you may get eaten by a bear, and if by miracle-of-miracles you make it, you’re going to die. Trend trading is best done when there is a trend. You can’t impose a trend trading strategy on a non-trending market (and expect it to work anyways).
The above is what is feels like trading against the trend… treacherous, exhausting, and will most likely lead to your demise.
Most of my accomplishments have been with the flow, with the tide, with stream – pick your water analogy. That’s not to say I’ve never worked hard, but the work seem to open doors, opportunities, and better ideas. I think trend following is this truth plotted on a price chart.
The easiest filter to apply to any market is whether or not the daily chart is in a trend. I call this Directional Bias. I don’t like non-trending daily charts…there’s no dominant psychology and you don’t know who’s behind the wheel driving the market. Frankly I don’t care whether it’s the bulls or bears…but there’s got to be a hoof or paw on the wheel otherwise I’m not playing.
My daily BIAS comes from these daily trends and it’s the first (and best) filter I will apply to the market.
For now my BIAS continues to be sell yen and pound, buy euro and kiwi. I’m seeing a sell aussie BIAS emerging although this aussie seems to be shaking off the expectations of RBA rate cuts through 2013 – starting in March; being a safe haven with triple-A credit will do that in this environment.
For traders wondering why I am still bullish the euro – simple – I don’t think Mario Draghi can talk the euro down without talking the Eurozone down. I think the kiwi is still the Flavor of the Month. The yen, duh. And the pound’s ever-eroding support makes it a terrific short.
One of my favorite single currency stories is the pound sterling weakness. I have pitted the pound as a stronger currency versus the yen but that’s it. The yen weakness is the driver behind my GBP/JPY buy (all my yen long positions for that matter!) but against the kiwi, euro, and greenback – I have been selling the pound. The GBP/NZD is still my favorite and biggest winner for the month.
So looking forward, what are emerging BIASes that are developing? Where is there or could there be a clear & strong flow in the stream?
I like the aussie’s recent rollover against the greenback – it’s potentially very interesting. There’s a fresh, bearish Directional Bias there. (By the way, this is nowhere near as defined as my current book of trades that are relying on primarily kiwi and euro strength, and yen and pound weakness.) The AUD/CHF has also recently rolled over and has been correcting higher into the resistance of the 34EMA Wave. These are “fresh” trends – that is – not established yet but both take advantage of potential aussie weakness. The aussie will be IN PLAY as of tonight with the release of the RBA’s Monetary Policy Minutes as we get a peek behind the curtain…
The daily AUD/CHF has rolled over (dove through the 34EMA Wave and switched from green to blue to red GRaB candles) and the bearish sentiment and momentum on primarily swissy strength could get a boost if the aussie begins to weaken. This would have the weakness in the pair firing on both cylinders. I am suspect of the pair since it has not been able to follow-through past the support of the weekly 200 period SMA close, but the missing element has been aussie weakness.
Questions? Comments. Feel free to leave ‘em here at the blog.
The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.blog comments powered by Disqus
Raghee Horner is a private trader and author based in South Florida. She began experimenting with market timing and charting analysis in 1989 at the age of 17... (More)
- The Core of My Trading: GRaB Candles and Market Trends
- Does what the Fed say today matter to the overall trend?
- Discretionary Trading: Why do some traders think that means trading “freestyle”?!
- Are you swimming upstream?
- Have you ever interviewed yourself?
- Five Days til the New Year: The 20-Minute Goal Setting Experiment
- EUR/USD Breakout through 1.2900 and Intraday Set Ups to Watch
- A forex trader’s view of today’s equities meltdown.
- A fun experiment: What if you could become an expert (at anything!) in twelve months?
- EUR/JPY’s 200DMA Makes for an Interesting Intraday Set Up