Unbelievable week. Market panic everywhere. Forex markets experienced moves not seen in many, many years. We were bombarded with such a deluge of important news, that is next to impossible to even remember them all, much less properly digest and react to. In an unprecedented move, FED and a score of other central banks cut interest rates in a coordinated manner. This measure was intended to restore confidence in panicking financial markets. This didn't work, at least not immediately. Stock markets continued to plunge world wide. Wall street has been falling all week long. By the end of the week FED announced taking an ownership stake in wide range of US banks.
Market panic extended to currencies. Australian dollar has been falling all week at torrid pace. NZD was right behind, loosing thousands of pips. British Pound dropped under 1.7000 level against USD. By the end of the week Canadian Dollar also came under extreme pressure, reaching 1.2000. For whatever reason, Japanese yen was the currency of choice and got much, much stronger. In other news, Iceland, as a country is on the brink of bankruptcy, after all the banks there failed and Krona lost half its value.
Intraday volatility was unbelievable. Swings of 100 or more pips in both directions within minutes were common. In response spreads were widen and slippage was common. This made for very difficult trading conditions. Our services had very tough time and suffered losses. We know, however, that extreme conditions like these don't last long, and changes are expected soon. Hopefully, as soon as next week.
(Sunday 10.12.2008)
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Here are the results for last week:
- Daily Pound lost 400 pips ;
- Daily Euro lost 288 pips;
Follow the link on the right to view details.
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Last week's results.
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Last week we mentioned a possible trade in AUD-NZD. Plan was to buy it at a little over 1.1800. That didn't happen as the price moved the way . In fact, it fell all the way to 1.0600 before rebounding. We are leaving this pair alone for now.
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There were some incredible moves in the markets over last few days. Dollar got stronger against most currencies, with one notable exception - Japanese Yen. Looked JPY was the currency of choice among safe heaven seekers. Yen was bought at the expense of everything else. The speed and magnitude of the move exceeded the ferocity of the famous "carry trade unwind'' from a year ago.
We think some correction is about to take place and want to try a trade against the Yen. We chose CAD-JPY as instrument of choice.
We want to buy it at 86.00 with a target of 88.00 or about 200 pips. We are using short term charts and looking fo relatively small moves. This is also a good place to enter a longer term trade, targeting 500-1000 pips moves. Our objective, however is 88.00.
Have a great trading week!
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Once again we must stress that the trades highlighted here are only a small sample of our trades. If you have any comments or would like to obtain more information please contact us at info@spectrumforex.com .
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Risk disclaimer:
Substantial risk is involved. Forex trading has large potential rewards, but also large potential risk. You must be aware of the risks and be willing to accept them in order to invest in the Forex markets. Don't trade with money you can't afford to lose. Nothing in our website shall be deemed a solicitation or an offer to Buy/Sell futures and/or options. No representation is being made that any account will or is likely to achieve profits or losses similar to those discussed on our site. Also, the past performance of any trading methodology is not necessarily indicative of futures results. Trading involves high risks and you can lose a lot of money.
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