Financial markets have been awaiting release of the so called "stress test", which was conducted on major US banks by the regulators. Purpose of it was to determine if the banks would survive should the economy deteriorate more. Authorities and ban executive have been very secretive about the outcome, creating some jitters among market participants. Finally, on Thursday auditors revealed that banks, as group, are under capitalized by about $75 Billion. Not a good sign, but it doesn't spell an immediate demise of any of the institutions in questions.
Central banks added to volatility in currency markets last week and they proved to be real movers, above stress test. European Central Bank lowered its benchmark rate by 0.25% to 1% an announced injecting money into financial system by purchasing Euro denominated bonds. Step known as quantitative easing and something other banks have been doing for a while. Euro surged on the news. Pound, on the other hand lost ground, also following Central Bank announcement.
Major currencies showed great intraday volatility, which was harmful to our systems. One finished week at about break even while the other had the worst period in over 6 months. Please see results below and follow link for details.
(Sunday 05.10.2009)
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Here are the results for last week:
- Daily Pound lost 253 pips ;
- Daily Euro made 8 pips;
Follow the link on the right to view details.
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Last week's results.
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Our trade from last week didn't happen. Intention was to sell EUR-USD at 1.3185 with an objective of 1.3080. All week long price in opposite direction, never touching our order. We are cancelling it, order is no longer valid.
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Last week brought about a lot volatility in Forex. Markets had large moves in both directions, but eventually Dollar settled down with large loosing day on Friday. We expect a lot more indecision ahead, with no clear trends emerging very soon. However, this period should provide a lot of opportunities for trades in a range of 100-200 pips. When markets are acting like they were lately, swings tend to be of good size.
We think that a situation is developing in USD-JPY which is interesting. Chart looks ready for move up and we want to be in on it. We want to buy USD-JPY at 98.84. We think price has a potential to go to 101.00 if breakout happens.
We wish everybody 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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