Saddam captured = $ strength?

[GeoffreyTransom]

Correction - no new high on GBP (although it may end up being a new high close).

[Maji]

This was a classic case of buy the rumor sell the news. Smart money used this opportunity to sell. Maybe this will signify a blowout top in the US equities. Got to check the volume to verify though.

Have a great day.
Maji

[eternalfuture]

Classic case?

I don't think so.

Apparently the rumors popped up during weekend in which the markets were closed.

The news which ensued shortly afterwards also popped up during weekend in which the markets were also closed.

When the markets were open on Monday they already passed the rumors news releases. Everything has ALREADY OFFICIAL on the first market opening on Monday.

On Monday the majors gapped out on sudden surge in USD strength. This probably just some acts of frenzy hedging big funds some specs jumping in. But the return fire also pretty swift. During early Asian session the market obviously pushed USD back down. By near Asian session close-out most ps already at the middle of the USD sudden rally. EUR/USD for example spent most time Asian close towards London opening at above 1.2200 which was actually not a good thing for USD bulls. Right after US opened after a temporary blip to sub-1.2200 the EUR/USD rallied to make another touchdown at 1.2300 pushed further to 1.2323. Creating another new all-time high.

This however is not surprising at all.

As I mentioned yesterday I doubt that the capture of Saddam will make the USD trend reversed. I believe he is not the source of USD woes. The USD misfortune lies on the economic side the bleak market sentiment.

With a perfect gift (Saddam's capture) still could not lift the USD up it could spell doom for USD.

This remaining days in December we may see EUR/USD to rally as high as 1.25. Next year it could also go all the way to 1.30.

However yesterday ECB Chief Economist Otmar Issing said that the ECB COULD intervene in forex markets IF it felt the need to.
This should send alarming message to the markets that when the going gets to tough for USD as reflected in EUR/USD ECB may be d to step in. But despite this comment I believe the current rate of EUR/USD is still within the ECB's tolerance.

Good luck Good trade!

Cheers!

[Maji]

I think my analogy was misplaced. What I really meant is that it is not wise to trade the market just based on news. Saddam had become a "non" news the markets had already factored this in. His capture is sensational to the news media but for the financial markets it was not. The markets already knew Saddam was no longer important. The knee jerk reaction was mostly a panic factor speculation. It shows the difficulty maybe futility in trying to trade the news.

I hope this clears up my point.

Maji

[peteuk]

Originally posted by eternalfuture
As I mentioned yesterday I doubt that the capture of Saddam will make the USD trend reversed.

I still think it was reasonable to expect a slightly longer dollar rally though taking into account Brussels Saddam the ECB profit taking accumulayed dollar shorts before the holidays. I don't think anyone really expected a major trend reversal or sustainable rally as such a slightly longer/stronger rally would have been nice though!

It's taught me again (for about the 99th time) not to trade news I'm always saying it then go do it myself!

We live learn hopefully learn by our mistakes at least it will save me changing my avatar for a while

Pete

ps Hi GC

[vzhig]

Hi Pete

well I think there was a rally of about 200 pips but it occurred during weekend was inaccessible even invisible to us mere mortars. I think big institutions may have an ability to trade on weekends just like they trade US stocks overnight.

So be it a weekday we most probably would have seen a rally. But +200 pips in CHF was already an end of that invisible rally then smart money just faded the gap again in the way they do it in stocks.

Cheers
vzhig

[vzhig]

Are you saying that one can trade on weekends at OA? Could you please post their Sunday intraday chart?

[eternalfuture]

Maji

On the contrary I actually took advantage of the news yesterday. When I saw that eur/usd at 2160 I quickly jumped into long position. Based on my view that the news will not give a significant continuous push to USD strength I expected the eur/usd would not stay below 1.2200 for long.

Also if you take a look at the 30 min chart yesterday it appears that the euro/usd was somewhat creating a bullish divergece+failure swing near the bottom of the day.

All I'm trying to say is that whenever opportunity knocks you can afford the risk regardless what the method of analysis you are using don't hesitate to go for it.

Too bad it wasn't occur during work day. It could have been merrier.