Tuesday, September 30, 2008

Daily Market Action

Every morning, upon waking, I open up my Forex trading platform and look for any major changes in the world of finance.

This morning, for example, I see that carry trades have had a bounce overnight.

So what, right?

Well, wait a minute here. Bounces represent opportunity. If you look at the 1hr GBPJPY or AUDJPY you'll notice some serious signals. Sure, the CCI, Williams %R and stochastics all moved north in the late evening, but just as importantly the price of these pairs started to show a bottom.

This would have been an excellent place to think about sticking your toe in. I use that phrase to make clear that there is every risk the market will continue to collapse after a false lull. However, those that don't freak out when the talking heads on the tube are mooing up a storm, have the opportunity to pull in some cash.

However, there is a bigger issue that I want to make you aware of. It is very common that the US and Asia will go in one direction while Europe goes in another. It's a natural turnaround point.

Just as Europe may wake up and find a sea change in the markets, so too can we. The end of the day, after Asia has had time to react, before the European markets open, if often a good time to act.

So, to be clear, if you live in Australia or Asia, the close of your markets represents a potential turning point. If you live in the US, you need to stay up until around midnight or so EST to see if the Forex markets will send you some smoke signals about a possible retracement.

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