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  • Bernanke Announces $400 Billion Twist – Dollar Rises

    From forexcrunch.com

    The Federal Reserve announced Operation Twist at a scale of $400 billion by the end of June 2012. This means no additional dollar printing – no QE3. They also fell short from announcing more measures such as lower rates on excessive rates. The initial reaction is a stronger dollar. EUR/USD is significantly down but partially rebounds. The market is still digesting. This might change later, although the probability is not very high. Yet again, there were three dissenters from the decision. The statement also included a pledge to but mortgage based securities. The impact of this move is uncertain.

USD is moving the exact same way as it did when we saw the fed announcing qe2 last year. Euro to rally to 1.42 once volatility calms!
I have a question to long term traders, does it matter, if it goes to 1.42 or not? I mean, for me forex is short term oriented market. Basically that's the case for most people, because of swap and good intraday moves. I can't imagine holding a trade until 1.42, but I have already had stocks for more than a year.
I found a penny today. That's +100 pips for me.
With QE2, we had one day of dollar weakness, a month of dollar strength and long term weakness. It was all in all a dollar bearish event.
This announcement isn't dollar bearish as no new QE was announced. The effect of flattening the yield curve is limited.
Soon enough, I believe that the events in Europe will return to the limelight, and this will be euro negative and dollar positive. We might see some rebound after this big fall, but the general direction in my eyes is down.
What do you think?
Quoting RodMca
USD is moving the exact same way as it did when we saw the fed announcing qe2 last year. Euro to rally to 1.42 once volatility calms!
This is very different from QE2 in that the Fed's balance sheet will not grow so it is in no way a QE move. It is only a swap from short term to long term.
Although the euro may very well go up after volatility calms down a bit, I don't see 1.42 in the cards unless we get good news from europe... which at this point I doubt. Perhaps 1.3935/45 or at a stretch 1.40. Anyway, that's how I see it at the moment.
Those who say it cannot be done should not interrupt those who are doing it
I am still short. I used this temporary raise to add a couple of new short positions. Lets see how it goes.
Enter Signature
Well from a personal point of view long term trading works for me because I'm a student and unfortunately I cant sit and make profits all day. I have no other choice but to open a small long position with a trailing stop and hope I'm making money. I do have the app for my broker but thats only useful to see which direction things are moving. So for me holding a trade for a few days is the only way of trading.
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I totally agree - the EUR/USD sees 1.2 before it sees 1.42
Yohay, you are bang on the money in my opinion, and I am putting my money where my opinion is.
Those who say it cannot be done should not interrupt those who are doing it
don't forget anymore push downwards now will only make buyers stronger......
I have past history of statements to justify what i say.
that is a sweet revenge on EUR/USD bulls...i got my fill...
There is always a price for promises you don't keep!
Quoting ReaM
I have a question to long term traders, does it matter, if it goes to 1.42 or not? I mean, for me forex is short term oriented market. Basically that's the case for most people, because of swap and good intraday moves. I can't imagine holding a trade until 1.42, but I have already had stocks for more than a year.
Well I trade long term but EU is not one I have traded for a while because it's basically been moving sideways since May. Although over the past couple of weeks it has showed a move downwards but not enough to put on my watch list.

I don't pay much attention to swap, some pairs I lose out some I gain. The overall gain in equity is my main concern.
I am out, i will start the shorting game again from EUR/USD 1.3759...
There is always a price for promises you don't keep!
Quoting DragonFire
that is a sweet revenge on EUR/USD bulls...i got my fill...
Good going DF
I took a short at 1.3773 just for spite 2 mins before the spread started to widen and I had a stoploss at 1.3845 for good measure. I'm glad it worked out.
Those who say it cannot be done should not interrupt those who are doing it
Quoting PipTrapper
Good going DF
I took a short at 1.3773 just for spite 2 mins before the spread started to widen and I had a stoploss at 1.3845 for good measure. I'm glad it worked out.
PipTrapper,

it takes a lot of courage to be contrarian..but it worked...I was skeptical about EUR move because AUD and CAD were not moving to I continued to short...so bad my last short was 1.3797,i never got it..but it was a good pay day..
There is always a price for promises you don't keep!
The likelihood of generating a trading system with a positive expectancy is much better on longer term systems, theoretically, because of the relatively low transaction costs (and possibly other factors as well).

Someone who does succeed in generating a positive expectancy short term trading system, however, is likely to have a much steeper (positive) equity curve, meaning they will make more money, more quickly.

I have not been successful at trading short term, but am quite successful at longer term trading. To each their own, I suppose, but I would encourage all new traders to resist the temptation of short term trading at least until they have a few years of experience, and fully understand the increased risks.
I'll admit defeat if eur/usd closes below 1.3500 before the weekend but until then im just waiting for the perfect time to jump on the bulls back!
fierceman,
nice post.
For newbie's who will make a lot of mistakes, by trading longer term in a trending environment (once identified), if the timing of the entry is off, then they can ride the flow which will bail them out over time.
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don't care eurusd move up or down as long I can make profit of it.
Quoting RodMca
I'll admit defeat if eur/usd closes below 1.3500 before the weekend but until then im just waiting for the perfect time to jump on the bulls back!
If that's you goal (jumping on the bull's back) you may want to take a less risky approach to it and try the EUR/JPY instead.
Those who say it cannot be done should not interrupt those who are doing it
I have been following the EURUSD. If you see the open interest, the volume of the EUR and the figures it has....I believe it will rally until 1.32. I am short on the EUR.
Effort refuses it's full reward, unless you refuse to quit.
Quoting PipTrapper
If that's you goal (jumping on the bull's back) you may want to take a less risky approach to it and try the EUR/JPY instead.
I opened a small position at 1.3650. I feel the euro will rebound if not i dont stand to lose too much I set a stop below 1.36. I feel the correction will continu once the info is digested. So lets wait and see!
For the Euro bears -- don't forget we have American style kick the can -- the budget needs to not be passed yet once again, the Jobs act needs to be shot down, and the deficit cut talks need to fail. All in all, the US has a pretty bad couple of months.

Also, the stream of bad news from Europe needs to get a lot worse for it to continue to drive the Euro down. More of the same will just not do it.
Quoting RodMca
I opened a small position at 1.3650. I feel the euro will rebound if not i dont stand to lose too much I set a stop below 1.36. I feel the correction will continu once the info is digested. So lets wait and see!
The equity indexes are in a freefall for the remainder of today. Usually that's not good for the euro and other risk currencies. The rest of today is USD positive. Maybe expect a small bounce close to the end of NY session as some traders cover their shorts.
Those who say it cannot be done should not interrupt those who are doing it
Greece's default is around the corner SHORT EUR...
There is always a price for promises you don't keep!
Anybody long on gold may want to rethink their positions in the short to medium term until it makes a correction to fair value at around the 1600 handle.
Those who say it cannot be done should not interrupt those who are doing it
Now Piptrapper i can agree with you there i feel gold is already to fall to 1690 definitely if not as far as 1600! may it will test 2000 then maybe even 2025!
Quoting AaronWard
For the Euro bears -- don't forget we have American style kick the can -- the budget needs to not be passed yet once again, the Jobs act needs to be shot down, and the deficit cut talks need to fail. All in all, the US has a pretty bad couple of months.

Also, the stream of bad news from Europe needs to get a lot worse for it to continue to drive the Euro down. More of the same will just not do it.
AW, The USD has QE3 on top of all of what you said already priced in. Over the next several sessions, the QE3 portion will have to be unwound. In the meantime, there should be some pressure on the eur/usd. However I agree that more bad news has to come out of euro zone to make any significant moves down. In the mean time, the current range will most likely continue with a slight bearish bias. Will have a better picture tomorrow.
Those who say it cannot be done should not interrupt those who are doing it
Quoting RodMca
Now Piptrapper i can agree with you there i feel gold is already to fall to 1690 definitely if not as far as 1600! may it will test 2000 then maybe even 2025!
Agreed
Those who say it cannot be done should not interrupt those who are doing it
PT -- Yes, of course. My comments are more focused on next week and the week after.
Quoting AaronWard
PT -- Yes, of course. My comments are more focused on next week and the week after.
In that case, I cautiously concur. I try to not look too far ahead and things change quickly in these markets. Greece or Italy may call snap elections, in which case it's game over.
Those who say it cannot be done should not interrupt those who are doing it
Yeah. The problem with following the news cycle is that sometimes the unexpected actually does concur. So like you, I (very) cautiously concur. But still, we have had nothing but Euro this and Euro that for about 3 weeks. Its about time for some bad news American style. I have been out of the Eur/usd since Monday when I closed my shorts. Trading the FED decision was a good call. I'm pissed that I overslept.
USD/CAD took out parity today.
AUD/USD headed towards parity.
Nice reversal in Euro/USD US session. Looks as if 1.3600 level is about to go
Global growth will have to come from working rather then the Fed

Lot of stop running so the dust will have to settle
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I have no idea which direction the Euro/usd is going..and in fact i dont care as a trader I just want to read the charts..If I "think' I already know what the market is going to do..then I'm Nosterdamaus...I not that ..just a trader..I read the book as its being presented and follow my rules..why is it
so important for pundits to "think' they know what is going to happen next..is it an "ego" thing or having to be "right"..I dont need to be "right" I just want to be on the "right side" of the trade..meaning the school of NOW....
Quoting PipTrapper
Yohay, you are bang on the money in my opinion, and I am putting my money where my opinion is.
Opinions do not a currency trader make.
Quoting RodMca
I opened a small position at 1.3650. I feel the euro will rebound if not i dont stand to lose too much I set a stop below 1.36. I feel the correction will continu once the info is digested. So lets wait and see!
Noticed some signs of trading out of innate need to be in the market and not miss the move. Usually this leads to one of the worst habits one can acquire - overtrading.


Imo one should remember - moves we see on the screen, predominantly has already happened and become part of the past already.
We wish we were there, but usually it's already late to catch the train which is about to arrive to its point of destination.

Similarly to boarding the train w/o plate pointing to its destination, assuming it'll go to NY (going long) whilst it's not even clear, when this train will have enough fuel and passengers even to start moving somewhere.. )
Well i will venture the opinion that party time will not be held tonite in the Asia session.
But then that is how I trade.
Quoting foto
Well i will venture the opinion that party time will not be held tonite in the Asia session.
But then that is how I trade.
Opinion does not a party goer make (just kidding)

"moves we see on the screen, predominantly has already happened and become part of the past already."

That might be worth a note or two.
http://img193.imageshack.us/img193/7820/templatege.jpg
Charts do give market structure.
At the ocean you will find fish around the large rock. Human behavior not much different.

But sometimes a little crystal balling may keep one in a position or out of committing when those indecisive market periods occur.
very nice cichy
On an earlier topic - I did mention the pattern that trade will assume rather precisely (ref. Eur/Usd). Well what you cannot measure you cannot control. After all these expressed opinions you would all still need to plot lines to resolve direction, entry and exit points - all in stochastic space. Wish you all luck - but I am so glad to be as unconventional as to have chosen an approach that does not depend on conventional wisdom and therefore free from the limitations I have been reading here these few minutes.
Could you be a little more precise, please?
Truthfully have never found markets all that predictable. Trend followers try to jump on the train as it is leaving the station, then jump off before the end of the line wherever that may take one.
Just letting price action answer the when question.
Quoting Loadedgun
- but I am so glad to be as unconventional as to have chosen an approach that does not depend on conventional wisdom and therefore free from the limitations...
I think I like that !!
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Quoting ReaM
I have a question to long term traders, does it matter, if it goes to 1.42 or not? I mean, for me forex is short term oriented market. Basically that's the case for most people, because of swap and good intraday moves. I can't imagine holding a trade until 1.42, but I have already had stocks for more than a year.

***Note: Your stocks are bought $ for $. FX is leveraged...obviously. However, the players which make up most of the action in FX are not leveraged anywhere near what we are. Institutions can invest in currency the way we invest in stocks.
I think this news is bearish for the US$, it is not called QE but it is printing money as short term interest rates are zero. the printing money would not be the fed but US banks and investors that will rise holding of short term investment (cash) from flogging long term bonds to FED. More cash around is like QE. Haven't traded eur/usd for long time but feel it was too good to resist and entered long at 1.358 with medium term look
Quoting DragonFire
PipTrapper,

it takes a lot of courage to be contrarian..but it worked...I was skeptical about EUR move because AUD and CAD were not moving to I continued to short...so bad my last short was 1.3797,i never got it..but it was a good pay day..
The crippled uptrend during the day made me think someone pushed the price up to get out of a previous long that was entered before the weekend gap. Once the price started to move down, everyone wanted to get out of their longs and I got in.

I made 7% on the downfall.
I found a penny today. That's +100 pips for me.
Quoting ReaM
I made 7% on the downfall.
Awesome !

Risk on Risk off
watch that chart with all your might

Believers sentiment always in sight

hoorah !! hoorah!!
I suck at rappin' !! (and that's right)
  • Comment #49
  • Quote
  • Edited Sep 22, 2011 6:16am Sep 21, 2011 8:17pm | Edited Sep 22, 2011 6:16am
If you trade the market by predictions you die by predictions - you cannot guess what is not guessable and while it is fun and nice to play God, genius or both - that is not the nature of the market I see everyday. The nature of the market is essentially fractal and that means going up or down is hard to follow until and unless you have found a way like I have to read the market dynamically. This means reading pivoting patterns. Once you can do this you can read the market and trade it long term or short term naturally and laugh your head off at some of the things people depend on to guide them. Consider it carefully, with a zillion impulses to motivate a zillion traders one way or another - no singular issue dominates trade for such an amount of time as to determine outcomes. Some people do not even go as far as finding an issue or reason - like me they act as they read it and they are traders too. But it is all nice and well - every man wants to think of himself a hero - I guess it is an ego thing and can be fun to observe sometimes.
Quoting Loadedgun
If you trade the market by predictions you die by predictions - you cannot guess what is not guessable and while it is fun and nice to play God, genius or both - that is not the nature the market I see everyday. The nature of the market is essentially fractal and that means going up or down is hard to follow until and unless you have found a way like I have to read the market dynamically. This means reading pivoting patterns. Once you can do this you can read the market and trade it long term or short term naturally and laugh your head off at some...
Well said. And as much as my ego DEMANDS that I come up with a genius reply, my genius seems to have left me.

Maybe I'll just have fun observing. :-)
A prediction based upon substantive facts helps with probability assessment. Whether or not the prediction is the reason the market moves in the prefered direction is really irrelavant.

What does matter is that the trader is in a trade going in alignment with the path of least resistance for the market.

One can make money in the market by making profitable trades. How one goes about deciding to put on that trade is about as important as looking for the Holy Grail System.

What does count is that a trade is placed and risk is managed.

Methodology employed is for the traders psychology. It has to mesh with the belief system of the trader. We trade what we believe.
If one believes celestial bodies control the markets it is possible to be a profitable trader trading in accordance with that belief.
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Quoting ReaM
I have a question to long term traders, does it matter, if it goes to 1.42 or not? I mean, for me forex is short term oriented market. Basically that's the case for most people, because of swap and good intraday moves. I can't imagine holding a trade until 1.42, but I have already had stocks for more than a year.
I am not a long term trader, I am a day trader, but it matters to me if it is headed to 1.42 cuz if I have an idea of the direction I would be more likely to buy any pull back till the target is reached
foto -- really good. A lot of people have made a lot of money for bad reasons and a lot of people have lost a lot of money for good reasons.
Hi AW
We traders are an odd bunch
My mom closed out her stocks late spring... the planets weren't aligned right... something about Mars and Jupiter. (yes, seriously). I followed her lead a few months later because the DOW was making double tops and the developed world was had really serious problems with no fix in sight...So I guess she gets to tell me "I told you so". Oh man, does that hurt.
Quoting foto
A prediction based upon substantive facts

Yes, there's a big difference between a "prediction", a "prediction based on substantive fact" and a "prediction based on the fact that I know more than anyone else".

It is up to traders to discern the three or to make their own "prediction".

"We traders are an odd bunch"
Maybe that's why the market never stands still.
When we develop a "herd mentality" we will be better traders.?
Thanks people
It has been a long day good to end it on happy thoughts
Quoting ReaM
The crippled uptrend during the day made me think someone pushed the price up to get out of a previous long that was entered before the weekend gap. Once the price started to move down, everyone wanted to get out of their longs and I got in.

I made 7% on the downfall.
ReaM,

It is a wonderful day; US dollar redeemed itself; Fed dribbled the dollar bears and EUR will suffer into the weekend unless something really good happens in the Euro zone... I am still shorting eur/usd from 1.3599 down...
There is always a price for promises you don't keep!
Quoting boz
I think this news is bearish for the US$, it is not called QE but it is printing money as short term interest rates are zero. the printing money would not be the fed but US banks and investors that will rise holding of short term investment (cash) from flogging long term bonds to FED. More cash around is like QE. Haven't traded eur/usd for long time but feel it was too good to resist and entered long at 1.358 with medium term look
Your analysis is completely wrong....there will be no net change in the money supply. This event is bullish for the dollar as the market was expecting more expansion in the balance sheet, when in fact there was none. The real loosers in this situation are the banks. They cant make money borrowing short term<6yrs because of higher interest rates and they cant make money lending longer term>6yrs because of lower interest rates. Banks are going to really take HUGE hits......
May be you are right and the euro will slump first and stop me out before he'll go back up. But things are far more complicated and I could write pages about my analysis. I also trade other pairs and the eur/usd is only one where I have a position on the US$.
Anyway, Your analysis is wrong too as with QE you also get long term lower interest rates from FED buying bonds and injecting cash, but share market and US$ slumped. Probably because there are not only banks playing the market, so it is not just lending longer term the alternative to make money, QE was bad for US$ because in the world there was far better places to put money then in US$ bonds so people were selling the $ to buy something else, I don't see it much different now with the FED buying 400 bil$ of long term bonds (and short term yield will stay stable). IF QE was good for banks this action can't be bad either.
Anyway, the 400 bil$ like you said was less then expected and share markets are going down, these days sharemarkets are driving currencies movements. I also see a short squeeze on some currency, specially the CAD$. The slump of markets on FED news is more then I was expecting
eur, as all other dollar pairs will go where stocks go...if stocks go further down, dollar will go up and vise versa...so you better focus on economic sentiment change.
There is an easy and accurate way to telling market direction - look for the last fractal formed 1.8 to 3 Standard Deviations from the monthly price mid line (or other time frame of choice) - either end of the current range. And regardless of what the issues are that is where the market is generally headed. This is not prediction but interpretation of pivoting patterns - it is how the market works M1 through MN. Now if you know how to use earlier frames to interpret forward frames (say M30 to interpret H4) you are in the money. Will say no more - except that this is not a system but a basic principle of price movement - the most fundamental.
You can never be wrong with this - but you can be late or under invested to survive the fluctuations before the opposite Directional Change Fractal is reached. But what I have stated here is easy to check - once confirmed the process of mastery begins and lots of questions have to be asked and resolved to start benefiting from this simple fact of market structure. Do not ask me cause I am too busy trying to get to the ultimate level of mastery, but on my last count out of 83 trades I lost 3. If this is not the Holy-grail, looks pretty close to me.
Loadedgun,
Interesting post. I also understand markets as swinging to cyclic extremes.
That is the basis of my strategy.
Have not come up with a way to use monthlies to project 4 hr. bar.
But do use PA to make discretionary judgement about the strength or weakness of a move on an interday and intraday basis.
The long term chart suggests a target for Euro/USD of around the 1.1900 level. But do not know how it will get there.
From the 1.1900 level the Euro has the potential to go to below parity but that is a projection that is to far out to be relevant for now.

Since risk management (position sizing for maximize gain) has to be based upon some interpretation of how much a market will move in what time frame, that tends to be for this trader a discretionary decision based upon the interpretation of PA

Good luck and it appears you will become an extremely wealthy person.
Quoting cichy
Could you be a little more precise, please?
I have now - as much as is possible for the situation
Hey Futo,

You got me upside down my procedure is to interpret from left to right for day trades and the idea is that if you can do that for H4 from events in M30 or M15 then you can apply this approach to higher frames (e.g. MN) to gain a sense of and or trade the long term or trade D1 from say H1, etc. And be assured money management is for me resolved by putting my stop ahead of price never behind it. That's because I am never guessing direction but often misjudging volatility around the takeoff zone - yet you need to get in early - very early for all kinds of reasons. So do get me right there is nothing speculative in the approach.
I think Euro is going down to 1.2 soon
Hey loadedgun,
My macro oriented mind thought you were approaching from long frame to short.
You meant minute charts going the other way.
i rem painfuly been kickd out ov the market @ 1.45....EUR/USD and 117.5 EUR/JPY... where is the Eur mojo nw? This market is for tha patient loaded fat banker who can hold 000's ov pips in losses till thy become profitable
Mrpipstar
There is always another trade.
Maybe look at some measure of volatility to help place your stop decision area.
There are price volatility indicators, market structure based stops, time stops. A book on risk management might help a lot.
Quoting Mrpipstar
i rem painfuly been kickd out ov the market @ 1.45....EUR/USD and 117.5 EUR/JPY... where is the Eur mojo nw? This market is for tha patient loaded fat banker who can hold 000's ov pips in losses till thy become profitable
Mrpipstar,
This market is not for the soft hearted, you have to accommodate a lot of losses, count your lost on 100 pips in other direction and join again at 150 pips, get out again at 250 pips, join again at 300 pips until you get it right...losing money is a pain in a** but it is the part of the game; you can't always make a right decision....when you get it right left it flies...
There is always a price for promises you don't keep!
If you can't take your looses, you have to win every single time...
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  • Story Stats
  • Posted: Sep 21, 2011 2:29pm
  • Submitted by:
     Yohay
    Category: High Impact Breaking News
    Comments: 72  /  Views: 16,382