DislikedRazor,
If i'm correct you see how prices react to the news in order to "feel" where the risk is going.
.......Ignored
We had the AUD employment rate unveiled hour and a half ago and prices are moving like if risk of apetite is growing.
This just means there were good numbers and the Aussie economy is getting stronger. This doesn't mean that most investors will be willing to take on greater risk based on these numbers alone.
The RBA raised interest rates Dec 1, this should have been very good for the AUD, but take a look at what happened the next few days. The markets were in the process of shifting from risk appetite to risk aversion in the MEDIUM TERM.
Can you also see that the shift from risk appetite to risk aversion took nearly 2 months? (from mid Nov to mid Jan)
That's 2 months to shift from uptrend to downtrend. It took me awhile to adjust to this longer time perspective.
Is this reaction a small indicator that the risk of apetite is slowly taking over?
I know that there are much bigger things going on in Europe and Dubai, but the trends already changed direction in the short term.
Take a look at AUDUSD chart during the uptrend from Mar - Nov 2009, did you see any short term movements against the trend?
There will always be times where the short, medium and long term trends will be moving in opposing directions.
Our jobs as investors is to decide which time frame we want to trade and stick to it.
Also it seems that tomorrow they will be anouncing news about Greece and.
I don't know fundamental to read the market. I use a paid service to read where it is going and this paid service show that the momentum is definetilly going to risk of apetite. This momentum is about to take over on the medium term charts.
What you need to do is to ask yourself questions, don't just blindly go by what others / news are telling you.
For instance this POSSIBLE bail out for Greece. Remember it's only speculation at the time, this hasn't been confirmed yet.
When something like this happens, I start to ask some questions. If Greece gets a full bailout then what will happen with Spain, Italy, Portugal and Ireland? Can the EU / ECB bailout every European country with debt problems? And don't forget that the UK also has some debt issues.
And then if there is a bailout, what does it mean about the European economy? Does it mean that the European economy will be stronger or weaker? IMO, it means that the root problems weren't solved and it will only delay a blow up later down the road.
The proper way to fix this would be to let Greece take care of their own deficit with MINIMUM support from the EU. Whether this will happen, we'll have to wait and see.
You need to understand that what I'm doing is NOT news trading. I am doing FUNDAMENTAL ANALYSIS, there is a big difference. News traders REACT to the news, while my style is to ANTICIPATE market swings over a longer time perspective. This means that you have to actually look beyond the surface of what is being said in the news and ANALYZE the situation.
Having said all this, yes, you could be right, but I don't think prices have reached a low enough level to warrant risk appetite.
To get a picture of what I'm talking about. Look at your MONTHLY charts on AUDUSD, NZDUSD, USDCAD over 2009 to now. To me it looks like prices have reached exhaustion and are turning around to make a correction. And there is still a ways to go before a correction is complete.
What does it look like to you?
Of course I could be completely wrong, but I still think the odds are in favor of continued risk aversion over the MEDIUM TERM.
-Razorjack