My own overview regarding the recent price action!!! | Forex Factory

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My own overview regarding the recent price action!!!

  • #1
  • First Post: Oct 27, 2006 8:36am Oct 27, 2006 8:36am
Dear All,

I would like to share my own personal point of view regarding the recent price action in the forex market....The Dollar got hit during the past 2 weeks (Including this week)...Although many indicators might point towards bearish dollar in the coming period, I am totally against this opinion...

My own analysis suggests that what we are seeing today is almost the last dollar selloff & that we are poised towards a dollar rally in the next couple of days or weeks ahead...

You can call my analysis a primitive one or not as valid, but I am just saying my opinion....I am not asking anyone to follow this opinion, but everyone must do his own homework & take the appropriate trades according to his/her methodology...

In brief words, I would buy USD on all fronts & I would short all European currencies...This is my own expectations & analysis...The market has been turning from dollar bullish to dollar bearish in a very relatively short time over the long term, that's why I believe that this is the end of this corrective wave...

Please, don't take this opinion as a trade recommendation, although at this point, it seems that it's one of the best risk/reward trades I have ever seen...I am just opening a door for a discussion about the recent price action, not for recommendations...

Hope that everyone shares their point of views & ideas...


Thanks,

Nader
  • #2
  • Oct 27, 2006 9:00am Oct 27, 2006 9:00am
Hello Narafa,
I just posted a similar thread. There is some nice technical evidnence to swing long on the dollar here.
Profit is where readiness meets Opportunity
  • #3
  • Oct 27, 2006 9:14am Oct 27, 2006 9:14am
Quoting FXopportunist
Hello Narafa,
I just posted a similar thread. There is some nice technical evidnence to swing long on the dollar here.
Ya I just read your thread...I believe so too...Only the market could tell...Let's wait & see....


Thanks,

Nader
  • #4
  • Oct 27, 2006 9:23am Oct 27, 2006 9:23am
I think as long as we dont go above 1.9074 on the GBP we should see $+ for awhile, do u have any specific prices u are looking at for your staement?
Ghost Swoopen in for my pips while no one is lookin !!
  • #5
  • Oct 27, 2006 9:34am Oct 27, 2006 9:34am
Quoting Ghostpipper
I think as long as we dont go above 1.9074 on the GBP we should see $+ for awhile, do u have any specific prices u are looking at for your staement?
Ya sure...

EUR/USD ---> 1.2730-1.2740 Zone

GBP/USD ---> 1.8960-1.9000 Zone

USD/CAD ---> 1.1160-1.1185 Zone

USD/JPY ---> 117.30-117.45 Zone

USD/CHF ---> 1.2480-1.2500 Zone


Those are the price zones which I do have & believe that won't be penetrated by a wide margin...


Thanks,

Nader
  • #6
  • Oct 27, 2006 10:42am Oct 27, 2006 10:42am
GBP is retracing from 1.9000 at the moment. Strong Inverted hammer forming on the 4 hour chart with 85 minutes to go.

Interesting to see if we get a bearish engulfing on next candle to confirm or spinning top or Doji for stronger signal.

Cheers
  • #7
  • Oct 27, 2006 11:31am Oct 27, 2006 11:31am
I think GBP/USD still has potential to go to 1.9050 - 1.9070 area before it's going down. However, it depends on the daily close candle today.
"Even the word impossible says that I M possible"
  • #8
  • Oct 27, 2006 1:05pm Oct 27, 2006 1:05pm
agree with ya, only stay a bit away from JPY for now
凹凸 only
  • #9
  • Oct 27, 2006 3:26pm Oct 27, 2006 3:26pm
Iso, my friend Always supporting us with the best charts in the country....Thanks for the contribution buddy...


Thanks,

Nader
  • #10
  • Oct 27, 2006 4:08pm Oct 27, 2006 4:08pm
Quoting narafa
Dear All,

I would like to share my own personal point of view regarding the recent price action in the forex market....The Dollar got hit during the past 2 weeks (Including this week)...Although many indicators might point towards bearish dollar in the coming period, I am totally against this opinion...

My own analysis suggests that what we are seeing today is almost the last dollar selloff & that we are poised towards a dollar rally in the next couple of days or weeks ahead...

You can call my analysis a primitive one or not as valid, but I am just saying my opinion....I am not asking anyone to follow this opinion, but everyone must do his own homework & take the appropriate trades according to his/her methodology...

In brief words, I would buy USD on all fronts & I would short all European currencies...This is my own expectations & analysis...The market has been turning from dollar bullish to dollar bearish in a very relatively short time over the long term, that's why I believe that this is the end of this corrective wave...

Please, don't take this opinion as a trade recommendation, although at this point, it seems that it's one of the best risk/reward trades I have ever seen...I am just opening a door for a discussion about the recent price action, not for recommendations...

Hope that everyone shares their point of views & ideas...


Thanks,

Nader
That's a great fundamental analysis for the USD, regarding one currency, but in the Forex we deal with currency "pairs." What's your basis or analysis regarding the pairs? Technical analyses suggest that a lot of the "pairs" are overbought or oversold and will be hitting a reversal. I'm not bashing you, but you can't base your "price action" on one currency alone. You have to look at the pairs and base your technical analysis on each individual pair. Thanks for the fundamental insight on the USD but that does not affect all the currency pairs nor does it take technical analysis into consideration.

Nancy
  • #11
  • Oct 27, 2006 8:34pm Oct 27, 2006 8:34pm
Quoting nmpeters
That's a great fundamental analysis for the USD, regarding one currency, but in the Forex we deal with currency "pairs." What's your basis or analysis regarding the pairs? Technical analyses suggest that a lot of the "pairs" are overbought or oversold and will be hitting a reversal. I'm not bashing you, but you can't base your "price action" on one currency alone. You have to look at the pairs and base your technical analysis on each individual pair. Thanks for the fundamental insight on the USD but that does not affect all the currency pairs nor does it take technical analysis into consideration.

Nancy
Thanks for the comment & the insight Nancy..I would like to stress 2 very important things I have learned throughout my trading:

1- In the forex market, the base currency is the USD, hence a sentiment change for the USD from bullish to bearish or vice versa almost affects all currency pairs quoted against the USD..This is not the case ALL the time of course, but let's say that in 90% of the times, it is like that

2- Based on fact number 1, I never mentioned any crosses, this is because I don't have any analysis or idea where the different crosses are heading to..I have only quoted currency pairs where the USD is included

Given those 2 facts (And please don't think that I am stressing my own opinion, as I might turn out to be completely wrong), I based my analysis...Some naive studies which I made in the past year concluded that the correlation between certain currency pairs tend to vary, specially those pairs having the USD as one side...Sometimes you will find that the market is near random & the correlation is very weak, like times where you see the USD/CAD going up, the EUR/USD going up as well & the GBP/USD going down....These are periods of LOW or WEAK correlation...During those periods, the tendency in the market is NOT the USD...Usually the market tends to spot or focus on certain currencies, like the EUR is the focus currency so you find that the EUR/USD is moving while other USD pairs are not...

In other instances, the correlation between the USD pairs is very HIGH or STRONG...These times the market tendency is to focus on the USD itself with very little focus on any other currency...At such times, and since the base currency is the USD, the market is in complete sync & almost all USD pairs move in the same direction, which is either USD up or USD down on all fronts...

So, what all this suggests, in other words, what do I want to explain to you is that when the market focuses on individual currencies, you know that the forex market is not as active as it should be....During periods of WEAK correlations, there is no major USD buying or selling...Thus a conclusion is that the USD sentiment during those times is usually LOW (Forex market participants are not aggressively buying or selling USD)...

On the other hand, when the correlation is STRONG, there is major buying or selling for the USD against almost all currencies...This means trillions of US dollars are being bought or sold...My little study showed that those times are extremes where thousands of traders all around the world are either aggressively buying or selling the USD against all major currencies...This means that tons of traders all around the world are on 1 side of the market in all currencies & consequently a reversal is very probable...

These periods of STRONG correlation are also accompanied by HIGH volume in the USD index futures...My explanation to this is that some smart traders who are taking long or short positions in the USD during such times against many currencies hedge their exposure through buying or selling the USD index futures...And since the USD index measures the performance of the USD against a basket of currencies, they are sure that they are perfectly hedged...

Hope that I cleared my point of view and once again thanks for the great insight you gave against my post


Thanks,

Nader
  • #12
  • Edited 10:25pm Oct 27, 2006 9:08pm | Edited 10:25pm
I greatly agree with your USD bullish sentiment.
Fundamental speaking, the market is not going to price in rate-cuts in the near-term as long as Fed speakers highlight concerns over inflation. Ofcourse GDP eased these concerns, but "did not fully erase them".

The environment is healthy for a dollar pullback before market begins to push it lower again as early of 2007 . It makes sense too. I do not expect the market to be dollar bearish from now on until next year when Fed may cut rates. It would take time for market to price in a rate cut. At least a statement from Fed which signals so ( I do not think this will happen )

Speaking from this point. I think EURO and Sterling are overbought versus USD, and that market already pricing in risk for BoE/ ECB rate hike expectations. So a minimal upside risk from here is seen.

Given market already priced in GDP weakness, housing sector weakness, European rate-hikes. and given the carry trades do well. The USD slide wouldn't resume in my view.

I actually think the rise in EURUSD and GBPUSD is a dollar-bull opportunity.

While my 1-week and 1-month chart still suggesting that further weakness should be seen in coming weeks on EURUSD.

Technically, EURUSD and GBPUSD are overbought. I expect 1.9045 to cap GBPUSD, and 1.2760 to cap EURUSD topside.
Forex is not easy!
  • #13
  • Oct 27, 2006 9:47pm Oct 27, 2006 9:47pm
Quoting Isotonic
i agree on the pound. the fundies i'll leave to the experts but there is a sell signal waiting for next week guys. nice resistance line to tag along...
ok, I'm not that hep,but that sure does look like a gartley patten is that correct?also Ive been reading James 16 thread if I did'nt know any better I'd say that is also a possible pinochio
  • #14
  • Oct 27, 2006 9:53pm Oct 27, 2006 9:53pm
Quoting narafa
Thanks for the comment & the insight Nancy..I would like to stress 2 very important things I have learned throughout my trading:

1- In the forex market, the base currency is the USD, hence a sentiment change for the USD from bullish to bearish or vice versa almost affects all currency pairs quoted against the USD..This is not the case ALL the time of course, but let's say that in 90% of the times, it is like that

2- Based on fact number 1, I never mentioned any crosses, this is because I don't have any analysis or idea where the different crosses are heading to..I have only quoted currency pairs where the USD is included

Given those 2 facts (And please don't think that I am stressing my own opinion, as I might turn out to be completely wrong), I based my analysis...Some naive studies which I made in the past year concluded that the correlation between certain currency pairs tend to vary, specially those pairs having the USD as one side...Sometimes you will find that the market is near random & the correlation is very weak, like times where you see the USD/CAD going up, the EUR/USD going up as well & the GBP/USD going down....These are periods of LOW or WEAK correlation...During those periods, the tendency in the market is NOT the USD...Usually the market tends to spot or focus on certain currencies, like the EUR is the focus currency so you find that the EUR/USD is moving while other USD pairs are not...

In other instances, the correlation between the USD pairs is very HIGH or STRONG...These times the market tendency is to focus on the USD itself with very little focus on any other currency...At such times, and since the base currency is the USD, the market is in complete sync & almost all USD pairs move in the same direction, which is either USD up or USD down on all fronts...

So, what all this suggests, in other words, what do I want to explain to you is that when the market focuses on individual currencies, you know that the forex market is not as active as it should be....During periods of WEAK correlations, there is no major USD buying or selling...Thus a conclusion is that the USD sentiment during those times is usually LOW (Forex market participants are not aggressively buying or selling USD)...

On the other hand, when the correlation is STRONG, there is major buying or selling for the USD against almost all currencies...This means trillions of US dollars are being bought or sold...My little study showed that those times are extremes where thousands of traders all around the world are either aggressively buying or selling the USD against all major currencies...This means that tons of traders all around the world are on 1 side of the market in all currencies & consequently a reversal is very probable...

These periods of STRONG correlation are also accompanied by HIGH volume in the USD index futures...My explanation to this is that some smart traders who are taking long or short positions in the USD during such times against many currencies hedge their exposure through buying or selling the USD index futures...And since the USD index measures the performance of the USD against a basket of currencies, they are sure that they are perfectly hedged...

Hope that I cleared my point of view and once again thanks for the great insight you gave against my post


Thanks,

Nader
Genius analysis, thank you for the effort, and definatly looking forward to make some mean profit next week , Good luck and happy pip hunting!
Egyptian and proud of it!
  • #15
  • Oct 28, 2006 7:11am Oct 28, 2006 7:11am
Nader,

I understand completely what you are saying. My philosophy, however, is I don't care what the pairs or individual currencies are going to do in the near and/or distant future. I only care what I'm going to do when the currencies set up for a high probability trade and I trade accordingly.

Nancy
  • #16
  • Oct 28, 2006 7:37am Oct 28, 2006 7:37am
Quoting nmpeters
Nader,

I understand completely what you are saying. My philosophy, however, is I don't care what the pairs or individual currencies are going to do in the near and/or distant future. I only care what I'm going to do when the currencies set up for a high probability trade and I trade accordingly.

Nancy
And this is exactly what I said in the first post of this thread...Everyone must trade his/her strategy & not based on tips from anywhere...The thread aim is to open a discussion about the recent price action, which doesn't mean that we are asking people to follow what we are saying here...On the contrary, it is better to not follow what is being said here unless ones' strategy approves & points in the same direction...


Thanks,

Nader
  • #17
  • Last Post: Oct 28, 2006 7:38am Oct 28, 2006 7:38am
Quoting g-dogg
Genius analysis, thank you for the effort, and definatly looking forward to make some mean profit next week , Good luck and happy pip hunting!
As I said, please don't take what is being written by me on this thread as trading recommendations...I might turn out WRONG, completely...Trade your own strategy...


Thanks,

Nader
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