does she want to pull back ? | Forex Factory

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does she want to pull back ?

  • #1
  • First Post: May 9, 2006 11:40am May 9, 2006 11:40am
Ive been watching the price action since I returned from vacation (and I missed all the action from the last 2 weeks), and I sense that the FX market is looking for an excuse to do a bit of a pull back...but isnt getting it. I think tomorrow is going to be a very very big day. If only we could read the markets mind about what it wants to see in the FOMC statement. Does it want an excuse to weaken the $ further ? Or does it want an excuse strengthen the $ ?

Any opinions ?


-Nick
  • #2
  • May 9, 2006 11:49am May 9, 2006 11:49am
Quoting svtnick
Ive been watching the price action since I returned from vacation (and I missed all the action from the last 2 weeks), and I sense that the FX market is looking for an excuse to do a bit of a pull back...but isnt getting it. I think tomorrow is going to be a very very big day. If only we could read the markets mind about what it wants to see in the FOMC statement. Does it want an excuse to weaken the $ further ? Or does it want an excuse strengthen the $ ?

Any opinions ?


-Nick
You need to qualify your question:

How big of a pullback are you expecting? The natural tendency is to say, we're up for a few weeks, so naturally we expect to be down at some point. The question is...how far of a retrace qualifies a pullback? Technically, we had a pullback yesterday...so the answer to your question is...YES, we expected a pullback and got it.

Look, the longer term outlook for the dollar is still bearish. The FOMC meeting may change that tomorrow, but to what extent would you be happy with?
  • #3
  • May 9, 2006 11:51am May 9, 2006 11:51am
My opinion is that we are badly in need of a correction at this point. The longer we go without one the more violent it could be. I doubt very much that treasury will label China as a currency manipulator. A weak dollar is one thing but I think that would be disasterous. I am also of the opinion that Bernanke thinks he came off to dovish in his testimony to congress and will shore up his credibility with tomorrows statement. All in all I am dollar bullish in the short term.

Of course all of the above could be worth exactly what you paid for it!
  • #4
  • May 9, 2006 12:20pm May 9, 2006 12:20pm
I believe that in this site: Ivesting to forex they say something about this.
I am not safe .
  • #5
  • May 9, 2006 3:03pm May 9, 2006 3:03pm
When I say pullback, I mean a 30-40% pullback(and I have to see it on the daily chart) Not a dinky 50 pips. For example (and Im just going to estimate), with the GBP\USD over the last 2 weeks is up say 900 pips. Folks, thats huge. Its fantastic. But do the fundamentals support such a surge? In my humble opinion, I dont think they do. (energy and commodities prices are adding to inflation pressures..i just think there is a bit of lag in the economy until we see it) I think there is a correction coming. And possibly a big one. All I do know is that there is going to be some serious volatility tomorrow. Either way, I will be prepared to make a trade after the news release. You cant (well you can, but shouldnt) trade on speculation after all, so Ill just have to wait and see.

Im prepared for a 400 pip correction(if the FED hints that they are not done raising rates)or a 200 pip surge for GBP (If the FED pauses). Id rather see a correction though.

It should be an interesting day.

-Nick
  • #6
  • Last Post: May 9, 2006 3:41pm May 9, 2006 3:41pm
Quoting svtnick
When I say pullback, I mean a 30-40% pullback(and I have to see it on the daily chart) Not a dinky 50 pips. For example (and Im just going to estimate), with the GBP\USD over the last 2 weeks is up say 900 pips. Folks, thats huge. Its fantastic. But do the fundamentals support such a surge? In my humble opinion, I dont think they do. (energy and commodities prices are adding to inflation pressures..i just think there is a bit of lag in the economy until we see it) I think there is a correction coming. And possibly a big one. All I do know is that there is going to be some serious volatility tomorrow. Either way, I will be prepared to make a trade after the news release. You cant (well you can, but shouldnt) trade on speculation after all, so Ill just have to wait and see.

Im prepared for a 400 pip correction(if the FED hints that they are not done raising rates)or a 200 pip surge for GBP (If the FED pauses). Id rather see a correction though.

It should be an interesting day.

-Nick
Depends on how you look at it, really...and this is the forex as art philosophy. If you look at the currency options, you would be painted a different picture. Right now, they are still very very much short on the USD. Add on top of that the hedges of gold skyrocketing, and various other metals.

I agree, that inflation will be key, but the correction you are talking about, which is inevitable could take place over many weeks, and it may not necessarily play out before the other majors rise against the USD.

The inflationary pressures you are seeing are very real, so I'm not dismissing your theory at all. I'm merely saying that at this point, your horizon is still weeks away...unless of course, tomorrow's FOMC suggests otherwise...which it very well could.
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