Discussion in 'Forex' started by quin8670, Jan 2, 2008.

  1. I just started Daytrading EUR/USD in the last few weeks and am amazed at how volatile it is.

    Is this regular price action or completely out of sorts?
  2. The pair tends to have higher than your usual volatility, but the last few weeks of thin holiday liquidity have definitely influenced the amount of randomness.

    It should pipe down a bit come Mid Jan.
  3. Erniii


    I like this pair very much. I can say that it's my favourite one, but for me it's good only for long term investing. 0,5 lot max. wide SL. When analysing this pair 70% are fundamentals an 30% is technical analysis
  4. I'd be interested in where you came up with the 70/30 ratio.
  5. His ass!
  6. Erniii


    I came with this ratio up myself. It works for me and that's all it matters doesnt it??
  7. Unlike the previous poster who was insulting, I was merely curious how you came up with it. If you don't want to elaborate, that's fine.

    I'm just trying to understand your methodology.
  8. Erniii


    First of all 70/30 ratio is not a solid rule. It may vary depending on whether I look at a weekly, daily, 4h or 1h chart. When playing short term on H1 or D1 (which I don't do very often due to lack of time) TA is much more important to me than the fundamentals.

    For this pair I usually play on a weekly chart on a long term.

    Why 70% are the fundamentals according to my way of thinking??
    Beginning from early 2001 the $ had a few good reasons to become weaker. The burst of the dot-com bubble, then 9-11 and the general weakness of the US economy led to a relatively rapid interest rate cuts to levels below 2%. That situation lasted till the beginning of 2005. During that period the European interest rates were declining as well but much slower and they were larger through the whole period from the US rates. Same situation with the UK rates and though they don't influence the EUR/USD pair directly, they have a large impact on the weakness of the $.

    That could roughly explain the situation till 2005. The EUR/$ traded 1,36 at that time. By the end of that year it traded around 1,15.

    On the 1st of May 2004 10 new countries have joined the EU. That has led the Euro to being more "popular" in Europe thus raising the demand for that currency. many countries like for example Poland (the country I live in) has started using Euros in international trade more often than dollars (the dollar was a VERY strong currency in central Europe in the 90's). The same goes for most ne EU members.
    Except that, some countries (UK, Belgium, partially Germany) have opened their borders for cheap working force from central Europe. That caused the whole EU's economy to move which led the ECB to raising the interest rates. That in my opinion among other reasons caused the Euro to get stronger.

    Now the 30% of TA.
    I've noticed that 27 period smoothed moving average shifted 5 periods forward is a pretty good support/resistance. So ater the price has moved over the MA from below I have waited until the chart will retrace 61,8% of the fall of the EUR from 2005 and put a short position in may 2006 with 150pips SL at around 1,2860. I closed the position when the price reached the MA. Then I switched the position to long and closed it @ 161,8% of expansion of AB (see picture)

    79 weeks but it was worth it even though I've invested relatively small amount of money.
  9. Well Ernie, you just shut those guy's up! :)
  10. Erniii


    Any constructive comments on that??
    #10     Jan 3, 2008