USDCAD Structurally, the whacky loonie is setting up for a directional move also. If you gin up a weekly chart, it is easier to see. This is a good example of identifying ranges to implement proper trading plans. It is tough to do from left to right. There may be a false break out and a return to the middle (1.00) or bottom of the range or the break could be for real. 50-50 chance I would say. We have built value for several weeks at parity and the move below parity was initially rejected strongly. If we do break free of the magical parity level and move up, it will most likely be a good move of many weeks IMO. In any case, beginning of Q2 and some nice possibilities for a plan to enhance trading year 2008.
I learned a hard (expensive)lesson when I first starting trading . Markets DO NOT trend or move directionally most of the time. Markets (all markets) spend most of the time in consolidation or range trading at some level. Of course if you are a scalper or very short term trader trader you may not care, but it is an important concept to keep in mind when making decisions. I think the inner self always wants us to believe that a big move is coming and we can go ahead and order our Porshe 911. This is not officail by any means, but the data comes from a very respected group of traders. Markets only spend about 6% of the time trending. The other 94% of the time is spent in normal range trading or building value. If this is something that you do not agree with, do your own research. Again, it is very important to grasp and will explain why the more experienced traders may take your money when it appears you should join the herd in the daily directional move.
A current example of this that you may want to study can be seen on our Swiss Franc and Japanese Yen trades. Both of these markets are at key levels for either a continuation of downtrends or a reversal and move back up. If we agree that structurall y 1.000 and 100.00 are key levels, then it may be very nieve of us to think that strong downtrends are going to reverse and move up 1500 points. I am positioned for this and that's my play until I am proven wrong but I am not expecting it to just "happen". I hope it does, but do not expect it. It is "more" likely that we will build value by establishing ranges around these levels. Much like the loonie has done over the last several weeks. I do think that a strong move up could cause some long term shorts to begin covering though but we have to get up there a bit for that. Watch the weekly or daily charts for a range to establish around these key levels and experiment with your trading styles. EXPECT RANGE TRADING OR VALUE BUILDING and prepare if a strong move occurs.... not the other way around.
As long as one cannot define a trend 100 % objectively , one cannot say that markets spend 6 % of time trending.. What's your 100 % objectively definition of a trend ?
Good point. Thanks. The study was done based on market profile theory. So trend days were defined as those days where other time frame sellers and buyers pushed the market beyond the boundaries of a normal or normal variation distribution curve. The point of my comment is not to debate the percentages so much but to just point out that most days markets do not trend.
Somebody is selling EUROS. D-Bank write offs. 4 billion of them I think. Something like that says Bloomberg. They may be the only ones selling EUROS
Any link to that study ? What exactly are the criteria for defining "beyond a normal distribution curve" ?