Author: Forex Kong

Further decimation of the U.S Dollar overnight has now taken us below a critical level of technical support, coupled with a dramatic and powerful “surge” in fundamental / supporting data.

All CPI readings for a number of European countries came in “above expectations” overnight propelling the EURO and other Europeans countries currencies “even higher” with the inverse effect on USD.

Now falling into “oversold” territory USD is setting up for a bounce / move higher, but that’s not of much consequence really – when you’ve just been completely and totally “fundamentally whipsawed”.

The barrage of conflicting data (suggestion of China’s tightening / slowing, as well the continued notion that indeed the Fed sticks with the taper) has created a scenario,where one has little choice but to either “get out-of-the-way” – or risk great pains in sticking to the program.

I choose to get out of the way. I will not participate in any “waterfall activity” as USD’s “time in the sun” appears to have been / will be short-lived, so will likely look to sell ( at a loss ) remaining open positions on any further strength.

This sets up for a very difficult time ahead with USD now rolling over and suggesting a “continued trip lower”. Personally I’m stunned by the activity but in putting a couple more pieces together am of the thinking that “few of the big boys” really have much faith / belief that the Taper will continue much longer – and aren’t even bothering to catch “whatever move upward” in USD may have resulted. That and the fact that the Fed is still very busy “behind the curtain” doing everything it can to crush the U.S Dollar.

I “may” try again to catch a move upward in USD but in getting my hand caught in the cookie jar here this time – will remain wary.

Considering I’ve suggested late March as a time to consider Fed intervention again ( and further printing ) anyway – I’ll now likely look for any further USD strength as an opportunity to sell / get short as opposed to riding it off into the sunset on safe haven flows.

Go figure eh…me the biggest USD bear on the planet get’s caught long.

I’m thrilled.

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There’s a pile of traders out there that feel “the fundamentals” are a complete waste of time. Following the charts day by day, minute to minute, hour by hour, “riding the waves” and trading the technicals –  with little or no regard for any such thing as a “fundamental”.

This works great of course…….until it doesn’t.

A “technical limit” provides a “fundamental challenge” in that eventually ( as markets will always push further in either direction than the average trader can bear) “all technicals” will be broken/shattered  creating further “fuel for the fire” in an industry “built” on the sale of technical analysis, and the promise of eternal wealth – while the fundamentals continue to lurk in the under current.

Can you consider making a living trading with “no concern” for the fundamentals, trading only the technicals?

I’ts my belief, that the answer to this question is no.

Eventually…..”all technicals” will be broken as the simple mechanics of the system “require” this to be the case.

Markets tell you to buy the RSI at level “x” and sell MACD at “y” as it “commands” – all-knowing the indicators / levels are meant to be breached, pushing “past” any extreme, essentially “snatching your dreams” with little concern for “anything you’ve learned” about technical analysis, time and time again as the fundamentals continue to hide in the shadows.

Do not leave your indicators set at the “pre defined” levels suggested to you in your trading platform! They are designed to be broken!

Learn to “compliment” your short-term trading with a “sprinkling” of the fundamentals as you really can’t survive without both.

Do I like coming home to “yet another day” of a counter trend rally? Absolutely not.

Am I at all worried about it?

What do you think?

Back in the game……nothing has changed.