Have Faith In Foreign Exchange

Considering the overall weakness in U.S equities today, and the blistering panic spread ‘cross the financial blogosphere – my currency trades / accounts have barely budged an inch. As cranky pensioners and smart alec newbies race for the exits, screaming,  “pleading for answers” as to why their “all-in” equity trades are in the red, falling like dominos to the wall street fatcats gobbling up their shares…all is calm with Kong.

The EUR even picked up a full 100 pips against the dollar, as U.S equities get taken to the cleaners (and I mean that quite literally), as the last of the weak hands are rinsed of their shares. This may continue ( but I doubt it).

The U.S equities market is the “number one largest measure of risk” I currently track in my pocket full of charts and graphs. At every crossroad, at every turn – no matter how sure you are of a particular trade – you will be tested. It is so painfully obvious, through observation of currency movement – that this is the final stage of “shake out in weak hands” as the big boys are buying shares hand over fist.

How do I know?

  • How about  complete reversals in several currency pairs suggesting “risk on” taking hold.
  • Only modest pullbacks in pairs that have already reversed (I will be adding to these..not selling).
  • The EUR gaining 100 pips against USD, as well JPY and even  moving on CAD!

The currency markets are not at all in step with the sell off in U.S equites, and most certainly paint a clearer picture of the  road ahead. You can trade it, or you can watch from the sidelines – but you can’t win if you don’t buy a ticket.