[Ingot54]

Those who have been following the thread from the beginning should have a good idea by now how beneficial it can be to trade the longer term TF. Although I have encouraged traders to stick with the DAILY and WEEKLY charts, the current return to volatile conditions is playing havoc with our Stop Loss orders.

Last Wednesday 18th March, the US Treasury announced that they would begin buying their own Bonds. This would occur a couple of times a week over a period of 6 months, and would involve a couple of hundred billion dollars!

It is astonishing to me that we can now converse in billions of dollars just like it was $5!! No one can conceptualise what ONE BILLION DOLLARS really is, and just how incredible an event the world financial collapse is ... happening in out time, in front of ur faces. And these hundreds of billions of dollars are figures tossed around like betting chits at the Melbourne Cup horse race!

The consequences for traders are that we will be experiencing this sort of volatility for time to come yet - particularly since China is reportedly very un-cool about the US debasing its currency in order to pay its foreign debt, and attract investment! Japan I suspect, would share the same attitude towards the USA as China - there are some very big foreign reserves at stake here, and these two Asian empires stand to lose heavily if the USA gets away with this.

My view is that we may see counter moves in other currencies, which will thrust reversals on the foreign exchange markets for some time to come, until one or the other adversaries gives up, and allows water to find its own level.

So - the EURUSD gapped up more than 500 pips in one day when the Bond news was announced by Treasury. Similarly, the AUDUSD gapped up about 250 pips, and the USDJPY crashed from around 99.00 to around 93.50 in just 2 days.

Not too many indicators picked this in advance!!

Clearly, it is not possible to rely on markets to show us reliable trends just yet. Indeed, if you look at the 10 pairs I posted to keep a watch on, only these seem to be unaffected by the Treasury announcement, and are on target to resume their LT trends:

EURCHF
AUDCHF

... and they seem to be struggling to even resume their WEEKLY trends so far.

But the USDSGD (which I do not trade because of spread) appears to have turned and is awaiting confirmation of resuming its trend, as are these:

AUDJPY
GBPCHF
AUDUSD
USDCAD

It is still too early to tell what these will do - but as the trends begin to resume, I suggest you look at the 4Hour Charts, and perhaps get some more reliable pips there, if you want to try it. Personally I am not in the market at all - too risky at the moment. If the regulators don't know what they are doing, how can I have a hope?

The Euro strengthened, then it weakened ... what gives? Of course the question is facetious!

But it illustrates the point. It is simply unsafe to trade these LT strategies just now.

In the next post I will try to address leverage, and explain how I think we should be using it to trade the WEEKLY or DAILY charts.