The fearsome upheaval in the forex market is over. There will be some backing-and-filling in the pairs that suffered the biggest moves on Friday, as the market adjusts to the “new normal”. But, prices won’t be plummeting into the abyss next week, as they did on Friday.
In the coming days and weeks, the “adjustment to the new normal” should offer us some excellent trading opportunities — especially those of us who are trend-followers. A lot of carnage and chaos was created in the currency market on Friday, leaving many pairs mis-priced. Panic tends to do that to prices. As rationality returns to the market, prices will trend toward equilibrium. If we can identify those trends in timely fashion, we should be able to ride them for respectable profits. I would expect some lively participation in [I]The 3 Ducks[/I] thread, even as we head into the time of year typically referred to as “the summer doldrums”.
The big loser (or winner, depending on your point of view) on Friday was the GBP/JPY, which gave up an amazing 2,700 pips from the HIGH of the day to the LOW of the day.
Here are the daily H-L ranges, for Friday 6/24 *, for some other pairs that I watch:
EUR/USD
518 pips
USD/JPY
810
GBP/USD
1,795
AUD/USD
351
USD/CHF
256
USD/CAD
390
EUR/JPY
1,287
EUR/GBP
720
EUR/AUD
350
EUR/CAD
352
GBP/JPY
2,703
GBP/CHF
1,630
AUD/JPY
921
NZD/JPY
860
EUR/NZD
443
NZD/USD
338
EUR/CHF
396
AUD/NZD
123
Every pair on the list above closed DOWN on the day, except USD/CHF, USD/CAD, EUR/GBP, and AUD/NZD.
[I]Finance Magnates[/I] reports that brokers weathered the storm on Friday, without suffering the sorts of problems they encountered in the SNB debacle 17 months ago. No doubt, the hikes in required margins protected them (and many of their customers).
I think the geo-political implications of this Brexit referendum are impossible to predict with any degree of certainty. Britain and Europe — and, indeed, their allies and trading partners — seem to have been served with that ancient Chinese curse, “May you live in interesting times”.
Finally, I’m amazed at the acrimony and vitriol with which parties on the two sides of the Brexit vote b!tch and scream at each other. I thought that sort of un-civil discourse was limited to my own country, where Democrats and Republicans sling mud at one another, and gun-owners and gun-haters impugn each other’s common sense and patriotism. I thought the Brits were more civilized than we, here in the colonies. Apparently, extreme polarization now characterizes all issues, in all countries.
- I use 5 pm (New York time) Thursday as the start of the “Friday” trading day.
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