I traded the EURUSD today, and waited for the events to come up and do their thing.
One thing I didn’t understand and would like to ask you, if anyone has any clue.
At the Chicago and Michigan releases, the price reversed itself, even though the results blow expectations. After reaching 1.387 price level, which is the today’s resistance area, it reversed again and fulfilled what was expected at the time.
Those 2 news releases came in higher than expected. Both of them. Aside from the volatility which commonly arises around news announcements their are other reasons for a pairs movement. As always. A lot sentiment believes the euro is oversold and the downtrend is coming to an end. This being Friday and the last trading day of the month and summer I’d chalk it up to profit taking and wouldn’t really read too much past it.
The Euro imo is heading to an extreme low. I can’t see any turn around till 1.3000 or there about.
Any movement is probably market maker shuffling. I would be careful though about tracking news events and relating them to trades. Remember, the market maker will use any news they see fit to make a market. So in some cases it is better to do your technicals and look at the volume associated with the move. The best clue on market direction.
Just wanted to clarify that I personally don’t believe the euro is headed back up yet either. Just SSI shows traders dumping their shorts and taking profits. I’m currently short the eur/usd for about 2 days now
The good news that came up, did [B][U]eventually [/U][/B]pushed the USD up (and the EURUSD down), and emphasize on the eventually. What I’m trying to understand is that, right at the time of the release, the market sold 10 points of the USD. And just after reaching the 82.44 price level (1.387 EURUSD) which was half an hour later, the market bought a huge chunk of it, which pushed it to a new year high.
BTW - if you will check, on the 09/01/2013, exactly one year before, the price level was the same…
Anyhow, I gotta say, I’m still learning the market behavior in certain cases and trying to write some market behavioral quotes to my own.
Also, wanted to share something with you (following emeraldorc’s comment)
I did some COT analysis for the current year on the EURUSD (see attached the results) .
The market is way, way too short on this pair, and some reversal is invetible.
We of course don’t know when and how it will happen, but numbers don’t lie.
My experience with news releases is they have almost nothing to do with facts on the short term. The short term charts during a news release just show the volatility and chaos that arises from news traders. Which is why I don’t focus on news events, especially lower tier, all too much. It would have to be a pretty crazy announcement from university of michigan to stop the eur/usd downtrend and have a trend reversal in the big picture. It almost makes me laugh the news they’d have to announce to turn the pair around lol not gonna happen. I guess what I’m trying to say is don’t confuse market news reactions with the prevailing sentiment on a currency pair. Unless you’re just trying to trade the news of course.
