data, the gold price was making new all time highs every week, oil was back at the 80 level (after dropping to 35 during the credit crunch) and the US Fed has indicated that it will be keeping US rates very low as long as possible and it will not move on rates if it does not have to in order to keep inflation in check. The zoomed in picture for the period preceding and leading up to our case study week looks like this:
This is the current median grid. At #1 we adjusted the 1.47/8 to 1.50/1 high. At #2 in the week under discussion the 1.51 was breached but we didn’t adjust the grid due to the fast drop, in other words because enough time wasn’t spent there before we could adjust, due to the “Dubai default” news. Due to the lots of price action between 1.47 and 1.50 my position in the EURUSD contained a few hedged entries, i.e. I had both long and short positions. The shorts were first established as we moved towards and beyond the initial grid high 1.47/8. The longs were established a bit later to “hedge” the shorts and to get to a net long position just in case we break above the 1.5000 level conclusively. In real-time this is not “obvious”. One of the arguments to maintain some short positions was because some of the big banks in their analysis didn’t foresee a move as high as beyond 1.5000. For me the strongest argument going into this last trading week of November was the fact that globally many financial trading companies had November as the financial year end and the date used to calculate bonuses.
Individual traders and trading teams thus have a “profit protection”
mindset going into end of November. And because this was a good period with stock markets making new highs, currencies in a strong trend and commodities pretty strong (because the “risk was on”) profit-taking could be on the cards. As a trader myself I know BIRD WATCHING IN LION COUNTRY 2010, PART 5
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