subject: Short Term Trading From Long Term Charts [print this page] I hope everyone had a great holiday! Thanks to all of you who sent your holiday wishes.
I had a good interview last night on CNBC, looking at charts and discussing the Japanese Yen, Euro, British Pound, and Australian Dollar.
Here it is: http://www.cnbc.com/id/15840232/?video=1713073457&play=1
To clarify my thinking about the Japanese Yen, Japan's intervention warchest was increased by 5 trillion Yen, bringing it up to 150 trillion Yen. The dramatic intervention in mid-September cost Japan only 2 trillion Yen, or about 1.3% of the total currently set aside to weaken the Japanese Yen. When you look at the intervention warchest from that perspective, Japan has a lot of dry powder!
Andrew made a valid point when he mentioned that intervention funds may be tapped by the Japanese government to pay pension benefits. However, this is considered a one-time, stopgap measure, and Finance Minister Noda implied that the pension shortfall would be remedied by a future tax hike.
I pointed out that the EURUSD currency pair was bouncing repeatedly off of its 200 day simple moving average. Now I know many short-term traders will profess that they don't look at daily charts because they want to trade only on 5 minute charts, or even shorter time frames. But the point is, over the past week there were many short term trading opportunities based on Euro's 200 day moving average.
This would entail buying Euro off of that moving average, which has worked like a charm for the past six trading sessions - but ONLY for a short term trade! I'm not ready to buy Euros for the long haul just yet, and I'm still bearish overall. But that doesn't mean we can't have some short-term fun with the 200-day moving average - just be nimble, mind your position and always be ready to get out of your position. Someday soon that moving average might break, and Euro will resume it's downward path.
Ed Ponsi
Forex Trader and Instructor
ed@pristine.com
by: Greg Capra
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