Here I am going to give you a simple tip that can make huge gains. It’s simple to understand easy to use and easy to apply and can and does make big profits.
To show how effective this tip is I have demonstrated it live by predicting the euro would go no higher than 1.50 (it fell from this level) said it would have a target of 1.44 (it traded below this level) and then indicated a rally to 1.48 was on the cards and its trading just below this level.
Does that make me a guru or an expert? Of course not all I am doing is using the news to indicate overbought / oversold areas and anyone can do it
I am writing this on Thursday Dec 3rd and now looking for the euro to fall again.
This may seem odd if you read the news – most are turning bearish on the dollar based upon:
A run of poor U.S. data, including Wednesday’s contraction in the manufacturing sector for December. To add to the dollars woes we have crude oil up at $100 a barrel.
This has seen dealers to fully price in a 25 basis point cut in the Federal Reserve’s benchmark interest rate at the end of the month, and a one-in-five chance of a bigger 50 basis point move.
So the dollar is a banker to crash out of sight then – No and for the reason why you need to understand this equation:
Supply and demand + Investor perception of them = Price
The supply and demand fundamentals are there for all to see but we all as humans draw conclusions based upon our own view. Humans tend to push prices to far away from fair value and when they do this and you can spot it you can look for a contrary trade.
Will the fed cut by 25bps maybe but that’s priced in, by 50bps? Unlikely, as they have already made their views clear on inflation. Is the US heading for recession as many think? Not yet, GDP is robust and the recent data indicates a sluggish economy not one in recession so prices look like they have run ahead of the fundamentals and the dollar could rally.
It’s a fact that the majority of traders lose, so being in the minority is not a bad place to be.
All the above is priced in and while the price may run a bit higher a selling opportunity is coming in the euro against the dollar.
This doesn’t happen just in currencies check out crude oil 15% in a short space of time is this anything to do with supply and demand its investor psychology at work and crude cannot hold these levels based upon supply and demand.
Of course humans are un predictable and you never know how far they can drive prices and this is where you need to look at your forex charts momentum is waning in both crude and the euro and its time to watch for a turn.
The important point is to wait for confirmation and when a top is confirmed shorts can go in but you need to be patient.
Our view is the euro will probably top around here and crude oil is the same tomorrow could be the day it happens. Wait on the sidelines and wait if the signals don’t come don’t jump, if they do then you can hit some nice contrary trades.
There’s an old saying:
“If you can hold your head when everyone else is losing theirs you probably haven’t heard the news”
In this case you have and you’re holding your head and seeing an opportunity for a profit.
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