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OK, this is getting ridiculous.. how is EURUSD now over 1.42?? (4/1/11)
- Thread starter Raul641
- Start date
That's why youQuote from Raul641:
This goes to the heart of the matter... let's assume for the sake of discussion that my fundamental analysis is absolutely 100% correct, and the Euro "should" be trading at 1.20. How on earth would knowing this do me any good?
As everyone loves to repeat, "The market can stay irrational longer than you can stay solvent." Even if I'm right fundamentally, I have no basis to short EUR here, given that (as someone else mentioned) it could well go to 1.50 or 1.60 or whatever before dropping to its "correct" price, wiping me out in the meantime.
i) use position sizing and risk management/stops
ii) shouldn't be discouraged from re-entering the trade multiple times, potentially resulting in consecutive (small) losses
iii) constantly verify if your underlying thesis is correct. If so, repeat from i)
eur/usd now at 1.4372. My models are telling me to go short. Anyone here with the opposite view?
Here's one view
"Recently we stressed the importance of the longer term technical picture and the
possibility of a major break through resistance, notably the Nov 2010 high at 1.4283,
which means that a huge double bottom appeared on the charts with theoretically LT
targets at 1.5706 and 1.6690. The LT downtrendline is also broken (see charts). We
are reticent to consider these LT euro picture as already established and do want at
least a weekly close above these levels. We shouldnât row against the tide and,
based on fundamentals and technicals, we favour a bullish euro strategy. However,
short term overbought conditions and extreme euro positioning points to an upcoming correction. Therefore, a buy-on-dips of the pair looks appropriate with
1.4021/00 the first major support and entry point. ST investors might consider
profit taking on euro longs, especially should the pair spike higher towards
1.45."
https://multimediafiles.kbcgroup.eu...unrise_market_commentary_0900dfde8028b215.pdf
"Recently we stressed the importance of the longer term technical picture and the
possibility of a major break through resistance, notably the Nov 2010 high at 1.4283,
which means that a huge double bottom appeared on the charts with theoretically LT
targets at 1.5706 and 1.6690. The LT downtrendline is also broken (see charts). We
are reticent to consider these LT euro picture as already established and do want at
least a weekly close above these levels. We shouldnât row against the tide and,
based on fundamentals and technicals, we favour a bullish euro strategy. However,
short term overbought conditions and extreme euro positioning points to an upcoming correction. Therefore, a buy-on-dips of the pair looks appropriate with
1.4021/00 the first major support and entry point. ST investors might consider
profit taking on euro longs, especially should the pair spike higher towards
1.45."
https://multimediafiles.kbcgroup.eu...unrise_market_commentary_0900dfde8028b215.pdf
Quote from tradingjournals:
eur/usd now at 1.4372. My models are telling me to go short. Anyone here with the opposite view?
Seems to me the trend is up. Plus the ECB just raised rates, making USD weaker against the Euro. I would much rather be long the Euro and short USD, than the reverse. I get some interest for Euro balances at IB and I get nothing for USD balances.
<img src="http://www.elitetrader.com/vb/attachment.php?s=&postid=3147579">
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Quote from Raul641:
This goes to the heart of the matter... let's assume for the sake of discussion that my fundamental analysis is absolutely 100% correct, and the Euro "should" be trading at 1.20. How on earth would knowing this do me any good?
As everyone loves to repeat, "The market can stay irrational longer than you can stay solvent." Even if I'm right fundamentally, I have no basis to short EUR here, given that (as someone else mentioned) it could well go to 1.50 or 1.60 or whatever before dropping to its "correct" price, wiping me out in the meantime.
The solution is to either develop enough timing ability to avoid cases where it could go another 10-20 handles against you, or to trade only in such a fashion that you can hold on, or even sell more, if that happened. For example, you could buy Euro puts with a 1.30 strike. Or you could short a moderate-size position, and just hold on or add a bit more short if it hits 1.50 or 1.60.
It's a similar dilemma, but less extreme, to shorting housing a few years ago, or the nasdaq in the late 90s. Having a correct view is only about 5-10% of trading success.
Dumb money is still short euro. So best is to go long.
If we break 1.45 1.70 is a possibility.
If we break 1.45 1.70 is a possibility.
Agree it is a matter of picking the least worst currency to park $$ and earn yield. Short USD and buy EUR, AUD, CAD, NZD.........