Current Market Vision

To analyze what could have happened over the past two weeks with our FX trading, we have dissected the results of the European Morning Technique EUR/JPY at 3am EST.  These are the results this technique has yielded over the last months.

	POSITIVE	NEGATIVE	POINTS
FEBRUARY	0	2	-80
JANUARY	8	4	120
DECEMBER	12	3	310
NOVEMBER	15	3	580
OCTOBER	8	4	240
SEPTEMBER	12	4	250
AUGUST	4	1	160
JULY	7	1	310
JUNE	9	1	400
MAY	8	1	360

And these are the results since January 14th, 2010.

02-Feb	-40
01-Feb	-40
29-Jan	0
28-Jan	0
27-Jan	0
26-Jan	0
25-Jan	-40
22-Jan	0
21-Jan	-40
20-Jan	0
19-Jan	-40
18-Jan	0
15-Jan	0
14-Jan	-40

The following is a chart with data as of January 14th for the EUR/JPY.  There is a strong downward tendency as the price fell from 133.50 to 124.50.

Why do we believe our technique is failing right now? It is because we are seeing downward volatility during the Asian session and then, when the European session starts, the pair is normally arriving to nightly ranges of more than 100 pips and, in the European session, we are seeing movements without any upward or downward tendency which is why this technique, which works when the price breaks a specific range, is having difficulties.   We see that in the European and US sessions, the price is completely stagnant and the price tends to gravitate towards the opening price of the previous day.  This makes for a stagnant market, as you can verify in the graph below.

This is not the first time this has occurred: It happened with less intensity in May, July and August of last year.  This are simple market “ruts” and we expect that, in this particular case, it lasts for at most 15 – 20 sessions and then the market will return to normality and we can begin again to add up gains as we always do.