The Foreign Exchange markets are in a state of
decided uncertainty this morning and as a result of this our situation in the
market is flat. We hold no positions.
The beauty of the Technical Analysis (chart-based)
approach to trading is that if the fundamentals are telling you one thing but
price is doing the opposite, then you go with what the price is saying. Right
now the fundamentals (revised GDP figures in the US that show much greater than
expected growth, high ADP jobs report outcome, better than expected official
jobless claims) are indicating that the end of Quantitative Easing (QE) should
be just around the corner. The logic of this, and experience from the past, is
that the Euro and the Yen should be weakening against the US currency,
but in the past few days this did not happen.
Perhaps
there is end-of-year positioning going on. Perhaps previous moves on tapering
fears mean it is largely priced-in. Perhaps participants are waiting for the
Non Farm Payrolls report later today and we have a thin, unreliable market as a
result. Perhaps, perhaps… In the meantime we keep our powder dry, noting that
certain of the pairs we watch, most notably the gold and the dollar / Yen
pair, are on the point of attacking significant support and resistance
levels respectively.
The Mandelbrot algorithmic
routine
The
new trend management software has reached an important milestone in its
development. The main algorithm is now perfected and coded, and all that
remains is to exhaustively test the outcome on historical data, over as many
instruments as possible. We will be writing more about this.
No
matter how technologically brilliant this piece of software is (and we all love
our own offspring the best) the fact of the matter is it has to assist us in making
consistent profits in order to be acceptable, and its ability to do this
must be proven in an objective, scientific and totally unbiased manner.
Watch
this space.
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