Sometimes the price or exchange rate
of a traded security can gap up or down at the open of a trading session. This
is quite common in equities, as these markets close every evening. It does not
happen that often in Forex, due to the fact that currencies can be traded
almost continuously during the week. However, there is always a break over the
weekend.
Those traders who do their work by
reference to Technical Analysis (TA), have an adage which holds that when such a
gap does occur, it will ‘always’ be filled. This is not literally true, of
course, and what they are really saying is that the probability of it being
filled is high and, provided that good risk control and money management techniques
are in place, it is worth trading in the direction that would see such a gap
being closed sometime after the open.
Forex trading for the week starts in
the Asian session, which corresponds to late afternoon on Sunday GMT. A gap has
formed in the EURUSD pair at the last two weekly opens, the latest being
Sunday just gone. This was down to news concerning the Greek situation, which
breaks very often over the weekend. In each case the gap was, indeed, filled.
There is a corollary to this. The
experience shows the very high risks involved in holding an open position over
the weekend. When such a gap occurs it has the potential to leap over any Stop-Loss
order that is in place, thereby negating whatever risk control the trader has
implemented.
Greek
central bank Twitter hoax drives confusion
Our attention was drawn to an item on
the newswires to the effect that there had been an announcement by the Greek
central bank. It turned out to be a statement pointing out that its governor,
Yannis Stournara, did not have a Twitter account and could not have been responsible
for earlier tweets.
It took a little bit more detective
work, and the assistance of the Google translation service (above) to track
down what all this was about. It turned out that an Italian journalist had set
up a false Twitter account in the name of the Greek central bank governor, and then
posted tweets claiming that the Greek issues with the ECB and IMF had been
resolved, for once and for all. The journalist later admitted the hoax, but not
before the central bank felt it necessary to issue the denial.
As if we did not have enough
confusion over Greece.
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