Hello fellow traders. Tomorrow morning at 7:45ET is the ECB rate announcement. At the time of this writing, I see EURUSD has droped to support around 1.46. Is this a good time to buy EURUSD in you opinion? I came accross this article
Why Is The Dollar So Strong?
which suggests that the drop to current levels might be too much, like somethig out of the ordinary is going on, and that traders should be careful. Now, it appears that the author has been stopped out a couple of times recently on this move, and I know from personal experience that getting stopped out tends to make one less certain of things. I was curious what you think about the current price level of EURUSD. Was the 2/05/08 drop unusual, like the author suggests? Here is a part of the article which I will quote:
Regardless of the economic possibilities, traders would be well heeled to listen to the advice of Mark B. Fisher, who in his book, “The Logical Trader” noted,
“If a market is making a substantial move and traders seem to understand why, this market trend is not going to last very long. However, if the market is moving in one direction and nobody has a clue as to why, then the trend is going to be prolonged. When a market goes up or down for no apparent reason, it tends to go a lot further in that direction than people can imagine.”
All of the traders probing for a bottom in this most recent down leg of the EURUSD may want to consider those words carefully. While the data continues to point to further EURUSD strength, the price refuses to confirm this analysis and as traders we should respect the message that price is sending.
This is an interesting statement. It made me think: 1. Investors with deep pockets can afford exotic research tools, like detectives, high tech spying, and perhaps simply paying for information. Not saying that is what is going on here. But the statement made me consider that when we see a big move that seems unsuporter by the evidence, perhaps there is something else going on other than a simple honest move. 2. Or perhpas the current move is quite honest. After all, there was recent data about slowing economy in Europe, making ECB rate cuts seem more plausible. Perhaps this is nothing unusual like the author seems to suggest.