Prepared for Anything

The Power of the News and Being a Learning Machine

When news is released like FOMC minutes or another related Central Bank announcement I normally look for a move in one direction and then a possible reversal.  Or I look for a move in this primary direction and a continuation.  The information disseminated today led to a bearish reaction in the dollar.  Below is a 15 minute chart with a label below a yellow arrow to indicate when the news was released at 2PM eastern time, and then the follow through.  There is the first push down, the consolidation and then the rush lower.  It seems that as I type this post, the dollar is attempting a rebound.  From the time the news broke until 9:40PM eastern the total distance traveled was 41 points.

This event resets a lot of my thinking regarding the direction of the dollar against many pairs:  AUD, CAD, and perhaps not the Yen.

Losing Intelligently

The maintentace side of trading involves keeping an optimistic and pessimistic set of targets for whatever happens.  For instance I could have viewed this move in AUD/USD as something positive but instead I wanted to stick to my guns and just shoot for a closer profit target.  Yet I had to learn the lesson again on how far things can run when RESISTANCE POINTS don't get respected.  "Change your specs" I I only did the opposite of what I thought

Tight and Dry S&P500

This time of the year is notorious for this type of tight range with dry volume.  This is an update to a prior chart where we are focusing in on volume conditions.  That is to indicate where volume spikes on bearish surprise days.  In this daily char you can see where volume spiked on the past 5 sell-offs, and how all the green candles occurred on significantly lower volume.

The triangle formation happened with a quick break out [8/8], which was followed up with a cascade last Thursday [8/10].  Each day after Thursday 8/10 was met with gradually less volume, the candlesticks traded in a total range of 12 to 13 points the whole day compared to Thursdays move of 41.5 points.  It is typical for August, but that doesn't mean we are not in store from a surprise geopolitical event shock.