Atilla
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I can tell you why..its because instead of riding trends, our natural instinct is to believe that "it cant go any higher". Im not being sanctimonious here..I have a large short position (well large for me anyway) on the Dow from 13660, and when I reviewed the decison this weekend, I had to admit to myself that I had opened the position on the basis that the price was "high enough"..something no one can really predict.
Morning everyone,
Here we are in June and in a very critical period in the markets imo.
On a technical level, cable has bounced off it's long term weekly SAR line (going back to Mar 06) on my charts. My view is 1.98 is now the new 1.93 support level. We have had consolidation at this level and 1.97 has held and so has 1.98. 1.99 tested. This is just a build up to breaking out of the 2.00 level.
I suspect we will try again and using text book theory retrace and on third attempt breakout and hold it.
On my daily charts we are about to breakout of the Standare Error Channel that has been in existence since middle of April 07. We tried last week and failed. Based on that I really can't see cable falling below 1.9730 which was the decisive support area last week.
On the fundamentals, markets are well and truly twisted. ECB talking about a rate increase. BoE likewise. Fed still contemplating a rate increase but no chance they will do it. China talking about cooling it's economy. For everyone out there if rest of world discusses cooling economies and raising rates whilst fed does nothing - this will ultimately mean dollar has some more falling to do.
Moreover, imo the DOW is at it's highs. This is purely based on charts going back to 2003 and previous past hypes like in 2000. There is no intrinsic value in the DOW or US dollar. If you take away the Yen carry trades which are purely speculative then the problem is even worse.
Mr Greenspan has commented on the Chinese bubble again. I find it curious he does not mention the DOW. At least in China there is real economic growth and productivity gains (I do agree there is a bubble there too). However, for the DOW there is stagnation - no growth and inflationary pressures. But everybody for some reasons justifies all news including bad ones as hey we are in a boom period.
I would be very weary of shorting cable with these strong undercurrents.
Good trading everyone...