The eyes of the financial world are on Europe, and by extension the EUR/USD.
Despite all the political shenanigans during the past week, the EUR/USD ended the week less than 10 pips from where it ended the last, and is locked in a tight range, as the hourly chart illustrates.
The following daily chart shows the market to be testing a trend line drawn from the mid-2010 low.
Yesterday I posted (with a twinkle in my eye and tongue slightly in cheek) about The Metallica Indicator, a variation of the magazine cover indicator, showing that sentiment is extremely bearish against the EUR/USD. If sentiment has reached the extreme, then by definition it must turn around, likely taking the market with it. There is no way of knowing that the extreme has been reached yet, but don't rule it out.
Saturday, 10 December 2011
This is big, I think. As I've said many times before, the trend line is parallel to the trend channel that contained the market's decline from the 2007 top to the 2009 bottom.
Gold's long term trend is up, which is not to say that it's a low risk long entry right now, as the daily chart picture is muddled. As you can see from the following long term charts, risk needs to be measured against 1600 or so, and arguably even 1300. If the daily chart trend changes to up, risk could be reduced.
Firstly a long term daily chart, arithmetic scale. Gold is stair stepping higher from one range to another.
Why didn't I post any trading charts from Monday to Friday of the past week? My favourite playground for trading is the daily chart, and the picture there is muddled for all the markets I commonly track and trade. When some of the pictures clear, I'll doubtless have more to say. In the meantime, there is no sense in looking too closely at the charts and forcing trades that really are not there. Any given market trends less than half the time. Usually at any given time at least a couple of the markets I trade will be trending on the daily charts, but sometimes none will be. Lucky it's cricket season...