How to Take Contraindication Trades When It Means Something.
Alright this is a very hotly debated subject because it brings sentiment and herd mentality into play. As we know it is NOT always wise to go against the trend. Case and point would be the stock indexes in the US at the moment. Simply not smart to go against this bulldozer at the moment. There will come a time but that time is NOT now regardless of what the pundits are talking about at the moment.
I don't so much use sentiment alone as a gauge but rather I reflect on what central bankers are thinking at the moment. That is the biggest play you can do or have had to do over the past ten years. People assume that this unwinding process will be done in a short period of time.
The quick and short answer is, "no it will not".
They execute orders on the exchanges so they will pull orders on both sides of the market (which is where their positions reside) like most large liquidity providers. It will require some steady hands and some tweaking but I don't anticipate any serious catastrophic events as long as they have control of the markets. They can add or subtract orders in milliseconds so why would anyone think that they don't have this control. I don't really know. Some very smart people are likely wrong about how the Fed does things.
You see the Dollar could stay in this range, between 87 and 97 for a very long time. I suspect that is what is going to happen. Not a Dollar crash but rather a back and forth movement to stabilize the markets. Anywhere in this area 87 to 89 I expect a good, rally for a few months from the Dollar. No it is unlikely to go to 80 although it would seem that way at the moment. This is a major volume area where the Dollar is and I don't expect it to go through on its first try.
I would look for shorts in the EUR/USD or Longs in the USD/YEN, USD/CHF and possibly a few other pairs. You don't want to load the boat one way. You could go long the EUR/USD while weighting your position short the USD/CHF.
As for me sentiment is ripe enough to go long the Dollar. It is time in my opinion or very close to it. Keep in mind that the pattern the Dollar is in could still see it make new highs. Yes, that could happen so be aware of that. I don't expect it to but it could happen. I expect more a 97 rally before stalling.
If you have played gold well over the past few months it might be time to take profits along with other commodities that have shown good signs of rallying.
The chart of the USD/CHF shows quite clearly the pattern of the market for the past few years. It is a reflection of the Dollar. Neither plunging or rising. See for yourself. We are nearing the bottom in my humble analysis. Time to think long. Cheers!
I don't so much use sentiment alone as a gauge but rather I reflect on what central bankers are thinking at the moment. That is the biggest play you can do or have had to do over the past ten years. People assume that this unwinding process will be done in a short period of time.
The quick and short answer is, "no it will not".
They execute orders on the exchanges so they will pull orders on both sides of the market (which is where their positions reside) like most large liquidity providers. It will require some steady hands and some tweaking but I don't anticipate any serious catastrophic events as long as they have control of the markets. They can add or subtract orders in milliseconds so why would anyone think that they don't have this control. I don't really know. Some very smart people are likely wrong about how the Fed does things.
You see the Dollar could stay in this range, between 87 and 97 for a very long time. I suspect that is what is going to happen. Not a Dollar crash but rather a back and forth movement to stabilize the markets. Anywhere in this area 87 to 89 I expect a good, rally for a few months from the Dollar. No it is unlikely to go to 80 although it would seem that way at the moment. This is a major volume area where the Dollar is and I don't expect it to go through on its first try.
I would look for shorts in the EUR/USD or Longs in the USD/YEN, USD/CHF and possibly a few other pairs. You don't want to load the boat one way. You could go long the EUR/USD while weighting your position short the USD/CHF.
As for me sentiment is ripe enough to go long the Dollar. It is time in my opinion or very close to it. Keep in mind that the pattern the Dollar is in could still see it make new highs. Yes, that could happen so be aware of that. I don't expect it to but it could happen. I expect more a 97 rally before stalling.
If you have played gold well over the past few months it might be time to take profits along with other commodities that have shown good signs of rallying.
The chart of the USD/CHF shows quite clearly the pattern of the market for the past few years. It is a reflection of the Dollar. Neither plunging or rising. See for yourself. We are nearing the bottom in my humble analysis. Time to think long. Cheers!
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