Hi My DTS Forex Friends!
Just wanted to give a little update on what’s taking place in the world right now and how it may affect your trading.
As I’m sure many of you have noticed, the markets have gotten a bit “strange” this week. Not that there haven’t been trades to be had, in fact we had two really nice setups (Eur/Jpy and Aud/Jpy) on Tuesday’s live session. BUT, prices seem to be getting compressed and going nowhere at the moment. We have already seen the stock market take a 170-point dive at the thought of what might happen. Take a cursory look at gold. Yeah, it’s moved up steadily over the last few days. The Aussie on the other hand HASN’T. This normal correlation is broken and that tells me Gold is moving by itself for another reason…………safety.
Remember, the “smart money” is usually the most risk averse because they have the most to lose, an while you may have been losing your shirt in the crash of ’08, there were a nice handful of market participants that sidestepped the catastrophe, and that’s because they saw the bigger picture and knew of the potential bubble burst calamity of the housing markets. This move in gold might be them “showing their hand”.
I’m not someone to fear monger, and I’m certainly not a fundamental trader, but this new direction in the Syrian crisis has me worried about trading this week and next. Why? Because chemical weapons is a line even some of the worst dictators would never cross because they know the global reaction is likely to be strong. What if that was part of the plan though? In my humble opinion, Syria might be hoping an outside attack on their soil, because it might inflame already difficult regional issues. Maybe they are hoping fragile areas around them will use this to turn on Israel and attack. Then what? OR, maybe the regime really has gotten desperate and will increase these atrocious actions to leverage China and Russia against a coalition that might want to disable Syrian military capabilities, creating an even larger, and more precarious situation. Best-case scenario is that the use of chemical weapons was merely hubris by a leader that thought no one would react, and that the response will move things in the right direction……but I’m not counting on that.
All of this reeks of potential shock waves to the forex market, and I feel that the markets will react violently to any of the “X Factors” I have named above, if they do in fact occur. The markets are counting on a coalition attacking Syria in some description, but they CAN NOT anticipate what might come after. Markets have been relatively calm and boring for some time now, due to much intervention to mend a global economic crisis, but a surprise reaction to the expected strike would send much of the currency market, albeit temporarily into a wild place to have open positions running, and a 500+ pip “super spike” can have devastating consequences to an account. I believe this reason has been what’s held back a response from the US up to this point. But chemical weapons forces the hands of nations who want to appear to that they are doing the “right thing” for the globe.
Politics and humanitarian issues aside, this recent development may have a huge impact on markets until we see what the response from the escalation of force is likely to be. Use extreme caution trading until we get some clarity on that issue.
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