Tuesday, October 19, 2010

Skeleton Shift Update: Oct 19, 2010


All major pairs closely moving in tandem.

Pink - Asian Hours
Yellow - Asian/Euro Overlap


It seems that I was wrong on the EUR/USD and that Asian trading did not agree with the EUR/USD London/NY trading. The amount of volatility on the EUR/USD in overnight Asian trading has been very suspicious. On the Asian/Euro overlap (2 am to 4am) I've been seeing roughly 50 to 60 pips between low to high, which is 60 to 80% higher than the the Asian/Euro overlap in 2005/2006 high to low range. While during Asian hours alone I've seen ranges between 50 and 100+ pips regularly, which is about 0 - 100% more than 2005/2006 pip ranges for these hours. These random bouts of 100% increases in historical pip ranges either means some sort of high speculation from Asian traders or big financial institutions/central banks are buy/selling large amounts of Euros going into European trading hours. Another possible scenario is the increased volatility may reflect the developing capital markets in Asia and the rise of new big market players on the other side of the world.

Whether this is a permanent facet to stay or if this just a temporary phase, it surely makes noise exponentially higher and making the pair much harder to read/trade. More players, more expectations more dynamics pushing the pair with different interests.

For now I stay by my stance to stay out of this pair unless a strong short term opportunity arises. Waiting for the range to break below the 1.377 range or above the 1.41 would be optimal still. The current fail at 1.40 maybe significant especially with a close below the 1.377 level.

With the current price action, I'm even sure swing traders are having a hard time with this pair.


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