11.10 am, bst.
I’m sitting here waiting for the second cricket test between Australia and England to start and just felt like saying a few words on what I see in the charts.
Overall, the markets are very slow and with small ranges. Typical summer markets. The big money people are on holiday, the politicians etc who drop unexpected tape bombs that cause volatility – they are also on holiday. Despite such range bound slow-moving markets I’m still making decent returns, that is a confidence booster.
My philosophy is that the charts show all that is there to know of the markets. Even inside information is reflected in the charts. After all, to profit from inside information one has to trade the market, and the charts will capture the effect of those trades too.
At the moment, the most curious aspect of the markets is how well EURUSD is defended around 1.3090. Overall, there seems to be a strong bid in EURUSD that is the opposite of all the negative news and commentary we read. EURGBP is making new highs and when that cross retraces it is via GBP strength, not much Euro weakness. Just curious.
In my last post I mentioned that the system is short EU but long GU which I thought was strange. If not following the rules I would not have bet on a strong pound in an overall strong dollar environment. However subsequent price action has proved the system right. GU has breached 1.5200 again. The weight of money as shown by the charts is telling us to be long GBPUSD, regardless of whatever the underlying economic fundamentals might be or what the talking heads on TV and the internet blogs might say. They get caught up in their own analysis and miss the reality in front of their eyes.
USDJPY is also well bid down at 99 and one of these days I think this pair will break its previous high and sprint up to 105. We should catch it, whenever that happens.
Note: What I write here is what I see now. I am not wedded to these opinions. If the picture changes in the next hour, my reading will also change.