Following from Mike’s and Eamonn’s posts about the reasons for the moves I think we are starting to see a shift in the landscape.
If the moves are a result of increased Japanese purchases of foreign bonds/assets then they have been ramped up in a big big way compared to previous weeks (as Eamonn’s data pointed out). Of course we won’t know that straight away.
The manner of yesterdays moves might ( and I’m going conspiracy here) have had some sort of semi-official hint to it. Maybe some nodding and winking to exporters with sell orders in the market. It’s very unlikely that this has been a Soros type punt by an individual or group looking to take out some stops, but you never know.
The surprise is the effects around the whole market. EUR/CHF has taken off as safe haven trades unwind. I’ve said previously that this was likely to happen but based it on the back of of a European recovery. Maybe that very fact is being front run as the market sees the Japanese machine starting to wake up and as the start of something big.
Often it’s difficult and sometimes impossible to fathom these moves and find a reason for it. There’s no big flashing sign pointing to the answer.
From a trading perspective if the land is shifting then we must watch closely to see where it’s going. Is it just a change of range or is it something bigger?
In times like this big levels can blow like a bullet through paper, tech can become meaningless and what made sense before doesn’t now.
If you’re not comfortable through this then stay out until the dust settles. If you’re trading through this then keep you positions tight and manageable.
Don’t get caught by a market running away from you.
Don’t be afraid to bail on trade you’re not comfortable with even one in profit. It’s better to get out and live another day than to guess and lose it all.
Don’t chase the market because you fear missing a big move. There is and always will be opportunity in the market.
