EUR USD rate question

[fiftyfifty]

This is probably quite a basic question but I'm not sure if there is any reasoning to it so don't know how to look at it. Say the high on the Eur USD was something like 1.4960 but before the Fed dropped rates by 1.25% in a week and a half. Now, would it be right to try project this 1.49 figure to see where it would have got to under these new rates? I.e. lower rates should weaken the dollar so therefore the previously stronger dollar would have actually gone to 1.51 or something...

Anyone got any ideas on this or is it completely off base

 

[fiftyfifty]

I get that there are lots of different variables working on exchange rates. What I was curious to see was whether the market now had a new idea of the recent high by projecting the previous high to a new level. Or is the old high still seen as a resistence level?

 

[shadowninja]

I am not clever enough to predict the movement. I just trade what I see.

 

[FXSCALPER2]

Your idea that exchange rates are even remotely calculable based on some figure shows a touching naivity. I don't even think one can ask a meaningful question about the forex markets. The truth is no one (I mean NO ONE) has the first clue WTF is happening. Unless someone is telling me the BS bias for the day, I am not even interested what anybody thinks about why stuff happens in these markets. You vertainly cannot take a pen and paper, or a calculator, to it.

 

[Rhody Trader]

I get that there are lots of different variables working on exchange rates. What I was curious to see was whether the market now had a new idea of the recent high by projecting the previous high to a new level. Or is the old high still seen as a resistence level?

It sounds like you're asking a kind of "inflation adjusted" type of question. Like what would the peak in Gold back in 1980 be equivalent to in today's dollars. Unfortunately, that's not quite something you can do with an exchange rate because it's a relationship, not a straight out value.

 

[fiftyfifty]

True, I'm coming at this from an academic sense knowing that in the real world it's going to be decided by the market and the people trading it.

"Inflation adjusted" is probably the right sense of what I was asking. I guess it would really be if all other things held equal and you change rates by 1.25% then where will the exchange rate be.

Thanks for all the responses. I'm not too familar with fx so even stupid questions are going to teach me something.

 

[grantx]

Fiftyfifty,

The attached may clarify a point or two.

Grant.

 

[fiftyfifty]

Cheers for that. All sorted

 

[CashOutChick]

I am not sure I understand

I am not clever enough to predict the movement. I just trade what I see.

I read this somewhere before, what does it mean "trade what I see"? Should you trade what you think you WILL want to see? I don't mean to play with semantics but I really want to learn how others trade so that I can improve my own trades!

 

[ampro]

It's easy to suffer from 'analysis paralysis' these days with so much info sloshing around, and keepings focused and simple is an art.

You're not wrong on that one, that's for sure. Some folks make keeping things simple an awful hard job.

Best advice I was always given was to "keep looking left" doesn't matter what you're trading, which frame you're observing or what your price action visual preference is.

Expand your template frame out to the max & look for the supply & look for the demand. If you can't see it to the left, drill down or scale up a frame.

If it doesn't hit you in the face, look elsewhere till it does. That little ditty has saved me a whole lot of pain & tears over time.

 

[FXSCALPER2]

Trading what you see is the point. It certainly isn't as easy at it sounds but I am sure being too clever is a big disadvantage in this business. The job figures is bad, rates are cut by 1.25% in a week. What happens? The pound lost hundreds of pips, the euro followed. You can get yourself in a twist trying to figure this out. The good people at various news outfits are loooking pretty funny trying to explain.

Taking the **** aside, do you reckon there is someone who actually knows what is happening? It is an intersting thought, no?

 

[ampro]

Trading what you see is the point. It certainly isn't as easy at it sounds but I am sure being too clever is a big disadvantage in this business.

Taking the **** aside, do you reckon there is someone who actually knows what is happening? It is an intersting thought, no?

I think there are maybe pockets of folks who "know what they know"...whether it makes enough of a difference in the bigger scheme of things?? highly doubtful.

There's so much contradictory crap washing around the wires & squawk day in-day out, not to mention the rumor mill working overtime....you'd require a couple PA's just to keep tabs on it all. Eventually, if you wait long enough & your discipline-patience is in gear, you'll get your price entry!

Like you say, an elevated i.q is no guarantee of (consistant) success in this mad cap business.

 

[CashOutChick]

You're not wrong on that one, that's for sure. Some folks make keeping things simple an awful hard job.

Best advice I was always given was to "keep looking left" doesn't matter what you're trading, which frame you're observing or what your price action visual preference is.

Expand your template frame out to the max & look for the supply & look for the demand. If you can't see it to the left, drill down or scale up a frame.

If it doesn't hit you in the face, look elsewhere till it does. That little ditty has saved me a whole lot of pain & tears over time.

When you mean "for the supply & look for the demand", you mean try to determine the current pattern or trend? Sorry for newbie question.

 

[ampro]

No need to apologize for asking a question. If more folks (me included) did that, we’d be farther along the trail than we already are.

If you take your time & flick thru your timeframe(s) of choice, you’ll uncover clusters of support (demand) & resistance (supply).

If you share the view that price is purely a function of supply & demand, generated solely on the back of, & as a result of, mass psychology, then it seems logical to seek out & focus in on an area where this battle is hotting up.

Some of these zones harbour more active & aggressive activity than others, but essentially these mini & minor fulcrums play out constantly during a typical session, across all timeframes.

Again, depending on your tactics & strategy plays, you can trade them each-way (long as well as short) or in synch with the dominant price flows.

As long as you got a handle on your upper & lower boundaries, you can calculate your risk exposure in accordance with your size & the aims of your trade intent.

The types of opportunities which spark your interest will obviously hinge on your trading style & preferences etc, but nonetheless if you stand back & observe with an easy eye, you’ll spot these occurances playing out time & again.

Don’t get too close to the action & most definitely don’t start looking for stuff which isn’t there!!

Good news is, you don’t even require to load your technical charts up with the array of fancy colourful indicators to help you on your journey - & that my friend is one big, sexy advantage, I kid you not. Nothing like a nice clean canvas to keep you (& the object of the exercise....price action) honest.

May as well haul up an example of what I’m jawing on about, a picture often explains things a little clearer. Given this thread has EURUSD in the title, lets remain loyal to this pair. It’s exactly the same principles across any pair you care to utilize.

 

[ampro]

Apologies for hi-jacking the thread with this slightly off topic material fella's....the last tit bit - promise!

A cleaner example here CashOutChick of the type of scenario typical of this behaviour when a pair is in tune with the flows.

Price pops in the direction of the dominant flows then checks & re-tests, ensuring the move remains genuine & the money is still on side.

Decent opps to engage at various junctions on route, either via this timeframe or by drilling down into a lower reference for maybe a keener? positional play.

 

[sniperfx]

Request for Ch6

Hi Grant

I am currently in training, and I am currently researching Emerging Markets, my FX spot project is Russia, and FX forwards is Hungary. I have recently seen an article in the FT about China's sterilisation efforts becoming cash negative and also, Russia's central bank does intervene in the market alot. I am curious to read Ch 6 - the one about the effect of Government on St.

Thanks
Wes

Fiftyfifty,

The attached may clarify a point or two.

Grant.

 

[sniperfx]

Trading what you see is the point. It certainly isn't as easy at it sounds but I am sure being too clever is a big disadvantage in this business. The job figures is bad, rates are cut by 1.25% in a week. What happens? The pound lost hundreds of pips, the euro followed. You can get yourself in a twist trying to figure this out. The good people at various news outfits are loooking pretty funny trying to explain.

Taking the **** aside, do you reckon there is someone who actually knows what is happening? It is an intersting thought, no?

The nonchalant attitude of the ECB as well as the BOE towards growth gave reasons for market players to dump the EUR and the GBP

 

[vergis92]

This is probably quite a basic question but I'm not sure if there is any reasoning to it so don't know how to look at it. Say the high on the Eur USD was something like 1.4960 but before the Fed dropped rates by 1.25% in a week and a half. Now, would it be right to try project this 1.49 figure to see where it would have got to under these new rates? I.e. lower rates should weaken the dollar so therefore the previously stronger dollar would have actually gone to 1.51 or something...

Anyone got any ideas on this or is it completely off base

The forex market is affected by fundamental factors before anything else like technical levels etc. Eur/Usd is actually expected to go lower this year, rate expectations get priced in
really fast, the markets are controlled by fundamental issues
and that's what central banks work with, if for example the Euro gets too high and threatens eurozone growth, exports etc then
ECB will act (at least temporarilly) to weaken the Euro, technical signals like macd buy signal, last swing high breach, and bullish trend lines little matters to them, the market will go opposite to
what technicians expect...

 

[grantx]

Sniperfx,

The attached untitled file is all I have. It was the result of a search on Google for "Triangular Arbitrage".

However, perseverance and detective work led me to discover the origin: University of Houston Undergraduate Finance course. Here is the complete list (Word format):

http://www.bauer.uh.edu/rsusmel/4386/notes4386.htm

I'm rather proud of that.

I hope Fiftyfifty can use it also.

Grant.