Yesterday, September 18 the FED has decided to lower interest rates by 0.25%. The markets reacted in an odd way because instead of the US Dollar going down it went up, freaking up some traders and speculators.
The reason why I did not panic or closed my position short on US Dollar is simply because of 2 simple reasons (as you can see on the chart):
1. Price Action: yes the price went up with a fairly decent candle, with no wicks.
2. VOLUME: the combination of Price Action and BELOW average volume had shown me 1 simple but important thing, the big market makers i.e. big banks, hedge funds, Central Banks, did not enter on the move up. Why? They already knew that the FED will continue to pour and supply the system.
A fairly decent candle (no wicks) without a volume to backup it is called an anomaly. And every time we see an anomaly we have to stop and thing.
By the way, I have chosen the pair USD/JPY because for me it's a better thermometer for the USD.
The reason why I did not panic or closed my position short on US Dollar is simply because of 2 simple reasons (as you can see on the chart):
1. Price Action: yes the price went up with a fairly decent candle, with no wicks.
2. VOLUME: the combination of Price Action and BELOW average volume had shown me 1 simple but important thing, the big market makers i.e. big banks, hedge funds, Central Banks, did not enter on the move up. Why? They already knew that the FED will continue to pour and supply the system.
A fairly decent candle (no wicks) without a volume to backup it is called an anomaly. And every time we see an anomaly we have to stop and thing.
By the way, I have chosen the pair USD/JPY because for me it's a better thermometer for the USD.