Monday, August 9, 2010

8/9 Forex

  • The balance of bad and worse: Dollar moves to bull phase against the peso (USD/MXN)

ppspps openupper pivotlower pivot
EUR/USD US$1.3586 US$1.2878 jul26 US$1.3696 US$1.2459
USD/JPY¥85.69 ¥86.78 jul30 ¥88.41 ¥83.96
GBP/USD US$1.5956 US$1.5258 jul23 US$1.6278 US$1.5136
EUR/JPY ¥113.58 ¥112.87 jul27 ¥115.86 ¥104.43
USD/CAD C$1.0272 C$1.0488 jul22 C$1.0561 C$0.9987
USD/MXN M$12.6646 M$12.5611 aug5 M$12.9999 M$12.2410

The phase switch on USD/MXN came late Friday and persisted during weekend trading. It was accompanied by a 1.7% intraday rise.

The preceding bear phase lasted 11 days and covered a 2.4% decline in price.

Reuters, the day before the signal, analyzed the dollar's rise in terms of the peso's fall, saying that banks were shunning the Mexican currency because of fears that the next day's jobs report would show the U.S. recovery had stalled, with devastating impact on Mexico's economy.

The jobs report was indeed bad, and the peso fell, producing the signal. Of course, economic decline in the U.S. should also have a devastating effect on the dollar, yes? If the economy stalls then the Fed is less likely to raise interest rates for fear of choking of any possible recovery.

These days pricing USD/MXN means striking a balance between bad and worse.

The analysis uses the daily Person's Proprietary Signal, developed by John Person, and the monthly Person's Pivot, which he also developed.

These are black box signals -- the "proprietary" means that Mr. Person knows how they work under the hood, and I don't. But they have shown a fair degree of success in identifying good entry and exit points, and I find them useful.

On the glance, "pps open" means the price at the start of trading in the United States on the day the signal appeared.

Tim Bovee, Private Trader tracks the trades of a private trader for his own accounts. Nothing in this blog constitutes a recommendation to buy or sell stocks, options or any other financial instrument. The only purpose of this blog is to provide education and entertainment.

No trader is ever 100 percent successful in his or her trades. Trading in the stock and option markets is risky and uncertain. Each trader must make trading decision decisions for his or her own account, and take responsibility for the consequences.

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