When is the best time to get into a short trade when the trend and charts are bearish? and herein lies the dilemma, as it can be liked to catching a falling knife. Without a doubt the markets are out of whack at the moment and not logical. Things could get worse between now and the end of the month with the potential stale-mate in US politics and the passing of the budget. In addition to that is the US debt.
But when is the best time to get into a short position on a bearish chart when the price is not retracing back for further downward movement? I don’t think there is an answer for this question and the only thing to do is wait for either a claw-back or announcement that brings back to a better entry level. The danger of getting in at the lower part of the trend is that if a reversal occurs then you blow that trade and are stopped out, then what would happen is the primary bearish trend continues.
Whilst I would love to be placing profitable trades as I did want to get my account into a better over-all returns position, it is just not worth it and would not want to go from 4+% up to 2 or 3% up by the end of the month. Too risky and will re-asses the charts tomorrow (Tues). Whilst there are announcements this week I feel somewhat that what is happening is that money is being taken out of the market at a higher level than usual as normally money is moved from one currency to another and think traders and banks are ‘cashing out’. Could be wrong and have been wrong many times before!
Last week I was starting to feel relieved in that the markets were reflecting a weakening US dollar, then on Friday night it all reversed. I just cannot make sense of it all and even the normal forex market commentary could not make sense of it – saying the market ‘reacted’ to the US interest rates on hold decision. Doesn’t make sense and the only sense I can make of it all is that we are potentially looking at bearish sentiment all around.