Friday, May 18, 2012

Trends picking up steam...

The markets are currently showing no signs of slowing down this slide after giving the most recent short signals, as economic news across the Eurozone gives little to cheer. It is important to remember that prices never go straight up or down, although it seems like we are getting increasing consecutive days to the downside, with the daily high being recorded very early in the sessions. Anyone who is on the long side of trades is looking in the wrong direction at the moment. No doubt knife catchers will be picking up bargains, which, in a few days may be even better baragins. Charts using traditional oscillating indicators such as stochastics, RSI etc will be giving oversold readings as well, but in a strong trend these are as much use as a chocolate fireguard. Better to wait for prices to stabilise and the downtrend finish, before even thinking about looking to the long side.

As I have said many times before, when markets are in a non-trending phase (such as the last couple of months or so) the risk management rules keep trend followers in the game, waiting for times such as these where (potentially) big trends occur, letting us profit handsomely. This could be the start of the big trend for 2012 - how far it could go is anyone's guess, but the goal would be to ride the trend until an exit signal is given.

No comments:

Post a Comment