Ilary wrote:Basically the focus in this thread is on price behaviour...
While the charting makes logical sense, I have often found myself wondering about the fundamentals behind the trades.
Is it really possible to make money without using fundamentals?
The type of structure used in this & similar trend approaches is based primarily on rolling momentum.
That type of price movement is virtually always the direct result of directional bias orchestrated & influenced by fundamental persuasion, so whether someone claims they're trading exclusively technically or not, in reality (if they're utilizing this type of approach) they're actually betting a strong fundamental bias anyway!
Market participants are constantly evaluating & revaluing quotes based on under/overweight exposure to a particular regional currency. Forward interest rate expectations & its inflationary consequences (which accounts for the majority of price weighting) are the number 1 focus & if a specific regional hub is weakening or strengthening v/s a trading partner it will reveal itself in the established technical structure presented in the graphs & charting images such as those portrayed in the pages of this thread.
I suppose it's entirely possible to make money trading via an exclusive technical model, as it perhaps is to trade an exclusive fundamental one, but I seriously doubt there are many trading professionally who do so successfully over a prolonged period.
Ilary wrote:Yesterday the story was risk-on (during Europe anyway) so would it have made sense to look long on GbpJpy for example?
It might have done if your specific frame of reference is geared towards that particular style.
I guess it depends on how you play your game & which tools you choose to operate with.
If using short range themes in tandem with technical structuring affords you reliability & consistency then all power to you.
Most of the prop players, model funds & broker participants running that type of set up have certainly made a decent living in that environment.
Ilary wrote:If there is a weak NZD theme in the markets, how do you know today will be a good day to play the theme, or whether it's better to sit the day out?
You don't.
You do what you normally do in previously similar scenarios & play the risk game based on probabilities.
It's what everyone else does too!
When your probabilities play ball you get paid based on how you play that ball.
When your probabilities fail to play ball you either bail out based on your pre-defined criteria or closely manage your exposure until the reasons for initiating the bet no longer stack up.