Euro Takes A Pasting Ahead Of Rate Decision

Every now and again I write a ‘confessional’, a blog to give newbies a laugh and make seasoned traders groan in despair. These confessionals usually feature a mistimed trade in gold, but this time I made a right fist of FTSE.

Check out the chart below and if you can see what the hell triggered a sale of FTSE at that point be sure to let me know. I don’t do drugs, and not a drop of Guinness had passed my lips. I wasn’t on the phone, or absent-mindedly tapping my finger too close to the keyboard. I did actually mean to trade!

Here’s the best explanation I can come up with:
I’d been looking to increase my short in FTSE, and over the past few days had made small gains from selling at around that level. Ignoring my moving averages and RSI I concentrated on the candles. The red (down) candle took out the previous green candles gains, but then rallied a bit (this was another mistake as it didn’t form an engulfing pattern). When the next green candle failed to hold above the previous high I jumped in and sold £1 at 4118.

I closed the trade out this morning at 4208 (probably where I should have been selling it) as I’m already running a long-standing short, which is quite enough when the market’s going against me. It was an unbelievably bad deal, not because I lost money, but because there was no rationale for the trade. I’ll bookmark this for my ‘Dumbest Trades’ blog next December.

In other trades I survived a sell bet on the Dow last night, taking a profit just before the rally, and sold EURGBP a couple of times, unfortunately closing ahead of this morning’s fun and games. The Euro’s taken a real pasting this morning; the EURUSD rate crashed 230-pips and even the less volatile EURGBP plunged by over 180-pips. So what’s that all about?

I’m not entirely sure, but here’re some of the scraps I’m picking up:
1) Knock on effect of Russian debt being downgraded to BBB (location, location, location I guess),
2) Goldmans reckon Euro interest rates will hit 0.5% by June,
3) The EURGBP rate failed to break £0.9080 for the third time in 3 days’
4) It was overdue a good mauling.

If you fancy an easy read with your coffee I’ve just knocked out a piece looking at where the equity markets stand ahead of tomorrow’s rate decisions and Friday’s payroll numbers. Hopefully, tomorrow I’ll be having a look at the currency markets.

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