BUFFALO BOUNCE in GBP/USD
Hello, I woke up and turned on CNBC to see what futures were doing. Then, as I had my charts up and running, I knew there was a real possibility of a BUFFALO BOUNCE in the 6 USD pairs that I watch. I saw the equity markets trending down and understand what that means for the USD - strength. I posted on the IBFX Connect site that I was looking for a BUFFALO BOUNCE and then posted again when it took place.
Before I get into the chart, let's talk fundamentals. I am convinced there are "chinks in the armor" and that with the lofty equity markets and the recent strong pace of economic recovery, something has to give. That something may be the US economic data. The Fed warned us that it may slow its recent torrid pace and I have been on the lookout. I am on the lookout due to the management of equity portfolios and due to new trading opportunities both in options and forex. We have a lot of data this week, so keep your eyes on that economic calendar for winds of change. Durable goods last week and employment data this week is giving us some clues - let's continue to be vigilant using your macro fundamental analysis.
So, to the chart:
Past performance is not indicative of future results
Remember, the BUFFALO BOUNCE has to do with standard deviations on trend days after certain timeframes have past. We have seen a decline in BUFFALO BOUNCE due to the lower volatility in the markets, but when they appear, there success rate has been positive. As with any trade and any trading strategy, there are no guarantees. I always use stops and targets that are pre-defined based on each individual trading situation. If I am, you should be too!
Be on the lookout for hopefully more of these as volatility possibly comes back in to the mix as the markets start to sort themselves out. The return of volatility is a good thing for all traders, so let's keep our fingers crossed that it ensues and provides an increase in trading opportunities!
Happy Trading and Be Environmentally Cool
Forex trading is one of the riskiest forms of investment available in the financial markets and suitable for sophisticated individuals and institutions. The possibility exists that you could sustain a substantial loss of funds and therefore you should not invest money that you cannot afford to lose.
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