How to grasp the foreign exchange market in summer
Turning to the historical chart, we can clearly see that every summer, the foreign exchange market always presents the characteristics of range shock. Even during the unilateral bear market of the US dollar from 2001 to 2004, it was basically the same.
People in Europe and the United States often go to the seaside in June or September, which is not an exception to the holidays in Europe and the United States. Before going on holiday, traders need to adjust their positions. They are used to selling low interest currencies and buying high interest currencies. This is the so-called spread trading, and then they slip away.
For this reason, transactions in the foreign exchange market appear relatively light in summer. In a light market, the market often does not have a clear direction of operation. The stimulation of news and less trading volume can promote the exchange rate to run in one direction, and the range often exceeds normal expectations, which is commonly referred to as "overreaction". But the overreaction was quickly corrected, which is why the summer market is volatile.
Therefore, the persistence of the market in summer is poor, and there are many false breakthroughs in technology. Investors who abide by the trend trading and trading according to the technical signals will suffer more losses. A careful summary of the characteristics of the summer market will help to improve our chances of winning.
This summer's market has the following characteristics:
1、 The high interest rate currencies Australian dollar and US dollar performed well, the low interest rate currency Japanese yen performed poorly, and other currencies basically fluctuated in a range, which is the embodiment of the power of spread trading.
2、 For currencies with range fluctuations, the rise and fall of 400 points is a basic amplitude. Due to the small point value of sterling, the fluctuation range is relatively large. Another common feature of interval fluctuation currencies is that there is a median line in the fluctuation range. The median line of the euro is around 1.2700, with an amplitude of 200 points up and down; The median line of sterling is around 1.8550, with an amplitude of 400 points up and down; The median line of the Canadian dollar is on the line of 1.1270, with 300 points below and 200 points above; The median line of the Swiss franc is on the line of 1.2260, with an amplitude of 200 points up and down, and this fluctuation range will remain.
3、 The rate of market fluctuation is relatively fast, and the turn is also fast. With some false signals, it is difficult for investors to operate.
According to historical experience, once the holiday is over, the foreign exchange market will go out of a large unilateral market. In view of these characteristics, traders need to be psychologically prepared and formulate corresponding countermeasures: first, investors should adhere to interval operation, do not chase up and kill down, and be particularly vigilant to break through the market; Secondly, look for technical signals, buy high interest currencies at bargain prices and sell low interest currencies at bargain prices; Thirdly, find a good interval and enlarge the stop loss order to filter out the stop loss caused by false breakthrough; Finally, once the holiday is over, once investors find the trend, they should close the reverse position in time, boldly catch up and follow the trend.