A Matter of Market Perspective

Interpreting a price pullback either coming from a decline or a rally still has two sides of the coin to be looked at. And that is how we view the recent price action that occurred from the stocks and currency markets.

This is in connection with our correlated information shared on the 'Aftermath of Market Volatility and A Matter of Perspective Analysis'. There will always be two angles to view the next probable direction that would take place. But it all boils down to how one interprets it and incline to believe.

In our recent information posted  the recent rapid upsurge has been short-lived with the Asian markets resumes its decline in triple digit territory today. The presence of secular forces are still dominant in the market, which traders should be aware that this markets are not technically motivated but whenever they are expect it to be a temporary condition.

Yes, prices were technically oversold but a few percentage point recovery will not cut it. Use price levels as reference points while going beyond price action analysis can do more good in timing a trade more than ever. This is where the underlying time and price correlation takes place within the three major markets price movements are equally as important to take note of. "CORRELATION" is the key component in these market conditions now. It is a matter of perspective to differentiate technical and fundamental analysis combined with Price Action and Market Behavior.

Note: On CORRELATION: To be an effectively trading in the presence of market volatility, by knowing how important it is in calculating or having a correlative value table for the currency pairs being traded because currencies are priced in pairs, no single pair trades completely independent of the others. These correlations do change over a period of time, which can be used to properly manage the overall portfolio amount of exposure in the market.

Thus providng significant advantages for a tactical investor / trader that uses the information while trading related pairs that would move in the same similar direction or counter direction. When such pairs move in opposite direction can mean certain external forces normally fundamental factors and risk events may be driving these movements. 

The rapid price change or similar pullbacks across the markets in general were considered to be a relief recovery from a battered stock market decline and with similar reaction from declining Oil prices. Once floating talks would appear in the market on production cuts from OPEC & Russia may tend to replicate an artificial market reaction that might for some reason can be a game changer.

With that said, on the currency side whenever these conditions occur especially with a dramatic price change on the USDJPY and its correlated Yen crosses it would be wise to consider how far such rebound can be sustained. The USD direction nearing the triple digit figure may provide a glimpse of reality either staying above these higher levels or simply closing lower by the end of a new trading week.

Advisory: As Tactical Investor / Trader

Awareness of risk events that can change market conditions before and after release of certain data is widely expected. In such cases, the main responsibility of looking forward towards price swings can be anticipated with a certain degree based on previous price levels and the process of deduction. Money flows as investors shifts, go where the trend flows so when time comes that it does change directions, then there will be ample time to make changes even on real time.

Although, the practice of forward looking should be done more often, while the use of a back-testing system can be limited only as a reference guide. Closely monitoring price action and market behavior as a basis can be more effective even before any price move occurs.

Yes, we know its easier said than done. Due diligence can only help build that trading confidence and consistency especially noting all trades in a journal for further reference when called upon. 

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