The stops above 1.3000 on EUR/USD were taken out in spectacular fashion, as bears who continue to trade solely based on market fundamentals got slaughtered as EUR/USD ran up to 1.3170. As I stated in my last post, there was lots of room for stops to be run today. I'm bearish in the medium term (end of the year), but I will not fail to trade with the trend for as long as it continues up. As traders, we have to trade what is in front of us (unless you plan on holding trades for a considerable length of time.)
From here, I think markets are due for a slight retracement on Monday. Why? Because I think the current moves are overextended (in the very short term). For the last couple of months, Fridays (on average) have been good days for the markets, while the reverse is true for Mondays. (Especially the Monday following a strong day in the markets on Friday). I also think that people who have missed the move up will try and jump into it the first thing on Monday, and will probably have price run down in their faces. In addition, Egan Jones downgraded the United States' debt rating to "AA-" from "AA" - and that brings attention to the fact that the other ratings firms (Moodys, Fitch, S&P) all have negative outlooks on their current ratings.
My strategy is to be patient and wait for a decent sized dip on Monday - which I plan to buy should market conditions warrant it. If you'd like to see exactly what I look for before entering a trade, simply request a free trial of our live trade room for current/live analysis.
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