A Quick Turnaround in USD Pairs. Remember, Thin Liquidity!
In the previous update, we talked about summer markets and thin liquidity. As I mentioned therein, the forex market tends to be quiet during summer, but breakouts can come out of nowhere.
That´s what´s happening right now with USD pairs. I hadn´t finished the previous forex update yet when the move started and it is extended as I speak.
The EUR/USD dived about 35 pips in a quick turnaround, while the GBP/USD fell 50 pips after touching the 100-SMA (red) on the hourly forex chart.
Summer markets are suitable for short-term forex signals.
Yeah, alright, I know it´s not that much, but don´t expect massive moves during these times, especially if there´s no incentive behind a forex trade, such as central bank rhetoric, action, or political turmoil.
Panic can be a great market mover as well. If you remember 2 years ago, the Chinese stock market plunged and everyone panicked. Forex traders thought another financial crisis was behind the door and the run for safety began.
The euro sometimes behaves as a safe haven asset and during that period the EUR/USD jumped nearly 6 cents, only to reverse and give up all the gains in the days that followed.
This is not the case today, but a move of 40-50 pips is enough to get you wrong-footed and reach your stop loss. At least this move is going in the right direction for us.
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