Today’s Fed Interest Rate Decision out of the US was, as expected, to keep the rate unchanged. However, the Fed Statement accompanying the decision sent shockwaves out. The Fed had earlier stated that they would implement one rate hike this year, towards the Fall. Today, they reversed direction, pushing off the next potential rate increase into 2020. They also expressed skepticism on this year’s inflation meeting the target 2%.
As we’ve been saying, ever more strongly, the US economy seems to be at a cusp, and not a good cusp. Really, more like a precipice. There’s very little upside left, and too many potential pitfalls. That’s not to say that the economy is going to crash down on our heads, we’re still solid, or at least, as solid as everyone else, if not better. But prices have risen beyond the sensible, and there must be a correction. It looks like the Fed is realizing this, too, and taking preemptive steps.
We’ve closed out all our trades that were based on continued dollar strength, and indeed, the fundamental announcement triggered some dollar short entries, which we’ll hold for as long as the current weakness lasts. This could be a temporary move, such as we’ve seen before, or the beginning of a longer correction. The key to successful trading is not to become emotionally invested in the trades. Trade in the direction of any movement, and ride the movement for as long as it lasts. Eventually, you’ll end up riding a long lasting trend, and that’s where the big profits come from.
The other trades? Well, you’ve got to be in the game in order to win the game. Since no one can know beforehand which move will be the big move, you have to take all likely trades, and manage them. Best case scenario, you’ll even make some profit doing this. But the big bucks will be from catching the trends.
In other news, the UK is still wrestling against itself as regards Brexit. An extension to the March 29th deadline has been formally requested by Theresa May. It;s up to the EU now, whether to grant it or not. And it’s not looking good. We took some quick profit earlier on GBP weakness. Not a lot, as the retracement followed not long after, but enough to bring a smile to our faces. We’ll continue setting triggers on the GBP pairs for quick entries, and trailing stops to take us out as soon as the move falters. 27% plus last week, and this week looking good, too.
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