18 July 2010

Technical Market

It could be argued that the forex market is designed to ensure a systematic approach to it loses accuracy. The process by which the stock market in normal times brings share prices up may smooth this element in the stock market.

But because there is no such mechanism in forex, this smoothing does not take place here.

I have said the conduit created by EUR/USD may take some of these complex processing mechanisms of stocks into forex. I look at long term charts like 1 month because there are traders and funds there with very deep pockets who take positions which are like investing positions.

However the note I made about the technical nature of the market applies here. The evidence I have seen of 1 minute functionality carrying into longer term charts suggests this as well. Thus taking investing decisions even on 1 month is still dangerous.

In fact the technical nature of the market is a reflection of this very process, support, resistance, retracement defining the inflexion points of it. It is perhaps why the forex market is so technical, in a way the stock market is not.

The stock market is always doing something positive, investors key into this (however this may be being being distorted by the conduit and inflation/delflation of assets values).

But going with forex is like going with a direction both north and south at the same time. Perhaps only the human mind can hope to try and cope with this marvelous sensibility of causality.

(Updated 4/14/13 - 3:03pm ET)

© 2010 Guy Barry - All Rights Reserved.