Forex traders, and traders in general, tend to break the Newtonian laws of physics at an alarming rate. Newton wrote that an object at rest tends to stay at rest and an object in motion tends to stay in motion with the same speed and in the same direction unless acted upon by an unbalanced force.
For some reason, we think that our counter trend trade will be the unbalanced force that stops the rally in its tracks and sets off the long awaited correction.
What scares me about the present EUR/USD rally is the willingness of specs to sell every uptick and buy every dip in USD/JPY.
There have been brief windows when counter-trend trading has been profitable (like yesterday’s 1.46/1.45 plunge) but you have to be quick.
With markets hyped up by upbeat Chinese data overnight, A trend change seems unlikely today, unless there is an unbalanced force yet to hit the market (like a news event). Stay alert, but don’t mindless fade the trend. Remember, objects in motion tend to stay in motion.
