euraud, page-18

Stiven, not an answer based on fundamentals unfortunately although I can finally reason the EUR/AUD gap fill.

I was wondering why my algorithmic system was picking up the trades with stunning accuracy whilst I fumbled along with spreadsheets trying to adjust my parameters and re-calibrating my monte carlo simulations.

Basically, there was a "flight to safety" but no one was interested in the US Dollar (probably because of the bond yields - model picked this up). Implied volatility was also not favouring the USDX which meant that all unwinding would be moving towards "safer" assets like gold (thus the slight gold rally during that period). To fund this movement, risk-ier currencies like the AUD would not benefit from this (signalled by weakness in the JPY trades which means the JPY investors were not increasing their speculative trades). This in the end resulted in a break-out in the EUR which is mildy correlated to the GBP which benefitted from the corrective nature of the situation. It's a weird correlation as volatility stayed low but risk aversion was slightly higher (due to the DJIA trading lower and the FOMC not changing interest rates).

Put that altogether and you get this simple picture which was coloured beautifully on the EUR/AUD. Risk aversion but correction because of lower volatility.

Hopefully I typed this correctly as I only have a 5 min window to type it. Maybe someone has another reason behind it.

Bearish gartley? That guy is quite a trader to use gaps in the gartley. My system is identifying a 59% bearish gartley signal... pretty good but not one I would bet the house on...... just yet. ^_^