Monday, August 29, 2011

A Play by Play of the Jackson Hole Trading Annoucement

Last week's trading was all about the Jackson hole meeting, where Bernanke was going to give a speech about the market and possibilities of the next round of stimulus.

However, last Wednesday and Thursday we saw market weakness as the crowd expected Ben to stand pat.

The key was to stay patient with the price action leading up to the actual event and wait to react to the price action on the actual statement by Bernanke.

On Friday morning in the US, the AUD traded in a tight 50pip range, and when the expected speech of 'standing pat' by Ben did in fact occur, the market responded with a short burst of selling, but nothing confirming below the trading range - as we see the long tails near the bottom of the trading range.

I got trigger happy and quickly shorted the AUD on this sell-off, but luckily I was able to feel the market putting in the buying support - I saw the lead from the sp500 price action and was quickly able to reverse my position and go long, and saw the price eventually breakout to the upside for a 120pip gain.