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Retraction from a Big Move - 30 Hours Later
In the following snapshots we have finished October 25th's trading session. Since the Forex market is open 24 hours a day, the agreed upon time when one trading session ends and another begins is 5:00 PM EST. We can see this graphically on the MetaTrader 4 software because the daily high/low zone has begun anew. Our positions have been open for more than 24 hours at this point.
USD/JPY - October 25th, 2006 - 6:00 PM
After the volatile candles we saw in the previous page around 3 PM, the markets calm down and there is a measured move in the Dollar's favor lasting 5 candles. By the time the new short trend ends, our USD/JPY position is back to being down around -14 pips.
EUR/USD - October 25th, 2006 - 7:00 PM
In our EUR/USD position we have a similar retraction after a sharp climb. This image is captured an hour later than the USD/JPY pair, and it can be seen that the (relatively) long term trend has resumed as the pair continues heading up (favoring the Euro). What likely happened here was that investors and traders than wanted to buy the Euro took advantage of a dip in the price to buy more long EUR/USD positions.
Had we closed this position earlier, after achieving some short term profit targets, we would be missing these gains. Of course, its easy to say what one should have done after seeing what has already happened. How and when a trader decides to close his or her positions depends on their strategy and what plan or outlook the trader had in mind when placing the trade.
Let's take one last look at our positions, after one more trading session has completed.
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