Central banks lead the news, if we can call it that. The news are old news, meaning no news. Or something like that. Both European Central Bank and Bank of England held their monetary policy meetings today. Outcome was very similar - no changes. Rates for EUR remain at 1%, while UK benchmark stays at 0.5%. Markets seem to be preoccupied with the still not materialized Greece bailout, and the ever changing plans for it. Story is different every day, while the interest rates, well, are not.

Meanwhile Bank of Japan is rattling saber again over the strength of Yen. They are not talking about intervention directly, at least not yet, but announced raising ceiling on the foreign exchange account, which holds funds to be used for possible intervention. Limit in this account is to dumped up by over $56.5 billion, to some new ridiculous level. By some accounts, Japanese authorities have on hand about six times the amount of proposed increase. These funds are immediately available, with the new $56.5 to be approved after April first. We’ll see what happens next.

I have been looking at GBP over last few days, trying to buy it against most other crosses. Press is universally ready to bury the Pound, but I don’t think it will happen just yet. Price movement late on Sunday and early Monday indicates possible bottom, at least for the time being. In the last post trade in GBP-CHF was talked about. It is still under, moving slowly in the desired direction. Hopefully it gets there. Next on the list were EUR-GBP and GBP-NZD. The first is still waiting for a move to 0.9000 and below, but Pound-Kiwi has already made good progress.

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Reserve Bank f Australia had policy meeting, with interest rates on the agenda. RBA raised its benchmark official cash rate from 3.75% to 4.00%, or 0.25%. Move was widely expected and came as no surprise, unlike a month ago when officials took no action and Australian Dollar fell sharply. Analysts are calling for more rate hikes in the future, citing strong job market down under positive growth prospects. We will see how all this adds up when Australian GDP numbers are released on Wednesday.

The big story in FX trading over last few days has been British Pound, or, more specifically, its collapse. It just keeps falling. All kinds of theories fly around as to why, but most likely explanation is that sellers outnumber buyers. This maybe coming to an end, though. While no reversals have formed, yet, GBP pairs are starting to look ready for a correction, which could easily be in hundreds of pips, depending on the cross.

Sunday nigh/Monday morning my time looked promising for that. Pound opened with gaps, followed by rapid sell off, culminating in what looked like parabolic run. Depending on the pair used either top or bottom seemed possible. Very similar to what I call Sunday evening set up, so it was a call for action. With commodity currencies still strong, GBP-CHF and EUR-GBP were better prospects.

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Everybody heard the expression “markets are always changing”. It is included in just about every book or even lengthy article about trading. This mantra sounds very sage, but exactly does it mean? Surely everybody knows that that markets are changing, all it takes is to take a look at any chart. Prices are always moving, especially in currencies, which trade around the clock, and it is visible on every time frame. Even charts of the smallest order of magnitude are in constant motion. Not necessarily huge moves, depending on many factors, but there is always activity. Hardly something profound.

Most of the time traders interpret this phrase as describing markets switching from trading to trending and vice versa. Directional move last for a while, only to be followed by a congestion. Some time later price breaks out of congestion and new trend start. This transition doesn’t happen within single price bar, but takes time to become obvious. It is universal on all time frame, hence the term “price bar” not a week, or an hour. At the onset, we never know exactly how long these periods will lasts, and only find out once they are over. Trending/trading switches are a good example for “always changing markets”, but not the only one.

All types of market behavior are subject to this observation. I call them “phases”. Somebody else can say these are “behavioral cycles”. These are any observable and repetitive (for a while) patterns. Opening gaps trading is one of my trading strategies. They can happen for weeks on end, only to be followed by very long stretches without gaps happening at all, or being sporadic. How many people have received emails urging them to buy “Trading NFP report” super-system? How well would that have worked last few months? What about all the “Forex robots” from last few years? They’ve been replaced by “new and improved” ones, which will disappear, too. Chart patterns keep changing from reliable, to nightmarish, only to become workable again. On and on it goes.

Recently couple of these phases have emerged, or rather changed, neither of which is getting a lot of attention, although they should. One of them is movement of EUR-CHF. It is hardly moving at all, and is practically untradeable. I have not placed a trade in this pair in weeks and will not until it starts moving again. We can attribute this to constant threats from NSB regarding intervention. On the other hand, this cross has been very slow mover historically and current behavior is nothing more than returning to more typical beat.

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