This viciously range-bound price action is simply undeniable. The last time we saw this amount of head fakes and false breaks in EUR/USD was back in the November '08 triangle that broke on the 20th day. We are currently in the 17th day of captivity and desperately struggling to break free. We have the G-7 in Rome this weekend and judging by today's price action, yen strength will likely be discussed. The Japanese export sector, auto manufactures specifically, are seriously struggling with this yen strength as a result of global risk aversion bidding up yen and making their exports considerably more expensive to the world. Japanese officials will possibly threaten unilateral intervention and or request that member nations move to stem Yen strength. In anticipation, at 1:30 PM EST, the yen is 1.45% weaker against euro, 1.61% weaker against Swiss, 2.01% weaker against Sterling, and most impressive of all, 2.43% weaker against Aussie. Should the G-7 disregard the Japanese request, in addition to continued weak equity prices, look for these gains to be reversed come Monday.

Ok, should be no secret, but here it is - EUR/USD has been nothing short of a diabolical chop fest. Why trade it? Well because most markets including equities and commodities are also stuck in an early 2009 range. So really it's a lack of options. Horrible reason to trade and I will address that in a second. I have been positioning for the downside EUR/USD break for most of this month and encountered some difficultly because, well, we haven't gone anywhere. I am going to continue monitoring the downside EUR/USD break from triangle wave 4, but will do so more cautiously.

My regular readers know I have taken a few stops, so self-lecture time. There are times we need to use more aggressive trade tactics and there are times we need to throttle back. I learned an invaluable piece of trade knowledge from my first trading manager (who I continue to speak with every day about the markets) almost a decade ago. You will usually make 80% of your money 20% of the time. What does that mean? There will be markets that you are so in tune with that you feel like you can do no wrong. This is called “trading in the zone.” You should be position sizing larger and trading more often and essentially printing money in your account. But there will be other times that either the market is not trading well, or it is trading well and you are simply not in synch with the market. You should be trading less often, trading less size, and trading with less risk to minimize capital draw downs. In my particular case, I believe February has been a bit combination of both, so my job as a trader is minimize risk to my trading capital and throttle back. Am I annoyed or down on myself about being out of synch? No way. It's part of being a trader. The other reason I am not annoyed is that though I am down on the month of February so far, I am only down about 85 pips on one unit. I recognize that one, the market is trading poorly, and second, I am out of synch with a poor market. So be it. I've been trading long enough to know that this inevitably happens as a trader, and I will pull myself out of it.

That being said, I strongly believe the market dynamics will improve, and improve dramatically. Keep your powder dry and your chins up because March is notorious for being a great month to trade the FX markets.

Todd Gordon is a Technical Currency Strategist and Fund Trader with GAIN Capital Group.

Disclaimer
The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.