WOW! What the hell can happen next? The Washington DC (the DC in this case stands for Dumb Circus) is enough to keep the market on edge. Throw in one of the most devastating hurricanes in history hitting the Texas/Louisiana coast and you have enough to roil the markets.

Now, with the true cost of hurricane Harvey still being tabulated, one of the most powerful Hurricanes ever recorded in the Atlantic is setting its eye directly at the Miami area.

Market volatility is essential to trading and we have certainly had that recently. Remember that volatility is caused by the market’s reaction to events. Unfortunately the reaction is not always what one might expect. For example, with all the costs associated with the two hurricanes, one still being tabulated and the other just being predicted, you would think that Washington is going to have to borrow a lot of money to help those devastated by the hurricanes. That should mean dollar weakness – IF the market looks at the situation rationally.

Well, I often trade the USDJPY pair and love going long against the yen – which I think has one foot in the grave and the other on a banana peel. Well, guess what, the yen was gaining strength against the dollar but suddenly reversed and went up today – and my system pretty well nailed the move. Logic would have indicated the yen to remain stronger because the market still considers the yen a safe harbor currency.

Notice the movement starting at noon today in the above chart price was moving down, but suddenly turned and headed up – ultimately making an upward move of more than 600 pips. A normal size position (100,000 dollars) would have gained $600.00. Not a bad trade for little more than one hour in the market.

My trading method easily predicted that move. We have an indicator system that quickly spots such dramatic changes in market momentum in FOREX – and most other markets as well. That indicator system is the RMI – available for TradeStation just click here.

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