short-term movements are usually based on my rubberband principle. That means that if something overextends, out of its normal movement within the past month, it usually will snap back at least a bit.
Using Candlestick patterns such as DOJIs, Evening Stars, Hammers etc. you can set entry and exit points.
I am not a trend trader but you can figure out 2-3 day trends. predicting more than 1 week trends is useless.
The rubberband principle makes sense in two ways, both fundamental and technical:
The fundamental part is that if two countries or continents are about equal, than there should never be an extrem discrepancy within their currencies in a short period.
Extreme example: the euro doesn’t appreciate to the dollar by double its value over night. the second theory is that enough people have positions they will liquidate to make a profit if there is a strong movement in either direction.
