Osman Ghandour has spent a lifetime trading forex markets. He has worked as a portfolio strategist, bank proprietary trader, hedger for a sovereign government, educator and commodity trading advisor (CTA) and has always traded for himself along the way. After trading from such exotic locations as Kuwait, Monte Carlo and Boca Raton, Fla., Ghandour, who emigrated from Lebanon in 1956, is now semi-retired and living close to his grandchildren in Houston.
Despite the myriad of changes in the foreign exchange world, Ghandour has always taken a simple approach. That approach attempts to find long-term trends and relies on one simple technical input, the New York closing price at 4:30 p.m. EST. Before forex went to a 24-hour electronic market, bank dealing rooms ended their day at that time. Reuters would average dealers’ prices and post them as the official closing price.
Ghandour bases all of his technical models off of that one input and it has served him well throughout the years. When Futures first spoke to Ghandour, he said, “It is really not that hard; if you want to complicate things you are going to lose money. The simpler the better and the simplest thing is a trendline. If you can’t draw a trendline for such and such a period, that is your answer, the market is trendless, stay out.”
To find trends Ghandour takes a long-term approach. He ignores all the intra-day noise and focuses on that single data point and longer term charts. “I truly believe that any single day’s action is purely random,” Ghandour says.
When he gets a signal, however, he is cautious, waiting for the market to prove itself. “I always phase in and phase out; I want the market to tell me that I am right. I am waiting for the market to tell me I am right before adding to the position.”
He believes the euro is near a reversal point although he is not quite ready to short it. He says that the euro will need to take out support at 1.52 first. At that point he would look to short the euro after it has an upward correction, and his position would be small. He would have to see the euro take out the next support or congestion area before adding to the position.
Ghandour distinguishes the recent congestion period in the euro from the one at the end of 2007 beginning of 2008 when the euro traded between 1.4350 and 1.4850. “You see how tough it has been to violate [resistance] on an upward move and how easily it is violated on the downside.”
The euro has made lower lows recently and Ghandour describes the current upward trend as tired.
He is not only bearish on the price of the euro but believes the currency may not last another five years. Ironically it is the dollar weakness that is a threat to the euro’s survival. “I believe the weakness in the dollar is going to accelerate the demise of the euro. It won’t last for more than five years.”
The fundamental problem that Ghandour sees is the large number of economies tied into the euro. He describes it as a hospital room where one patient’s treatment may require the temperature to be very cool and another requiring it very warm, but there is only one thermostat. He sees that conflict as a fatal flaw.
But he will not take that trade yet. And when he does it will be small and he will wait for the market to tell him if he is right before adding to the position. “You need to be in harmony with the market,” Ghandour says.
