Hot tip: bet one Aussie dollar each way

[Chris Lloyd]

At the one extreme we have exotic financial derivatives that no-one knows how to value as well as opaque bundles of high risk loans and low risk bonds that no-one knew how to value either. At the other extreme, we have the simplistic nonsense known as technical analysis that anyone can understand, but happens to be bollocks. No wonder the world financial system is such a ferrel beast.

Age write Lucy Battersby has produce this gem of an article, that spruiks the sage thoughts of Paul Ash, president of the Victorian chapter of the Australian Technical Analysts Association. It is all about the much-buffeted AUD.

It turns out that the Aussie went down for a while, then up, then down, then up a little bit, then down a tiny bit. This is clearly big news. But not one to take things at face value, Ms. Battersby notes that the Aussie is

at a moment of indecision that could see it continue downwards or climb and break though resistance.

Let’s rush straight out and put some money on it to……go up?… go down..? Hell, let’s just buy a Tatts ticket.

But it gets more specific (and consequently more wrong) as the article progresses. Mr. Ash claims that for the next day “it is critical if the AUD can spend 24 hours above 90 cents.” Like Uri Geller and John Edwards though, he never actually completes the prediction of what might happen after that. But he is clearly saying that Tuesday Feb 23 is critical. Forget any notion of EMH or martingales. The claim is that the value*Vt of the aussie dollar satisfies the condition

*if inf{Vt:t ? Feb 23} > 0.90

then ?EVt/?t>0 ….. or perhaps ?EVt/?t