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Archive for the ‘commods’ Category

Yes, I am trading 5m charts on XAU, but only because volatility (though GVX doesn’t show it that much) has been exploding in the Euro and US sessions.

That shooting star (yes, though a blue candle, it comes as a topping pattern) is caused by a short squeeze at 1275, which was taken out within a few minutes. A beautiful confirmation followed (combine those three down candles), making this pattern one of the best examples of an evening star pattern I have ever seen. HA and Ichi confirms. A point and figure chart should show a high pole reversal.

Is this asset driven by ISIL/Iraq, or rates? Anyways, it is at resistance on a falling channel right now.

20140613xauusd

To the best of good buys.

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There was definitely a BFTD air in the markets today, especially with gold which dropped $10 in a minute, and then did it again. It has passed a major fib, but its proximity to the senkou span B gives some support.

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Anyways, there are a lot of technical supports calling for a bounce. The first bias is that gold is undergoing a reverse cup and handle, though the cup isn’t exactly round. This of course, may be in line with the overall double topping, but this trade will only be for 2, 3 days (FOMC on Wednesday). Confluence of fib supports and CMA regional low gives enough support for a moderate bounce up to $1750. Price target is half of the last major move between the fibs, and estimated to be around the slower moving kijou-sen.


Second bias is from a head and shoulders with a descending neckline. Same fib, CMF and ichi supports are in play.

Anyways, this was the exit of my XAUUSD short from a few days ago. Lots of event risk from the US starting on Wednesday and ending Friday. Will be waiting for a right shoulder or handle completion before diving in again. Stop is at $1710 on a daily close, $1705 hard.

For the FOMC position, USDJPY or CADJPY is giving some good positions, though CADJPY needs a bit more time… fundy and techy analysis on that tomorrow or later this weekend.

To the best of good buys.

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Gold – kinks in the run up

Just a few charts –

Actively scalping the gold (not silver! and definitely not platinum unless you want to do the XAUXPT short thing). Heikin Ashi has turned negative on the daily and weekly candles are quite dead as well.

There’s an extremely strong correlation right now with EUR and GBP, non-growth risk currencies compared to AUD, NZD, CAD, SEK and NOK, hinting demand is due to dollar weakness instead of actual higher demand for metals (which are still somewhat correlated, as in base-precious).
Enjoy these charts. Time to study and recruit…
To the best of good buys.
Daily – failed test at 100% extension x 3, though there may be a weak support at 1768 or so. Stop set close on this short to re-enter again at the 100% retest.

Weekly – HA has petered out and flattening, warning of a trend reversal. 3 dead candles after QE3 ain’t meaning well. Catalyst may very well be European risk or as we have seen, better US data (Beige book is this Wednesday)

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Basically this… that was when he was a kid.

PGMs look good again… especially XPD at around 620…. post soon…

To the best of good buys.

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Or rather, it was early July that gold had its record 11 day run before shooting up to 1900 in two months due to (hey, what do we have again?) QE3 expectations (mind you this was 2011). Since then, gold has fallen but in the last weeks also put in its own 8 day run. Equities so far show a repeat of 2011 – is gold going to do the same thing?

Possibly. Gold is being driven completely by stimulus expectations – as it should be. To foresee the direction of gold is to simply ask whether or not the Fed will print again. This was the same question everyone was asking or pointing to as evidence last year near this time during the low volume. Back during that time, economic data was much worse than where we are now (look at NFP change and underemployment as the two main metrics), with inflation moderately lower (quarterly average of YoY core and headline). Compared to now, then was a much better time to introduce new stimulus.

But the Ben could be trying to make one big push now (as we found out what happened when he didn’t). People don’t understand how much pain central banks can take, and as long as printing means a job, I’m all for it.

Looking for (but not expecting) a dud to fall short of QE at Jackson Hole. Remember that what’s been driving these markets have been 1. minutes from before a large NFP jump and 2. some letter Ben wrote a few months ago. And keep in mind of the current game – if markets are too high, then there’s less chance of stimulus. Markets want stimulus, but that will only happen if it shoots itself – and then hoping that the fed will come in and save it.

Will be shorting USDJPY into next week – monitoring another time to enter gold and silver.

To the best of good buys.

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Just for fun, here are the major events in Q3 of last year that made trading more fun than studying – and enough volatility to make it worthwhile.

1 week gold…

1 day gold…

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Augustyen is at the dangerous low 77s, and there were threats (and actual) interventions. Gold had a similar narrative – that volume was low and everyone (like junkies waiting for the next injection) was expecting the Benjamin to open the floodgates like what he has done in two consecutive years. Everyone is also expecting the US to default after that massive round of congressional dickwaving.

4 – Bank of Japan intervenes as Noda makes his last stand. We go back to the same spot in three days.

5/6 – S&P downgrades the US credit rating after Obama, Biden, Boehner and co. participate in what can only be called American politics at its best and raises the debt ceiling. Everyone starts questioning how valid are those low rates? And then the fun begins…

Late August – summer numbers from the US and EU start to look not as rosy as before. The FOMC adopts more of a wait-and-see approach with regards to what happened in August, and starts pinning the blame on the fiscal side.

September – focus shifts back to Europe, which combined with the volume coming back, proved to be quite a dangerous situation.

6 – The Swiss National Bank puts a floor on EURCHF. War to debase has a new entrant.

5/6 – Gold tests double top of $1900 as the next two weeks see it clear to $1600 again.

12 – Obama sends the $447 job package to congress, where it gets somewhere but mostly forgotten as it has no real effect.

19-26 The massive drops occur as the Fed only reveals Operation Twist instead of the full punchbowl. At that point, NFPs were showing another sharp decline while inflation was still at 2.0% core (YoY). Oil was in the low 90s (mirrored by a weak copper) as the US economy was expected to suddenly halt again, while gold dropped only after the Fed offered no new stimulus.

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Just step  one of when to activate my new and improved breakout strategy, now optimized for silver and gold, which for some reason (low volume) has experienced remarkable squeezes over the past few days.

Noticed this pattern when still in HK – a morning drop (~0800HKST), a lunchtime rally (from around 1100HKST to 1200HKST), another lunchtime push (1400HKST to 1500HKST) and then decline into European and American sessions. Though not really supported by strong fundamental argument, the fact that this pattern has persisted for 2 or so weeks gives it enough merit to analyze, and possibly frame as an intraday trading idea.

Although now that I have switched timezones, it does take me a bit to re-calc the time differences.

The pattern continues. Breakouts (most notably for silver) still occur at relatively set times during the day (1100EST-1300EST). Provides excellent (though risky at my leverage) timeframes to turn on the breakout trader and catch some profits.

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This study starts out with t1 as 1300EST, 1700GMT. Each t is a 5 minute interval, which means there are 288 of these intervals in a complete trading day. % change are calculated as an average of holding times (5m, 15m… 360m) centered around a 1hr/60min/12 t-interval pivot. We don’t want to scalp that much do we? (And also, reversals have been rare these past days… again due to low volume).

 

That above is the return for 5 of the more popular scalping assets over last week’s sample, just to see if the pattern still stood from Hong Kong. Silver stands out to have the greatest reward (though the same study can be conducted with EURJPY).

That’s day 1… outstanding spikes starting at t = 1, or 1300EST/1700GMT (returning from lunch in the American session)

Day 2… dropoff in the post-lunch session. Same thing happened in yesterday’s, but was countered with rally when the hours changed. This is not due to spread illiquidity since spreads are constant (on my CFDs) and these are taking midpoint bid/asks.

Day 3, the whale did something or rather

Day 4, a bit different as there was notable change in the morning (0900EST) timeframe. Note that this was most likely a carry-over from the gold spike.

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So because breakouts done with a robot is really the only way to be profitable in these currently dead markets (it’s ok… only 2 more weeks…) it’s extremely important when to let the robot loose on your account. Due to fundamental trends being smothered by low volume, technical trading gets a tick here. The lunchtime pattern still exists, most notably in the US markets, and since it’s been continuing for a few weeks, it give me enough confidence to target a set timeframe to trade, so 1100EST to around 1300EST or 1500GMT to 1700GMT for the friends across the pond.

And also, make sure to adjust the sensitivities of your robot (and turn it off sometimes) before it wreaks havoc on your account.

Will be modifying this a bit later… and examining the “lunchtime effects” on EURJPY… seems like the Asia morning effect (~0800HKST)…

IntradayMoves

… watching SPX and NKY futures with interest… and lots of margin…

To the best of good buys.

 

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In addition to British GDP having major event risk on those remarkable GBPUSD and GBPAUD, the FOMC is once again going to announce rates for the 3rd time this year. I can’t seem to find the post for March’s meeting (this was it… I think), but here are the minutes as well. Overall, last month’s showed more on-track recovery, which had the greatest effect on knocking the wind out of yen.

For the last meeting’s pre-announcement look, EURUSD and AUDUSD offered relatively good indications of direction. However with the tight range on both pairs, commodity charts once again give us the best outlook. I would like to pull up yields, but no bloomy…

Also, watch USDJPY as we are bouncing against a very steep tenkan-sen. Very steep, as in 84.000 by the end of the week. However, any chance of a crack and that will turn into 79.500s by about the same time.

Silver, descending channel.

Gold, also descending channel. Gold charts offer a bit more of a worry since prices have stopped at the external fib. 1 day upside seems to be 1660, while downside almost certainly means at least a retest of 1616. Downside slightly outweighs upside.

I can’t trade this, but I’d put in 1 entry right now, 3 at 1660 and then hold at least into mid-May as the bottom of the cloud descends to 1650.

So metals are showing more downside potential than upside. Will the Fed overlook moderately weaker data in the last month and attribute them to a natural breath of air before full-recovery sets in? Whatever the case, the rhetoric for additional easing should be subsiding. The last few European bond auctions have been somewhat optimistic, depending on how you read it.

Unloading some EURUSD exposure and putting it in EURCAD…

To the best of good buys.

 

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