Archive for the ‘forex’ Category

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Monitoring USDCAD for a Breakout

USDCAD hourly has bounced up and down within this quite well defined triangle from late August. 10, 20, 50 and 100 MAs are all converging, and the TTM Squeeze indicator (Bollinger, Keltner and an oscillator) all show the pair is ready for a breakout. Base of the triangle is 300 pips, which gives a target for the first move after the break, whatever the direction.

Will the FOMC stay, raise .25% or raise .50%? I don’t want to guess so I will enter this only after that major event has passed.

To the Best of Good Buys.


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I’m on tradingview!

Because other chart apps are too heavy. See what my comments are on the Forex feed.


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Back to Research

It has been a year since the last post, and before that time, I’ve worked at a trading firm, learned, and left to start the new stage of my career. I have also passed all 3 levels of my CMT exams, and even though I certainly like the novelty of Point and Figure’s boxes, catapults and more, its obscurity (especially in FX) goes against an important tenet of the markets: it may be a self-fulfilling prophecy (if enough people are looking at the same thing).

So what have I learned? Follow the trend, Digested in these few simple points, which has simplified my charting.

1. Trade breakouts. Follow quiet markets, and get in when it breaks

2. There is no too high of a price to buy, or too low of a price to sell (that’s from Livermore). Especially true with all these extremes in FX and indices.

3. Use simple indicators, especially the ones that everyone is following. Hence my use of only 10-200 MAs, and now on hourly charts because that creates more opportunities.


Follow this trade on TradingView!

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But this first, from BAML… While everyone was expecting a yield rally this summer, it seems like that hasn’t been the case. Even with food prices jumping due to the winter this year (due partly to higher natural gas to keep everything from cattle to corn warm), core CPI is relatively subdued. There also seems to be a shortage of 30Ys, which naturally means bond prices should go up and yields come down. Talk about a contrarian move.


We are currently entering wave c for 10 Yrs. This pattern, quite dangerously, is also an HS pattern. Though the resistance is quite strong at the neckline with two former tops in 2011 and 2012, a break could spell a lot of danger for the dollar. Even if we don’t break the 2.400% line, the path of least resistance is still down, and we have some room to go. Thus, anything long USDxxx would not be constructive.

For the USDCNH which has thrown out more than a few traders, there might be a good opportunity for those who want to trade the dollar weakness without going USDJPY. The USDJPY is less intervened against, but this post is to see where we can enter a comfortable long term USDCNH trade. Though with the way USDCNH trends, it is entire acceptable to enter with more confirmation.


Watch that there has been a false break once before early April, which was denied by a morning star. But, there are other signs of confirmation for this break:

1.  It is marked with a shooting star on 4/30 (which can be combined into several other reversal indicators with adjacent candles).

2. Negative divergence on RSI, which has also passed below 70 again. Negative CMF too, which indicates less momentum upwards, as well as a cross into 0.

3. Heiken Ashi reflecting that shooting star (though blue), and trend downwards. 

So technically, I feel comfortable enough with a short trade. Probably put in 20k short at 6.2323 (current price), stop at 6.3000 and targeting 5.xxxxx or something. Risk reward back to 6.0000 (not impossible) is 3:1. Will be gaining rolls too.

Also, did you see that descending triangle breakout on gold?


Also, I passed my CMT Level II. However to get my Series 86 exempt, I would need to have a current CRD… (though I can apply for it within two years). Someone hire me?

To the best of good buys.

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Amazing how the two fibs fit so well together.

This is a reference to where the bleeding might stop. As noted here by Morgan Stanley, the rebalancing is continuing, and per DB, the assumed breakeven point for the products built on top of USDCNH is at 6.25. Now that we have passed it, there are two simple resistances. Only after conclusive reversal signals (possibly over the span of a month) would I look at selling the pair. Note the rounding top from 3/27 to 4/9 which was invalidated with another run higher.


Studying for CMT Level II… test this Saturday. Wish me luck!

To the best of good buys.

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SGD at first support

Currently at a confluence of a 3 time tested rising support, as well as the 50 MA (I realize it is open MA – oops). SGD based on the SNEER basket is heavily influenced by trading partner currencies in Asia (AUD, MYR, PHP, CNY, etc). Though US yields can go both ways, the pair is heavily influenced by the AUDUSD rate. The AUD has broken above its recent October-February channel and its 50MA quite significantly, and is currently in the cloud, showing there is still possible upside in the near month or so.


USDSGD tecnicals confirms this assumption, with RSI not yet at oversold (which has been reached sparingly before) and CMF showing a deaccumulation of the pair. A more reasonable target might be to buy at the longer term May 2013-October 2013 support line, which might be reached early March at 1.24200. Who knows, maybe the September 16 gap might happen again (I believe that was due to a PBOC cash injection).

Also, because of the crop problems all over the country due to the freeze, lower production, propane to warm chickens, etc, will that lead to cost-push inflation this summer? That will mean higher US yields/interest rate expectations correct?


To the best of good buys.




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