Feeds:
Posts
Comments

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.

Image

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

To the best of good buys.

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.

 

 

Image

By the Way…

uh… I closed out the USDMXN position at break even after the most recent bearish engulfing. It’s currently below the coil, and with FOMC on tap, I’ll wait out.

Will they taper or not? I thought we will only taper when unemployment gets to 6.5%, right?

To the best of good buys.

Image

I will not be trading this and only passively monitoring. USDJPY and JPN225 I think give much dirtier signals and are based on much dirtier fundamentals. Long dollar positions I think are much better. (Higher yields do mean higher USDJPY, but lower equities in general, which again would drag on the Nikkei – and a whole host of risk on/off components).

jpn22520131108

The Nikkei has hit a rising trendline, tested 3 time already, established since June 2013. Yesterday’s sharp end of session bang on the yen and Nikkei has made a close around that line. Volume/momentum (in FX) indicator CMF still shows inflows, though this signal in FX is usually quite undependable and should be taken with a heavy grain of salt. The close is also slightly below a blue cloud, which serves as a support line as well, but usually gives away to further declines.

Two other, closely linked charts are somewhat troubling. First is the SPX500, which in the path of least resistance, should correct down the the lower part of the channel.

spx20131108

The next is EURJPY, which has broken a trendline set since June as well. Though the last bar was due to the surprise rate cut, such a significant decline could indicate risk off? Carry covering? (I should have my yen pair charts back…)

eurjpy20131108

Again, passive monitoring. As the recent run was due to higher US rates and Abenomics, it is also important to monitor Japanese politics, which if history serves as any guide, always has a few hiccups.

To the best of good buys.

 

USDMXN, Buy, 10k @ 13.0945

I moved up the upper boundary a bit, and prepared an entry on pullback at 13.1000. Entered at 13.0945 when the ECB cut rates. This was the first post watching the triangle on 10/22.

usdmxn20131107

Target for symmetric triangles is measured by the height of the triangle at the widest part (13.3800-12.5900 = .7900) plus the breakout line (13.1000) which yields a final target of 13.9000 to keep it round. If it closes below the bottom of the cloud at 13.0000, monitoring is warranted, and a break below the midpoint of the triangle at 12.9000 stops the trade.

NFPs tomorrow, expected an October change of + 125k. Even with the government shutdown, I think it’s still quite likely for the jobs market to beat that. To the best of good buys.

 

So, I have passed my CMT Level 1. Hooray! First milestone on my new journey reached again. I didn’t know what Diffusion Indicators were, but appears to be something similar to an AD measure. This can also be used for economic indicators, which reminds me of the heatmap on Zerohedge of global PMIs a few months ago.

usdmxn2131022

==

An excellent pattern is forming in the USDMXN chart. The few days of volatility in late October (during the government shutdown and the debt ceiling crisis) have further cemented the two support and resistances binding this 3-month old pattern. The lookout is for a break on either side.

Other indicators are certainly helpful. Right now, the CMF is slowly creeping above the zero line, which indicates there is an increasing volume of buyers (though for FX, it is calculated without volume but with momentum).

Post-break, if it is downwards, then the Ichimoku indicator certainly gives quite excellent signals. For the break lower, instead of opening a sell position right at the break, I would wait for the lagging span to at least close below the base of the cloud support, marked out as position 3. Target price for this would be 60% at 12.500 and the rest at 12.275.

For an upside break, there is a quite hard resistance region at 12.950, the flat line (4) for most of the cloud supports and resistances. The upper line of the triangle will intersect it on 10/28, giving a break upwards on days near that more importance. The two birds one stone move (break of 12.950 Ichimoku resistance and trendline resistance) will also place the pair above the thin cloud region, giving a bullish signal. To prevent whipsaws, a close above the fib of 13.023 will be more preferred, which was also the start of the gap a month or so back. Target would be the (new triple) top of 13.360.

On a fundamental view, even though Cal Professor Janet Yellen is in the Chairman seat at the Fed, the dollar is still expected to gradually strengthen as yields recover. Though there might not be any announcements about the taper given the volatility from July to September, the market itself might slowly adjust to more expensive credit. With the S&P also at all time highs, buying dollars shouldn’t be a problem if there is a move towards risk aversion. Hence my bias is towards a stronger dollar (and a break to the upside), though I shall be waiting on this chart.

To the best of good buys.

Back to posting! To practice my Technical knowledge before the CMT test this October. Image

==

Either a break upwards or a break downwards. Sentiment for the next few days, including in the USDJPY, Nikkei and the S&P is pointed slightly downwards. However in the interest in confirmation and that the overall trend is upwards, I will be monitoring for a daily close above 8470 or a close below that uptrend.

For a close downward, if the candle down isn’t too significant, I will wait for the pullback back to the former rising uptrend, and then enter a short.

To the best of good buys.