Euro architect tells Chris Jeffery that muddling from one crisis to another cannot go on endlessly. Politicians need to admit “there is no likelihood” of political union to give EMU rules a chance,Economics,Financial Stability ,European Central Bank,Deutsche Bundesbank,Wim Duisenberg,Jean-Claude Tri...
Happy Monday, and another great weekend of sport here in the UK with the England Italy rugby match delivering some great trading lessons.
For those of you unfamiliar with the game, this weekend's match was part of The Six Nations Championship. Italy is the weakest team in the group, while England is the strongest, and in the lead up to the game had won 16 consecutive games. And by the end of the first half Italy were unexpectedly in the lead having deployed some very unusual spoiling tactics. Lots of column inches in the sports pages about the cunning creativity of the Italian team, and whether such behaviour may prompt a change in the rules.
However, it was the reaction of the England team when faced with this totally unexpected scenario which is interesting for us, and indeed at one point the team captain asked the referee for advice and guidance, which prompted the response : 'I'm only the referee, not your coach'. In other words England's game plan had been totally up ended by events they had not even considered, which reminds us as traders that we always have to trade with an open mind, and be very light on our feet.
Having a game plan, and a set of tactics is all very well, but does assume the opposition plays by the same rules. In our case we have to deal with, not only the market makers but also all the expected and unexpected fundamental news and geopolitical events. What is also worse for us there are no rules of the game in trading. ... See MoreSee Less
With the indices looking weak this morning, no surprise to see some pretty heavy yen buying. However, there is a further reason why the market starts to buy yen at this time of year, and it's because of the way Japanese businesses invoice their overseas clients. The Japanese are, to my knowledge, the only exporter country that invoices in the clients' native currency. What this means is businesses accrue huge amounts of foreign currency which then has to be repatriated. Traditionally this happens in March and September which coincides with their accounting year.
I've read elsewhere that the repatriation may have started a little earlier than usual this year. Whether that's correct or not, we never really know, but there have been some interesting moves in the yen pairs, so anything is possible.
Moving to the yen pairs, and taking the renko charts we can see we've had some strong moves lower across the complex, but now seeing a turn in eur/jpy gbp/jpy and chf/jpy. But no sign of any correction in the usd/jpy, nzd/jpy and aud/jpy.
All the renko charts are set at their respective ATR value which helps to highlight the momentum across the complex.
With the US session now on the horizon it will be interesting to see whether we will see a change in sentiment in both the indices and the yen crosses.
The daily charts for the yen complex also reveals the extent of the down move for aud/jpy, which of the pairs is probably the most senstive to risk in the market. And at the moment it is telling us the market is decidedly nervous. ... See MoreSee Less
I wrote this at the end of January for the VIX which is moving into worrying complacency levels, and reflecting the strong performance of the indices. We are not quite at single figures - but came perilously close yesterday at 10.74, so this afternoon's US session will be interesting. We also have to bear in mind that the index can stay low for an extended period of time, ie years, but as Wyckoff's second law of cause and effect tells us - the longer the complacency, the greater the reaction when it comes.
Stronger USD has had the inevitable impact on gold which is back trading around the volume point of control on the daily chart, and which is currently at 1230.78. Price action around the VPOC always signifies a degree of consensus amongst market players. In terms of market profile - it is the value area, where market is happy to transact. For short term directional traders it means rangebound price action, and low volatility and is where patience is required.
For fold any further move lower now depends on the USD, and whether it can take out some minor resistance on the DXY in the 101.70 price region. We also have the FOMC minutes tomorrow, which if various FED members are to be believed the US is heading for a series of interest rate hikes this year. So minutes are going to make interesting reading, given market reaction to these statements has been, at best, lukewarm.
Moreover, any hike in interest rates presupposes the FED is concerned with inflation, which should help gold prices, and restore its traditional place in the market as a hedge against inflation. Furthermore, given President Trump's pledge to increase spending on a large scale on infrastructure, which too should be positive for gold. And if the USD weakens as a result - then it's all looking good for gold.
However, as they say - many a slip between cup and lip! So the time being - let's just focus on price action on DXY, and see what happens around the VPOC. ... See MoreSee Less
Since my last gold post Camarilla pivot levels very much in play in the last few sessions with buyers coming in at the 1217 support region. And with yesterday's session closing above the 3rd resistance level has given gold some bullish momentum. This has taken the price to 1239.10 which has also been helped by a softer USD.
For a continuation of the current bullish move gold needs to take out this resistance, as well as the 1244 price point, after which the 4th Caramilla pivot awaits at 1250.
As I have mentioned previously the Camarilla pivots on the daily charts will remain for the rest of February. If you want to plot these levels on the faster charts - up to 30 mins - take yesterday's HLOC, and you will have to update these daily.
For the hourly & 4 hourly charts take last week's HLOC, and these values can remain for the rest of the week. ... See MoreSee Less
1244 proved to be a bridge too far for gold which has corrected from the level in response to a strengthening in the USD, as well as equities moving higher. This is now the key level for any continuation of its recent bullish trend. The move lower has also taken it back through the third camarilla pivoit at 1230.59 and additing some interim resistance to the move higher. To the downside 1223.64 should provide first line of any support, and thereafter we are looking at the VPOC on the weekly chart at 1217.60. So this afternoon's US session may help to clarify how the precious metal wants to end the week.
In the background we have the ever present IMF/eurozone/Greece soap opera which is once again centre stage as Greece has an debt payment coming up, which it cannot find. And which should, in theory, send market participants scurrying back to gold. Sadly we've had so much brinkmanship & cries of wolf the market may no longer be listening which is always dangerous. ... See MoreSee Less
Gold has been taking full advantage of USD's recent correction with the metal putting on an impressive breakaway from the VPOC at the $1200 region on the daily chart. This has acted as a springboard for gold to take out three Camarilla privot levels at 1216,95, 1223.69 & 1230.42.
Price is currently attempting a break through yesterday's high at 1244.47 & if through here 4th pivot level awaits at the all important 1250 level. Any push through here will need good volumes, and continued weakening in the USD. ... See MoreSee Less