I would caution not to get too “too excited” here – getting back to trading for the first day of the new year. Many portfolio manager types will be busy “re balancing” as a number of asset classes “appear” to be sitting right near areas of possible correction.
The fantastic “dip” in USD I caught a couple of days ago ( as an extra little Christmas present ) has very quickly been replaced by an early morning “surge” here this morning, as gold has also made a nice bump up of 17 – 18 bucks.
Japan’s Nikkei has certainly stalled here “around the 16,000” area so we’ll need to keep an eye on that as well.
All in all I imagine today as well tomorrow (heading into the weekend) should be a couple more days of relatively low volume, with larger / more pronounced swings in price. Not exactly the environment for making any big decisions or making and larger trades. It’s easy to get “swayed” when you see something move a considerable amount in one direction or another, thinking you’ve missed something when in reality it makes a lot more sense to sit it out – until volume returns, and prices find a more stable footing / direction.
Technically speaking, today’s move in USD looks to have done “some damage” to the prevailing downtrend “but” – I’m not looking to take it into account yet….with the new year balancing act / shenanigans playing out as they normally do.
I am also watching AUD like a hawk, as in my view – she’s not looking very good here across the board.
I would love to know what is the ‘thesis’ behind your dollar weakness bias from a technical perspective as I just can’t see it right now. This doesn’t mean that I expect a huge dollar move either, but I suspect we’ll see 86-88 DXY before seeing a sub 78 print. Please no fundamental considerations as they are beyond the purpose for fx trading on short to medium term (& possibly long term too!)
I don’t generally “divulge” my short term indicators Leonardo, but I’m sure you can see via charts like EUR/USD as well GBP/USD that obviously the dollar has been losing ground….up until a a single 4 HR candle occuring well…..In the last 4 hours!
So…..if you’ve “not” been short the dollar over the past several days / weeks – you’ve obviously lost money.
I look for further weakness, before an obviously “needed” bounce as we know nothing moves in a straight line for too long.
Pull up a 4 hr of EUR/USD for example…
Then tell me if price starts in the far “left” bottom corner of your trade screen…..and ends up near the top “right corner”.
Guess what?…..ya I know……a monkey can do the exercise and identify the trend is up.
What “can’t” you see?
Kong,
How was your holidays? Do you remember you said you will work out the daily important time to watch the news according my country time for me? Can it be as my new year’s present for me? Hehe
Yes of course Carey….Ill get to it here later today I promise!
I seem to be at opposing view here. With regards to the dollar index, I’m interpreting the current situation as a major consolidative move (ps i’m not an elliottician which I deem next to useless) from the 2011 low, which I still interpret as a major low for the dollar despite (and yes I agree with you here) EUR & GBP strength. But given that USD has been unable to break on a weekly basis the 79 level (where I keep rebuying DXY) suggests to me that any EUR weakness will propel the dollar higher. As I said, I expect to see 86-86 first before evaluating if we have a stab at sub 78. I’m currently about to get a major sell signal in EUR and a slightly less strong one in GBP too. BUT, with my system, these signals do not infer the magnitude of the move. Consequently the next 2 weeks will be most telling for me to see if I’m correct. A failure to go towards 1.33 and below in coming weeks will suggest more EUR upside near term.
Please refrain from pretending to know how one trades. NO I have not lost money as I was in cash Vs EUR & GBP but went short at 1.38. So, per your reasoning “you’re obviously loosing money” 🙂
Would still like to know your bigger picture thoughts on DXY
I can’t be bothered – sorry Leonardo.
Now talking weekly…and that the next couple weeks will be most telling? No really? No kidding.
If I get a sell signal in the next 4 days in both EUR and GBP ( which I “should” get as a dollar bounce IS expected ) then there you go – we are right on track.
Go Leonardo go.
I’m now buying GBP/USD at exactly 164.40 for your “observation”.
It’s a shame that just because one disagrees with your view, you are unable to engage in a thoughtful discussion. My query was always about the bigger picture thoughts, which means going beyond analysing a 4 & 8 hour chart, which I never mentioned nor did I ask about your short term indicators which I couldn’t care less about. If you couldn’t be bothered, you just had to say so right away, which you eventually did
Bigger timeframe analysis requires more time to pass, hence the comment regarding the next two weeks. but you know this obviously…..
All the best Kong
Leonardo.
I started blogging / contributing to get my ideas out there, and hopefully to help a few people along the way.
The “debate” of short term squiggles / trade systems / opinions in a minute to minute sense would have me just pack up shop and head back into the jungle, as it’s pointless – and yes…a complete waste of my time.
We all make money “trading the peaks n valleys”. Some are long , when others go short….visa versa and on and on it goes….ideally – everyone making money along the way.
Your original question was “my thesis” but with “no fundamentals” as they are useless to short and medium term traders – and now you are “all on board” with the longer term view.
What “is” the long term view “if not” based in fundamentals??
I think the US dollar is going to zero long term – how’s that?
Hehe.. Thank you Kong! Yeah, seems gbp/us may drop to 1.62 before to go any higher. Well i closed my short just now. May look for a re-entry again 🙂
I agree. The dollar is going to zero. I am not interested in cash -but in brick and mortar. Real assets.
And Kong I have been following you -every time I didn’t follow I fell flat on my face.
Happy new Year from HK.
The Doctor…….
For all reading…..as I’m not going to create an entire “new post” on it….
I see several trade opportunities shaping up in getting short AUD.
So….AUD/JPY ( yes even vs JPY! ) something to get on your radar….as well AUD/NZD looks interesting “short” here.
So short the currency of a country that invested massively into expanding export capacity and has a low debt-to-gdp ratio and a willingness (or at least desire) to control the budget against the currency of a country that is investing massively into offshoring production accelerating the escalating trade deficits, has the highest debt-to-gdp ratio on earth, zero willingness (or desire) to control the budget and is monetizing the debt as fast as it can. Not to mention the feminist/technology induced destruction of the birth rate. And the pointless saber rattling. This assuming Fukushima is under control. Got it.
I think I’m going to stick around just to wait for the “It was fun while it lasted, goodbye cruel world!” post. Do you have a case for shorting AUD/JPY besides “risk coming off”? Do you believe China is about to go bust?
He he he…yes that post will have it’s day no doubt – no doubt at all.
And yes….the trade would be short AUD/JPY. Fukushima is “anything but under control” hence some of the new graphics / duds – 2014 baby! here we go!
The underlaying fundamentals of a given country don’t dictate the direction of it’s currency “day to day” as we can see in so many cases.
There can be times ( even long periods of time ) when a given country / pair, heads in the exact opposite direction “any ration human being thinks it should go”….but there’s the problem right there.
It’s an asset like anything else that trades – you can’t just pull GDP projection then”get long” and hit the beach.
I could make the case for shorting AUD ten million ways to Sunday, but again will just let the trade speak for itself.
Got long GBP/AUD this morning as well in case you’d like to follow another one.
Of course markets are irrational in the short term. There is also the human element of uncertainty and things have to play out in their own time. However, the way you make money in the markets, any market, is by being rational while everyone else is irrational. It is irrational to go long the yen against anything. At all. Period. The crisis is set in stone and it is too big and multifaceted. Japan will have to face a major reset. It might end up occupied by a foreign power by the end of this decade.
Lots of time for some squiggles in there before the end of the decade Andre.
For your own interests sake – keep an eye on JPY when SP 500 corrects.
Unless you believe stock prices / risk will climb forever, there’ll certainly be a time to get long JPY as the world will get a front row seat and an opportunity to witness first hand! That money printing doesn’t work!
Kong, have you ever heard of Currensee?
Yes I’ve heard of it.
I like the “concept” in principal, but need to see what kind of track record they actually have with regards to “payout”.
I am eyeing Hong Kong for a move – as 2014 has me “getting out of the jungle” to a certain extent – and “into the future!”
Ill keep reading etc….but HK very high on the list.
Morning…sentiment extreme hit again with USDJPY. Probably a good time to be on the watch for risk class corrections since since JPY QE has been a big driver. I think the last major USDJPY correction was in June and it was when sentiment hit an extreme and it was a ripper. Of interest too was that it’s correction was not followed by a US stock market correction which probably will happen to some extent this time which might make it worse. All that being said I’m not 100 percent sure if it’s a trade I will take. Just some ramblings
I’m not touching a single “other thing” JPY related until I literally see big flags waving in the air, and have signal upon signal.
I’ve never seen a devaluation / move / trend as strong as BOJ’s assault on JPY, and will tread very lightly.
AUD/JPY is a flyer, as it’s about the “only” thing I’d look at for today.
Nice ramble.