Stacking Cans – Get Long EUR and GBP

As generally bearish as I am…I’m really not what you’d call a “doom’s day’er” although these days… really does feel like that’s what this is setting up for.

Everyone on the planet is 100% convinced that The Central Banks have this all under control, and that there is no possible way things can wrong.

That’s scary in itself as….haven’t markets always traded “up down, up down”, bull bear, bear bull, back forth on and on – same ol thing since the beginning of time?

It’s when the boat gets a little too loaded to one side when markets are generally known to “do what they always do” no?

If the Euro and Pound have not bottomed against the US Dollar here – I’ll eat my hat.

EUR/USD has been basing and putting in a continued series of higher lows on a 1H chart  since Nov 6th!

GBP/USD MUST have now double bottomed at 156.00 on the dot.

What is absolutely amazing here day-to-day, is that we “still” see the Dollar Index ($DXY) appear to be higher, but really have it in range for the past 10 straight days. This price action is grueling, with the story of all stories still being that of the seemingly “ever depreciating Yen”.

It’s actually “showing up/making a difference” within the DXY basket of currencies (considering how small a percentage it carries), and considering that EUR is continually moving higher.

Now that is what you call some “serious weakness”, as well some serious divergence. You have to be watching both EUR as well GBP for bottoms vs USD here, and along with it a host of other market dynamics on the cusp of change.

Gold as well Silver both look to be “front running” potential weakness to come in USD – and as I suggested earlier, the move is going to be large and take the majority of passive traders completely off guard.

It’s impossible to put a target on USD/JPY at this point considering that it’s in “no mans land” but as far as any kind of “count” might go ……we are well into the final stage of 5 of 5.

If all of this coincided with a sudden crash, or news of the world ending I would not be surprised at all, in fact……at this point it’s looking just as likely that things are setting up for “exactly that”.

I’ll be “stacking cans” in my bomb shelter for the rest of the day.

That’s a joke.


8 Responses

  1. madness November 19, 2014 / 9:05 am

    Judging by the past comment on here, don’t think anyone on here believes, “…The Central Banks have this all under control…”. What is happening is that the CB’s are, and will, throw everything including the kitchen sink to keep the illusion of control alive. Almost every CB decision since 2008 has been about maintaining the power base of a select few. The only way in which they can do this is via control of the financial system. They will not let this go without a serious fight.

    The markets will be allowed to fall, “a little”, as this will allow the CB’s the excuse to engage in even more QE and harmful policies. This will continue to prop up the markets. A true crash will not happen until the market participants lose faith in the CB’s ability to maintain control and this will only happen once the realities of QE not working are felt by the masses which will be in the form of rising poverty levels and unemployment. Until then, we can expect the same pattern of last second “stick saves” and economic disparity.

    US$ weakening, unless accompanied by JPY strength will not materialize in to a serious risk off scenario. In fact, the meme will probably be, “a weak US$ will be good for earnings and exports as well as emerging markets who have funded most of their carry trades in US$. A weak US$ may even encourage more foreigners to buy even more US assets”. At present, markets are bullish, so every single event will be spun in such a way.

    If US$ weakness also translates to higher commodity prices, then when this really starts to hurt Japanese industry, perhaps this may cause a re-think of the current Japanese QE policy. That’s when the JPY equity markets will hit the ground hard. Either that or Abe losing the election in December.

  2. Bull till 2020 November 22, 2014 / 6:46 am

    wrong again and again whats your next post us stocks are in bearmarket teritory

    • madness November 23, 2014 / 4:34 am

      Not having a go but it’s easy to criticize someone who at least has the guts to pen their thoughts. If you feel it is wrong, lets have some alternate views from you? Shall I buy? If so what? and what is my stop loss and take-profit?

      This market has become near impossible to call as there has been so much CB intervention, verbal, physical, overt ,and covert.

      Unfortunately all fundamentals have now gone out the window and it’s all about free money and momentum. But even this is now beginning to show signs of serious exhaustion. As I said, if it wasn’t for funds looking to tie in year performance fees and bonuses, I think we could have seen the start of a major fall on Friday gone. World GDP being lowered yet stocks at near or all time high in several major economies, stocks eventually do have to adhere to rules of valuation. I believe the next leg in risk down will be started by a realization that equities worldwide are grossly over-valued, each CB decision is having less and less effect on moves upwards.

      The more CB’s do to keep the charade alive, the less ammunition it has going forward. If the US is indeed heading for deflation, what tools does it have left? It can’t lower rates any more, and politically, it has no case to engage in more QE – after all, the US economy is healthy isn’t it? The FED has created an almighty mess and it’s the people who will eventually have to pay, if not today then certainly tomorrow.

      Look at ECB, periphery bonds yields are already at near all time low. Even if Draghi is allowed to buy bonds, what possible good will it do? Periphery bond yields have nowhere to go except up. Southern Europe is messed up and without a serious fiscal/social restructuring, it is doomed.

      Ask yourself a simple question, when fundamentals no longer matter, when technical analysis seems to defy all gravity, what on earth do you have left to base your decisions on? CB’s around the world are now seriously panicking and keeping the illusion that all is well alive.

      In this market, I would rather sit on my hands do nothing rather than buy and hope that I am the first out the door.

  3. Bull till 2020 November 23, 2014 / 5:44 pm

    Well just follow them the cb s think this bullmarket will continue another 5 years. I know it sounds weird and scary. But thats what it always is still people are way to pessemistic and missed alreadt a big chunk of a move in this bullmarket. People always look for negativity and fight against it. Think about it people say always smart money blah blah. You know retail is still very bearish and they always talk about smart money like they so smart and find 100s of reasons to go short and there is a top. I can tell you this whe will have some steep corrections but this bullmarket will continue for another 5 years imo. Look at Europe lagging behind draghi is ready and Finnaly making his moves with another round of fresh cocaine do I care naah but this cristhmass rally in this massive bulflag in the dax is looking so sweet that I will buy every fucking dip. It is gonna blast through the 10.000 handle in it and will go for 15.000. Japan nikkei whe are just starting there a bull market. Dont get sucked in by the losers and so called smartmoney retail idiots and keep picking tops look what the centralbanks are doing look what the charts are saying. Only a few get rich on bullmarkets people look back at it later and think wow could I have catched that. What about a bearmarket . Even less people get that 1 right. But for now i am more sure whe will not see 1 for the comming 4 a 5 years. All I can say to you is BUY THE DIPS europe and japan looking more atractive at this stage allwel us wil still have much more room up aswell. And dont be scared of the those corrections use them as opportunities. Get rid of the retail bullshit predicting tops when there shitty indicators get overbought what it tells me this market is verry strong pure strength…..

    • Forex Kong November 23, 2014 / 6:02 pm

      Go man go…..

      Please check back in here in a couple weeks as readers would appreciate knowing how you are doing with this….

      Japan in recession…..E.U in recession…..U.S in recession etc…..

      I’m a fundamental trader….and unfortunatley The CB’s “don’t” fit into that picture here.

      Japan looking more attractive?? Wow.

      • Bull till 2020 November 24, 2014 / 12:18 am

        I will check back for sure you keep fighting this markets as the other 90% who dont get it. Your fundamentals are a joke. The worse it goes the more qe there will come whe will see elections in Japan but another round of abe and you gonna get ya heads kicked again. The yen moves have been fantastic nikkei is lagging same goes for Europe. The next dip and another what’s gonna be the nr 20 or so top call post. I am gonna get ya stops again

    • madness November 24, 2014 / 3:52 am

      “… I can tell you this whe will have some steep corrections…”. Yes, this is the problem. In the long term, markets always go up but it is the steep correction that I am worried about. What you seem to be saying is buy and if steep correction happens, just hold it and wait for it to go up again. This is fine if you holding stocks but if you are buying/selling on margin, this strategy can wipe you out.

      To just say “buy” isn’t a strategy. A strategy has stops, targets etc and you have not given any stops.

      Draghi may be willing but he does not have the legal right too plus there are 10 countries including Germany which is 100% against sovereign bond buying so Draghi cannot do anything without risking a massive political
      fallout which could potentially signal the end of the EUR.

      QE has made all governments lazy. In the US, Congress has failed to implement structural reforms as it believes, the FED has our back”. Same in Japan and same in Europe. Every time a CB engages in QE, it stops the governments from taking hard decisions which is what is needed for long-term economic success. QE has failed yet it is the only thing CB’s are doing. This itself should speak volumes. Can you not hear the frustration in Draghi’s voice every time he complains about governments not engaging in structural reform? In fact many CB members are now saying the same thing.

      As for Dax at 15000, what time frame are you talking? Do you mean next year? If so, with worlds GDP forecast to fall, not sure how Dax would justify a near 50% rally from current levels?

      Yes, there will be more rate cuts out of China but again, this will simply hide their problems. In fact markets gave up all the post Chinese rate cut gains did they not? Why is prices of all industrial commodity falling? Falling demand, that alone should tell you everything you need to know about global demand.

  4. Bull till 2020 November 24, 2014 / 3:13 am

    You watching kong look that dax flying early in the morning and old nikkei threatening those old highs with your stops above. watch that breakout kong it is gonna happen sooner then you think

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