See the green area on RSI – How long it’s been overbought? See the distance DOWN to the red line ( 200 Moving Average ) See the “rolling hills” of the MACD ( useless indicator anyway ) as price on the chart is so much higher…yet the near term “rolling hill” so much lower than the previous. Divergence baby – Huge divergence.
Even a correction down to the 50 MA will wipe any and all profits that anyone “envisions” prior to actually realizing them – and pushing the sell button.
This is the blow off top. How long she goes? Who cares! Just be sure to get out alive.
This trade fits into the exact same framework we have been working with…with respect to The U.S Dollar taking a very large nose dive – very, very soon. You can see in the chart below that EUR/USD has now put in an absolutely “classic swing low” right at the 50 day moving average…after completing only the first daily cycle of this new “intermediate cycle”. This suggests that we’ve got several more daily cycles to go ( lasting somewhere between 30-35 days each) before this upswing completes.
I would imagine the 200 day moving average ( marked in red ) should be the next target. That’s some 350 – 400 pips!
Buy EUR Before Tues Afternoon
These correlations with The Euro, USD and Gold are batting near 100% right now….as you can’t have The Euro rise without USD moving decidedly lower. The same thing goes for Gold, and if you really want to nail this…feel free to get long The Japanese Yen ( JPY ) as well. Yen chart looks exactly the same as EURO.
So…only one more asset class to consider here right? U.S Equities.
I can’t stand the stock market right now, as it’s continued rise goes against just about every fundamental principle I can drum up. There are too many indicators and factors to list – all suggesting this thing tops out soon…or at the very least – makes a serious correction. The stock market is cyclical and there is not a single thing “any acting president” can do to change that.
Trump has certainly “empowered the common man” with the talk of bringing jobs back, and I can certainly appreciate that but…..it won’t last. Unfortunately for stock buyers – foreign exchange leads the way and the message is painfully clear.
This thing needs a complete and total reset before some incredible turn around in the U.S economy will be realized.
Wash rinse repeat people. You know this. Has it ever been any different?
The U.S Dollar has now breached the low from the previous daily cycle….confirming that this “next cycle” will also manifest as a “left translated cycle” and take the dollar decidedly lower.
But first we bounce.
We bounce higher in a confirmed downtrend so…you don’t go buying this dip in USD bonehead. You wait 4-6 days ( 6 at most I imagine ) and “sell the rip” as we are in a downtrend. Patience is everything when trading, as you’ve got to fight that “urge” to get in there…and be involved every minute of the day.
I can honestly say that these days ( having long since been through the emotional torment experienced when learning ) I spent more like 85% of my time plotting / scheming / observing markets than I do “actually trading”.
Magically…..the less I trade – the more money I make…but don’t confuse this with “investing”. Yes I believe that gold and silver have bottomed, the Euro will rise and USD will fall…JPY will surge and U.S equities will soon take a substantial hit so….
Investing is 100% totally / absolutely / without question OUT! I trade…..and I trade assets I believe to be in longer term trends. I don’t consider it investing.
Most of the standard correlations are looking pretty good right now ie…USD down has The Euro and commodities ( priced in USD ) moving higher…and The Japanese Yen flying cuz money borrowed some years ago is now repatriating to the place of its origin. Yen up = U.S equities down.
The fact that this thing has traded sideways for this long must have many of you looking at your portfolios and wondering – why haven’t I done so well this past year?
How much “higher” can you really expect anything to climb in the face of a dramatically waning “appetite for risk”.
The planet is completely freaked out about Trump. Good or bad….I have no opinion, but I can tell you this….markets hate uncertainty, and the future looks “more than uncertain” to say the least.
Obviously the short USD trades are now in the money as The U.S Dollar continues to weaken. The mining trades have been on fire with GPL, IMG and now NUGT ( purchased yesterday ).
It may at first appear boring to just sit around and watch a single asset / asset class ( currencies and USD ) but one has to consider “just how much revolves around the value of USD” – as U.S equities and global commodities trade in this currency.
Correlations can always be found with respect to the “value of USD” and the price of “things” on planet Earth. Thus far we’ve really only seen the beginning of a much larger and expected fall in USD.
Perhaps this is where some of you stock traders can find a solid reason to follow currency markets closely. Also with consideration that JPY ( the Japanese Yen ) trades “in tandem with risk”. When JPY value moves lower – stocks move higher. JPY moving higher ( on repatriation of currency flooding back to Japan ) – stocks move lower.
That’s just how it is!
You can easily check currency pairs at www.stockcharts.com by typing the symbols like this: $usdjpy, $audusd, $cadjpy etc… just dont forget to add the “$”.
I will now focus on JPY as a turn in “global appetite for risk” will soon see JPY on the rise against nearly every other currency on the planet. That means “shorting” currency pairs such as AUD/JPY ( meaning….I a shorting the value of Aussie Dollar “vs” the value of JPY) where in AUD will fall and JPY will rise.
It clearly looks like this will stretch into the new year…….before we see a major turn in both currency and equities markets. Money is pouring into silver and gold with the gold miners ( and gold complex in general ) finally showing us not only the daily cycle low….but quite possibly the “yearly” cycle low as well.
This makes for some pretty solid trades as……The EUR will bottom along side gold and silver, the U.S Dollar slowly rolls over for extended losses and equities make a solid correction.
Sound about right? This is EXACTLY how I am positioned with short trades in USD/JPY, long silver and gold miners ( GPL bought at 1.27 ) as well limping into further “long JPY” ideas / shorting the commods ( AUD,NZD and CAD ) with marijuana companies holding tough.
End of the year selling, and who knows what other “market shenanigans” playing out these last days of 2016. I see a large-scale correction first half of January 2017.
The currency pair USD/JPY ( U.S Dollar vs Japanese Yen ) is a bellwether for “risk appetite” in markets. Simply put, when the currency pair rises…..risk is ON. When the currency pair falls – RISK OFF.
Risk ON meaning……the general investing community is in “buy mode”. Risk OFF meaning – “sell mode”.
USD/JPY – Weekly Chart.
I’ll let you be the judge….as “per always” – you can lead a horse to water – but you can’t make’em drink.
This chart looks terrible. After months of consolidation( June, July, August, September ) and now with the recent run up into “and after” the U.S election, USD/JPY finds itself at an interesting junction. You don’t see this in equity/stock markets as they only give you a tiny glint into the real world economy ( if any insight at all, considering the money printing and Wall St. corruption ) but…..currencies don’t lie.
USD/JPY will very soon turn. Global stock markets soon to follow so I challenge you to consider….
Are your assets currently protected? Stop losses? Mental stop losses? Greed got you by the balls? Any notion “what so ever” that…..tides may turn?
I’ve softened over these past years as….the Central Banks have made it impossible for the average “at home investor” to even consider things moving lower. I’ve “sung to the choir” at least a handful of times over the past years…encouraging my followers to exercise caution. I’ve been right at times….and horribly wrong at times.
The U.S Dollar has now reached “another” serious area of resistance here around 100.00 / 99.85
Inversely gold and silver mining stocks ( and likely the entire metals complex ) look to be putting in a serious low here ( as suggested in my previous post ).
As I’ve suggested time and time again….the absolute best way to play these “potential turns” is to place your orders some 50 – 100 pips “below” current price action….or in the case of “getting long EUR/USD” some 50 – 100 pips “above”. This way…..you don’t get picked up if price moves against you ( nothing ventured nothing gained right? ) OR you do get picked up on momentum moving in your direction.
Another way to do this is to place your order “above or below” the previous days high/low ( as seen by the bottom or top of the candle of the previous day ) – keeping yourself out-of-the-way of intra day fluctuations, but still leaving you tonnes of room for profit – should price action move in your direction. The key is to get into the trade “on momentum” and not get caught in the daily volatility.
You can’t pick an exact price. You never can. No blog, no investment consultant, no snake oil salesman can call it that close – it’s impossible when you consider we are talking about moves in a currency as small as 1/100 of a cent!
As well…..if you are looking for further confirmation / theory that perhaps things are ready to turn lower….take a look at Apple ( AAPL )
If the entire planet is so “hell-bent on buying U.S Equities” – How come industry leaders like Apple look like shit?
In a general sense……you can’t do shit when markets continue to trade sideways.
It’s very difficult for new traders as……you still feel that you “must keep trading” in order to keep money coming in. Trades go nowhere, you get frustrated…..then you make mistakes. Costly mistakes.
Taking a quick look at the Dow ( going back a few months ) we can see at least the past 8 weeks as virtually “unchanged”. Marketing stuck in the mud a full 8 weeks now.
You can’t “really” trade this, as this small amount of movement leaves little room for profit – and timing entries becomes paramount. You need to recognize it for what it is….and accept it. Then your trades / trading will improve.
I don’t really expect this to change until AFTER the U.S Election / Gong Show finally winds up in November, and will be planning trades accordingly. Smaller orders…lower expectation. More planning for the larger moves expected post elections.
It is what it is…..you’ve just got to learn to recognize it sooner.
With Japan now out of the way….we can clearly see that markets don’t dig it. The Yen is powering higher which is the absolute last thing Japan would like to see.
A strong Yen is terrible for Japan ( as a strong currency is for any nation these days ) and suggests that money is actually flowing “out” of markets – back to the place where it was originally borrowed at 0%.
Think about it.
Let’s say you went nuts and borrowed thousands of dollars when the interest rate was 0%, then invested it in U.S Equities hoping you could make a buck. Months later your U.S Equities trades are flat at best, but even more likely sitting at a loss. Then you figure out……hey wait a minute – if we get an interest rate hike here in The States…this market is gonna tank! You sit there thinking…..man I better get the hell out of here, or I am gonna get killed.
Imagine if they actually DO raise rates in the U.S today? You are hooooooped!
How will I pay back all that Yen I borrowed??
So you unwind your trade. You sell your U.S Equities likely at a loss…..then you have to convert the U.S Dollars “back” to Yen ( at a new rate that also hurts ) and finally pay back your loan. This is the fundamental driver behind movement in the currency pair USD/JPY. This is why it’s been tanking since markets “actually topped” back in late 2015. Everything else has been pure distribution as the big boys and heavy hitters unwind their Yen Carry trade, and it’s taken more than a year to quietly do so.
You can see it on the charts so clearly, and now that USD/JPY is at parity……things could get pretty ugly.
Clear signs that markets have more or less topped out – and have been distributing to retail “hopefuls” for the past full year.
Little mining stocks on fire….just getting started in the larger macro trend people so……go grab a couple!