The time and effort to develop this model and follow the central banks is astounding but the model is perfect in its accuracy in terms of targets, ranges, levels and the full price view in every, every currency pair. We won’t ever get caught on a price deviation nor will we suffer losses. The downside to the model is it takes time to calculate to insure accuracy. After I viewed NZD/USD and NZD/CAD last night, I didn’t see much excitement. Yet both pairs rose what 40 pips yet it achieved those 40 pips while price was overbought. So the downside is time devoted to calculations then disappointment occurrs due to a no trade or undecided currency price. Yet the other profound aspect to the model is to warn when prices aren’t correct and stay away when necessary to wait for a better day in the particular currency pair. When a currency price is in constant motion, at times it finds itself in undecided or just terrible positions. In that instance, we find another pair and not risk the trade. Many time when one pair has problems or is undecided then all pairs are in the same positions because currency pairs and prices are so interconnnected.
AUD and NZD both share a relationship to Europe as AUD/EUR and NZD/EUR. Without both pairs, NZD and AUD’s connection to Europe would sever. When a price problem is seen in NZD/USD and AUD/USD, typically the problem is due to NZD/EUR and AUD/EUR because of their wide ranges. The problem is related to central banks price agreement or disagreement between EUR/AUD, EUR/NZD and AUD/EUR and NZD/EUR. Sometimes its due to a back room deal in maybe an export arrangement other times it may even be just a price fluke, a discrepancy due to the way the numbers and prices worked from the current prices. Other times in disagreements, the ECB and RBNZ and RBA perform price battles V each other to fight for their price. What I see in AUD is not much different from last night’s NZD. What is seen is a tight tight market in both AUD and NZD. Its the same tight tight market seen in German V USD yields. Yields, interest rates are compressing to cause our tight tight situation.
AUD/USD. The bottom is found at 0.7280. The range is found between 0.7317 — 0.7267.However the bottom is 0.7280. Below 0.7267 then next 0.7243 and 0.7220. Overall, a solid solid bottom exists at 0.7177 and 0.7170. Above 0.7317 ranges then next 0.7366 and solid solid at 0.7390.
Shorts need a break at 0.7316, 0.7317, 0.7318. Then we target the bottom at 0.7280 and below. Overbought sell point 0.7338. Points above 0.7316 and 0.7317, Next 0.7318, 0.7322 and 0.7338. Sell and sell rallies is the way. Over time, AUD is heading much lower. What changes in ranges, levels, hardly 1 pip changes in the calculations.
More pairs coming.
Brian Twomey, Inside the Currency Market, btwomey.com