Inside the Currency Market: MXN/USD

Changes occurred in MXN due to a 200 million? intervention by the Bank of Mexico. The earlier post regarding MXN is not valid. Interesting how we saw non uniformity in targets and sell points within the last 24 hours and now we see an intervention by Mexico. An intervention is much more than an exchange rate alignment. The exchange rate is one small part. An intervention is actually a wholesale change of the entire financial system in terms of Bonds and yields, CD’s, Forwards and Forward Rates, interest rates and ancillary financial instruments such as stock markets. Huge volatility should be ahead for MXN as the Mexican system adjusts. The new trade follows.

The bottom 16.2715. Range 16.3532 – 16.2715. Note the bottom is a range point. Range point below 16.2715 next 16.1897. 16.2715 is not expected to break. Range point above 16.4350. Overbought sell point 16.4080, 16.4194, 16.4309. Essentially sell point between 16.4080 – 16.4309. Note the last sell point at 16.4309 is still below the range top at 16.4350. Note the many and wide ranging sell points. That’s warning that trouble exists because prices aren’t uniform. This was seen in AUD/USD, AUD/JPY and EUR/USD over the past 24 hours. It was seen in EUR/USD from 1.0913 – 1.0966 last evening. For MXN, the area from 16.4080 – 16.4309 will be erratic.

Strategy. 16.35333 must break higher to target long to 16.4080, 16.4194 and 16.4309. Then reverse short between 16.4080 — 16.4309. Failure to break 16.3533 targets range bottom at 16.2715. Don’t marry the target. Many apologies for this one, it was far beyond control.

Brian Twomey, Inside the Currency Market, btwomey.com

Inside the Currency Market: EUR/USD, EUR/JPY

Tomorrow is Non Farm Payrolls. Why volatility is due because its hard to price that announcement. Its not the actual announcement, its the pricing of the exchange rate. If an Inflation release is expected say 0.1 then that’s easy to factor to determine exactly where to take the trade. Non Farm Payrolls is actually a very small release. The entire ranges going back to Non Farm Payrolls 1939 inception is 50,000. Let’s say last month was 200,000. In the range would be 250,000 – 150,000. If we saw say 260,000, well that’s 10,000 above the range and a break of the range. If 140,000, that’s 10,000 below the range. Its the bullish and bearish aspects to the release that allows traders to pile on and take the exchange rate to the extremes. But many times its also the central banks that are complicit in the release so they allow the knowledgeable traders to pile on in the direction of the trades so exchange rate trade to their extremes. The release in itself doesn’t call for the volatility that we see yet its seen. Again. more helpful info not written anywhere else in this world.

EUR/USD. Bottom 1.0872, up from 1.0812 last evening. No Range breaks are seen. Nearest above is 1.1145. Two lines are descending on current prices, 1.1031 and 1.0001. most important line is 1.0001.

Strategy. Overbought sell point 1.0970. Price above 1.0930 then long to target 1.0970. Then reverse short back to 1.0930. Points on the way up 1.0927, 1.0930, 1.0932, 1.0948, 1.0959, 1.0970.

EUR/JPY. Bottom 135.47. Range break above 138.95, below 133.40. A big break line exists at 137.51. Like EUR/USD, price is bouncing around in small ranges between 135.47 – 137.51, 204 pips.

Strategy. Overbought sell point 136.70. Long to 136.70 on a break above 136.17. Then reverse at 136.70 back to 136.17. Points on the way up, 136.17, 136.22, 136.32, 136.43, 136.56, 136.70.

Brian Twomey, Inside the Currency Market, btwomey.com

Inside the Currency Market: MXN/USD

Note AUD/USD I stated sell point 0.7354, price turned short at 0.7351, off 3 pips. AUD/JPY. Price turned at 91.70, I stated 91.84. Why the miss, as mentioned prices will be uneven. Dead on call. Why. I may miss by 1-3 pips but never, never 15. A miss by 15 pips for me is literally impossible. Mentioned 91.54 – 91.84 was danger treacherous zone to trade. We knew long before what to expect. Yet the trade was profitable as well as AUD/USD. Every trade for us is profitable and will continue to be profitable by far more than 20, 30 pips.

MXN Bottom 16.2943. Another big move ahead for MXN. Overbought sell point 16.4866. Range break above 16.4580 and 16.4990. Range break below 16.2943. Note the bottom point coincides with a range break today, today only.

Strategy. Long above 16.3762, target 16.4866. Watch 16.4580 as this is a range break. Point 16.4580 could be target, a break above 16.4580 stay to 16.4866. Points on the way 16.4220, 16.4269, 16.4318, 16.4592, 16.4866.

Brian Twomey, Inside the Currency Market, btwomey.com

Inside the Currency Market: AUD/USD Update

By the way. Much talk about why AUD exchange rate wasn’t written in the last statement. The RBA doesn’t have a need to speak about exchange rates any longer since they will achieve their lower exchange rate goals. Again I caution most respectfully regarding what is written out there. Chances are extremely good, its all wrong and a public relations document rather than sound commentary based on facts.

AUD Update. Bottom 0.7293. Overbought sell point, 0.7354. May not be seen. Range above 0.7354 and 0.7379. A break of 0.7354 means next sell point and target at 0.7379. Bottom range point 0.7305. That’s our target today. I reiterate, uneven prices will be seen and can’t be helped. Its in the numbers. What we have is warning to what;s coming.

EUR and other pairs, later this afternoon

Brian Twomey, Inside the Currency Market, btwomey.com

Inside the Currency Market: AUD/USD, AUD/JPY

Quickest last evening review. EUR/USD. I reported the area from 1.0890 – 1.0966 to be a treacherous area to trade. Price broke 1.0913 warning, then 1.0927 and dashed to reverse at 1.0941. It was a nasty move. But we knew in advance this pricing area would be rough but the sell points were good. The question was which one. AUD/NZD reversed at 1.1303. I believe I reported a few pips higher in sell point. Yet the short was good. When one pair reports uneven prices, all are uneven. AUD/USD reversed at 0.7389, not sure my sell point but the Sell was a good trade. All profitable. EUR/INR Ranged 69.43 – 69.71, perfect in this trade. USD/INR Range 63.68 – 63.81, perfect again.

Fair warning today. Prices will be uneven in all currency pair prices. What this means is the same scenario last night for AUD and EUR will be seen. We have more treacherous areas in our sell points. Reported Bottoms are fine and perfect. I will report topside sell points. Also, rough areas to trade and our sell points can’t be helped but its important that we know what’s coming. Most days are a breeze and price responds perfectly. its our rough areas have ranges instead of perfect targets and sell points. We will be extremely close in sell points but not absolutely perfect as past weeks.

AUD. Bottom 0.7303. This point is solid. Overbought sell point 0.7364. Range above 0.7364 and 0.7389. Note 0.7364 sell point and range point. Range points are bumping against our levels and its causing grief in our uniformity in prices. Range below 0.7315. See how 0.7303 is protected by 0.7315.

Strategy. Sell 0.7364, target 0.7315. Don’t marry 0.7315 due to our uneven prices today. Watch closely 0.7389, that may be our sell point. Can’t help this. Points 0.7389, 0.7364, 0.7348, 0.7341, 0.7340, 0.7349.

AUD/JPY. Bottom. 91.10, 91.09. Not perfectly solid but extremely close. Range below 91.24. See how 91.10 is protected today. Range above 91.86, 92.17, 92.47. Note how AUD/JPY dead stopped at 92.20 last night on AUD employment data. Now its 92.17.

Strategy. Overbought sell point 91.86. Note its also a range break point. The treacherous area is between 91.86 – 91.55 due to uneven prices. Our target is range bottom at 91.24. Monitor closely 91.86 for second sell point at 92.17.

EUR Next

Brian Twomey Inside the Currency Market, btwomey.com