BOJ Appointments and Implications

Since 1885 and start of Prime ministers, Shinzao Abe is the only prime minister of Japan to ever serve two terms, 2006 to 2007 then from 2012 to present. Abe served from 2012 to 2014 then won reelection in 2014 and remains current prime minister. Kurodo’s appointment April 9 to a second consecutive term is a first since BOJ appointment began in 1882. Eikichi Araki is the other to serve two terms but not consecutively as terms ran from 1945 to 1946 then 1954 to 1956.
Why Kuroda V Shirakawa is a policy rather than ideological issue as Kuroda sees the virtues and successes to the current QE/ Yield Control program while Shirakawa stated publicly otherwise. Abe, Shirakawa and Kuroda actually hail from the Southern Prefecture of Fukuoka and all are, I believe, members of the current ruling conservative LDP Party. Fukuoka’s current 5 million population is matched only by Hokaido prefecture then surpassed by Chiba 6 million, Aichi 7 mil, Kanagawa and Osaka with each 8 million. The policy difference is seen in the replacement of Takahide Kiuchi with Hitoshi Suzuki and the February Kiuchi speech.
GDP says Kiuchi will likely achieve 0.5 to the reporting period in fiscal 2018. His overall skepticism and why he sees risks to the downside is the Output Gap closed and remains neutral therefore 0.5 is viewed as a best case scenario. GDP growth rate projections are higher only to reflect a lower JPY and continued improvement in overseas economies.
Current Japanese economic drivers are exports and low JPY. A decline in world economies and higher JPY then exports flounder and GDP will fail to see a 0.5 target. Kiuchi fails to see the 2% Inflation target achieve as it assumes prices and wages tracks higher and this explains his persistent no votes on the BOJ board both on the overall JGB program and policy proposals to purchase Reits, ETF’s and Commercial Paper.
As Yield Control entails JGB 80 Trillion Quantity purchases at a minus 0.1 interest rate on balances and Interest rate targets and 0 on the 10 year JGB, Kiuchi actually forecast neither targets in quantity purchased or 10 year Interest will achieve. Purchases will actually drop. A shock to the economic system as in negative / positive or in world markets then the chance of program success lessens as JGB yields skyrocket or suffers a massive drop. A higher USD 10 year poses the first challenge to the Abe/ Kuroda program.
Kiuchi’s main argument dating to the Aug 2016 minutes and every meeting since is the stability and sustainability of the JGB market as the overall BOJ goal is expansion of the Monetary Base to 80 Trillion. The program goal is long run and runs to infinity until economic goals are achieved or until possibly when the BOJ concedes defeat.
Every Kiuchi proposal brought to the BOJ board since August 2016 to tweak the program was roundly defeated by votes exactly of 7 – 2. One example is sell current JGB holdings and purchase only 45 Trillion per month against a 7 year average maturity. The BOJ reports in the February minutes the Monetary Base growth rate Y v Y is growing at 20 to 25% and rate of growth in the Money Stock at 4%. The money stock growth rate in September was 3.5% and 3% to 3.5 in November.
Most importantly and I concur with Kiuchi is the limited ability for central banks to control interest rates but more importantly is the scary desire to control not only an entire market but the most important market to financial stability and economic growth.
All central banks are now trying interest rate control and each in their own unique money market system but other central banks are cutting ranges rather than forecast and implement wholesale changes as is the BOJ case. To control an interest rate contains drastically negative effects to an economy and restricts money flows, prices, loans, and the list goes on. A sharp climb in CPI for example would see interest rates rise and risk the Yield Control Program. A stasis price only sees a higher breakout potential later as pressure mounts on the price to move. Currently, the BOJ controls 40% of the JGB market.
Kiuchi’s ally Takehiro Soto and second dissenting vote on the JGP program and tweak to policy proposals will be replaced in July by Goshi Kataoka. Soto’s main argument throughout the program period is the distance from the Monetary Base to Inflation expectations are wide and an unclear long run view. Soto’s concern is JGB holdings may see a 10 year duration at negative interest rates. Further, is the unknown shape of the yield curve even upon program success.
At what point is the yield curve shape measured correctly against economic acceleration v deceleration. The consummate no vote by Soto was against the setting of long term interest rate targets especially when Inflation, GDP and interest rates sit at essentially 0. Soto favors setting short term targets and in line with current economic results. Higher Inflation for example would naturally result in setting higher short term interest rate targets. The Soto argument converges to Silvio Gesell in the Natural Economic Order. And I believe the Soto and Gesell arguments are the direction for future monetary policies, interest rates will follow CPI and price levels. The BOJ target overall is the interest rate rather than the Monetary Base and this offers a more market oriented approach.
Soto since 1999 was head of interest and fixed income strategy at JP Morgan Japan and came to the BOJ with 32 years of bank experience while Kiuchi was chief researcher at Nomura and also has 32 years bank experience.
The BOJ votes based on actual Minutes ran consistently 7 -2 and not 5-4 as was reported by others. A 5 -4 vote on overall BOJ policy, interest rates or policy changes hasn’t been seen from 2012 to 2017. This 5 – 4 figure is made up, thin air information. Kiuchi and Soto were lone dissenters in BOJ policy and Kiuchi was most pervasive while Soto came to dissention ranks shortly after appointment. Both were consistently outvoted meeting after meeting from 2013 to 2017. Kiuchi and Soto however were consistent in votes under Skirakawa and Kuroda.
The idea an ideological divide exists on the BOJ Board as in Kuroda / Abe V Shirakawa appears as a specious and most dangerous argument. An ideological amalgamation would be seen if a BOJ appointment is from the Chiba Prefecture because that Prefecture includes Tokyo. One would then assume a political and economic meld was placed on the board purposely to vote the political line rather than economic. Mayekawa was the last BOJ Governor from Tokyo and his term ran from 1979 to 1984. Tokyo was represented on the BOJ 4 times in 350 years of BOJ existence. What is seen on the BOJ Board is independence to vote and propose rather than political party line votes.
Further, GDP at 2% or better since 2008 was seen 7 times in 9 years or 7 times in 36 quarters.
BOJ Governors since 1882 hail from Southern Japan and South of Tokyo. Of the 31 past Governors, all were represented by 9 of the total 47 Prefectures.
As Japan exits yet another ” Lost Decade”, it meets the challenge with another questionable economic program but this time they add wholesale change under questionable results. One false move or one disaster would result in Japan lost for many decades. Since August 2016 Yield Control, JGB yields traveled higher from -0.29 to 0.16 while the US 10 year rose from 1.31 to 2.64.

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NZD Dairy and USD Pairs: Levels, Ranges, Targets

New Zealand’s Dairy Auction on Tuesday revealed a 3.1% increase in the overall GDT Milk Index while NZD/USD Tuesday dropped 1% from 0.7015 to 0.6942. Thanks to extensive records maintained against multiple thousands of trades, Tuesday;s day trade was easily accessible.
NZD/USD faced stiff resistance at 0.7019, 0.7046 and 0.7055. When NZD failed to break 0.7019, down was the only path. The NZD/USD and Milk Correlation viewed from 2015, 2016 and within the past year runs +70%. If this Correlation held significance then NZD should’ve rose at least 1.5% to 2%. Instead it dropped 1%. NZD couldn’t even rise + 0.7 to meet the Correlation.
Back to the trade service and fund managers to impart Milk fails miserably to explain 1 pip of NZD price movement and therefore the concept of NZD as a Commodity currency is a giant myth. NZD was dropping anyway but not as a result or cause to Milk prices. Milk prices are traded in NZD, EUR and USD predominantly but sellers and buyers predominate therefore the GDT index moves ever so slowly as final prices settle. How can NZD not correlate to its own Milk prices is the same as saying how can NZD not correlate to its interest rates. Both must correlate but only only one moves NZD prices.
NZD Milk in EURO’s always trades below NZD prices by about 10 Euros. On Tuesday, EUR/NZD flew higher from 1.5477 to 1.5766. Why didn’t it drop is because Milk imparts zero information to a currency trade as EUR/NZD prices operated correctly. Its not the lack of knowledge from the trade service as this is expected but what’s wrong with the fund managers to maintain such company.
Where Milk is vital to the NZD trade is because its New Zealand’s main export but the Export aspect must be viewed when Trade Balance figures are released. Generally, a rising Milk price would see good trade balance figures. March 2017, NZD reported it first trade surplus of NZD 332 million yet overall its 1 year deficit runs NZD 3.7 billion. Seen in the corresponding period is Milk at 33 lows to current 49. June Trade Balance determines the effect from 33 to 49.

USD/JPY today must break for longs or shorts 111.00 and 111.50. Tow soli points to the donside are 110.87 and 110.93. A break of 110.87 then far lower for USD/JPY. USD/JPY gains speed on a break of 112.72, this line is dropping by the day and USD showdown is on the way.
Severely overbought USD/CAD from 1.3300 needs breaks for longs or shorts at 1.3687 and 1.3626. A Break of 1.3625 Targets 1.3583. USD/CAD is far to overbought to consider longs.
Oversold USD/CHF for longs and shorts must break 0.9929 or 0.9975. USD/CHF is screaming range break which means current prices won’t hold present ranges must longer. Alongside 0.9975 above lies falling lines 0.9991 and 1.0020. Take a look at 0.9898 s long point.
 

Brian Twomey

EUR/USD: Levels, Ranges, Targets

Trump failed twice on two executive orders to restrict Syrian refugees. The healthcare bill failed as it was designed to do for failure to eliminate taxes to government. The latest Executive Order to review funding for Sanctuary cities failed. Instead of closing government Friday, Trump caved on his build the wall policy and the funding will wait until later in the year. Two successes of the 67 Executive Orders signed by Cave man Trump was to eliminate Section 2 of Dodd Frank and the Fiduciary Rule and eliminate and/or severely reduce regulations.
The two foremost principles for Republican Party formation in 1856 was eliminate slavery and later no taxes. Immigration policy was well established in the 1920’s by law and by Republicans and it was the governing policy until a slight tweak in 1952 by passage of Mccarran / Walter. Mccarran Walter was seriously violated by the Hate group and national security threat known as the Democrat Party.
Trump’s customary “see you in court” response is again another Democrat win as the government will litigate over months and years. Cave man Trump so far is another in a long line of Republicans to not understand Democrats nor how to fight. Trump follows the rule of law while Democrats never follow laws. Trump should stand proud to close government until the Democrats capitulate on wall funding because to cut government slashes power of Democrat allies in Public Unions. Unless extremes are taken by Trump to fight Democrats then Democrats will always win.
Democrats will fight tax cuts to the bitter end and its questionable if Trump has the ability to win. The start of the Democrat fight is to introduce human stories by ordinary Americans how tax cuts will wreck their way of life. Then stories progress to Government deficits. The first stories appeal to emotions then comes the negativity of tax cuts. Cut government and deficits will lose lustre as an issue.
Traditionally, economics drove markets, today markets are politically dominated but again if Trump finds ability to fight then this lopsided conundrum will change.
EUR/USD’s French election liftoff points at today’s 1.0745 and 1.0667 are wildly overbought and hit extremes from 1.0911 to 1.0921. Averages 20 to 200 day are all overbought and the 100 day at 1.0676 is most overbought among the averages. Other indicators are flashing sell signals. EUR is heading lower.
Two sell points to watch today on a possible Draghi spike are 1.0926 and 1.0955. The USD/EUR line runs into a brick wall at 1.0926. A break would target the cluster of Resistance at 1.0955 and 1.0972. Rallies are meant to sell as EUR is heading lower over days ahead.
We’re looking at hitting bottoms at 1.0843 on breaks of 1.0871 and 1.0856. Corresponding USD/JPY needs a break at 111.14 and 111.56 for longs and shorts. A solid bottom is located at today’s 110.76 and only a break here would see USD/JPY lower. Overall for EUR/USD longs will evaluate again upon a correction with focus on 1.0745. To understand how solid is 1.0745, range breaks are located at today’s 1.0744 and 1.0727 while above breaks are found at 1.1053 and 1.1071.

 

Brian Twomey

WHY Le Pen

Michael Corleone stated it best in Godfather 3, “Just when I thought I was out, they pulled me right back in”. So back by popular demand to post trades, market stuff and features when appropriate.
The question began as why Le Pen and is a win a viable option against Macaroon. In actuality, neither candidate will bring France from its eonomic, political and social doldrums. Macaroon represents more of the same as former member of France’s left wing parties and as former Public Finance Minister. His En March Party translates to English as Move On. Mao Moved On in the Long March and began as dictator ruler. Mussollini Moved On in the March of Rome and became the dictator ruler. Yet the why Le Pen answer is found in the atrocious year after year economic data, high taxes and revolving living spaces among France’s populations. Conditions of this type explained Hitler’s rise. Is Len Pen Hitler is unknown but she allies to failed state Russia and brings unwanted trouble to all Europe is elected and if Russia intervenes.
France’s GDP as a 1 year percent is currently 0.2. Since 2012, GDP ranged from 0 to 0.2. In the 2008 crisis, GDP was minus 4%. France’s GDP is well below Germany and the whole of the Eurozone.
The Unemployment rate is currently 10.6%. Since 2012, Unemployment ranged from 10.1 to 10.6%. Since the 2008 crisis, Unemployment was 7.5% and steadily climbed to current levels. In a current population in France of 66 million, roughly 6 million persons are unemployed at 10% as opposed to 4.9 million in 2008.
The Government deficit is minus 3.45% of GDP in 2016 and 2.7% in 2015. The current Debt to GDP ratio is 96%.
Inflation is current 1.4%, minus 0.4% in 2015 and down from its highest reading at 2.7% in 2011.
Household loans as a category is interesting as the annual percent in 2014 was 2.37 and now 4.09. Charted, this rise was an enormous spike but the overall unanswered question is could borrowing mean a need to cover existing debt and expenses, loans for investments, or home purchases.
Industrial Production Flat lined since 2011 yet saw a slight rise in March, although very slight.
Services are up and above trend as opposed to previous data above which is all trending lower. Advertising and Marketing overall fell and the trend is down.
Business Inventories in the Food and Beverage space is minus 5%. The trend is down from March 2015 at +5%. Inventories overall are low yet Inventory Orders are up.
The vast majority of the 66 million population, 33 million, range in age from 20 to 59. The average male age is 39.8 and 42.5 for Females.
Business failures at 63, 159 is the highest since 12,445 in 1974 and 43,968 upon Euro introduction.
Wages as an annual Hourly average is currently 9.67 and up from 6.53 in 2001. Male remuneration is about 5 Euros higher per hour over females for positions other than Manager and Professional. Male pay is 10 to 20 Euros higher per hour over females in Manager and Professional positions. The pay deviation remained constant over many many years in France.
Wages are eliminated by taxes as 19% is charged for tax on Personal Income, Profits and Gains. Payroll taxes are 4% and 9% for property as well as Goods and Services tax. The VAT tax is 15% and 37% for Social Security. The Tax to GDP ratio is 45.5 and ranged 45.5 to 43.1 from 2001 to present day. The OECD average is 34%.
Managers and Professionals work in Urban areas while outside cities in Municipalities are employed Agriculture, industrial and manual laborers. 90% of municipalities are sparsely populated despite millions of unused dwellings built by past lefty governments to stimulate Agriculture and Industrial Production. Those dwellings are populated by previous Arab entrants to France.
The House Affordability Index is the lowest on record since the early 1970’s yet the overcrowded rate at 31% is high. Part of this explanation is the dwelling, rent and property tax.
Then the question France’s position to Germany and the UK. Does France still hold grudges from Alsace Lorraine. France and UK leaders and Diplomats hardly share the same room unless its mandatory due from the Currency Wars of the 1930’s.
Brian Twomey

Brian Twomey 2012 Fxstreet: Live Trades

20 Trade Recommendations, 20 Reasons To Visit Forexstreet.net. Come And Learn With Us!

Hi everyone

At the beginning of October 2012, a new member of Forexstreet.net named Brian Twomey started blogging here at Forexstreet.net. I thought: “look another one trying to sell his stuff…. He won’t last…”. Certainly Brian had written a book and he was referring to his book at the end of each blog post he was making. Fair enough.

But then Brian decided to run an amazing exercise that turned things upside down: He decided to go for 20 trade recommendations to prove (using his own words):

1. Exchange rate targets are predictable.
2. I can hit targets based on mathematical calculations employing 8 different moving averages.
3. I can hit 20 of 20 trade targets and profit without loss.

On Brian’s words: “So far, 15 posted targets hit exactly with two additional trades for 1156? pips thereabouts. Granted, a few entries weren’t perfect yet targets hit. Constructive criticism is accepted. The operable word is constructive.
Never in my imagination did I suspect these trades would become the subject of intense debate and scrutiny. I proffer with hope that new traders would become better in their chosen craft and all would garner a greater understanding of currency pairs and price movements. I reiterate, trades offered are educational therefore please manage own risk. Targets will hit, that’s written in mathematical stone but market events may cause price deviations so must wait until prices continue their intended price path to target.

Now Brian is one of the most respected members of our community, not just for the accuracy of his calls, but for the interaction he has been having with all of us. I am not sure what the future will bring us all, but I certainly must thank Brian for his great contribution to our community.

Many of us are now better traders thanks to you.

Thanks Brian!

Read please Thank you Brian Twomey from network’s member Oasis

Francesc Riverola
President & Founder at FXstreet.com and now Community Manager at Forexstreet.net 😉

25 trades, 36 days, +2500 pips, no sleep

 

20 Trade Recommendations, 20 Reasons To Visit Forexstreet.net:
Trade Recommendation # 1 Sell EUR/USD 1.2995 to 1.2922 hit for +73 pips
Trade Recommendation # 2 Sell EUR/JPY at 104.15 to 101.71 target for 244 pip profit is in th…

Trade Recommendation #3 buy Eur/USD at 1.2891 to 1.2974 for + 83 pip

Trade Recommendation # 4 Buy EUR/USD at 1.2895 to 1.2952, target hit for + 57 pip profit.

Trade Recommendation # 5 Today Sell GBP/JPY at 127.60 to 127.02. Profit = 58 pips

Trade Recommendation # 6 EUR/USD at 1.3007 to 1.2945, profit = 62 pips

Trade Recommendation # 7 GBP/JPY  I have a 1 lot sell at 127.60 and 128.64 for my 127.02 tar…

Trade Recommendation # 8 Sell GBP/CHF at 1.5088 to 1.5034, + 54 pips

Trade Recommendation # 9 Buy EUR/USD at 1.2850 to 1.2922, + 72 pips

Trade Recommendation 10 Long EUR/USD at 1.2750 to 1.2850

Trade Recommendtion # 11 Long EUR/USD at 1.2712, Target = 1.2769, + 57 pips

Trade Recommendation # 12 Long EUR /JPY at 101.01, Target = 101.64, + 63 pips

Trade Recommendtion # 13 Long NZD/USD 0.8100  Target = 0.8153, + 53

Trade Recommendtion # 14 Sell NZD/JPY 65.83, Target= 65.05, + 78

Trade Recommendation # 15 Sell GBP/NZD at 1.9572 to Target = 1.9517, + 55

Trade Recommendation # 16 Sell USD/JPY at 81.21 Target 80.56, + 65 pips

Trade Recommendation # 17 GBP/JPY Sell 132.03 target 131.07, + 96

Trade Recommendation # 18 EUR/JPY Sell 106.87 Target 105.74 + 113

Trade Recommendation # 19 EUR/USD Sell 1.2975 Target 1.2915 +60

Trade Recommendation # 20 USD/CHF Long 0.9273 Target 0.9344 +71

For Brian’s friends in India: EUR/INR Sell 71.933. Targets = 71.341, 71.042, 70.740, 70.507, 70.4…

Views: 1108

Great tribute Francesc – and well deserved Brian x x

Comment by SSS Dev on November 27, 2012 at 6:34pm

Great stuff and nicely thought out article. Francesc. Maybe you too can post trading strategies on  eurusd more frequently/

Regards

Srinivas Devanahalli(Dev)

Comment by Christopher Bullock on November 28, 2012 at 11:35am

Great tribute Francesc,well deserved. This was remarkable feat, least of all psychologically on Brian who though it all made it to his 20 trades, can’t be over estimated what we have witnessed in my opinion well done Brian, I don’t think were be seeing anything like this again on anywhere in the near or far future, unless you feel like doing it again Brian lol,no I wouldn’t either. Of all the things I’ve seen over the years this was truly outstanding loved it Brian, atvb, Chris

Comment by Francesc Riverola on November 28, 2012 at 11:41am

well… I think that Brian’s work needed such tribute… in fact, many of you already deserve one 😉

Candlesticks, NZD, Dairy

 

Candlesticks on the 1 hour chart are wrong because prices are off. Trade on the 1 hour chart or listen to the multitudes of pseudo analysts then its a loser. If the 1 hour is off then guess what the 4 hour is further off. The 4 hour support at 1.0687 is not a bottom but the point where the downside will gain speed. But overall, 1.0687 is a meaningless level. Why? Because EUR/USD for example needs a break of 1.0706 from the 1.0724 close and not 1.0699 as the 1 hour informs. Currency prices are dynamic which is a worthless adjective to impart the concept of currency and all market prices moves in ranges.

Here’s the example, at 1.0710, EUR/USD must break 1.0705,  At 1.0705, EUR/USD must break 1.0704, The official break then is exactly 1.0704 because prices turn negative from positive.  How important is 1.0704 is because the USD/EUR break is 1.0703. Where 1.0704 is seen is the 30 minute chart. At 1.0699  from the hourly informs the wrong message and a meaningless level to the price. Further, 1.0719 is the exact point when 1.0706 turns to 1.0705. Overall from 1.0705 to 1.0719 is vital to a downside break.

The hourly candle runs from 1.0731 to 1.0699 and averages to 1.0715. What is 1.0715, yet another meaningless level. What is 1.0731 from the 1.0724 close, good chance it could break higher to 1.0760’s in normal market movements. What did the hourly or 4 hour do for the trade is it turned a trade to a possible loss. The problem overall is the trade start and stop points are measured wrong.

The weekly 1.0603 bottom again is the point where price will gain speed and here is where the stupidity stops.

Ever seen where dairy prices actually quantifies to NZD/USD, nope. How about a correlation. The effects to an auction on NZD. Dairy auction prices are based on the monthly average NZD  which means Dairy auctions contain little significance to overall NZD. Does dairy mean Farm Gate Milk prices because those prices at February’s NZD 49.40 are at highest levels since January 2015. Milk could mean Anhydrous Milk Fat, down 0.5 for the past year, Butter + 2.9, , Cheddar +6%, Lactose   + 1.2%, Rennet Cassein down 3.8%, Skim Milk Powder + 7.1 and Whole Milk Powder + 3.5%. The Milk season runs from August to April while May to July is the off period. The GDT Index since December hit highs at 1,076 NZD and lows at March 955.

The 2016 yearly average for Farm Gate Milk prices is 40.28 and NZD/USD 0.6971. The 2016 correlation is 73% and hits a brick wall at 91% and 94%.  January and February Farm Gate Milk price average is 49.59 against a current February Close at 49.40. At 49.40, NZD price should be 0.7379 while the overall range is located from 0.7198 to to 0.7560. From 40.28, NZD should be 0.7105 and range from 0.6924 to 0.7286.

From February 2017 to February 2016, the Milk price average is 42.81 against NZD/USD 0.7069. The correlation drops to 72% and 91% and 94% remain brick walls to correlations. NZD/USD based on 49.40 should be 0.7271 and ranges from 0.7197 to 0.6941. The Milk price should be 42.80 and ranges from 47.87 to 37.72. The Milk price is overbought at 49.40.

The 2015 range for Milk was 39.91 to 32.09, subtract the 32.09 outlier then the range was 35 to 39. The highest price was June at 39. The 2016 range was 33 to 49 where June began the climb higher. From Feb 2017 to Feb 2016, the range was 33 to 49, subtract the 33 outliers then the range was actual 36 to 49. The NZD range was 0.6700 to 0.7300’s. Month to month, Milk prices are extremely steady and don’t move far from its nearest average while NZD moves 100’s of pips from its nearest average.

Since 2007, NZD Farm Gate Milk prices traded and continues to trade far below USD milk prices.

A message from a trade service to subscribers to include fund managers is this week NZD prices will be determined by the Dairy auction. When the laughter ended, realization just how dangerous are these types became a reality. And none are ever called or questioned for lack of knowledge, wisdom and brains. Its scary.

 

Brian Twomey

 

 

 

GDP: Past, Present and Future

To read the hundreds of Podesta e mails is to understand the striking revelations to the term ideology as defined by a belief in govt power as solutions to every societal problem or private sector as the force for good. Ideology is separated by political party as in private sector Republican V Government conviction in Democrats to include Labor as it relates to the wider group of nations.
New to the concept of ideology from the Podesta e- mails is a deep, deep division between Republicans, Democrats / Labor. The division is purely psychological as Democrats truly believe private sector Republican beliefs are radical and the opposite is true as Republicans believe Democrats are radicals. Its impossible for the two divisions to ever meet in the center to solve or address policy. Think lower V higher taxes, government healthcare V private sector, Stimulus V non, Bank failure V Rescue, belief in markets or non. The divisional list is endless and its Democrats and Labor’s agenda driven purpose to divide as they seek government growth and power at every and all costs.
GDP for example under Obummer was the lowest string of readings and dates so far to the George H.W. Bush presidency from 1988 to 1992. George W Bush GDP beat Obummer and Clinton. GDP under Republicans always outperforms Democrats and by wide margins in percentage, Index and many other terms. Clearly, economic realities under Republicans are always far better to the wider society.
The commonalities to Democrats is all severely cut defense spending which means Democrats begin presidencies in GDP negative territory. The commonalities to Republicans is they cut income and other taxes and historically by wide margins. The economic boom of 2003 to 2006 was the result of George W Bush substantial tax cuts. Democrats further love for higher taxes enhanced the deep negative pocket to bring GDP prosperity. High GDP and Democrats is an oxymoron.
The implications to the 9/11 terrorist attack had far reaching consequences as 2011 was the dividing line from true prosperity in GDP from Reagan and George H.W. Bush to current day. GDP never fully recovered from 9/11.
Minus Postal workers, Federal government employees from Reagan to current day number about 2.9 million but far higher 3.3 to 3.5 under Obummer and Slick Willie Clinton. Political appointments lacks an argument as cause because traditional number of political appointments number roughly 20,000 persons and roughly 10,000 higher under Democrats.
A possible explanation to the 9/11 GDP polemic is government budgets skyrocketed from 1.2 trillion under George H.W Bush to 3 and 4 trillion today. Growth in present and new government programs is fully responsible to explain government growth swallows the private sector and limits GDP’s ability to rise. Roughly the same number of employees now administer many more programs.

Brian Twomey

GBP/USD and GBP/JPY: Levels, Ranges, Targets

Here’s yet another perfect Brian Twomey trade call and is another in a long line that spans years and years. Correct call also means GDP, CPI, interest rates and market structures and events coming down the pike. Despite 1000 followers per day, what good is it all, honestly. 90% are still losing aren’t they, of course and despite all the recognized experts, anyway no more time for this artucle

 

 

From the 1.5000 Brexit fall June 2016 to 1.1900 lows, GBPUSD at 1.2800 ‘s is at its highest levels in 7 months. The mid point of the fall is located at 1.3464. Viewed from longer term 5, 10 and 14 year averages at 1.5159, 1.6036 and 1.6623, GBP was severely oversold in the 1.1900 vicinity and represented the perfect buy point.
Long term averages reveal GBP remains oversold at1.2800’ which means 1.2200 to 1.2500 then GBP will struggle to hold the lows near term until or unless the averages perform a more rapid fall. The current 5 year average at 1.5159 was 1.6300’s at the time of the Brexit fall. Took 7 months for the 5 year to drop 1200 pips and a 150 pip drop per month. The commentary on 1.1900’s and without a serious Brexit correction is the power central banks gained over respective exchange rates. For the past 6 months, GBP/USD ranged from 1.2767 highs to 1.2012 lows in severely oversold territoty in relation to longer term averages.
The problem with current 1.2800’s is longer term oversold averages are fighting against short term severe overbought particularly from strong and rising supports at 1.2397 and 1.2512 and MA’s from 10 to 200 days. The nearest range overall still represents 1.2300’s to 1.2800’s and confirms a significant bottom and long point from 1.2200 to 1.2300’s if seen on a possible French election outcome.
For today, must breaks and resistance for GBP/USD is located at 1.2835, 1.2853 and 1.2884. The top channel is represented by 1.2906. The level at 1.2853 is most significant as GBP runs into a solid USD brick wall. Below 1.2835 then comes 1.2787, 1.2769 and 1.2750 is still in view. To see a major drop then 1.2512 must break over days ahead .
GBP/JPY in the larger GBP/USD scenario constitutes a problem for GBP/USD movements as GBP/JPY prices are contained between and among vital break points. The downside and must break for lower prices is rough at 138.43 while above stiff resistance is found at 139.41, 139.70 then comes 140.39 and 140.46. The point at 140.39 is most important as GBP/JPY runs into a solid JPY wall. Why GBP/JPY focus is its the most vital pair alongside GBP/USD due to consistent Correlations.

GBP/USD and GBP/JPY: Levels, Ranges, Targets

From the 1.5000 Brexit fall June 2016 to 1.1900 lows, GBPUSD at 1.2800 ‘s is at its highest levels in 7 months. The mid point of the fall is located at 1.3464. Viewed from longer term 5, 10 and 14 year averages at 1.5159, 1.6036 and 1.6623, GBP was severely oversold in the 1.1900 vicinity and represented the perfect buy point.
Long term averages reveal GBP remains oversold at1.2800’ which means 1.2200 to 1.2500 then GBP will struggle to hold the lows near term until or unless the averages perform a more rapid fall. The current 5 year average at 1.5159 was 1.6300’s at the time of the Brexit fall. Took 7 months for the 5 year to drop 1200 pips and a 150 pip drop per month. The commentary on 1.1900’s and without a serious Brexit correction is the power central banks gained over respective exchange rates. For the past 6 months, GBP/USD ranged from 1.2767 highs to 1.2012 lows in severely oversold territoty in relation to longer term averages.
The problem with current 1.2800’s is longer term oversold averages are fighting against short term severe overbought particularly from strong and rising supports at 1.2397 and 1.2512 and MA’s from 10 to 200 days. The nearest range overall still represents 1.2300’s to 1.2800’s and confirms a significant bottom and long point from 1.2200 to 1.2300’s if seen on a possible French election outcome.
For today, must breaks and resistance for GBP/USD is located at 1.2835, 1.2853 and 1.2884. The top channel is represented by 1.2906. The level at 1.2853 is most significant as GBP runs into a solid USD brick wall. Below 1.2835 then comes 1.2787, 1.2769 and 1.2750 is still in view. To see a major drop then 1.2512 must break over days ahead .
GBP/JPY in the larger GBP/USD scenario constitutes a problem for GBP/USD movements as GBP/JPY prices are contained between and among vital break points. The downside and must break for lower prices is rough at 138.43 while above stiff resistance is found at 139.41, 139.70 then comes 140.39 and 140.46. The point at 140.39 is most important as GBP/JPY runs into a solid JPY wall. Why GBP/JPY focus is its the most vital pair alongside GBP/USD due to consistent Correlations.

 

Brian Twomey

GBP/USD: Levels, Ranges, Targets

 

 
Yesterday’ s GBP/USD began its journey at mentioned 1.2512 and bolted to 1.2903. The point at 1.2903 was 27 pips above the dead stop level at 1.2876. The impetus for higher was exactly our target at 1.2632. What gave 1.2632 in our target was 1.2589. Above 1.2632 allowed the range to become 1.2632 to 1.2876. Above 1.2876 was bonus points for our shorts. Overall, GBP skyrocketed at 5 times its normalized range against 6 known break points.
Yesterday’s overall strategy was long at 1.2512 to 1.2632 then watch the break points on the way up and short for GBP at 1.2876. At 1.2903 was bonus for lot 2 to not miss the 27 available pips. The quick long then short earned almost the same amount of pips as the skyrocketed GBP but we did it cleanly, smartly and without gamble as levels, ranges and targets were known in advance. This wasn’t exactly a tough call as GBP began the day overbought and remains overbought today. The expertise however is to know exactly the levels, ranges, targets so not to miss 1 traded pip, trade smart and not sit watching all day.
GBP/USD break points today are located at 1.2800 and 1.2868. Below 1.2800 targets 1.2750’s. Any rise in prices in the vicinity of 1.2868, we’re selling. The rough spots for GBP are located from 1.2828 to 1.2834. And naturally based on the new nasty price structure, GBP currently trades in the 1.2830’s. The 1.2830’s are untouchable.
Overall, GBP supports are strong yet massively overbought at today’s 1.2499 and 1.2391. Further, all MA’s are overbought and all call for lower levels to 1.2500 and 1.2600’s, particularly 10 day to 200. The BOE range remains 1.2300 to 1.2800.

 

Brian Twomey

GBP/USD and Cross Pairs: Levels, Ranges, Targets

As the possible news of Theresa May’s resignation is at the forefront of today’s market moving events, GBP/USD and associated cross pairs highlights as most volatile. On a wider scale, GBP ranks automatically tops on the volatility scale in comparison to its counterparts EUR, NZD, AUD and USD. Why volatility means GBP ranges are far wider than counterparts.
GBP has ability but previously lacked the necessary inputs. Current GBP/USD as mentioned yesterday is far overbought and desperately needs a correction. May’s resignation overall is viewed from a personal perspective as a tradgedy because I believed May would bring a great nation with enormous economic potential back to its proper role among nations.
GBP/USD range for today is located from 1.2520 to 1.2589. Below 1.2520 then next targets become 1.2512. Below 1.2512 then a free trade long exists. On the bottom side, GBP supports are strong and located at 1.2459 and 1.2384. Any GBP/USD price above 1.2576 enters the overbought stratosphere which means a price above cannot hold nor close in the region. Price spikes are meant to sell. Our target today is 1.2632.
GBP/JPY vital break points for today are located from 136.51 to 137.25. Current GBP/JPY is oversold particularly from MA’s 10 to 100 day. Below 136.51, targets 136.42 and the point where we will see a bounce. Above for GBP/JPY, solid resistance exists at 138.26 but also a must break point to target higher prices at 139.39 and 140.52. Lower for GBP/JPY means further oversold.
GBP/CHF. Range for today is located from 1.2554 to 1.2623. Below 1.2554 targets 1.2546. Strong supports exists below at 1.2487 and 1.2453. GBP/CHF needs a correction as its price lives in overbought territory. At 1.2607 for example, GBP/CHF resides in the upper stratosphere.
GBP/CAD. Range for today is located at 1.6673 to 1.6764. Below 1.6673 targets 1.6659. As is the case for GBP/USD, GBP/CAD is overbought and sits on solid supports at 1.6589 and 1.6437. Part of GBP/CAD overbought is explained by USD/CAD as USD/CAD sits oversold and just above 1.3312 and 1.3273.
GBP/NZD. Supports below exist from 1.7699 and 1.7487. Today’s range and break points are located at 1.7949 to 1.7851. Below 1.7851 targets 1.7840. Overbought begins at 1.7961 and far overbought at 1.7998.
Overall, GBP pairs are well supported below yet overbought and in need of a correction. On the USD side is an oversold USD/CAD, USD/CHF and USD/JPY. Most special to the overall conundrum is a far overbought DXY.
 

Brian Twomey

EUR, GBP, AUD, NZD, JPY: levels, Ranges, Targets

GBP/USD is contained for this day’s break points at 1.2525 and 1.2584. Its overbought at current prices yet below 1.2525, GBP/USD is well supported at 1.2456 and 1.2384. The larger BOE range for many weeks is 1.2350 to 1.2800.
EUR/USD needs a break at 1.0636 to target lowers levels at 1.0567 ish. Massive and many resistance points lie above at 1.0636, 1.0686, 1.0715 and huge break at 1.0747. Above 1.0747, then far higher for EUR/USD.
EUR/JPY is far oversold from its vital break at 118’s yet again as EUR/USD, resistance points were built into current prices at 115.94, 116.22 and 116.51. A break at 116.51 then next comes 118.54 and a wider range trade environment. However, USD/JPY and EUR/USD ranges compressed and are compressing further. This offers EUR/JPY little hope for a big move until the EUR/USD and USD/JPY logjam is broke.
GBP/JPY offers the same scenrio as EUR/JPY and all JPY cross pairs, range compression is the current order of the day as GBP/USD and USD/JPY ranges compressed further. GBP/JPY bolted lower upon most vital 138 break but sits dead at 135’s. Must breaks higher musy be seen at 135.79 and 136.42 then wider trading ranges will be seen yet current 138.18 is dropping by the day. GBP/JPY is massively oversold and needs a correction higher.
USD/JPY had a great shot higher before the Trump comments but after saw USD/JPY ranges compressed. 110.96 and a dropping line remains the overall most important break to travel higher. For today, USD/JPY is contained by 108.07 and above at 108.61.
The further conundrum to USD/JPY and all USD pairs is not necessarily the Trump comments but DXY from 3 most important Trade Weight Indices and monthly averages is sky high overbought. Trump’s comments were dead on track.
NZD/USD sits mid range just below vital breaks at 0.7040 and 0.7083. As most important signal pair toth majors, NZD reveals more range trading ahead.
AUD/USD is well supported at 0.7553 and 0.7561 but faces headwinds at 0.7677. The better day trade is found in AUD.

 

Brian Twomey

Weekly EUR/USD and Cross Pairs: levels, Ranges, Targets

 

EUR/USD. Vital break points below 1.0548, 1.0530 then 1.0497 and 1.0478. Above 1.0634, 1.0674, 1.0685 and 1.0727.

EUR/JPY.  Vital break points below 113.89, 115.07, Above 116.00 and 116.57. Longer term, dropping 118.54, 119.62 and 120.07.

EUR/CHF. Vital break points below 1.0598 and 1.0546. Above 1.0695, 1.0711, 1.0743 and 1.0797.

EUR/CAD. Vital break points below 1.4117, 1.4062, 1.4044 and 1.3976. Above 1.4229, 1.4236, 1.4307 and further out 1.4593.

EUR/NZD. Vital Break points below 1.5064, 1.5022 and 1.4988. Above 1.5182, 1.5267 and 1.5343.

EUR/AUD. Vital break points below 1.3910 and 1.3840. Above 1.4091, 1.4097, 1.4133, 1.4168 and 1.4209.

EUR/GBP. Vital break points below 0.8416, 0.8375 and 0.8162. Above 0.8531, 0.8574, 0.8579 and 0.8588.

 

Brian Twomey

 

 

WTI: Levels, Ranges, Targets

I define WTI as a USD currency pair but operates under a different name because WTI and the interest rate curve responsible for WTI’s price and movements shares a perfect 100% correlation to its interest rates. For WTI not to correlate 100% means its price is wrong and mislocated therefore forecast abilities becomes an abnormal game of chance. The same scenario holds true for all market instruments to include currency prices.
Bond and interest rate markets were closed Friday and CPI as well as Retail Sales both reported lower prices. The side bar to CPI is it was written and forecasted to report lower for April because 0.6 CPI for March was far to high by at least 20 to 40 basis points. A check on Friday’s “investors”, WTI ranged 0.57 from 53.40 to 52.83 and closed at 53.18. As Bond and interest rate markets open again Monday, WTI must properly reprice from Thursday closes to a lower CPI and Retail Sales therefore volatility has potential. Yet 53.18 holds for 24 hour trades.
The bottom side vital break point is located at 53.01 in order to target the bottom level at 52.91. Next after 52.91 is a range point at 52.64. Range points always hold more credence to a trade able level therefore 52.64 is expected to hold. Below 52.64 in days ahead, next point is 51.58. The strategy is long the bottom and free long trade below 52.91. The target from 52.91 is 52.99 and 52.91 from 52.64.
The topside must break is located at 53.27 to target 53.46. The target achieves its destination by 53.19, 53.22 and 53.23, 53.27, 53.32, 53.38, 53.42 and target 53.46.
Longer term, USD interest rates are low therefore WTI requires a yield advantage and positive news to travel higher. The next targets above in days ahead are 53.71, 54.10 and 54.57.

 

Brian Twomey

Swap Rate Spread Close, NZD Pairs: Levels, Ranges, Targets

The RBNZ as the leading central bank among the group of world nations switched from the Monetary Conditions Index to adopt Taylor Rules and the world followed. CPI calculations were re arranged by the RBNZ and the world followed. The RBNZ informed OIl accounted for 0.2 in CPI calculations and the world followed. Trade Weight indices re factored every 5 years began with the RBNZ. Now comes the next RBNZ’s greatest market convention achievement by switching its most important indicator Swap Rate Spread Close to basis points. For the RBNZ, this move is beyond smart, forward and brilliant as it aligns its interest rate system to other central bank wholesale changes but without a complete restructure.
Editorially and respectfully, its a proud moment as I surpassed the most respected RBNZ by at least 2 years prior. It explains why the few I accept in my trade service join but never leave and why stops, charts and all market conventions employed by a vast majority are never used or even considered. We deal and trade in a factual number offered by the central banks. Stated respectfully for the record rather than an advertisement.
Then the unknown questions by the RBNZ move are: is the market simpler to understand and trade or does this move “professionilize” the market to the point understanding travels light years beyond reach and comprehension.
The vitally important Swap Rate Spread Close for New Zealand’s financial markets are the 10 and 2 year yield spreads and its the basis to price Swaps from 1 to 15 years. The current Swap Rate Spread Close runs 1.03, lowest since January and Swaps along the curve from 1 to 15 years run from 2.06 to 3.30 at the 10 year and 3.59 at 15 years. The 2.06 is the current 2 year yield close. Important for readers is not to focus on fancy terms like Swaps but the numbers.
Next importance to the Swap Rate Spread Close is to establish a basis to price the ever important New Zealand Bank Bills. Current Bank Bills are running from 1.84 to 2.01. Bank Bills are currently trading below Swap rates but its normal to see this in markets.
Central banks and traded financial instruments are experts to protect bottoms and establish floors. The Swap Rate Spread Close establishes well defined and forecasted floors. Its much easier to take a trade long from bottoms than try to predict a long to theoretically go to infinity. Alternatively, its much easier to take a short to bottoms. NZD/USD is well defined at 0.6800. The S&P NZD 50 Stock Index is well defined bottom at 7193.65, The NZD 20 Index at 4912.36.
NZD/USD as usual is running at terrific correlations to its cross pairs. NZD is a wonderful currency pair inside a brilliant RBNZ system, NZD/USD Correlations run + 66% to NZD/JPY, + 94% to NZD/CHF, + 96% to NZD/CAD and + 78% to most important NZD/EUR.
NZD/USD most important break points are located at dropping 0.7038, 0.7060 and 0.7080.
NZD/JPY most Vital break points overall are located at 80.37, 79.38 and 78.11. Points to trade and watch for today are 79.17 and 78.10.
NZD/CHF most vital brak points are located at 0.7255, 0.7121 and 0.7055.
NZD/CAD most vital break points are located at 0.9371 and 0.9398. The range for today will trade from 0.9392, 0.9372 to 0.9352.
NZD/EUR most vital break points are located at 0.6658 and 0.6586. The range for today will trade from 0.6615, 0.6584 and 0.6553.

 

Brian Twomey

DXY, Major, Broad, OITP: levels, Ranges, Targets

The nominal Broad USD Index began its free float life in January 1973 at 33.96 and ranged from 30.00 to 33.00’s until 1975 when 34.00 was first seen. Then began a new range from 34.00 to 38.00 until February 1981 when 39 was the top traded number. The climb continued as 100.00 was seen January 1997.
From 1973 lows at 33.00, the Broad Index now sits at its lifetime high levels at 125.25 based on March monthly averages. The overall first ever highs at 127.74 and 127.61 were seen in December 2015 and January 2016. Since August 2015, the Broad Index ranged from 119.28 to lifetime highs at 127.74.
The historic mid point is located at 78.87 as the Broad Index climbed steadily and continuously over a 44 year period. The 1 year average is 123.40 and trades mid range from current 125.25 March monthly average. Targets are located at 126.16 and 125.19 is a must break point to head lower.
The Broad USD Index consists of exchange rates of 26 of the major trading partners of the US. The largest trade partners and those nations with the most current Total Weights in the index are in order: China (20%), Europe (17%) Mexico (12%), Canada (11%) and Japan at 6.28%. The UK is next a 3%.
China’s share in the index increased 5 3/4 % from 1997 to 2003, Europe increased 2% and Mexico 1 1/2 % while Japan dropped 4%. Shares in the index is a reflection of increases or decreases in trade with the United Stated and is reflected in Weights given to the 26 nations based strictly on trade. If Japan increases trade with the US for example, Japan weights will increase. Most nation”s central banks update Trade Weight Indices every 5 years to account for inclusion or exclusion in trade partners and update Weights given to trade partner nations. The purpose overall for trade weight indices is to measure a nation’s exchange rate to trade against trade partners.
The 26 trade partner nations in the Broad Index accounts for 90% of total Imports and Exports and no changes occurred to the 26 Major Trade partners inclusion or exclusion since its 1973 inception. Only weights change.
The Major Currency Index, a subset of the Broad Index in monthly averages closed March at 94.49 and down from its January 1973 introduction at 108.18 and also down from 143.00 lifetime highs at 143.00 February and March 1985. The Major Currency Index is the daily traded DXY and reflects 7 currencies: EUR, CAD, JPY, GBP, CHF, AUD and SEK. The 1 year average is 91.95 and targets 94.18. From current DXY at 100.26, the Major Index is miles upon miles overbought. The historic 106.06 Mid point is located from 69.09 in July 2011 to 143.00 highs.
The OITP Index or Other Trade Partners consist of 19 of the 26 nations exchange rates and is the most volatile in relation to the Broad and Major DXY indices. The number 19 is derived from exclusion of the 7 nation currencies in the DXY Major Index. Not only is the OITP volatile but it far outperformed the Major and Broad indices continuously since its 1973 inception.
The OITP began January 1973 at 2.1287 and now sits at March’s monthly average at 157.74. Lifetime highs were seen at 162.95 and 162.25 December 2015 and January 2016. The historic mid point is located at 82.47. The 1 year range saw 151.57 lows to highs at 162.95. The 1 year average is 156.55 and oversold from 155. The OITP closed yesterday at 156.50 and threatens a break lower. Above 156.50 then threats higher to 160.21 is highly possible due to oversold.
Trump’s announcement for a lower USD and Interest rates must be viewed overall from a DXY Trade Weight perspective. While DXY rose significantly since 1973 against all indices, the current US trade deficit is $300 billion and traded in negative since the last positive Trade Balance was seen in the early 1970’s. Its no coincidence DXY from the Major Index is as much overbought as Fed Funds in monthly averages from 1 month to 10 years. Suspect in this analysis is not from the Trump side as DXY is far to high and overbought but the Fed’s sudden concern to raise Fed Funds multiple times.

Brian Twomey

EUR/USD, EUR/JPY, USD/JPY Correlations: Levels, Ranges, Targets

EUR/USD negatively Correlates to EUR/JPY at minus 14% and EUR/USD negatively correlates to USD/JPY at minus 63%. EUR/JPY trades as the same exact pair with USD/JPY because the USD/JPY and EUR/JPY correlations run + 85%. For the current risk off trading environment, correlations are correct. Where the trade signal generates from a correlation perspective is an extremely low EUR/JPY.
At 14%, EUR/JPY is fast approaching bottoms and this is known because a cross pair can’t fall outside the EUR/USD and USD/JPY trading boundaries. Its mathematically impossible but it also goes against the grain in the purpose for cross pair construction, design and purpose.
Cross pair correlations revolve and in the case of EUR/JPY it switches from EUR/USD to USD/JPY over time. The correlation to EUR/JPY informs the type of markets that trade and its either risk on or risk off. From 2000 to 2008 in risk on environments, EUR/USD and EUR/JPY were married at + 93%. EUR/USD and EUR/JPY skyrocketed higher. Since the 2008 crisis, EUR/USD and EUR/JPY began at + 57% but now negatively correlates at minus 14% in risk off markets. EUR/JPY went from 169.00’s in 2008 to current 116’s and a 5293 pip drop.
EUR/USD and EUR/JPY will eventually remarry and positively correlate which means EUR/USD and EUR/JPY will travel far higher together. What changes negative to positive correlations are significant break points must occur and this is where 7 to 10 year period averages come into importance.
The change will be seen when USD/JPY drops its EUR/JPY correlation from 85% to below 50% and turn negative. Then the EUR/USD and EUR/JPY remarriage begins as well as the multi year long trade. Further, a 5200 pip drop is highly unusual which informs how off kilter are economics and markets since 2008. Normalized boundaries for EUR/JPY in any given period and particularly 2000 to 2008 and 2008 to present is about 2500 to 3000 pips.
The overall aspect to correlations and exchange rates is to inform just how aligned, integrated and married is the nations and markets. One weak link, one disaster in the chain in our current world can bring down the entire world system. Where weak links are seen however are not in exchange rates but in interest rates.
EUR/USD in ranges is the same old 500 pip story from 1.0884 to many amd solid bottoms at 1.0300’s. Current EUR/USD is oversold from a daily and longer term perspective. Yet the must break points to head higher are located at 1.0629, dropping 1.0661 and 1.0694. Massive daily resistance is located from 1.0620 to 1.0624. A break higher at 1.0694 then EUR/USD runs into a brick wall at 1.0740’s. Higher for EUR/USD means a slow slow grind due to many resistance points. Lower means more oversold.If we can catch a 1.0560 ish today, we’re long.
EUR/JPY. Longer term, falling lines at 118.82, 119.84 and 120.86 are descending on current prices and forcing EUR/JPY into a slow grind lower. To understand 119’s, many range break poinst are located at 119.00’s. For current oversold EUR/JPY to travel significantly higher particularly today then 117.01 and 117.67 must break. Not likely We’re selling rallies and long bottoms until conditions change.
USD/JPY. We are looking today for longs at 109.00’s and we’re short in the 109.80’s. Thick resistance above is located at 109.80 to 109.86 and this would prevent a further rise to the top at 110.27.

 

Brian Twomey

Trump, War and 4th Quadrants

The question in regards to War and possibility to War is an aspect to not only the current 4th Quadrant but all previous wars including WW 2 were located in the 4th Quadrants. The current 4th Quadrant and the last period inside the market ending 50 year mark began perfectly in 2008 and the end date is 12 1/2 years from 2008 or 2020 but 2022 from Jan 1972’s Free Float. The difference between 2020 and 2022 is measure of half years. Most important to this reference is 4th and last Quadrant because of its predictive powers.
What is found in 4th Quadrants since the 1600’s is unusual economics or experiments, Political uncertainty, Wars and War possibilities, market volatility due to uncertain economics, politics and war events. The current 4th Quadrant is no different from WW 1 and 2, Gold booms from the 1870’s, world depressions and Currency Pegs of the 1820’s. Broken down into Quadrants, the picture is clear as history repeats.
Russia and the current ultra orthodox Shiite regime in Iran are two most important in Ruble and Iranian Rial terms. Iran is currently in 1.6% of deficit as a percentage of GDP. Revenues are Rial 368 V 211 in expenses. The Iranian Export index is down 16% over the past 12 months, Inflation is + 11% over the past 12 months, Producer and Wholesale Prices are + 4.5% and 13.3%. M1 money growth is minus 0.2%, Oil accounts for barely 3% of overall GDP and drops as oil prices decline. Iran and Russia both lost 12% in oil revenue terms due to price declines from December 2016 to present day.
Not all Oil or Oil nations are the same. Iranian oil is a special Sour blend and not employed inside many nations. Sour blends are common to Islamic Shiite nations as opposed to Light and Heavy blends predominantly used in the West. Iran’s largest customer since at least the 1970’s was Japan as Japan is dependent on Sour oil to fuel the economy.
Against US sanctions, Japan was forced to align with Shiite Gulf nations for oil imports. Against sanctions, the $400 million given by Obummer was hardly an assistance to a failing economy whose largest Exports beside Oil is Animal fats. Against sanctions and access to banking from 250 year ally Germany, Iran is hardly in a position to fight a war but Iran must yet can’t reconcile improved economic conditions V the wish for the 12th Iman to return to bring 1000 years of peace to the world. The 12th Imam comes when Chaos rules and Iran purposefully adds to chaos.
A possible war alignment in the Middle East begins with allies Russia, Iran and China. Why China is due from the 1980’s relationship with Iran in Arms and Oil exports. Why 1980’s from the Iranian side is due from the Orthodox Shiite rise to power by Revolution in 1979 when Iran’s Orthodox Shiites overthrew the prevailing start of the 1925 Shah dynasty in the Pahlavi family. The takeover was as much political and economic as much as nuclear because Shah Mohamed Reza Pahlavi began a peaceful nuclear program in the 1970’s.
The Orthodox Iranians redesigned the program and invested in nuclear bombs. China in the late 1980’s began to “open” as is ther historic practice every few hundred years and Iran had the necessary bombs and Oil to begin and protect China’s rise to economic power. China’s 5,000 year history is best viewed as a flower.
When the flower blossoms, China joins the economic world but the flower wilts when China is hurt by the world. China’s greatest historic hurt was the result of the Great Wall as they again closed its border doors. In flower terms, China will eventually close. China is careful, patient yet calculating in all decisions. China won’t start or jump into an immediate war or take proximate sides but they will watch.
Russia’s story in the 4th Quadrant role and war possibilities is the story of conquest as a 1000 year agrarian society stuck in uppermost Central Asia / Eurasia sought as their 1000 year goal to modernize.
As leader of the Slavic tradition because of Arms investments, Estonia, Latvia and Lithuania were lost since the 1500’s to Sweden and Denmark, Georgia since the 1800’s, East Europe for 70 years from 1920 to 1990’s. Peter the Great was the only Russian ruler to ever fully invest time and energy into a peaceful modernization effort yet he failed.
The larger conquest prize for Russia was always Western Europe and today inroads were finally seen from the political side in France’s Marie Le Pen. Disintegration of 1949 creation of Nato is not only a national security threat to Europe but Nato’s Article 5 held western nations together in war by ” An attack against one is an attack against all.”Without Nato’s Article 5 Treaty obligations, Western nations join war by a loyalty pledge then the question to fight ability upon a greater Russia threat to Western Europe.
For Russia’s current 36 billion surplus as highlighted by Soc Gen, the more Russia resorts to war then the less is employed for economic modernization and overall improvement inside Russia. Reagan learned this maxim in the 1980’s when the arms race began and Russia was outspent therefore Russia allowed East Europe to roam freely as independent nations.
The next question is would Russia, Iran and the Shiite nation alliance wish to go against the might of the US, UK, Canada and Isreal. Add the Arab Sunni nations to this list then the power and might of the Western/ Sunni alliance becomes a powerful force yet a force not even China’s entrance can match.
By the US War Powers Act, Trump has 60 days to act in national security interests with a 30 day extension if hostilities warrant. After 90 days of war fighting, Trump must go to Congress and ask for a War Declaration. Failure to obtain a war declaration means Trump can’t any longer fire one bullet but he holds Congressional majorities.
The purpose to all this was to quickly highlight War, market, political, and economic uncertainty in 4th Quadrants. Its the same old 4th Quadrant story as has materialized over the past 400 years. The main question is will the current 50 year period from current 4th Quadrant end in war or will a peaceful transition be seen to mark the next 50 years. Once the next 1st Quadrant is seen then 12 1/2 years of peace and and prosperity will reign.

Brian Twomey

AUD/USD and AUD/EUR Weekly

 

AUD/USD 86 pip range this week is located from 0.7458 to 0.7544. AUD/USD highest achievable price above 0.7544 is 0.7562 and reaches this destination by 0.7548, 0.7552 then 0.7562.

But 2 vital break points forces AUD/USD lower and sustains upper correction: 0.7532 and 0.7581. Both must cross to go higher yet both points could take AUD a bit lower. A bit lower means 0.7450’s and prices in this vicinity will struggle to go lower and struggle to remain at these levels for any period of time. At 0.7450, upper points drop to 0.7531 and 0.7578.

AUD/USD is not only highly oversold from 0.7581 but AUD finally warns a big move is ahead and the big move should go far higher. Lower for AUD will move very slow due to oversold. Upper and highest  target above 0.7581 is first at 0.7621.

 

AUD/EUR 80 pip range is located from 0.7128 to 0.7048. Most vital and recent break points are located at 0.7090, 0.7082 and 0.7079. EUR/AUD closed at 1.4108 and still must break lower at 1.4106.

Vital points to watch in AUD/EUR are 0.7095,0.7080, 0.7073 and 0.7102. AUD/EUR’s trade around its break points over the past few weeks particularly 0.7079 allowed AUD/USD to break 0.7600. AUD/EUR is neither oversold or overbought instead its directly trading around its break points yet this pair alone is best to offer direction to AUD/USD.

 

Brian Twomey

Trump and Syria

 
Obummer’s Iran nuclear deal and $400 million booty as assistance contains implications to only add to the complicated dimensions of the Middle East. The two major powers, Russia and the US, involvement further adds to the powder keg known as the Middle East.
The Middle East since Muhammad and Cousin Ali founded Islam in the 7th Century at Mecca and Medina experienced a split. Founders of the majority Sunnis followed Muhamed and minority Shittes followed Ali. Today’s two great rivals are Sunni Saudi Arabia and Shiite Iran As populations grew over centuries, 12 Caliphates born from the similar 12 tribes of Israel were established as the ruler class.
The Caliphates, Rashidun, Umayyad ( Damascus, Syria Capital), Abbasid ( Capital Baghdad), Fatimid (Capital Tunisia, Shiites), Ayyubid ( Capital Cairo), Mamluk ( Capital Cairo), Almohad, ( Morrocco), Ottoman (Capital Turkey, Constantinople ), Sokoto ( Nigeria), Khalifat ( India), Sharifin. Ahmadiyya. Over time factions within and among Caliphates were established by wars, by elections, by economics, by rich v poor or by wishes for power alone.
Syrians are Sunni’s but majority ruling Alawites, Saudi Arabia are majority Sunnis but are followers and rulers of Salafi’s and Whahbbi’s. Then come Gulf Arab states various factions. The Palestinians are majority Sunni’s but unlike counterparts play both sides of the Sunni V Shiite divide. Iraq Sunni’s are minority rulers in a majority Shiite state.
The Kurds are Christians, The Druze are Christians, Coptic Christians of Egypt, Maronites in Lebanon are Christians. Armenians, Assyrians and Chaldeans are Christians.
Terrorists were all born from the 1900 – 1920 establishment of the Sunni Muslim Brotherhood in Egypt. Al Queda and ISIS are Sunni’s. ABU Bakr are Sunni’s, Hezbollah are Shittes.
Why Syria and problems. ISIS is the Islamic State of the Levant, or the Islamic State of Iraq and Syria born from the most conservative Salafi’s and Whahabbi’s of Saudi Arabia. ISIS shares the Iran Shittes end of days scenario where the final battle will be seen in Dibiq Syria. The 12 Imam or the Madhi will release its treacherous forces and end the world as is the belief.
The current ISIS headquarters are Roqqa Syria. Alawhittes of Syria under Bahar Assad are traditional minority classes since Aaad’s father ruled from WW1. Levant is the East Mediteranean and includes wishes for installation of the Rahidun Caliphate of Lebanon, Syria, Israel, Iraq and parts of Jordan.
The Levant was the ruling borders until the British and French split the levant into individual states by Sykes- Pico after WW1. ISIS desires are to eliminate Sykes -Pico.
Trump bombed Homs, location of the slaughter of 30,000 when the Muslim Brotherhood failed in ts 1982 attempt to oust the Alawhites.
Russia’s allies as well as border allies are Iran and friends for 1000 years. The Sunni Arabs and Shiites are factions across and within border states almost to numerous to mention here in this quick introduction and never to become friends.
Obummer allowed Iran more power by not only the Iran Deal itself but the $400 million and release of sanctions. . Release of sanctions allowed Iran again access to banking and finance. Obummer also allowed Russia to walk into the Middle East unabated. This means Russia has a seat at the negotiating table if and / or when the Syria conflict ends.
Does Trump want this involvement, was the current airstrike plopped on his lap by Obummer and without choice. With Assad gone, who rules Syria. The answers aren’t easy and all choices are horrendous.

 

Brian Twomey