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

 

 

 

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