EUR/USD and Fed Funds: Levels, Ranges, Targets

Current Fed Funds average for 3 months in 2017 is 0.70. The 1 year average to March 2016 is 0.47 and Median 0.40. Fed Funds 2 year average is 0.32 and Median 0.36. On a 2 year Forward basis, Fed Funds prices at 2.16. Soc Gen prices 5 year Forward Fed Funds from Swap rates at 2.33. The difference is personally to never use market rates because market rates are always off kilter.
Is the question to Fed Funds not where is the terminal rate to end the rate hike cycle but is 2.16 or even 2.33 to ambitious a forecast. Fed Funds from monthly averages 1 to 10 years remains in severely overbought territory. Then what if the Fed raises ever so slowly over time. Current EUR/USD at about a 1 year Forward basis from present prices forecast an exorbitant implied average price at 1.25. On a Fed raise basis then an implied EUR/USD goes to 1.02 easily. On a mid point, a 1.13 EUR/USD appears so far to factor as a longer term top.
EUR/USD. Vital break points at day 2 remains now at rising 1.0618, stuck 1.0670 and falling 1.0722. EUR/USD is in showdown mode as 1.0722 must break to travel higher or 1.0618 to head lower.
The bottom side at 1.0618 for today is protected and won’t break therefore buy the drop is the way today. Likewise, 1.0722 forecasts a target slightly above 1.0722. Its very possible to see a slight break higher but then EUR/USD travels directly back inside the 1.0722 to 1.0670 range. A break of 1.0670 then range becomes 1.0670 to 1.0618. Either way, the range overall is 52 pips.

 

Brian Twomey

EUR/USD: Levels, Ranges, Targets

EUR/USD breakout points are located at rising 1.0618, 1.0672 and falling 1.0727 meanwhile GBP/USD sits on massive support points at falling 1.2379, stuck 1.2420 and rising 1.2461.
AUD/USD is in its typical dead ranges from 0.7529, 0.7600 and 0.7648 while EUR/JPY and GBP/JPY sit below falling 119.49 and 120.34 and GBP/JPY at dropping 138.83 and 140.06.
USD/JPY adds to the range mix as break outs are located at falling 111.44, 112.11 and 112.79. The sanity is found within signal pair to the majors NZD/USD as its oversold and current bottom today at 0.6936 won’t be seen. NZD is most comfortable in its Distribution at 0.7005 and 0.7008. Break out points at falling 0.7064 and 0.7083 informs overall currency markets on the downside will see a slow slow grind.
What looms for EUR/USD on the upside break out at 1.0727 is 1.0738 and 1.0743 then a shot exists to 1.0797 and 1.0802. The downside is solid on the 1.0544 base and its rising yet 1.0618 break is strong but its the break to see further downsides in days ahead.
European interest rates warned Monday range conditions would remain as the ECB restricted EUR/USD’s daily range movements. USD interest rates finally normalized yesterday from the massive 0.91 to 0.82 drop Monday. Fed Funds again trades at 0.91. Fed Funds 0.91 was mandatory to normalize as GBP Gilt Repos threathened to trade in negative territory at staggering 0.01. In the past 20 years, not Sonia nor GBP Repos ever traded to negative and current 0.01 is the lowest rate ever recorded.
What currency pair by another name, WTI informed at yesterda’s close was today would become another range day and the USD 2 year yield near its 2 month lows at 1.24 informs as well range conditions will persist. WTI won’t travel beyond its vital point at 51.44. Overall, the impetus for any breakouts must materialize from the USD side.
What we’re looking at today for EUR/USD is sell points at 1.0696 to 1.0705 and target back to below 1.0672 to 1.0643.

 

Brian Twomey

WTI: Levels, Ranges, Targets

What explains partly the drop in WTI was Fed Funds closed at 0.81 from 0.91. When Yellen raised interest rates March 15, Fed Funds skyrocketed from 0.66 to close everyday of the last 11 trading days at 0.91. The point at 0.91 is not only above the 0.87 to 0.88 mid point but the mid point is the traditional location for Fed Funds. A one day drop from 0.91 to 0.81 is a big day. The second aspect to WTI’s drop was failure at reported must break at 50.92 and 50.95.
Yesterday’s reported long target based on today’s trade was 51.03 but only if 50.92 and 50.95 broke higher. WTI failed at 50.84 in NY trading at 9;00 as well as the 24th hourly candle. Point 50.84 resulted in an hourly double top and it was the interval between 50.82 to 50.88. The trade strategy was short on a failure at 50.92.
The bottom at 50.51 and furthest point at 50.35 saw actual bottom at 50.14. Trade strategy was long at 50.51 and long for a free trade on a break lower at 50.51. The target on a 50.51 break lower was back to 50.51. Actual from 50.14 was 50.46. Overall, from 50.84 to 50.14 saw a 0.70 move for WTI.
The long target in the next “24 Hour Trade” is 50.52, 50.55 and 50.58. Top of the daily channel is 50.78, 50.83 and 50.88 but respective points are not expected to be seen. To achieve target then 50.48 must break higher. Failure to break 50.48 then short is the strategy.
Higher for WTI means breaks must be seen at 50.30 to 50.32, 50.34, 50.38, 50.42, 50.48 then 50.52 to 50.58.
The bottom and long point for WTI is located at 50.02. The key to the bottom is 50.21 must break. The long point target from 50.02 is back to 50.21. The furthest points below 50.02 are 49.94, 49.87 then 49.79 and 49.72. Should 50.02 break then free trade long to 50.21.
Below points begin at 50.13, 50.10, 50.07 then 50.02.

 

Brian Twomey

S&P’s: Levels, Ranges, Targets

The S&P’s from the current close at 2357.50 contains a price built upon a solid base at 2333.06. It is this current base which allowed the S&P’s to achieve current levels. The base at 2333.06 was seen as bottoms last week twice at 2333.56 and 2331.91.
Based on daily highs and lows last week, the average high was 2360.94 and average low at 2344.82. Last week’s high was 2366.69 and low at 2331.91. The 5 day average range was 11.35 and translates to 2.27 points per day.
On a much smaller scale,”The 24 Hour Trade” from Friday to Monday’s close is the focus because the central banks around the world, to include the FED, changed their interest rate orientation.
To align an interest rate alteration is a complete overhaul to a market price because it restructures the price. As the central banks adjusted, the current trading system geared strictly to interest rates conformed to the new central bank standard. Currency trades were restructured to hours while the S&P’s, WTI, DXY and others were re vamped to 24 hours.
The S&P Bottom until Monday’s close is 2345.71. This point at 2345.71 is the long point. What’s 2345.71 is the middle range from just below at 2343.88 and above at 2349.72. Overall points to achieve bottoms are 2350.64, 2349.72 then 2345.71. Should 2345.71 break to 2343.88 then a free long trade exists to 2349.72.
The long target above is 2369.29 yet also on the radar for days ahead is 2372.40 and 2374.03. The key to the 2369.29 target is the S&P’s must break 2363.25. Failure to break 2363.25 then price will trade back to 2361.78, 2361.71, 2361.68 and 2359.51.
Why the target at 2369 is because price lies just below the next range point and most probable target in days ahead at 2382.18.
Target above is achieved by 2359.51, 2361.68, 2361.71, 2361.78, 2362.82, 2364.32, 2366.03, 2367.75 then target 2369.29. What lies ahead in next days is 2372.40 and 2374.03.

 

Brian Twomey

DXY: Levels, Ranges, Targets

As leader of the currency and Commodity markets, DXY from current close at 100.42 sits on solid supports beginning at 100.23, 100.11 and 100.03. For “The 24 Hour Trade” from Friday close to Monday close, not only is 100.03 the last of the supports but price targets in days ahead now include 101.30 and 101.99.
The impetus for a higher DXY is the result of a solid range break point at 99.37. To understand how strong is the range break point at 99.37, DXY bottoms until Monday’s close are located at 99.91 and 99.80. This is the long point for the day yet bottoms assume 100.23, 100.11 and 100.03 breaks lower.
For 100.23 to break lower assumes Correlational opposite EUR/USD breaks higher at its most important point at 1.0680 then comes more problems for a higher EUR/USD at falling line 1.0745.
The upper target for The 24 Hour Trade” is located at 100.85. How DXY achieves 100.85 is by breaks higher at 100.45, 100.51, 100.56, 100.60, 100.63 and 100.71, 100.78 then 100.85 target.
At the target 100.85 we’re selling again to 100.63 and 100.60. The close on Monday is expected from 100.60 to 100.63.
Further to the topside at 101.30 and 101.99 in days ahead is a range break point at 101.47 will stop any further rises for the next “24 Hour Trade” to end Monday. Monday afternoon, we’ll recalculate to determine the new location for 101.47 but early assumption is 101.47 will rise because the below supports at 100.23, 100.11 and 100.03 will also track higher.
For the long trade at 100.23, target for this long is back to 100.45 and the 100.56 and 100.60 area. This again will alow DXY to close at the 100.60 point.
Overall, DXY on a daily basis lacks range and the explanation is the March change in Fed Funds Effective from a Volume Weight Mean to a Volume Weight Median. The change as the BOE explains it results in about a full point shaved off the traded interest rate market price. The BOE and Sonia as well as the RBA and OCR are both in the process to change to Volume Weight Medians.
Commodities priced in US dollars are affected because it stops DXY and commodity related price movements.

 

Brian Twomey

WTI: levels, Ranges, Targets

WTI last week traded from 50.85 to 47.06 for 3.79 points. The 4 and 8 week highs traded 53.76 and 54.95 while 4 and 8 week lows traded 47.09 and 47.06. Both 4 and 8 week lows were seen within the last 3 weeks. WTI’s best volatility weeks were seen at the 4 and 8 week points as 4 weeks ago 5.48 was the weekly range V 2.84 for the 8 week.
The 4 week high average is current 50.72 and 52.54 against the 8 week for a 1.82 point difference. The 4 week low average at 47.35 traded against an 8 week low at 49.90 for a difference of 2.55.
The 4 week average range is current 3.37 and 8 week at 2.64. Minus highs and lows, the overall range average is 2.40.
For “The 24 Hour Trade” from close to close, the long target is located at 51.03 but WTI could trade to the last 2 upper points at 51.12 and 51.16. Imperative to the long target is WTI must break 50.92 yet a clean break is seen at 50.95.
Two alternatives for shorts are reverse short at 51.03 and short if WTI fails at 50.92. The point at 50.92 is key to “The 24 Hour Trade”. What encourages longs and a 50.92 break is the 2 year yield is low at 1.26 and seen 3 times in March. Further, DXY sits on massive supports at 100.23, 100.14 and 100.03. On the radar for long trget in days ahead is 52.17 yet the overall interest is “The 24 Hour Trade”.
On the bottom side and the long point is to hit the cluster supports at 50.51, 50.55 and 50.63. A break of 50.51 can only see 50.35. Should the bottom at 50.51 break then a free long trade exists to target above 50.51 to 50.63 and 50.65.
Here’s trade able levels until Monday close for “The 24 Hour Trade”, 50.51, 50.63, 50.65, Then above at 50.72, 50.82, 50.88, 50.90, 92 and 95 and target at 51.03.
The close price for Monday should be right at the 50.95 vicinity.

 

Brian Twomey

AUD/USD V AUD/EUR Weeklies

 

AUD/USD. Weekly range this week 94 pips from 0.7677 to 0.7583. The 94 pips is  consistent with the past 4 weeks as reported here before market opens.

Last week’s range was 91 pips from 0.7679 to 0.7588.

2 weeks ago range = 0.7746 to 0.7605 for 141 pips.

3 weeks ago = 0.7717 to 0.7533 for 184 pips.

4 weeks ago = 0.7629 to 0.7492 for 137 pips.

Weekly 4 week avg = 138.25 pips per week.

Weekly 4 week Avg High = 0.7692. Weekly 4 week Avg low = 0.7554.

 

AUD/USD This  week vital break points = 0.7525, 0.7563, 0.7601, 0.7697, 0.7645 and  0.7794. This is AUD entire market.

Uptrend begins at 0.7635 and downtrend at 0.7569. We want to watch 0.7612 and 0.7601 below and 0.7630 and 0.7640’s for moves higher.

Overall, overbought or oversold doesn’t exist. AUD price is dead center inside its ranges. But 0.7681 begins overbought then 0.7690’s becomes  scary overbought as well as 0.7705 to 0.7714. Our sell points will be found at 0.7690 areas.

 

AUD/EUR

This week’s 84 pip range is located from 0.7204 to 0.7120 and as well this is consistent with the past 4 weeks reports.

Last week 0.7176 to 0.6979 for 197 pips.

2 weeks ago = 0.7210 to 0.7032 for 178 pips.

3 weeks ago 0.7210 to 0.7041 for 169 pips.

4 weeks ago 0.7210 to 0.7046 for 164 pips.

4 week avg = 177 pips.

4 week avg high = 0.7201

4 week avg low = 0.7024.

AUD/USD V AUD/EUR = 138.25  V 177. AUD/EUR 40 pips accounts for the 40 pip misses in AUD/USD 90 pip ranges to 138.

AUD/EUR = Break points 0.7076, 0.7084 and 0.7088.

AUD/EUR will struggle at overbought 0.7182, scary overbought 0.7202 to 0.7226. On the bottom vital point = 0.7119.

Overbought AUD/EUR tells us why AUD/USD will struggle at higher prices.

 

Brian Twomey