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

Yesterday’s hazy EUR/USD convolution resulted in a 69 pip range from 1.1882 to 1.1813. Topside held and performed perfectly while 1.1838 was under serious question. EUR/USD broke 1.1838 and dead stopped at 1.1813. The 10 day average at 1.1826 broke lower to ensure 1.1813. The far better model informed long before 1.1813 was the ultimate bottom and 1.1826 was the rest point. The original question was volatility to target time and revealed is no question exists as performance was perfect. Yesterday informed range while Tuesday saw clear trend.

Different models yet same features but each is employed to meet its own specialities, overbought Vs oversold, range v trend, break points v trade able levels, perfect entry to exits, fast price speed to slow, short to long term trades, gaps to range.
Never mentioned is stops because its a feature long ago excluded. To know a price path excludes a stop. High volatility markets and fast price speeds may require my invented Mathematical Stop. Charts are also gone and not needed. I need a number, not a picture. Charts were replaced long ago with pen, paper, calculator.

How does today’s daily currency pair Gaps match to previous days and years and are Gaps a constant feature or not in the life of a Statistical Price Path. Rather than quantify the Gap statistically as in the “Tiles”, Quintiles, Quartiles, interquartiles the question is what informs the breakouts. Stay tuned for interested yet overall, don’t complicate trading as the basic foundations of math for trade success are add, subtract, multiply, divide. Never forget the progression, Money Supply, interest rates, currency price , economic data.

EUR/USD break points are now 1.1801 and 1.1731 below vs above at 1.2024. A break below at 1.1831 targets 1.1822, 1.1816 and break point at 1.1801. Above watch 1.1874 and 1.1889. Overall MA’s are neutral but this situation informs how close is the breakout point at 1.1801. Correct language is EUR is vastly oversold unless 1.1801 breaks. If 1.1801 breaks, EUR gains downside speed and longs are done as sell rally strategy becomes the new order.

EUR/JPY remains safely above its break points at 131.77, 131.55 and most vital 131.30. The break at 131.30 is required to see EUR/JPY direction change to sell rallies. Today, 132.04 and 132.37 protects 131.00’s. Topside, 133.37 must break to target 133.63 and 133.89.Short term MA’s are today overbought.

USD/JPY. Supports now exist at 111.92 and 111.67. Vital break points today below are 111.96 and 111.88. Strong cluster of supports overall. Above must break 112.37 to target 112.45 and 112.74. Watch the brick wall at 112.74 and 112.72.
Brian Twomey

 

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EUR/USD: Levels, Ranges, Targets

Yesterday’s overbought 5 day average at 1.1845 hit its upper target at 1.1905 then began the drop. The vital break point below was 1.1887 and this point broke at the time of the post. What remained as targets upon the 1.1887 break was 1.1878, 1.1875, 1.1864 then 1.1847, 1.1843, 1.1845 average and 1.1829 and 1.1821.

EUR dead stopped and bounced at 1.1827 and now trades at 1.1873. I expected the bounce at 1.1847, 1.1843 and 1.1845. The significance of 1.1847 is represented because its the central bank level. This means any price under 1.1847 became a free trade and it highlights the importance to know price location and associated vital break points. Central banks offer free trades every trading day. Despite the 1.1840’s, nothing was missed as the free pips came from 1.1820’s.

The minor aspect to yesterday’s trade was EUR/USD from the 1.1905 break was already into its drop and the entry at 1.1905 was the perfect point. The trade was caught in the middle of the drop.

Today’s 5 day average at 1.1884 reveals a trend just underway. The 10 day is located at 1.1826 and the 5 day target at 1.1843 achieved objective. Outstanding targets below exist at 1.1858, 1.1843 and 1.1838. Above targets outstanding exist 1.1887, 1.1862, 1.1901 and 1.1922. The target at 1.1882 was hit and its the Gap between 1.1962 and 1.1887. Nasty move those Gaps. Actual drivers to today’s prices are the overbought 50 and 253 day averages.

Overall break points are located at 1.1799, 1.1724 and 1.2024. Break at 1.1799 and 1.1724 then longs are finished and new sell rises becomes the way forward.

The daily model is viewed as 1.1888 as the break point then 1.1903 and on to target 1.1917. At 1.1827 and 1.1814 becomes the bottom break point to target caution area at 1.1799. A break of 1.1799 targets 1.1764 and this is the free trade area 1.1799 to 1.1764 for longs. Obviously those few traders I agree to take into my trade service are not afforded the convolution offered here.

Brian Twomey

EUR/USD: Levels, Ranges, Targets

Yesterday’s EUR/USD contained 2 price points above, 1.1960 and 1.1979. EUR/USD reversed at 1.1960 and bolted 18 hours later to 1.1885. Yesterday’s assist lower was the result of breaks at 1.1942 and 1.1913. Once 1.1913 broke, EUR was able to travel lower for an overall 75 pip move.

The target yesterday was 1.1879 based on this particular model but mentioned was 1.1879 would possibly fall just short of its objective. Yesterday’s trade was marked as perfect and for gazillions of new readers, every trade is perfect as we remain years later, serious traders. Trades are games of ping pong, Statistical Price Paths as I call it, as we take longs and shorts continuously. Under question was yesterday’s volatility comments.

Today’s overbought 5 day average at 1.1845 targets 1.1905 but this target was achieved today. To travel further to targets, what remains below is 1.1875, 1.1843 and 1.1829. Today, 1.1875 was also achieved so 1.1843 and 1.1829 lingers as outstanding. Above 1.1921 exists.

The short term daily model informs 1.1887 must break to target 1.1878, 1.1864, 1.1847 and 1.1821. Forget 1.1829 and 1.1821 achievement today and view 1.1847 and 1.1843 as bottoms and bounce points.

Above must break 1.1931 to target 1.1947, 1.1968 and the Max top point today at 1.1997 . Although specified, 1.1997 won’t trade today.

EUR/USD vital break points overall are located at 1.1798 and 1.1710. Breaks are needed here to see shorts gain speed. Above, the 5 year average is located at 1.2026.

Brian Twomey

EUR/USD and G10: Levels, Ranges, Targets

The generalized word volatility as in price movement is defined by example. EUR/USD’s 5 day average at 1.1804 is currently overbought and needs correction. A correction to align the averages targets 1.1879. How long before 1.1879 achieves target. We’ll count the days.

To continue, prior targets took 3 to 7 days roughly. This is astounding and quantifies how dead is volatility. An overbought / oversold average target should take as little as 20 minutes to as much as 1 hour to compare to our old trades in fxstreet.net days. The trade should pay at least 50 pips from fxstreet examples and many examples exist. The 1.1879 target may not see its achievement until, well that’s where the price to time components factor. In today’s markets. a target should hit at most in 2 to 2.5 days. And this is kind to the calculations.

Many times was written this day would come and strategy changes were mandatory. Markets didn’t change but central banks changed markets. This condition could last well into 2018 easily. As conditions changed, we changed strategy so not to rely on days wait for targets.

Overall, EUR/USD’s 3 big break points are located at 1.2026 , 1.1797 and 1.1695. At 1.2026 is the 5 day average and a huge break. Means far higher for EUR/USD but it also means the EUR would enter a new day, not seen since the 1.3200’s break below in 2014. The 1.1695 line is fast rising and its the line to view in days ahead. This line must break to see shorts gain speed.
For today, a break of 1.1942, targets 1.1879 and 1.1860. Below must break 1.1913 then comes 1.1899, 1.1882 and 1.1867. How’s 1.1879 today, not looking good.

AUD/USD is approaching vital break at 0.7681 while NZD break point is located at 0.6987.

USD/JPY break is 111.62 and 112.16. See EUR/AUD today? Oversold AUD/EUR was responsible.

GBP/USD is well supported by 1.3159 and 1.3151. But GBP/JPY is in do or die mode at 147.51 and 146.90. GBP/JPY’s brother EUR/JPY is also at crucial breaks at 131.67, 131.55 and 131.17.

 

Brian Twomey

 

 

Fed Monetary Policy 2016 to 2017

A Fed Statement for market move purposes is defined as Inflation and Interest rates up or down then GDP and the economy up or down. Monetary policy is a quasi legality and is defined by vote to solidify the objective. Monetary policy adopted by vote becomes accepted until or unless its eliminated by another vote. Older monetary policy adopted by vote is written forever in the statement such as the Fed SOMA account and Swap arrangements with other nations. Written means use the exact same words month after month.

New monetary policy must succumb to a majority vote such as January 2015 adoption of Repo Markets, January 2016 adoption of new Inflation language, January 2016 adoption of new Unemployment language and QE, January 2015 adoption to longer term FX holding periods from 18 to 24 months. Today, Minutes are 10 + pages as a result of Keynesian policy under full market control over many decades.

Why lazer focus in what appears as minor changes to policy is vital because modern day Fed policy, information, minutes and statements reveal zero to no actionable information especially in relation to past decades. The Fed speaks and writes but says nothing. Students of the markets must perform due diligence and do their homework.

The December 1925 Fed Bulletin for example contained 84 pages of deeply detailed charts as well as a plethora of economic / market statistics and information. American markets were built on Agriculture yet AG is missing from today’s statements. Credit extension and interest rates built America yet today’s statements afford a few minor words to an OIS rate or a spread.

Bank health, troubled banks, borrowings and financial holding information is missing, money supplies are missing, Fed economic projections are revealed only 4 times yearly and the information is always wrong. The modern day Fed blacked out and quarantined necessary economic and market moving information. Fed statements from 84 pages are down to barely 10 and much is non information. The counter argument to today’s markets are more efficient doesn’t hold as 1925 market focus remains the same factors today.

As 2016 and 2017 is reviewed, the depth and degree to Queen Yellen’s deeply conservative, unyielding ideology is known and it turned to the poison of social justice. If Yellen was a voter, only the Democrat party is her choice because of the concepts of negativity and control. Yellen thoughts are forced to see rain as dominant on a sunny day. Those deeply negative feelings experienced daily transforms by osmosis into policy and market control. The concept of a free market and a random price would drive Yellen into pure insanity as the price lacks control and lack of control becomes fear of the unknown.

Life under true price discovery is seen by Yellen to quote Thomas Hobbbs as a war against all where market life would be poor, nasty, short and brutish. Without policy control, markets would crash as a war against all would ensue to quote Hobbs again. Men under their own devices would self destruct. An unsatisfactory price to Keynesians is a market disturbance rather than normal functions of markets.

As Yellen felt the strengths of her savior/ power to the rescue, QE was adopted to control money, Repo markets were adopted to control fed funds, QE recission was adopted to control money’s trip downward. Without a plan, roadmap, structure and control, Yellen wouldn’t nor could she move. Control is hard as more energy and time is expended to complete an unknown market roadmap. Interesting question is without control, where markets would be today if markets were allowed full correction on its own.

Yellen’s negativity as dominant was on social justice display January 2016 as unemployment was adopted as a new policy and reporting requirement in the statement. Why not focus on the positive employment is because employed person positions are known, fully covered and fully controlled. The randomness of the unknown in the unemployed drives Yellen and Keynesians to the brink of mental disaster.

Long term Unemployment is now viewed as a median rather than central tendency and the Social Justice Keynesians delineated unemployed to Asians, Blacks and Whites rather than an overall focus on specific industries for market / investment purposes as was done in 1925. Employment / Unemployment lacks Fed direct influence as its classified as the result of Fed policy and gleaned from the short term Output Gap therefore focus as new policy is challenging. A full view to Employed / Unemployed requires a data check to its Feb 1939 inception and simple averages is enough because Medians are always wrong.

As January 2016 long term repo rate holding periods were established as 65 days, the Fed is now taking a longer term view in continuation to hold Fed Funds in its 25 point range, specifically at the mid point. To accomplish this mission, Repo rate floors as well as the 1.25 basis point interest paid on reserves must hold. Only then will Fed Funds rise again.

Why mid points is to allow brisk Repo lend and borrow against a 12 point channel above and below. To further guard against longer term plans, QE rescission was done to not only assist to hold Fed Funds steady but if Fed Funds falls below its channel or crashes, the Fed is prepared to institute new QE spending.

As money supply and interest rates share an adverse correlation, the Fed message is not only will the floor hold but a new floor will establish upon the next raise to Fed Funds. Repo market participation is key otherwise Fed Funds is vulnerable to trade outside its 25 point range. The current range is 1.00 to 1.25 and 1.75 as the Primary penalty rate for banks and borrowers in trouble. The 1.75 is the Discount Rate and the discount window to borrow at 1.75. The 1.00 point is known by other central bank terminology as the Treasury Funding Rate.

The mid point and monetary policy success in Keynesian terms is hold the channel particularly against higher Fed Funds. A higher Fed Funds means more slow and dead volatility remains but market prices will operate against the next highest range plateaus.

The 65 day or less new holding period represents 2 Fed Maintenance periods at 70 days, 2 Fed meeting periods and /or 3 months if viewed from 20 trading days per month. Knut Wiksell is alive and well.

The topside to 1.25 is  protected by interest reserve payments and by 3 month Libor at 1.46 while the OIS spread at current 0.30 protects Fed Funds to trade to zero. Viewed from American markets specifically, OIS runs from 0.13 to 0.19.

In normal market trading, bottomside Fed Funds is protected but if markets crash, Fed Funds is vulnerable and this explains the Fed’s cautious approach, the long term view and the slow rise to Fed Funds despite the 9 year wait. A higher Fed Funds raises the OIS spread therefore against a market crash or severe correction, Fed Funds in the longer view is well protected from zero.

Market price volatility is held hostage by the Fed and its small ranges to control over Fed Funds. From 2008, brought Fed tools and replaced the Fed’s traditional obligation to add and subtract weekly money to the financial system. Floating weekly money supplies and floating Fed Funds dictated a market price and volatility but Fed tools, Repo Rates and QE reversed market volatility to condense prices to ranges. All central banks adopted the Fed’s approach.

January 2017 defined Inflation and the 2% target as ” the annual change in price index for Personal Consumption Expenditures”. Overall 2% is a giant number in relation to a CPI index and its many variable price components.
The new Stanley Fischer policy offered and adopted by the Fed is to view the 2% target acceptable if its within the 2% range. The new 2% is seen as a goal, not a ceiling and the range means slightly above or below 2% but not far above or far below. To far above or below means a policy response by the Fed is mandatory and a policy response is defined as an interest rate raise or drop to bring CPI back to range. Why interest rates is because Inflation percentages and Fed Funds share an opposite correlation.

The model to follow is Canada’s October 2016 renewal to its Inflation Control targets as 2% is the mid point to 1% and 3%.

Current CPI annual 2016 average was 240.0 against a low Inflation rate at 1.3%. The 2017 annual average at 2.0% must see the CPI index at roughly 244.8. Current CPI in Oct reported 246.6 and a 2017 range from January 242.8 to September’s 246.8. Current CPI is running slightly above 2.0 %.

To the credit of Keynesians, Fed Funds maintained its mid point close for a vast majority of days from 2016 to 2017. Normally 2 to 3 days per month sees Fed Funds close far below  but this daily pattern changed as repo traders maintained the 25 point channel. Only 3 times in the past 78 trading days has Fed Funds closed at 1.06 and 1.07. The questionable days are now month and quarter end.

What the Fed created was the 25 point channel rather than the current $2.3 trillion daily trade in repo markets. Repo market daily trade volumes  in 2015 went from $2.2 trillion and 48% Treasury and Mortgage securities as collateral to $2.3 trillion and 54% Treasury and mortgage securities as collateral. Despite lofty numbers, volumes are down significantly from the $4.8 trillion 2008 peaks. The increase in Treasury and Mortgage lend / collateral is derived from new SEC rules to Money market funds.

Under the 25 point channel, monetary policy is measured a success as 2016 and 2017 was a steady time without alarm bells on the horizon. Monetary Policy is expected to see more of the same in all 2018.

Despite Fed criticism, Yellen’s road was quite a balancing act. How Yellen will be viewed overall is more interesting. One view is Yellen is a transition chairperson as she steered the US back to economic health. She then paved the way for Powell to continue unabated. Then the question to policy and timing. Is Yellen policies correct and in relation to time or not correct policies as in to little to late. Fed policy affects world economies as the copycat syndrome dominates.  Good question is the left / right divide to economic policies. The jury is still out.

 

Brian Twomey

EUR, AUD, NZD, JPY, Fed 2016 to 2017

Next post is a long review to Yellen as well as 2016 and 2017 Fed Monetary Policy. Yearly monetary policy is established every January as this meeting represents the Fed’s organizational meeting. Tweeks to policy are done if needed in the middle of the year such as Yellen’s increase to QE around May 2015. Tweeks or changes to monetary policy won’t be seen in the OCT / Sept period traditionally as this time represents not only budget time for the US but the Fed’s Yearly investments are recommended and implemented at this time.

Yet this time doesn’t stop deeply conservative, deeply ideological Yellen to warn against tax cuts. Its impossible for Yellen to overcome her deeply ingrained Keynesian disposition. Given a full Fed board of Keynesians against the same shared ideological dispositions, Board member votes become an exercise in Irving Janus groupthink as Keynesians all vote as 1 solid block.
Given a negative or positive view to life and economics, ideological predispositions always chooses negative and this negative view is what stopped economic progression over years as Keynesians abilities just can’t move forward. It took 1 year to raise Fed Funds in 2015 and this is just one example of many meanwhile Fed Funds traded 0 to 1/4.

Here’s 3 examples. The weather and hurricanes are back to explain low GDP. Obviously its been raining and cloudy over the past 9 years with 2% GDP. Given small numbers in unemployed persons Vs the vast majority employed, which way is the focus. The positive majority employed or negative small numbered unemployed. Kook ball Yellen took unemployed to a new low. How about new Inflation Language. Sure looks and sounds like Canada’s October 2016 revamp of Inflation targets in ranges. Yellen’s message is i’m trying to balance negativity against mandates to move forward and I’m struggling.

If GDP hit 5% today, the message would be negative. Negative explains why EUR rises on every Fed statement.
Yellen and the Keynesians in post 2008 are the Arthur Burns of our time. If markets were allowed to function on their own without the spookiness in Fed tools, where would markets trade today. Yet the negative in Yellen and Keynesians were balanced against her overall economic approach.

Fed Statements are defined as policy as opposed to law. The majority vote implements policy yet a majority vote may rescind policy. Once policy is voted, its written in the statement and reported month after month using exact same words. An activist Fed against new policies increases the number of statement pages. No policy changes means Statements are reported as the same document every month, same words, same everything.

Statement commonalities for market moving purposes month after month, decade after decade, reports Inflation and Fed Funds up or down then economy good or bad. Fed Minutes are statements yet restated but stated succintly using same words, same old document reported month after month. Statements are market moving documents rather than minutes because a statement might contain new information.

Criticism to those reporting on 1 statement as this represents 1 moment in time and its meaningless pablum respectfully, as the full Fed statements over time must be seen to understand the Fed’s approach, philosophy,, orientation, tools. We’re dealing with Keynesians and to their credit, they provide crystal clear roadmaps. The statement may report for example Fed Fund raise probabilities but gazillions of prior statements reveal probabilities to the Fed board is meaningless information. The current Fed statement reports 87% probabilities to a December Fed Funds rise. Severe caution is warranted as this probability report has been seen time and time again. June 2015 is just one of many examples.

The view overall appears as 2016 and 2017 has been a good ride for the Fed against only minor, minor changes. The EUR was hit in July 2017 by Fed policy but this is unclear so far to the what question.

EUR/USD. Overall break points, 1.1796 and 1.1681. Bottom sides continues to rise and its the line to watch. A break of 1.1879 targets low 1.1900’s while 1.1821 provides the support point.

AUD/USD. Overall break points are close at first 0.7682 then 0.7832.

NZD/USD. Overall break points are located at 0.6989, 0.7125 and further out, 0.7271.

USD/JPY break points 111.61 and 112.25.

 

Brian Twomey

 

EUR and GBP: Levels, Ranges, Targets

New Zealand Dairy prices moved 3% and I’m in utter schock why NZD/USD traded 2 pips on this stunning news. AUD/USD moved 50 pips and I’m in utter schock again as Iron Ore didn’t move 1 pip. A jar of coffee in my grocery store dropped 3 cents, DXY went higher. Maybe attributable to Queen Yellen’s Inflation thing. What explains USD/CAD’s 50 pip move and WTI moved 1 point. Could it be the WTI / Brent spread or maybe Canada’s premiere oil WCS.

Stunning developments in currency prices must be attributable to those fickled traders and their money as they just don’t know what they are doing. Must be the liquidity thing as this surely distorts the price. Maybe the platorm is off kilter as a 3 cent move in a jar of coffee and 2 cents in NZD milk might reveal a problem if the exchange rate doesn’t move. Only if North Korea fires a missle today into Tokyo and USD/JPY drops 200 pips will I call the authorities or my banker. Then I will know this whole currency price thing is rigged against me. Myths and realities of exchange rates continue and the retailers are in the cross hairs. Students of the markets and I know a few must still exist, should read Fxstreet pre 2008. Such excellent commentary.

GBP/USD overall break points, 1.3154 and 1.3130. Bottom side is rising, same as EUR/USD 1.1798 Vs 1.1675. Lower for GBP must break 1.3226, 1.3209 then the rough points at 1.3209 and 1.3201. Higher remains equally rough as breaks must be seen at 1.3253 and 1.3266 to target anything near today’s tops at 1.3319 and 1.3329. Do you think Hammond or UK reports will move the market today. Not if the BOE has its way as they ring fenced GBP.

EUR/USD. Overall Break Points, 1.1798 and 1.1675. Big move from the bottomside as Monday was 1.1611. EUR big break move is on the way. Higher for EUR must break 1.1769 then 1.1798 is challenged. EUR top today is 1.1833 while shorts must break 1.1726 to target 1.1717 and 1.1703.

Both GBP/JPY and EUR/JPY sit just above vital break points at 147.58 and 146.79 while EUR/JPY breaks are located at 131.63, 131.56 and 131.22. At 131.56 is the 14 year average to offer 131.56’s vital import.

GBP/JPY break at 148.61 targets 148.31, 148.12 and rough point at 148.03. Above must break 148.61 and 148.76 to target 148.99 and `149.23.

EUR/JPY below 132.58 and 132.45 targets 131.44 and 131.27 while above 131.58 targets 132.72.

Brian Twomey

GBP, EUR, 24 Hour Results: Levels, Ranges, Targets

AUD/USD’s 24 Hour Range ahead prediction was 0.7589 and 0.7584 Vs 0.7538 and 0.7518. AUD caught the low at 0.7532 and skyrocketed to exactly 0.7584.

USD/JPY 24 Hour Range ahead prediction was 111.93 to 113.55. To see 113.55 then 112.69 must break. USD/JPY touched 112.70. Both AUD and USD/JPY hit range tops and now trades lower.

EUR/USD now trades at its lower end break point at 1.1723. A break then comes 1.1707, 1.1699 and 1.1686. The overall most important break points are located at 1.1798 and 1.1671. Above 1.1723 targets 1.1766.

GBP/USD. Overall break points are located at 1.3154 and 1.3125. Lower for GBP must remain under 1.3244 to target 1.3217, 1.3199 and a massive line at 1.3184. Above 1.3244 comes next 1.3257 then a wide swath of land to 1.3318. GBP touched already today 1.3267 and 10 pips above 1.3257.

GBP/JPY below 148.99 then comes 148.69, 148.51 and a massive line at 148.32. Above 148.99 comes 149.14, 149.51 and 149.89.
Brian Twomey

USD/JPY, GBP/JPY, AUD/USD: Range Predictions

GBP/JPY dead stopped today at 149.23. That’s 39 pips above GBP terms at 148.84, and 8 pips above USD terms at 149.15 but perfect inside the JPY terms gap between 149.13 to 149.47. More closer was GBP/JPY in USD and JPY terms and far off in GBP denominations.. Means USD/JPY took GBP/JPY higher as the driver.

USD/JPY 111.52 held as USD/JPY dead stopped at 111.88, broke 112.53 and ended at 112.71. The 24 hour ahead range was located from 111.52 to 113.07. The points 112.14 to 112.42 was pablum information.

The next 24 Hour range for USD/JPY is located from 111.93 to 113.55.

The next 24 hour range for AUD/USD is located from 0.7589 and 0.7584 to 0.7538 to 0.7518. A gap was created from 0.7538 to 0.7518. USD/JPY’s far wider Gap is located above from 112.69 to 113.55. If a range break is seen then take the trade in the direction of the break as a range is far more important in today’s currency trading than any other concept.

Nothing new to the concept of Gaps as they were created within the new range structures to central bank revamp to interest rates. Mind the gaps means mind the gaps and don’t get caught off guard. Gaps are dangerous because wide real estate exists between points but this is representative as the new trading technique. Means further technical analysis is dead and long gone as a new trading world was created.

To the concept of range ahead predictions is the focus is strictly on price and not the outside market influences as they are meaningless. As accurate as Range ahead predictions are means whatever price is blamed on tomorrow is meaningless. Merket was blamed today for EUR/USD’s drop but actual dive was derived from EUR/USD upper point at 1.1818. The 1.1756 break below gave another 28 pips to 1.1728. Merkel or no Merkel, EUR/USD was dropping from 1.1818.

479 currency pairs are contained within my arsenal to offer Range ahead predictions but I offered many before to view.

Brian Twomey

GBP, EUR, Pip Deviations: Levels, Ranges, Targets

A continuation to pip deviations, here’s GBP/JPY most vital break points for today.

In GBP terms, exact break points are 147.24, 147.81, 147.96, 148.45 and 148.84

In USD terms, Exact break points are 147.42, 147.73, 148.04, 148.78, 149.15.

In JPY terms, 147.71, 148.14, 148.80, 149.13 and 149.47.

So closely aligned are interest rates from GBP, USD and JPY yet far enough distant. Note 5 break points. The 5 break points are the British Tradition and instituted for the most part by all nations exchange rates pegged or closely associated to GBP dating back 100’s of years. Nothing changed over the years.

GBP/JPY viewed in JPY terms was actually JPY/GBP in USD terms. The close association to GBP/JPY in USD, JPY and GBP terms is the leftover result from JPY/GBP’s peg to GBP money markets and Gold in the 1930’s. Interest rates may have changed over the years but exchange rates remain the same. While nation’s play around with interest rates, the unknown answer is at what level is an exchange rate perfectly viable to sustain an economy. We’re sloshing 5 trillion around daily and exchange rates remain dead yet growth hasn’t been seen in 9 years.

Why GBP/JPY makes it to the USD stage is because the difference between GBP and USD is so slight. Hardly a difference exists. GBP/USD is trying so hard to become USD as its pegged is so closely tied together.

EUR/USD, Overall Break points 1.1797 and 1.1652. Higher or lower today must break 1.1756 to target 1.1713 and 1.1818.

EUR/JPY. Overall break points 131.56 and 131.12. Break points above are located at 132.12 and 132.35. Lower must break 131.89 and 131.66.

GBP/USD. Overall break points, 1.3152 and 1.3112. Break points above today are located at 1.3264 and 1.3276. Lower must break 1.3212 then 1.3199.

GBP/JPY overall break points 147.55 and 146.70. GBP/JPY traded today 148.88 which is 4 pips above its break point at 148.84. Lower must break 148.45 to target 147.96 and 147.52.

Both GBP/JPY and EUR/JPY are trading close to break points, caution as the big move is on the way.
Brian Twomey

USD/JPY and MA’s: Levels, Ranges, Targets

Facts regarding pips is every pip contains a deviation, a variance. Some deviations are wider than others but it depends on the currency pair. A deviation maybe off by 1 to 2 pips while other pair deviations may extend by as much as 5 and 6 pips. Low end deviations may contain 0.25, 0.50, as fractions 1/4 and 1/2. Is 10.25 result 10 or 11.

Certain currency pair pip deviations may result in even or odd as the next trade able point, target, range break. Certain currency pairs live their whole trading life as pip deviations while other currency pairs hit deviation then perfection and back to deviation due to the course of a trading day. Every traded pip and fraction pip imparts huge messages but one must understand it to act upon it. A 1 pip break of a range speaks to the next trade able point. Pips don’t contain false breaks as the pip traded perfect but the strategy was off.

USD/JPY 112.42 is the examination. If the 1 to 30 year yield range was the measure then USD/JPY breaks are located between 112.14 to 112.42. Between the 1 and 2 year, USD/JPY break is 112.22 and between the 20 and 30 year contains the break point at 112.18.

USD/JPY 112.14 to 112.42 points are found between the 2 and 20 year yield. This yield curve contains problems because it lacks uniformity. Under 112.14, nothing exists but measure USD/JPY by the yield curve, a bottom point is never found. No range breaks exist either as they are far far away.

if the yeld range was measured by Fed Funds then USD/JPY break points are located from 113.93 to 130.07. This means 113.93 is the first break point above. Overall break points are located at 105.05 and 106.17 Vs above at 118.94 and 119.57. From 106 to 118, we have 112.55 and 112.31 from 105 to 119. The result is 112.43 was found.

Yields impart one moment in time as 112.42 maybe the view at the moment but yields must trade rather than stand idle. Note no points exist to inform range break locations or the next trade able point, or a high point, or a target. Above 112.42 as well as below 112.14 exists nothing. Travel further down the yield curve then life becomes worse at 112.30 and 112.61.

From Moving averages, 2 breaks exist above, 112.37 and 112.53. Now 112.45 becomes the break point onward to 112.53. Higher for USD/JPY must break 112.53 to target at this moment, 113.07. What’s 112.42 and 112.45 is an implied trade able point but a trade able point that fails to impart a range break. Big difference between actual to implied. Break points above 112.37, 112.53 and 113.56. Overall 112.53 must break to see USD/JPY far higher.

Below breaks are 111.52, 110.70 and 110.18.

The next 24 hour  range is located from 111.51 to 112.63. To 111.51 must break 111.96 and 111.72. Note 111.51 meets 111.52. Means 111.52 won’t break. Further, a range break is located at 111.56. Higher must break 112.19 then on to challenge 112.53.

Here’s averages.

80 day = 111.52
Special average = 112.53
337 = 110.18
594 = 112.37
849 = 113.56
1104 = 110.70
1279 = 5Y= 108.41
1359 = 106.67
1616 = 102.20
1874 = 99.47
Brian Twomey

EUR, GBP Lead and Lag: Levels, Ranges, Targets

In the leading and lagging category to currency pairs, deceptions exists. On paper, AUD/USD appears as a superstar for its wider ranges. AUD is not a king therefore always take an NZD/USD trade over AUD despite NZD’s shorter ranges. NZD is allowed to move, AUD is severely contained. NZD will always earn profit, AUD trades will struggle.

EUR/JPY ranges are much shorter than GBP/JPY yet EUR/JPY is the far better trade and GBP/JPY should be relegated to a Speculative trade. On paper, GBP/JPY appears as the superstar because of its wider ranges but EUR/JPY targets and market movements beat GBP/JPY by miles.

On paper GBP/USD appears as a superstar, wrong again as EUR/USD despite shorter ranges is the far better trade and its allowed wider movements. Some pairs in the leading and lagging category perform far better than others. EUR beats GBP easily. EUR/JPY beats GBP/JPY. EUR cross pairs beat GBP cross pairs. GBP lost its name as a market oriented pair, EUR didn’t lose its market status.

USD/CAD on paper and trade deserves its special attention as superstar.USD/CAD is the same pair as EUR/USD only opposite. USD/JPY beats USD/CHF easily but USD/CAD beats both as CAD is a market oriented pair and its allowed to move whereas CHF and JPY are contained currencies.

Market oriented is defined by GBP. Banks and certain money people are afforded special access to GBP information and data. These are pros and take the perfect trades. Everybody else is denied access and this is done on purpose. By the time everybody else gains access, the trades are over as GBP hit targets and fulfilled its intended Statistical price path. The pros earned money, everybody else is trying as the pros maybe left a few pips on the table. 3 hours later, access is still denied. This means the everybody else crowd is still trying to obtain data.

So all don’t fall into the laughable everybody else crowd and to understand the name of this game under new market structures is ranges, we don;’t need to Gain Access. My question is how far will the BOE go to lock out the everybody else crowd. Today is the worst day I’ve ever seen in 2 years of daily BOE data views.

Yesterday afternoon, GBP ranges and necessary information was figured and factored ahead for the next 24 hour period.
GBP/USD overall range today was 1.3260 to 1.3183. Overall ranges yesterday afternoon reported, 1.3260 to 1.3152 but 1.3152 smacks dead against the vital break point at 1.3151 therefore exclude 1.3151. What’s 1.3260 is dead set stop at USD 1.3260. USD stopped GBP rather than GBP stopped on its own.

Here’s the data from yesterday. 1.3260, 1.3238, 1.3235, 1.3217, 1.3215. 1.3173 and 1.3170. Then comes break points at 1.3152, 1.3151. Buy drops was the strategy. Maybe I will post 24 hour ahead trades so may view but also to laugh at the everybody else crowd. Never fall prey to the crowd.

EUR/USD. Overall break points, 1.2031, 1.1797 and 1.1651. Higher today must break 1.1831 to target the brick wall at 1.1860 and 1.1858 upon a break of 1.1837. Below 1.1797, 1.1787 and 1.1778 provides supports. A break lower targets 1.1763 and 1.1749.
EUR/JPY. Above, EUR/JPY must break 133.20 to target 133.55. Below watch 132.62 then 132.47 and 132.38.

Brian Twomey

 

Realignment Part 2

Why the Realignment view is seen in USD/JPY and EUR/USD is because both pairs are most traded and because they represent the best insights to market domination to either USD or EUR. As the vast majority of cross pairs contain opposite associations, EUR/JPY for example is born from the USD/JPY and EUR/USD relationship. Therefore its correct position must trade between the parameters of USD/JPY and EUR/USD.

Its mathematically impossible for EUR/JPY to trade outside the USD/JPY and EUR/USD boundaries so the purpose to all cross pairs with opposite compositions is to trade within the confines of the underlying USD or non currency pairs. More importantly, the underlying USD vs Non USD currency pairs are the drivers to cross pairs. The underlying currency pairs answer for cross pairs is where to and how far will its price travel.

Overall, if a Realignment is seen in USD/JPY, EUR/USD and EUR/JPY then the entire structure in all currency pairs will also Realign. A total Realignment in process such as 1998 and 2008 is a volatile time in currency markets because completion can take up to 1 year. Realignment was the cause to volatility as cross pairs enter new associations to the underlying pairs.

To understand EUR/JPY and its position is seen only within the confines of USD/JPY and EUR/USD. To view USD/JPY and EUR/JPY only is to miss the 3rd most important aspect to the total relationship and Realignment positions. At 2008 crash time, USD/JPY and EUR/JPY both broke its respective averages to form the new market Realignment. Viewed from USD/JPY and EUR/JPY alone is to miss EUR/USD’s position above its average.

A Realignmenmt is a role reversal as EUR/USD and EUR/JPY traded above its averages pre 2008 and USD/JPY below. After 2008, EUR/JPY left, broke below its average and married USD/JPY as USD/JPY also broke below its respective averages.
Pre 2008, USD/JPY at 124’s in July 2007 provided screaming early warning to impending Realignment changes as USD/JPY is and was the less volatile pair and it shares a shorter boundary to EUR/USD. This phenomenon won’t ever change in the history of markets.

Interesting aspect to boundaries is currency prices traditionally trade directly to its boundary limits which generally are far extremes prices. Boundary limits hit a brick wall then trade back years and months later to the next boundary. This limit hit is what allows for multi month and multi year trades. In 2008, EUR/USD at 1.6000’s and EUR/JPY at 169’s are 2 examples.
As Quadrants are separated by 12 1/2 years, shorter term, mini Realignments occur and trades can be taken for lesser pip values. Traders in this mini Realignment scenario catch the “correction” and usually for multi month trades. The June 2016 article was a good example as the call was a 1000 pip move that materialized. But only the short for 1100 pips was seen and missed was the EUR/USD 1.0300 to 1.1400 move.

The overall speculation to 12 1/2 year Quadrants is 4 mini Realignments are seen in 3 year increments. The current period means 2008 to 2011, 2011 to 2014 and 2014 to 2017. The 2014 to 2017 period is most concerned as interest rate systems struggled in Jan 15, March and October. Monetary Policy and Central bank revamp of interest rates explains the struggles. Outside of the 3 months, all systems operated perfectly. This leads to further Realignment speculation as 2017 may see a continuation phase as new interest rate design by central banks were introduced around June 2016.
Brian Twomey

EUR, JPY and Realignment: Levels, Ranges, Targets

EUR/USD is below its 10 year average at 1.2905, EUR/JPY is above its 10 year average at 126.71 while USD/JPY is also above its 10 year average at 98.91. USD/CAD is above at 1.1226 and slacker currency USD/CHF is above its 10 year by 35 pips at 0.9829. DXY is above its 10 year at 85.28.

The overall Realignment from 2008 remains in place as markets switched from risk on to risk off. From 1998 to 2008, EUR/USD and EUR/JPY were married in longs and shorts and USD/JPY was left on its own.

The crash hit and switch hitter EUR/JPY married USD/JPY and EUR/USD became left on its own. The 10 year average was the demarcation line then but its questionable if the 10 year still plays its vital role today. However the 10 year is traditional in prior periods. This same outline was seen only in reverse to today from 1998 to 2008. Risk on, risk off means the markets in the larger picture must favor USD or EUR and EUR/JPY decides. USD is most dominant today.

When USD is favored as dominant market structure, Volatility is low because built in parameters in USD are severely compressed. When EUR is favored as dominant, volatility explodes because EUR and Dem before is traditionally a high volatility currency pair.

When EUR/USD is married to EUR/JPY, it adds to high volatility. Volatility is defined as wide ranges. Note the 16 DXY Vs EUR/USD articles. EUR/USD ranges were favored from 600 and 500 monthly pips to DXY 200 and 300. Times this by 12 months or 10 years.

The larger scale new Realignment switches when EUR/USD breaks above 1.29, USD/JPY breaks below 98 and EUR/JPY remains above 126. Now its risk on and high volatility.But the 14 year average at 1.2848 is in the way of 1.2900.
Currency markets are in the 9th year of the current realignment and a switch is due as durations generally run roughly 10 years. Its also the 4th quadrant which means the new period, the new Realignment is upon us. It also means real trends, easily seen as well as good economic times are also upon us.

4th Quadrants as current period are nasty times for markets, trends and economic prosperity. This changes when 1st Quadrant and Realignment hits. Quadrants are traditional and dates to 1694 and the BOE as 1st central bank. Means Quadrants never fail. 2008 was seen from miles away.

Current period and Alignment informs EUR/USD is on a massive correction. From 1.0300’s to current 1.1800’s is 1500 pips. Allowable range in current period is right at 2500 pips in longs or shorts, 1/2 = 1200. Coincides to 12 1/2 Quadrant years. The next big line break is the 5 year average at current 1.2032. At 1.2032 is 1700 pips. If the current period holds and I see it will then EUR is ready for a big correction lower. See USD/JPY V EUR/USD and its informs if this is correct.

EUR/USD. Brick wall today is 1.1839 and 1.1851. Overall break points today are 1.1794 and 1.1631. Shorts must break 1.1806 then comes 1.1778, 1.1761 and 1.1747.

EUR/JPY. Higher for EUR/JPY must break 133.54 then on to 134.29 and 134.34. Below 133.54 then comes 133.29 and 133.06.
USD/JPY. Overall break points are here at 112.64 and 111.48. Higher today, USD/JPY must break 112.96 then 113.25. Lower break points are 112.68, 112.64 and 112.61. Solid here. Lowest today is 112.54 on a 112.61 break.

Brian Twomey

 

 

Fed Monetary Policy 2015

The original intent of this article was investigation to 2015 months reported as momentous changes occurred to EUR/USD in each month. Two questions existed and overall this was done for personal purposes and the questions regarded strategy and new Realignment concepts. I’ve written much in regards to realignment yet much more could be written but done in another article as the information is lengthy. Overall, a change in monetary policy especially as it relates to interest rates such as Yellen in January 2015 results in a Realignment and a multi month or possibly a multi year trade for 1000 pip clips in each trade. While 1000 pips represents only one side to the trade, Realignment allows for 1000 up and 1000 down.

Further defintions as additions and subtractions to market developments must be understood as an expanded version to true currency market realignment. Currency markets Realign only to the extent underlying developments allow a wholesale market change. In the June 2016 article “2016 Currency Market Realignment”, it was written ” a 1000 point move was upon us”. Despite a prescient assessment as EUR/USD dropped in June 2016 from 1.1400 to 1.0300’s in December, actual market realignment / market changes occurred in January and February 2015 as well as March and October 2015. Trading strategy from 2015 realignment reveals a continuation exists into 2018 provided 2015 assessments hold.

January 2015 market changes while fed funds traded 0 to 0.25 was the introduction of Overnight Repos with plans to assess longer term durations. As a new introduction to Monetary Policy as viewed by an additional Deposit rate, the Fed Board considered this development as the path to future rate rises as well as the path to interest rate normalization.

As Keynesians dominated the Fed Board to exclude Lacker’s January appointment, Fed Funds would rise only if it was held inside the 25 basis point channel to the buy and sell points in Repo rates. The question to raise was assured and argued throughout 2015 but only upon accompaniment of ability to control the 25 point channel.

By March 2015, Overnight Repo tests were successful and raise to Fed Funds was a question of when, not if. The last detail to the March statement was ensure overnight Repo transactions would materialize longer term against absolute certainty the 25 point channel would hold. It did.

The issue to spread was addressed many times as the Fed had every ability to set the channels as they desired. The concern from 0 to 1 /4 Fed Funds on the low side was fear Fed Funds could trade to negative against concerns on the high side to raise to high, to fast. The Fed settled on 25 after much debate but the success of longer term repo tests and market participation sealed 25 as the final number.

Never would non free market Keynesians allow Fed Funds to free float to allow the market to decide its price. Supply sider belief in markets would view Keynesian normalization as non normal as well as to the full control of Fed Funds and channels. Lacker was not only a consistent no vote throughout 2015 but he was the lone no vote. Jay Powell voted 100 % with the Keynesians.

The second monetary policy issue to January’s Repo developments was the Fed changed its holding period in its FX portfolio from 18 months to 2 years. The Fed’s FX portfolio is held and traded through the 1934 creation of the Exchange Stabilization Fund.

Open position limits are held by Exchange rules at $25 billion to exclude DXY. Further rules include no more than $300 million accumulated on any day in 1 currency and no more than $600 million from central bank meeting to meeting. Meeting to meeting is defined as 30 calendar days. Accumulations in 1 currency begin at $150 million. Foreign Currency Denominated Assets are held either less than 3 months or more than 3 months but less than 1 year.

The Fed in 2015 in EUR and JPY holdings were minus $2.9 billion against investment income at $41.5 million. A $2.9 billion loss was enough to bankrupt every retail currency broker in the United States and its the reason the Fed trades through “selected banks”.

Currencies in the Exchange Stabilization Fund are 14: AUD, BRL, CAD, DKK, EUR, JPY, KRW, MXN, NZD, NOK, GBP, SGD, SEK and CHF.

Lacker again voted no to the extension of holding periods as he viewed the polcy change as Fed intervention. Intervention perspective from the Fed is ability to extend Swap Agreements to those currencies in the fund for longer time periods. The Fed then increases its position as Financier to foreign governments. United Nations payment for Dues membership is paid from the 4th Quarter to January for most nations as this tme is vital to nations to borrow in US Special Drawing Rights, the SDR.
MXN for example since NAFTA in 1994 is afforded a standard $3 billion Swap Agreement. Further, the Fed in January was preparing a raise while December 2014, the SNB dropped the EUR/CHF floor, the ECB expanded QE purchases, the SNB dropped interest rates as well as AUD, CAD, DKK, INR and TRY.

The US Exchange fund in 2015 held Cash and Cash equivalents in thousands at $5,793, 812 Vs September 2016 at $7,051, 950. JPY holdings in 2015 were $2, 577, 671 and $4,706, 992 for September 2016. Cash and Cash Equivalents are defined as US government short term securities usually 3 months or less and Foreign Currency Denominated Assets to include most, most important deposits and securities denominated in Euros and JPY. The 2017 reports yet to post as of this writing.

The last aspect to realignment and policy change is September failed as the raise month due to fear by the board of an “Inflation Buildup”by a raise but also because September is the yearly time to review proposed investments to include currencies.

October was a momentous month for policy as this began the Fed debate to Natural, Neutral or Equilibrium interest rates and the fact the Natural interest rate for many economies declined over the past 25 years. Under a decline in the Natural rate, I viewed as a forward conditioning effect as the Board questioned how far and how many raises to consider in the future. The concept to Fed Funds lower for longer and under the Natural rate despite any raises was the message and it continues today. The main aspect to the overall October debate was Repo Spreads narrowed and overall market participation was low.

More important to Fed policy was the IMF’s October / November 2015 introduction in its new 5 year review of the SDR and inclusion of China and Yuan in the new basket of 4 currencies. The effective date was October 11, 2016 as Yuan became the 5th most imporatnt currency alongside EUR, DXY, JPY and GBP.

Renmimbi as CNY is representative of the currency but in SDR terms, its the Yuan and expressed as a unit. The Yuan’s interest rate was introduced at 2.048200 and trades today 3.499200. As SDR, Yuan traded 0.108156 and today, 0.107566.
DXY in SDR’s dropped $28 billion in 2015 against its $35.9 billion holdings, cash equivalents of $50.3 million and interest income of $71.3 million.

SDR Weights were changed at DXY 41.73% from 2010 41.9%, EUR 30.93% from 37.4%, JPY 8.33% from 9.4%, GBP 8.09% from 11.3% and Yuan began 10.92%.

JPY is an extraordinarily minor currency pair yet its prominence and reason for special attention derives from its positions in the ESF as well as the SDR, the Special Drawing Right. As EUR/USD is most widely traded, the preeminent pairs in currency markets yesterday, today and decades in the future are USD/JPY, EUR/USD and EUR/JPY.

Brian Twomey

 

EUR, CAD/ZAR and 2015: Levels, Ranges, Targets

2015 additions include focus and mentions to Fed Speakers, meanwhile zero information, zero market data nor actionable information was revealed. Same scenario today. Fed people speak but say nothing and lack ability to afford special attention. Save the ink to report Fed speakers. Follow the RBA as they are the only central bank to reveal actionable information and they even bring charts whereas Fed speakers just blab on regarding nothing. The Fed and the entire board frankly don’t deserve any respect.

June 2015 probabilities as first Fed Funds liftoff date failed miserably. Queen Yellen knew the high probabilities but liftoff was impossible without Repo Rate control to Fed Funds. October 2015 Natural Rate debate led to the largest intelligence insult to reveal 5 year Median Fed Fund rates, meanwhile the Fed Raised into massive overbought on Fed Funds where it remains today. Lost as investors was $28 billion SDR and $2.9 billion EUR and JPY trades. Yellen and the Fed just don’t give a dam as they don’t inform the public on one iota of information. Yellen is far to dangerous to allow ability to sit on her throne, as the last 9 years revealed. Its 300 million Americans lost by Yellen’s hand. The statements are an imperative.

The striking miles of difference between the Retail and professional investor crowd is astounding. The retail side lacks any fighting chance as exposure to proper information is never revealed. Much is written but nothing stated and this includes dribble from banks. I can’t report it all as I’m a one man band and trust the proposition I am not here forever.
How’s trades, perfect as usual.

EUR/USD trades between vital break points from 1.1612 and 1.1793. CAD/ZAR as most opposite and a USD currency pair trades at 11.2860 against support points at 10.82, 10.72 and 10.06. CAD/ZAR Vs EUR reveals how tight are prices, how tight prices trade against each other. Vast majority of currency pairs trade at or near vital support and resistance points. A big breakout is upon us as CAD/ZAR and EUR must trade at greater distances to each other.

CAD/ZAR is massively overbought and is the signal pair to USD as EUR sits in neutrality to its averages. A EUR break at 1.1793 means far higher, USD and CAD/ZAR lower. Watch USD/JPY 112.70 then 111.46. How much higher for EUR above 1.1793 is to watch NZD/USD at its break point at 0.7031. EUR above 1.1793, travels to 1.1900’s and 1.2000’s.

EUR/USD. The next break point above is located at 1.1751 while shorts today must break 1.1702 and 1.1693 to travel back to 1.1649.

EUR/JPY trades between break points from 133.22 and 133.37 followed by 133.54. Lower must break 133.22 then on to 132.86.
GBP/USD. Break points overall today are located at 1.3148 and 1.3107. Above must break 1.3124 to target 1.3170’s while 1.3101 and 1.3107 provides solid supports.

Brian Twomey

EUR/USD Peaks and Turns, 2013

 

Original Published 2013

An old EUR/USD 2013 study, never published but slated for FX Trader Magazine. They requested minor changes, I refused so never published. Then sent to Stocks and Commodities Magazine only to get lost in the shuffle.

To forecast tops and bottoms, below is the methodology and it was employed to accurately call the EUR/USD top at 1.3900’s. The peaks and turns however must update. Note also our EUR/USD is traditionally a highly neutral currency pair and rarely falls outside of its neutrality. Today it broke its tradition, a tradition that held dating to its forerunner DEM/USD. Once the Euro zone finds it balance again, hopefully soon, the EUR will retain its neutral 95 year tradition.

 

Because the current EUR/USD price was confounding due because it retraced more than 50% of its move from last year’s 1.3712 top to the 1.2750 bottom, I decided to look at daily, weekly and historic significant peaks to predict a possible top. My early assumption was 1.3350 in the July /August period may very well have been the current top at time of this writing. Further, if the EUR/USD is measured in terms of peaks only from a daily, weekly and historic perspective, the EUR/USD as a currency pair falls into the exact neutral category. Its typical Euro in classic fashion as it loves its neutral zone comfort level. It rises and falls only to end in undecided zones. We begin with the daily charts.

Since January 2013 to July /August, daily down peaks record as 6 days, 1 peak, 12 days, 1 peak, 38 days, 1 peak, 15 days, 1 peak. 71 days total was recorded with 4 significant peaks. Down days turned every 17.75 days on average.

Daily up days since January 2013 to July /August. I recorded: 5 days, 1 peak, 22 days, 1 peak, 17 days, 1 peak, 14 days, 1 peak, 16 days, 1 peak. A total of 74 days saw 5 significant peaks with an average turn every 14.8 days.

If daily up days to down days are viewed, the EUR/USD trend/peaks turn every 16.1 days total.

Figure 1 is a daily EUR/USD chart.

Weekly EUR/USD. Since January 2013 to July / August, Up weeks I recorded: 4 weeks, 1 peak, 5 weeks, 1 peak, 5 weeks, 1 peak, 4 weeks, 1 peak. Notice the 5 / 4 relatiuonship. A significant peak occurred every 4.5 weeks on average.

Weekly Down days. Since January 2013 to July / August, down weeks I recorded: 8 weeks, 1 peak, 2 weeks, 1 peak, 3 weeks, 1 peak. A significant down peak occurred every 4.33 weeks on average.

Weekly up days vs down days. A significant weekly peak occurred every 4.4 weeks on average and fairly consistent with the 16.1 daily peak turn.

Figure 2 is a weekly EUR/USD.

From the Oct 2000 bottom at 0.8206 to present July / August period.

Monthly up months with a signfiicant peak I recorded, 3 months, 1 peak, 3 months, 1 peak, 16 months, 1 peak, 5 months, 1 peak, 8 months, 1 peak, 3 months, 1 peak, 29 months, 1 peak, 13 months, 1 peak, 12 months, 1 peak, 2 months, 1 peak, 6 months, 1 peak.

Total up months with a significant peak equates to 100 up months with 11 significant peaks.

Monthly down months I recorded: 5 months, 1 peak, 4 months, 1 peak, 3 months, 1 peak, 3 months, 1 peak, 6 months, 1 peak, 3 months, 1 peak, 6 months, 1 peak, 7 months, 1 peak, 8 months, 1 peak, 5 months, 1 peak, 7 months, ?. Present month and possible next peak is ongoing.

Total up months: 100, 11 peaks. Total down months, 57, 11 peaks. Total up months peak on average every 9.09 months vs total down months peak on average every 5.18 months.

Interesting aspect to the historic up months was the economic boom period between 2003 – 2006 where the EUR/USD I recorded 29 straight months before a significant peak occurred. It would appear this large increase before a significant peak occured to skew the averages can easily be argued because minor peaks occured along the way. Yet if we look in terms of significant peaks only, we find an exact 11 peak difference between up and down peaks and because we see the EUR/USD daily, weekly and historically as a highly neutral currency pair with fairly consistent up and down numbers throughout, I hold to my 29 month count.

The purpose why a longer term view in monthlies was not only to determine significant peaks but the EUR/USD’s neutrality became a fascinating issue along the way. Lastly, if the EUR/USD was viewed perfectly parallel to the daily and weekly January time frames, only one significant peak occurred and that was last year’s 1.3712 top.

Brian Twomey, Inside the Currency Market, btwomey.com

EUR, GBP, Yellen, JPY: Levels, Ranges, Targets

Posted today is concepts and new revelations to Realignment as it pertains to 2015 to 2017 but deeply focused on Jan 15, Feb / March 15 and September – November 2015. Realignment was always addressed by prior articles and 1 upper tier bank in broad concepts and this is a wrong view as mini Realignments occurr within a market period. Drastic monetary policy changes occurred within the focused months. Once October 2015 was over, markets traded back to normal and this normalcy survives today and it appears so far, more of the same will be seen in 2018. So far is a caveat until reported differently. Few takeaways.
USD/JPY is an incredibly minor currency pair. If USD/JPY wasn’t included in the US Exchange Stabilization Fund and the United Nations SDR program then it would be relegated to the category of the Iraqi Dinar, or Afghani AFN.

Because of the ESF and SDR, USD/JPY as well as EUR/JPY because of EUR/USD, deserves special attention. The main 3 pairs in all currency trading in decades past, present and future are EUR/USD, EUR/JPY and USD/JPY. Not even DXY deserves attention. Its another extremely minor currency.

Every Fed Monthly Statement mentions “The Dollar” went up, went down. Its not specifically mentioned as DXY. Fed investments including currencies span 1 year time frames from September to September. The Fed as investors lost in 2015 $28 billion in SDR’s and #29 billion on EUR and JPY trades. For context, the FED may never recover losses in EUR and JPY trades. Losses are enough to bankrupt every retail currency broker in the US.

Fed Minutes has got to be the most worthless read in the history of the world and month after month, year after year. The exact same words are written only rearranged every month, every year. Board member votes? Keynesians vote as 1 big block every month, every year. Minutes has got to be the most non market event in the history of markets.

Most vital read are Fed Statements because much is missed, analyzed nor ever reported . Queen Yellen was intent on Raising Fed Funds in January 2015 and it was clearly obvious from Statements. The only question was when. Forget the read to economic forecasts as they remain always wrong.

Queen Yellen’s press conferences are the most perfectly scripted events ever seen in the history of plays. She insults good intelligence by regurgitating dribble from past statements. She hasn’t offered an ounce of substance, new or actionable informatioin her entire tenure as falling Queen. Equally tragic are reporters. They ask questions that were already reported in Statements. Makes scripted Yellen look like a genius.

Queen Yellen is clearly a Keynesian, conservative Ideologue. She doesn’t believe nor likes markets because she lacks control. Yellen lacks ability to deviate from QE and Keynesian practices. Yellen could’ve raised Fed Funds in January 2015 when rates were on the floor but she couldn’t do it without backing from new Repo facilities as control. Took an entire year to raise. I expect the same in Powell as he voted 100% with the Keynesians.

GBP/USD. Overall break points, 1.3147 and 1.3108. Break points below to 1.3056 are 1.3115, 1.3089 and 1.3072. GBP currently trades at the low end of the range. Breaks higher must cross today 1.3115 and 1.3128 then 1.3158.

GBP/JPY. Overall break points today, 147.78 and 146.51. To see 149.09 then watch 148.46 and 148.27. Higher must break 148.77 then 149.09.

EUR/USD. Overall Break points, 1.1615 and 1.1793. Below must break 1.1632 then 1.1623 and 1.1609. Watch 1.1675 above.

USD/JPY. Overall break at 112.73 is close the next comes 111.43. Below break are 113.27, 113.14 and 112.99. Higher must break 113.58.

Brian Twomey

G10 and Defined: Levels, Ranges, Targets

 

And on this day, just 6 days after the BOE raised Bank Rate, GBP normalized. Normalizations for GBP means the range structure is back to normal. As suspected, the bulk of the 260 pip move was accomplished on the same day then ranges began to trade back to flat ways. From Nov 2 BOE decision, ranges compressed in following days from 113 pips, 90, 78, 68 and 70. GBP/USD trades today in a 53 pip range from 1.3167 to 1.3113. Expect more of the same in the distant future.

In the currency pair lead and lag category, EUR will now again takes its rightful place as leader to GBP rather than GBP as leader to EUR. If ever GBP leads EUR, giant market problems exist. Same holds true if GBP/JPY leads EUR/JPY, or AUD/USD leads NZD/USD or USD/CHF leads USD/JPY and USD/CAD or USD/JPY leads USD/CAD. Rightful is USD/CAD always leads USD/JPY and USD/CHF. And this list goes on throughout all the currency pair structures.

Structures? Begins with a pip. A pip is many factors. A pip could be defined as 1/8 of a pip, 1/4 of a pip, 1/2, 3/4 or maybe even 1 full pip. A pip could even define as 1/16. A Treasury yield is defined a 1/32 so why not define pips in the same manner to align apples to apples.

Today includes GBP/JPY but I speak as 148.43. But defined, 148.43 is actually 148.43410. So 148.43 doesn’t actually define as 148.44 but its not 148.43 rather its closer to 148.435 and is a 1/2 pip. JPY pairs are historically classic for calculation to fraction pips. Its reason why USD/JPY could never outperform USD/CAD because CAD works on far higher pip values.

Pips define the ranges and the range as most important aspect to understand in currency trading epecially today under the new market structure. Structure is defined as ranges and they are fixed by the central banks but specifically held by interest rate traders. Central banks set the term of market trading and market traders adhere to the terms and conditions.
Here is every traded pip today for EUR/USD as an example.

1.1725, 1.1692 1.1684, 1.1676, 1.1668, 1.1661, 1.1654, , 1.1650, 1.1651 1.1649, 1.1633, 1.1625, 1.1617, 1.1609, 1.1602, 1.1595, 1.1591, 1.1588 and 1.1568. Look at 1.1595 to 1.1602 and 7 pips. Now we have 3.5 pips to define this range or broken down to 1.16985.
Cross off the list 1.1725 and 1.1568 as both are offered today but won’t trade. The area at 1.1588 is also under severe question and would be seen only if an out of sync news announcement hits the markets or a similar event as a missile strike on North Korea.

EUR/USD and most pairs are extraordinarily strange in range trading because intervals from upside to downside never trade exactly nor does intervals between ranges. Above 1.1654, EUR gains speed at 7 pip intervals but gains more speed above 1.1668 in 8 pip intervals.

EUR/USD overall break points are today 1.1615 and 1.1793, slowly are the ranges opening wider for EUR/USD and all currency pairs. EUR goes higher on a break of 1.1661 to 1.1676 and 1.1692 as target. At 1.1615 is seen only on a break of 1.1633 but massive resistance is sen at 1.1617 and 1.1615.

EUR/JPY. Overall Break points are located at 131.37 and 130.95. Above remains rough as resistance points remain built into the range structure. This has been and will be seen far into the future. The why question is JPY as the reason and not EUR. It means upside for EUR/JPY will be a long hard road. Break points 132.24, 132.42, 132.60, and 132.97. Look for upside targets at 132.60, 132.73 on a break of 132.42. Downside is contained by 131.74 and 131.59.

GBP/USD. Overall break points are today 1.3145 and 1.3113. At 1.3145 is rising slooowly. Targets at 1.3224 is seen only on breaks at 1.3167, 1.3189 and 1.3214. Downside breaks to see 1.3097 is seen by 1.3144, 1.3122 and 1.3104.

GBP/JPY Overall break points are located at 147.85 and 146.47. Target 149.86 is seen on breaks at 149.30, 149.48, 149.55, 149.67. Downside to see 148.52 must break 149.05, 148.81, 148.62.

Brian Twomey

G10 and Finance Committee: Levels, Ranges, Targets

Of 34 Republicans on the House Finance Committee in charge to push Trump’s Tax bill, 2 members, Steve Pearce and Bill Posey, are members of the Conservative House Freedom Caucus. The Democrats lined up on the Committee are the best of the far left communists but Republicans hold advantage by 34 to 26 Dems.

The Senate Finance committee is a 14 Rep to 12 Dem line up and 3 possible Republicans share the Trump / William Howard Taft Philosophy — Tim Scott, Isakson and Grassely from Iowa yet don’t hold out hope on the Taft Score as all 3 Senators were dead silent through 8 years of America’s Bummer.

To sit on most prominent Banking, Finance and the House Ways and Means Committees, Party members, usually most senior, buy the seats if they raise at last check about $200,000. As the Democrats under Obummer pushed through Dodd- Frank, regulations and other economic disasters, Republicans were silent to alert the public. To speak against then Republican seats on the committees and re election money from the party would disappear. The choice was speak and lose or silence to hold positions. The Republicans sold out in favor of silence.

The result is non conservative and moderate Republicans from the Teddy Roosevelt Wing of the party dominate the Committees as has been the case since 1988. Their philosophies are different to Trump and it will reflect in the final product of the Tax Bill as Trump may not see all he seeks in Tax cuts. Reagan tax cuts were different as Taft / Reagan had majority support from a Taft congressional party members by shared philosophies.

The larger political picture line up is interesting. Many Moderates from the Democrat and Republican parties are retiring in droves. Democrat Moderates see far left Communists sitting on all prominent committees therefore they lack any chance to raise money and sit on those committees. Better to retire as reelection efforts will also flounder.

Republican moderates will lose ability to sit on prominent committees and struggle in re election efforts as Trump / Taft philosophical members will dominate the committees. The political front is moving to far left Communists to right wing Republicans and a far far divide than has been seen since the 1920’s, 1930’s?

The news media has been in operational mode to condition the public for the left / right divide as they speak for the first time in their histories in left / right terms. Traditional left right terms was studied and defined by academics.

GBP/USD. Overall break points are now located at 1.3143 and 1.3114. The break at 1.3131 would challenge 1.3114 then 1.3071. At 1.3131 defines the upside to see a run above 1.3143 then 1.3172 and 1.3203.

If GBP/USD breaks 1.3114 then GBP/JPY will break today’s 148.49 and head to its overall break point at 147.87 and 146.43. GBP/USD will decide the fate of GBP/JPY.

EUR/USD. Overall break points are located today at 1.1619 and far above at 1.1791. Above, EUR must break 1.1626, 1.1632, 1.1643 then target at 1.1654. Below, a break of 1.1583 would target 1.1574, 1.1561 and 1.1553.

EUR/JPY. Overall breaks today are located at 131.34 and 131.01. Upon a break then targets today 131.18 and 130.93. To rise, EUR/JPY must break 132.08 then a gap materializes from 132.08 to 132.56.

USD/JPY must breaks are located at 113.42 and 113.32 then comes 113.18 and 113.04. Above 113.42 targets 113.79.

 

Brian Twomey