EURUSD Trends/Turns: 2013 -2015 and 2018 -2019

To forecast tops and bottoms, below is the methodology and it was employed to accurately call the EUR/USD top at 1.3900’s.

This post is a re creation of the 2013 – 2015 view to Peaks and troughs, tops and bottoms for daily, weekly and monthly charts. The difference today is the view was assessed from 6/29/18 to 6/28/19 for a 1 year inspection.

The character of the EUR on any chart since inception hasn’t changed as EUR/USD is traditionally and invented to trade as a highly neutral currency pair and rarely falls outside of its neutrality. Any deviation to neutrality always corrects to assure EUR trades neutral.

Neutrality for EUR/USD means an equal number of up and down days, weeks and months match almost perfectly. New highs and lows never assumes an automatic continuation on its price path. The question for traders must be how many peaks and valleys were involved in the price move to determine if a continuation or retrace will develop.

How many peaks and valleys may or may not mean the EUR trades within a few pips to its previous highs and lows. The EUR contains a distinct habit to bring this question to the brink.

The EUR/USD has radically changed from its 2013 -2015 trading days as 2013 -2015 afforded far wider ranges, trends and trade opportunities. The EUR/USD from 2018 to 2019 revealed daily and weekly trend / turns occurs much quicker due to depressed ranges and trends. Peaks and valleys were shortened by 1/2 in 2018 -2019 from its 2013 -2015 counterpart. Traders must be quick on the trigger to catch the move.

Daily 2013-2015 Vs 2018 -2019.

In 2013 -2015 for example, 71 down days total was recorded with 4 significant peaks. Down days turned every 17.75 days on average. A total of 74 up 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.

In contrast, the 2018 -2019 EUR/USD daily up and down days are equally matched by 24 up days to 24 down days. The 3 daily Doji indecision chart candles appears for a reason.

2018 -2019

At 123 up days recorded 24 peaks for an up trend /turn every 5.12 weeks while 126 down days recorded 24 peaks for a trend /turn every 5.25 weeks. Up days Vs down days factored to a trend/turn every 5.18 days. Up to down days and trend/turn radically changed to shorter terms from its 2013 -2015 counterpart at 14 and 17 days by at least 3 times.

EUR/USD averages from 24 up days factors to 1.1500 and a 1.1489 Median. Interesting numbers as the current 5 year average is located at 1.1476. EUR/USD average for down days factors to 1.1312 and 1.1280 as a Median.

Weekly

2013 -2015 Vs 2018 -2019

From 2013 -2015, a significant up peak occurred every 4.5 weeks on average while a significant down peak occurred every 4.33 weeks on average. A significant weekly peak occurred for trend / turn in up vs down weeks every 4.4 weeks on average and fairly consistent with the 16.1 daily peak turn.

The 2013 -2015 Up data: Up weeks recorded: 4 weeks, 1 peak, 5 weeks, 1 peak, 5 weeks, 1 peak, 4 weeks, 1 peak. Notice the 5 / 4 relationship. A significant peak occurred every 4.5 weeks on average,

The 2013 -2015 down data: down weeks recorded: 8 weeks, 1 peak, 2 weeks, 1 peak, 3 weeks, 1 peak. A significant down peak occurred every 4.33 weeks on average.

2018 -2019

For 2018 -2019, in 27 up weeks recorded 11 peaks or trend / turn every 6.75 weeks. Up week ranges lasted an extra 2.25 weeks Vs its 2013 -2015 period.

In 24 down weeks recorded 10 peaks for a trend turn every 2.4 weeks. A trend /turn in up v Down weeks occurs every 4.57 weeks. Up Vs down week ranges extended by a negligent 0.17 weeks. Overall up vs down weeks trends /turns shortened by 1/2 vs its 2013 -2015 counterparts. The answer is revealed by up trends at 6.75 vs Down weeks at 2.4. This deviation is rarely seen.
Weekly EUR/USD factors an up average at 1.1501 and down average at 1.1229.

Monthly.

Up months factors as 4 up months and 3 peaks for an up trend/turn every 1.33 months while 6 down months at 3 peaks equates to 2.0. Up Vs down trend /turns every 1.66 months.

Monthly 2000 – 2015

From the Oct 2000 bottom at 0.8206 to present July / August 2015 period.

Data

Monthly up months with a significant peak 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.

Overall 98 months Vs 11 peaks to include the EUR trend from 2003 to 2006 factors to 8.90 up months.

Monthly down months 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.
50 months vs 10 peaks factors as a trend /turn every 5 months. Overall up vs down trend /Turn every 6.95 months.

Current EUR/USD

The EUR/USD topped at 1.1341 from 1.1183 in 5 days then bolted from 1.1183 to 1.1411 highs in 5 days. If the past is prologue then the EUR/USD contains 5 down days ahead.

 

Brian Twomey

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FXTrade Results Feb 22 -June 28

 

Actual Profit Pips = 23,021

Actual Pip Profit Average 1292

We profit on Average 1292 pips per week on 12 currency pairs. We maintain profit at least 50% of all traded pips on 12 currency pairs. Mathematically, SD on 17 weeks and 12 currency pairs = 650.40 and 1/2 of 1292 = 646.

Further, Signal/ Noise Ratio Vs Variation equates to 1.98 Vs 0.50. The Signal is perfect and high Vs its 50 % Variation. We are dead on track to report profit on 50% of all traded pips.

Weekly Pips Totals for 17 weeks

911

1450

1203

1187

2

1162

126

1979

794

957

1033

1127

1700

1962

1979

1800

2592 =1292 Pips Average

 

Brian Twomey

FX Results June 24-28

 911 pips 13 Trades, 12 Currency Pairs.
Perfect CADJPY Vs offset by Missed entry USDCAD. -29 Pips.
Was 1111 pips overall but missed entry GBPCAD.
Entry and targets below.
EURAUD 1.6423, 1.6442, Target 1.6202 Actual 1.6410 -1.6204 +206 Pips
USDCAD 1.3218, target 1.3343, Actual 1.3216 -1.3087, -129.
CADJPY 80.66, 80.46, Target 81.40. Actual 80.99 -81.40, +41 pips. 81.89, Target 83.10, Actual 81.89 -82.36 +67. pips
GBPUSD 1.2685, 1.2654, Target 1.2757, Actual 1.2662 -1.2723 +61 pips
EURUSD 1.1268, 1.1273, Target 1.1288, Actual 1.1406 -1.1344, +29 ongoing target. 1.1271, target 1.1237, not triggered.
GBPCAD 1.6822, 1.6776, Target 1.7012. Actual 1.6854 -1.6582 Minus 240.
GBPCHF 1.2432, 1.2388, Target 1.2610, Actual 1.2454 -1.2342, Trade just triggered.
GBPJPY 136.60, 136.25, target 138.34, Actual 135.82 -137.32, +107 Pips on instruction.
NZDJPY 70.44 70.24, Target 72.02 Actual 70.64 -72.02 138 pips. 72.42 Target 73.20 not triggered.
EURNZD 1.7269, 1.7310  Target 1.7063, Actual 1.7270 -1.7063 +207 pips.
GBPNZD 1.9384, 1.9428, target 1.9317, Actual 1.9344 -1.9317, +27 pips. 1.9296, Target 1.9117. Actual 1.9296 – 1.9117. +179 Pips Total 206 pips.
GBPAUD 1.8424, 1.8443, Target 1.8325. Actual 1.8386 -1.8325. +61 Pips. 1.8308, target 1.8190, Actual 1.8308 +118 pips total pips 179
                   Brian Twomey

FX 28 Break Point Context

NZDUSD overnight was only pair to break above its Point at 0.6627. Must break first as Vital signal Pair and to serve its rightful position in Currency markets.

NZD leads, never follows. Leads all other currency pairs.

EURUSD Broke 1st at 1.1272. Highly neutral, Traditional follower never leads. This time it did. Wrong position.

GBPUSD Touched 1.2778, then downtown, it traveled.

AUDUSD 0.6981, traded 0.6971 then down.

Strength of trend for all non USD pairs always means JPY cross pairs must follow as rightful position.

JPY cross pair rightful position to majors is attachment to travel together. Protects JPY viability since WW2, a service from the allies.

CHFJPY serves it rightful function as Signal Currency Pair to JPY crosses. Break Point 109.64, now trades 109.76. A Break below usually means JPY cross pairs remains dead and strength of trend for above pairs to trade above break points is weak.

CHFJPY above 109.64 then JPY cross pairs follow.

USDJPY and USDCHF all trade below Break points. CHFJPY , USDJPY and USDCHF can’t trade below

Misplaced, In English called Dangling Modifiers, EURAUD EURNZD and GBPNZD must trade lower especially for NZDUSD and AUDUSD to contain chance to break its point, sustain and travel higher.

 

Brian Twomey

FX Break Points, 28 Currency Pairs

EURUSD only USD V Non Pair Broke above Break Point 1.1272.

 

USDJPY 109.34, Trades below

USDCAD 1.3347, Trades below

GBPUSD 1.2780, Below

USDCHF 0.9973, Below

AUDUSD 0.6982, Below

NZDUSD 0.6624, Below

 

EURUSD strength of trend above 1.1272

EURJPY 123.26, below

EURCHF 1.1234, below

EURCAD 1.5032, Below

EURNZD 1.7024, Above

EURAUD 1.6152, Above  EUR = 3 above Vs 3 below

 

AUDUSD Problem is EURAUD 1.6152, trades above

AUDJPY 76.25, trades below

AUDCHF 0.6956, Below

AUDCAD 0.9308, Below

AUDNZD 1.0540, Trades 1.0540 AUD = 4 below and AUD/NZD on the Edge

 

NZDUSD 0.6624 Problem, is EURNZD 1.7024, Above,

GBPNZD 1.9291 Above

NZDJPY 72.34, Below

NZDCHF 0.6601, Below

NZDCAD 0.8832, Below

NZD/EUR 0.5875, Below

NZD/GBP 0.5183 On the Edge to break  NZD =5 Pairs Trade beloe

 

GBPUSD 1.2780, Below

GBPJPY 139.76, Below

GBPCHF 1.2733, Below

GPCAD 1.7036, Below

GBPNZD 1.9291 Above

GBPAUD 1.8323, Above GBP = 4 pairs below and 2 Above GBP/AID on the edge of Break

 

USDCAD 1.3347 Below

CADJPY 81.90 Below

CADCHF 0.7473, Below CAD = 3 below but CADCHF on edge of Break

CAD/ZAR 10.83 On the edge of Break

 

CHFJPY 109.63 Trades Above

 

6 Currency Pairs above: EURUSD EURNZD GBPNZD EURAUD GBPAUD and CHFJPY

Means 22 currency pairs below. Giant moves ahead due to severe mis positions

 

Brian Twomey

Boris the Schlosssssberg Strikes Again

 

See the weekly trade results. The good  is all these people read my stuff as nobody ever reported weekly trade results nor  to the depth as yours truly.  The bad:  20 + years in FX, graduate of Ivy League’s Columbia University, world famous lecturer and TV personality. The caliber of trade results just doesn’t match the credentials and it applies to his partner, the dumbest woman ever to trade FX, kathy lien.

Boris earned 200 pips this month, charges $175 or $145 with the discount.

Informed was the discount doesn’t work.

FX Trade Results Feb 22 -June 21

Actual Profit Pips = 22,110

Actual Pip Average =1315

We profit on Average 1315 pips per week on 12 currency pairs. We maintain profit at least 50% of all traded pips on 12 currency pairs. More Available Vs Actual is explained by Contingency Trades for trades at significant MA Break Points. Those Vital points may or may not break in any given week but we’re prepared.

Weekly Pip[ Totals

1450

1203

1187

2

1162

126

1979

794

957

1033

1127

1700

1962

1979

1800

2592 = 1315 Average

 

Brian Twomey Interested in Trades then contact

 

FX Trade Results June 17-21

 Total pip profit 1450 pips, 12 Currency pairs, 16 Trades.
Entries, Targets and Actual below.
pip count based on weekly instructions. Extra is bonus. My interest is methodology and Models rather than extra pips.
GBPUSD 1.2568, 1.2539, Target 1.2798. Actual 1.2508 -1.2725. +186 pips.
GBPJPY 136.52, 135.87, target 139.11, Actual 135.40 -137.17, +130 pips.
GBPCHF 1.2552, 1.2512, Target 1.2714, Actual 1.2489 -1.2586, +74 Pips.
NZDJPY 70.22, 70.04, Target 72.09, Actual 70.26 -71.09, +83 Pips.
EURAUD 1.6355, 1.6323, Target 1.6119, Actual 1.6386 -1.6275, +111 pips
EURNZD 1.7288, 1.7325, target 1.7043, Actual 1.7304 -1.7108, + 196 Pips
GBPNZD 1.9443, 1.9493, Target 1.8322, Actual 1.9389 -1.9322, +67 pips 1.9298, target 1.9201, Actual 1.9289 – 1.9201, +88.
GBPAUD 1.8380, 1.8424, target 1.8335, Actual 1.8407 – 1.8335, +72 pips 1.8291, Target 1.8202, +70 pips
USDCAD 1.3459, 1.3482, Target 1.3388, Actual 1.3432 -1.3388, +44 pips 1.3365, target 1.3294, Actual 1.3365 -1.3294, +71 pips
GBPCAD 1.6861, 1.6846, Target 1.7029, Actual 1.6757 -1.6881. +41 pips. Terrible trade.
CADJPY 80.33, Target 81.60, Actual 80.57 -81.86, +103 pips
EURUSD 1.1185, 1.1164, target 1.1248, Actual 1.1181 -1.1248, +67 pips. 1.1269, target 1.1332, Actual 1.1269 -1.1316, +47 pips Total Pips 114.
     Brian Twomey, Contact for trades if interested

FX Trade Results Feb 22 -June 14

 

The available part to the weekly was dropped as I became swamped to prepare for Brother Dale’s guest appearance.  What is known is Available usually doubles from Actual due to trade contingencies at significant break points.

Actual profit Pips = 20,669

Actual Pip Average = 1306

 

We profit on Average 1306 pips per week on 12 currency pairs. We maintain profit at least 50% of all traded pips on 12 currency pairs. More Available Vs Actual is explained by Contingency Trades for trades at significant MA Break Points. Those Vital points may or may not break in any given week but we’re prepared.

Weekly Pip Data

1203

1187

2

1162

126

1979

794

957

1033

1127

1700

1962

1979

1800

2592  = 1306 Average

 

Brian Twomey Interested in Trades, then contact

USD V Non USD Currency Pairs

Break Points GBPUSD 1.2794, GBPJPY 140.19, USDJPY 109.56,

All #Trade below, Incorrect positioning. 1 or 2 Pairs must trade above and 1 below.

Or 1 pair above and 2 below. Who wins, GBPUSD dropped 1000 pips from 1.3400’s, GBPJPY dropped 1200 from 147.00’s.

Same deal EURUSD 1.1270, EURJPY 123.49 and USDJPY 109.56. Same for all JPY cross pairs, Light years higher to go.

For the guy EURAUD long. AUDUSD Break Point 0.6990, EURUSD 1.1270, EURAUD 1.6125, Trades above and deeply overbought. Long is gambling, 7 come 11.

EURJPY Long 121.08 was written late last night on my site. Target 122.00’s. Why Long. Shorts Impossible.

For Trade service to take GBPJPY short today, More gambling and no conception to a financial #price. How do these people obtain their positions and status while commanding the multitudes down the path to ruin is beyond comprehension.

USDCAD Vs GBPUSD 1.3400’s Vs 1.2500’s, or 900 pips. How long can this whopper distance hold, not much.

 

Brian Twomey

Fed Funds, Rates, Averages and Correlations

Since the last Fed raise to 2.50, the daily trade able fed funds effective rate closed and traded at 2.38. From monthly averages  1 to 24 years, Fed Funds effective trades between 2.13 to 2.47. The wide distance between averages is explained by lower averages from the 4 year at 1.02 to the 22 year at 2.19 then 2.47 at the 24 year. Middle averages since Dec 15 raises moved and are moving extremely slow to center positions to cause a wide divide between shortest and longest term averages. The entire 27 year  average curve runs from 0.48 to 2.61 against a 1.54 mid point.

Middle averages overall are overbought yet shortest and longest term averages reside in good positions. A clear explanation why forecasts range from 1 cut, 2 cuts to zero  cuts but a further commentary to exactly what the data reveals.

If the Fed cuts once to 2.25 then Fed Funds effective would trade at the 1 year average at 2.13 as a cut in headline means 12 1/2 points lower must factor to assess the position of the daily trade able rate. Further, 2 cuts means the Fed Effective rate trades at 1.88 and directly at the 20 year average.

Current ECB rate at 0.63 Vs 2.38 reveals a 174 point distance, a cut to 2.26 slashes the distance to 162 points, CAD 1.74 V 2.38 distance is 64 points and closest proximity to the FED among all G10 nations. JPY 0.94 Vs 2.38 = 144 points, AUD 1.25 Vs 2.38 =113 points, NZD 1.50 Vs 2.38 = 88 points, GBP 0.70 vs 2.38 = 168 points and 212 points CHF from 0.26 to 2.38. Fed cuts to 2.26 compresses interest rate distances further.

Distance and interest rate compression as practiced since the 2008 crash means 21 currency pairs trade below 5 year averages while 8 currency pairs to include DXY trades above. The 8 currency pairs as follows share a commonality as all are considered USD pairs: EUR/GBP, EUR/AUD, GBP/AUD, EUR/NZD, USD/CADUSD/CHF, EUR/CAD and DYY. Slash interest rate distances automatically cuts price movements.

Always was my contention in past writings the FED lifted rates far to late, to fast  and at the 1.0 vicinity while post 2008 lows hit at 0.02 and 0.06 and a perfect time for liftoff if normalization was the serious policy move.

If the Fed cuts and the If question is why then I see a one and done without a need to move further, particularly when GDP averages remain extremely healthy to see 2.0’s from now to infinity.

Consider as well a cut means in positive correlation terms, lower 2 and 10 yields, S&P’s, DXY and negative to GDP and WTI. Understand WTI correlates to nothing, literally and is a lost price, floating without purpose or direction.

120 month data below per financial instrument.

FED Funds Vs DXY Correlates healthy 76%

Vital Fed Funds average = 0.98 Vs 92.44 for DXY yet the 5 year year is located at 94.72.

,Fed Funds vs 2 year Correlates 99%,

vital averages below 0.98 Vs 1.437 and 5 year at 1.347.

Fed Funds Vs 10 year Correlates 83%

Vital averages 0.98 Vs 2.382 and trades below the 5 year at 2.34

Fed funds Vs GDP Correlates minus 22%

Vital averages 0.98 Vs 2.20 GDP and 5 year average at 1.98

Fed Funds Vs WTI Correlates minus 57%

Vital averages 0.98 Vs 63.71 and 5 year average at 56.69.

Fed Funds Vs S%P’s Correlates 94%

Vital averages 0.98 vs 2300.348 and 5 year average at 2339.47.

The interesting aspect to GDP is AUD and NZD outperformed GDP in the United States every quarter since 1990 while the GBP and JPY under performed every quarter since 1990.

 

Brian Twomey

GDP and Correlations

GDP at last reported 3.1 skyrocketed over its 10 year average at 2.57 and now sits in ranges from 2.57 to 4.05. GDP below sits comfortably at 2.00 and its 5 year average at 1.98. Overall GDP averages from 1 to 3 year are slightly overbought but in total the averages are in great shape. This means GDP contains no problems for 2.5 and middle 2.0 ‘s from today to infinity.

As was the same scenario under Reagan in the 1980’s, tax cuts were directly responsible for GDP’s fast rise but Trump added extra benefits to slash Obummer’s regulatory burdens and trade wars forces US companies to operate again in the US. Trump’s plan in my estimation is to bring home the powerful manufacturing base so then to export and possibly reduce reliance on traditional service exports. The last positive trade balance in the US was 1975 then the 1960’s.

A Trump re election in 2020 and control of the House of Representatives means a cut to Personal Income taxes and an economy that skyrockets at 4 and 5% GDP to infinity.

Next points below 2.57, 2.49, 2.46, 2.32 and 2.29. Currently overbought from lower averages at 2.17, 2.21 and 2.29.

Off the charts at 3.1 may explain why GDP correlates Positively to WTI and barely to the 10 year yield while negative to DXY, 2 year, Fed Funds and the S& P’s. GDP is lost at 3.1 and needs a correction to then travel higher and to re correlate to its own financial instruments.

Interesting fact is AUD and NZD GDP out performed the US every quarter since March 1990 while the UK and Japan under performed every quarter since 1990.

Correlations 120 data points

GDP Vs 10 Year Yield

Correlations 10%, Vital Averages 2.20 Vs 2.38, GDP 5 year average 1.98 Vs 10 year at 5 year average 2.27. Max range for 10 year is 50 ish points but Max spread relationship is 16 points.

GDP Vs DXY

Correlation -73%, Vital points 2.29 Vs DXY 92.44 yet 5 year average 94.72.

GDP Vs 2 year Yield

Correlation -29%, Vital points 2.20 Vs 1.437 and 5 year at 1.347.

GDP Vs WTI

Correlation 83%, solid to hold in the future. Vital Points 2.20 Vs 63.71 and 5 year average 56.69

GDP Vs Fed Funds

Correlation -22%, Vital Points 2.20 Vs 0.98 and 5 year average 0.84. The spread in this relationship is 0.57, extremely low.

GDP Vs S&P’s

Correlation -45 %, Vital points 2.20 vs 2300.342 and 5 year average 23399.47. The spread in this relationship is 294 points.

 

Brian Twomey

2 and 10 Year Yields

Monthly averages 1 to 10 years for the 10 year yield severely compressed at current 2.24 to 2.74 and at a maximum range of 50 points. Averages and ranges should spread easily 2 and 3 times from current compression particularly when the 2 year maximum range is 80 points.

From June 2 to 13, the 10 year ranged 13 points from 2.05 to 2.18.

10 year Correlation to DXY is practically lost at 35%  and 10% to GDP yet positive at 83% to Fed Funds and positive 80% to the 2 year. Lost correlations to DXY and GDP explains why averages and ranges consolidated as those correlations should trade easily at 80% and above.

Break points to travel higher are located at 2.24, 2.27 and 2.29 to target easily 2.34 and 2.38. Current 10 year from the 1 year average at 2.74 is severely oversold. A far higher yield must break 2.34 and 2.382 to challenge 2.44 and 2.55. Perfect long points are located at 1.79, 1.82 and 1.87 to target 2.29 and 2.32.  A Fed interest rate cut may easily challenge those lower levels further.

The 2 year averages range from 0.91 to 2.52 and a maximum span of 80 points. The 2 year exceeds the range of the 10 year by 30 points. If a trade is warranted then the 2 year is a better trade. The 2 year is overbought from 0.91 and deeply oversold from 2.52.

From June 2 to 13,  the 2 year ranged 16 points from 1.77 to 1.93. Correlation to the 2 year stands on more solid ground than the 10 year as DXY correlates at 80%, S8P’s at 96%, Fed Funds at 99% and 80% to the 10 year. As in GDP correlations to the 10 year, the 2 year is negative 29% to GDP.

Vital supports for the 2 year are located at 1.437 and 1.347. Below 1.347 targets 1.18 and above 1.437 targets 1.80, 2.19 and 2.52. Perfect long point is located at 1.67 – 1.75 to target 2.19. if the Fed cuts then the 2 year travels lower to challenge 1.437 and 1.347.

Brian Twomey

Trades: AUD/USD, USD/JPY, USD/CHF, EUR/JPY and NZD/USD

 

Thank you all for many views lately. Here’s trades for the week, wait for the entry price to trade.

 

AUD/USD

Long 0.6841 and 0.6821 to target 0.6916, Long Term Target 0.7200’s easily

 

USD/JPY

Long 107.79 and 108.05 to target 108.56. Below 107.79 then long 107.54 to target 108.56

 

USD/CHF

Long 0.9891 and 0.9902 to target 0.9953.

 

NZD/USD

Long 0.6474 to target 0.6551. Long Term Target 6859 easily

 

EUR/JPY

Long 121.43 and 121.08 to target 122.12. Long Term Target 125.00’s

 

Brian Twomey

 

 

11 Central Banks Overnight Interest Rates

Overnight Rates Mid Point CHF V FED 1.32,
Total Range CHF Vs Fed 2.12.
Explains Dead Markets,
Prices compressed and trades below 5 Year averages, applies to currencies, Commodities and Most Financial Instruments.
Fed Cuts and Not seen reason why then cut means more dead ranges and price compression.
Higher goes all prices then higher goes ranges to follow. Its stats, Ranges are in stats.
Forget the ridiculous word volatility, its meaningless. stated by traders to impress.
Of 29 Currency Pairs, only 8 pairs trade above 5Y average. DXY trade above, big deal, DXY is dead, un trade able as any viable trade.
Better currencies to trade.
Fed Funds 2.38
Japan 0.99
Europe 0.63
New Zealand 1.50 ish
GBP 0.70
Canada 1.73 Corra Vs 1.74 OMMFR
Sweden 0.75
Norway 1.01
Denmark 0.35
      Brian Twomey
    My trusted friend, http://tantalumwatches.com  exquisite top brand name Watches, #watches, Pocket Watches, Rings, luxurious, please have a look, Brian Twomey

WTI June 17

Recall the WTI trade last December from 44 ish to 52 for 8 quick points in 1 or 2 days. It was the best and only trade available.

The recommendation then was leave WTI alone above 52.00’s. For 6 months, WTI traded above 52, around significant averages and trended higher at barely 2 points per month. The top at 60’s was missed but my specialty is currencies so wasn’t interested in a top.

What changed since December was the overall averages changed slightly yet to no significance but ranges remain today as then at maximum 22 points.

Why dead ranges is because WTI contains negative correlations to DXY, 2 and 10Y Yields, S&P’s, and Fed Funds.

WTI Positively correlates to GDP. If GDP goes higher then WTI will follow. WTI is a lost price and doesn’t have a clue where to trade.

I suspect many other commodities also contain dead ranges and no correlations. The reason is a vast majority of currency and commodities trade below 5 year averages. Of 29 Currency pairs including DXY, 8 trade above 5 year averages while 21 pairs trade below. WTI trades below at 56.69.

If the FED Cuts interest rates and I haven’t seen a good argument as to why then ranges for all financial instruments, including currencies will compress further. The higher prices travel then the expansion of ranges will be seen and the faster prices will move. Downside won’t experience the same quickness to drops as prices are already deeply compressed and lay on the floor.

The top in WTI is located at 63.71. At 56.69 represents a big break for WTI to move higher but 53.02 and 56.06 must break. The next trade we want entry at around  48.75 to target 51.89, 52.46. A break at 53.02 then targets 56.06.

As in Currency Trading, its imperative to know  entry and exit but it is just as vital to wait for the price, no matter what it takes. Why no touch above 52 is because, WTI wouldn’t perform well and the call was correct.

Brian Twomey

Effective Lower Bound V Zero Lower Bound

 

sr877.pdf

My speculation is Effective Lower Bound addresses the decades old central bank problem to managing Inflation rather than focus on interest rates judging by the above paper.

The math in the paper looks complicated but they used Taylor Rules and Taylor Rules are simple to factor and know the appropriate Fed Interest rate in relation to Inflation and GDP. By Q to Q, I factored the appropriate interest rate at 3.24.

Taylor Rules

Inflation +0.5 X (Inflation Minus Inflation) + 0.5 X (GDP Minus GDP) + Current Interest rate.

The 0.5 is called a Coefficient for math Purposes and anchors the Interest rate V Inflation and GDP relationship.

Taylor Rules Using 1.5 and 90 Day Interest rate

Target = 90 Day Rate + Inflation target +1.5 X (Inflation Minus Inflation ) +0.5  X Output Gap.

Only slight differences between the 2 calculations.

 

Fed V Inflation V Fed Funds V GDP

The Fed Set up is to anchor Inflation as an average or range from 1.75 to 2,.00,
Fed funds at 2.25 and 2.13 as daily trade able Rate
GDP anchored comfortably from 2.00 to 3.00.
Recall many Fed Minutes ago, Inflation within range of 2.00, above and below is acceptable.
Looks like this on a cut to Fed Funds 2.25.
1.75 to 2.00 Inflation average or range
Fed Funds 2.25
GDP 2.0 – 3.00
This means Fed Funds daily Trade Rate at 2.13, not a terrible position as Fed Funds middle bounds holds distance to Inflation and GDP and has ability to change in relation to GDP and Inflation Data. Fed Funds becomes the equilibrium point to adjust.
A No cut Set Up
1.75 -2.00 Fed Funds Daily Trade Rate 2.38 or Fed Funds Headline 2.50
GDP 2.00 – 3.00.
GDP Averages sits comfortably well above 2.0 and has ability at 3.00 and above.
    Brian Twomey

WTI June 17

Recall the WTI trade last December from 44 ish to 52 for 8 quick points in 1 or 2 days. It was the best and only trade available. The recommendation then was leave WTI alone above 52.00’s. For 6 months, WTI traded above 52, around significant averages and trended higher at barely 2 points per month. The top at 60’s was missed but my specialty is currencies so wasn’t interested in a top.

What changed since December was the overall averages changed slightly yet to no significance but ranges remain today as then at maximum 22 points.

Why dead ranges is because WTI contains negative correlations to DXY, 2 and 10Y Yields, S&P’s, and Fed Funds.

WTI Positively correlates to GDP. If GDP goes higher then WTI will follow. WTI is a lost price and doesn’t have a clue where to trade.

I suspect many other commodities also contain dead ranges and no correlations. The reason is a vast majority of currency and commodities trade below 5 year averages. Of 29 Currency pairs including DXY, 8 trade above 5 year averages while 21 pairs trade below. WTI trades below at 56.69.

If the FED Cuts interest rates and I haven’t seen a good argument as to why then ranges for all financial instruments, including currencies will compress further.

The higher prices travel then the expansion of ranges will be seen and the faster prices will move. Downside won’t experience the same quickness to drops as prices are already deeply compressed and lay on the floor.

The top in WTI is located at 63.71. At 56.69 represents a big break for WTI to move higher but 53.02 and 56.06 must break. The next trade we want entry at around 48.75 to target 51.89, 52.46. A break at 53.02 then targets 56.06.

 

Brian Twomey