Fed Funds History, Averages and Targets

The Fed Funds rate began trading as a lend/ borrow money market instrument in the 1920’s under the designation of Call Rates or Broker Call rates. Loans were collateralized by stocks and bonds and arranged on the New York Stock Exchange floor by security dealers to cover customer securities held in margin accounts. Margins in the 1920’s were 10% which implied a customer could own 100 shares of stock for 10 cents on the dollar while 90% of the purchase required brokers to finance through banks.


Money markets for lending and borrowing grew and became active day to day therefore banks began trading for funds between each other and between Federal districts by the middle 1920’s. A bank with a surplus loaned money overnight to a bank with a deficit to balance end of day bank books. David C. Wheelock in a recent paper estimates trading volumes from $100 to $250 million.


The question to ease or tight money conditions referred to availability of loans, Call Money rates and Fed reserves.


November 10, 1920


A typical newspaper story to markets and reference to Call Money and Money Markets appeared as follows.


Call Money traded yearly highs at 25% to 6% lows. On November 10th, highs traded 10%, lows 9% and a renewal rate to continue the loan at 9%.


Clearing House Exchanges balances were $938, 987, 775 vs $75, 468, 493.


Sub Treasury debit balances: $1, 014, 895. Fed Credit balances: $62,733, 891.


The Fed withdrew from markets and banks on this day $9, 000, 000.


Total Government deposits: $15,000, 000.


Fed Funds Averages and Targets


Median averages for 31 years of monthly averages or 372 months run from 0.09 to 1.75. Data dates to 1992 and Fed Funds trades daily at 4.33.


Fed Funds trades massive overbought from averages 1 to 26 year monthly averages. Since 2016 and all past Fed Funds reports, Fed Funds traded overbought in every article from 1 to 12 and 15 year monthly averages. The difference today is Fed Funds is much higher and mandatory to add extra months to find the Fed Funds rate average.


Averages from 26 to 31 years are actually in good shape and oversold. The overall range is located from 1.69 to 6.95 and 6.98. The 70% Confidence interval is located at 5.65 and 7.85 at the 90% mark. The larger context to 7.85 is a line at 9.57 reigns supreme against all interest rate activity today and this line will begin a slow descent over the few years.


The Fed from projection reports factors Fed Funds at 5.1 for 2023 or a range from 5.13 to 5.37 then 4.1 for 2024 and 3.1 for 2025. The longer run past 2025 forecasts 2.62 to 2.31.


Fed Funds from current 4.33 to 5.1 to 5.37 informs at least 70 points or approximately 50 points to raises remain available. A 100 point raise places Fed Funds at roughly 5.33 and inside the Fed’s range.


Fed Funds first major break is located at 3.29 and within a 3 point range. Averages from the 31 year are located at 2.6302, 2.6026, 2.5880, 2.3362. Fed Funds will remain trading above 31 year monthly averages for at least the next 2 – 3 years.


Targets from 3.29 are located at 6.44, 4.81, 4.71, 3.19, 2.80, 1.85 and 1.57.


Neutral Rate


2.6302 minus 7.1% Inflation factors the neutral rate at 2.55 or 1.2 minus the 10 year yields. Either way the neutral rate is viewed, the economic scenario factors as lower GDP, higher unemployment and Inflation no change or slow crawl lower.


The Core PCE or the Personal Consumption Expenditure recorded 4.77 for November and just above Fed Funds at 4.33.

Brian Twomey

FX Next Week and GBP/JPY

GBP/JPY began trading life in September 2000 at 148.00’s and traveled to 251.10 in July 2007 or 1031 pip at 147 pips per year. From 251.10 in 2007, GBP/JPY traded 3200 pips lower to 119.80 in January 2009 or 1600 pips per year. GBP/JPY then traded 7600 pips higher from 119.80 to 195.83 in July 2015 or 1266 pips per year. From June 2015 to October 2016, GBP/JPY traded from 195.00 to 125.01 or 7000 pips at 3500 pips per year.


GBP/JPY is currently trading within the 125 lows from October 2016 to 172.00 highs achieved in October or 4700 pips at 783 pips per year. The 1/2 point from 125 to 172 is located at 148 and brings us back to the 148 starting point from year 2000.


GBP/JPY is not only a historic number but a vital point for big moves upon past breaks in June 2016, June 2013, July 2021 and 2008. GBP/JPY’s 14 year average is located at 148.25 and 5 year at 147.36.
GBP/JPY’s historic mid points are located at 148.50, 157.81, 160.42, 185.45 and 199.50.


Today’s GBP/JPY for day trades is also a rare and historic event and may never be seen again due to the non existent perfection to a market price. Today, the perfection is seen.


Upside: 159.86, 159.96, 160.06, 160.16, 160.36, 160.46, 160.56. Bottom: 158.96, 159.16 and 159.36.


Next Week


GBP/JPY trades deeply oversold and contains easy ability to trade to low 164.00’s. Higher must break 165.53.


EUR/USD trades from 1.0379 and 1.0369 to 1.0841 and 1.0848. Above 1.0848 targets 1.0997 and below 1.0369 next level is located at 1.0280. EUR/USD trades deeply oversold from upper averages and overbought from 1.0379.


Watch 1.0677 for higher/ lower EUR/USD over the next week.


GBP/USD trades from 1.1997 and 1.1988 to 1.2542 and 1.2551. The break below 1.1988 is required to target middle 1.1800’s. Any price below 1.1988 becomes a free trade for free money. Longer dated averages are deeply oversold and forces GBP/USD to a long only strategy to match EUR/USD.


AUD/USD 0.6721 is most vital to AUD/USD particularly when NZD/USD trades safely above 0.6225.
EUR/AUD vital point at 1.5444 must break to target lower prices. EUR/AUD has been a good mover currency over last weeks and its a good trade to focus over next week’s.


GBP/AUD traded to tops as reported December 18 at 1.8223, 1.8246 and 1.8286. GBP/AUD traded 1.8274 highs and lows at 1.7902 against following averages: 1.8075, 1.7999, 1.7982 and 1.7843.
GBP/AUD big break for lower is located at 1.7844. GBP/AUD trades deeply oversold and targets low 1.8000’s provided 1.7844 holds.


EUR/NZD or the the counterpart to GBP/AUD trades deeply overbought and must break 1.6685 for lower.

Brian Twomey

Trade Results: CAD/JPY and AUD/JPY

GBP/USD’s big break for lower is exactly 1.2001 and as written December 12th targets 1.1945. Actual below 1.2001 levels: 1.1888 then 1.1775. Caution exists at 1.1775 as GBP/USD becomes oversold.
Recall GBP/USD’s big break line failed at 1.2544 and traded to highs at 1.2440 and lows this week at 1.2088.


EUR/USD trades 1.0378 to 1.0830 and overbought from 1.0378. Below 1.0378 targets 1.0279 Vs shorts at 1.0675.


GBP/JPY and AUD/JPY completed targets while EUR/JPY lows at 138.79 traded between ranges from 141.49 to 137.38. CAD/JPY’s final target at 95.03 traded to 95.83 from 101.00’s and 103.00’s.


SPX 500 at the 3860 line held as shorts traded to 3795 lows for +64 points.


GBP/NZD from 1.9023 traded to targets at 1.9160 and 1.9200 then decided to travel another 130 pips to 1.9300’s. From 1.9023 to 1.9200 factors +177 easy pips.


EUR/NZD from 1.6500’s traded to tops at 1.6900’s and broke vital 1.6647 on the way up. Trade recommendation was long above 1.6647 to target 1.6800’s but also long from 1.6500’s until a resolution at 1.6647. EUR/NZD higher was the result of follower status to leader currency GBP/NZD.


GBP/NZD and EUR/NZD strategy is short especially below 1.6684 and GBP/NZD 1.9286.


GBP/AUD 1.8075 held this week at 1.8081 as GBP/AUD traded to weekly highs at 1.8275.


GBP/CAD shorts below 1.6767 as this level held since December 13. Shorts traded this week to lows at 1.6400’s however no target was offered although range points were written and located from 1.6392 to 1.6767. GBP/CAD traded from range point to range point.


AUD/USD low target at 0.6637 traded to lows at 0.6628.


NZD/USD high and low targets at 0.6471 to 0.6359 traded to 0.6469 to 0.6285. Extra pips was profit on the low side miss.


Severely overbought EUR/AUD at 1.5800’s strategy is continue short only. EUR/AUD’s big break line at 1.5452 must break on the way down. AUD/EUR certifies EUR/AUD shorts as AUD/EUR trades at richter scale oversold.


AUD/JPY and CAD/JPY


AUD/JPY lower averages are located from 84.00’s to 87.00 and higher at 92.23 and 92.70 inside a 500 pips range. Lines from 92.23 and 92.70 are drooping as AUD/JPY trades lower.


AUD/JPY is oversold from 92.00’s and overbought from 84.00’s as both averages will hold AUD/JPY to a 500 ish pip range.


Watch AUD/JPY at a good 91.64 target to relieve oversold.


CAD/JPY averages below are located from 95.73 to 91.00’s and 89.00’s vs 102.61 above.
CAD/JPY targets 97.97, 95.84 and 94.83.


AUD/JPY and CAD/JPY trade strategy is short to follow USD/JPY lower.

Brian Twomey

USD/JPY and JPY Cross Pairs: +3500 Pips

Merry Christmas and glad tidings to Fxstreet, friends, subscribers and readers as God’s blessings arrived much earlier than expected. In previous years as posted prior, trade durations lasted 5 to 8 weeks on a 1000 pip trade. Long term target trades for 18 currency pairs began posting December 12 and targets nearly achieved destinations within 1 week.


Trade results: USD/JPY and JPY cross Pairs +3500 ish pips. CAD/JPY fell an additional 300 pips from 103.00’s in a previous post. And to 97.10 lows at +600 pips total from 103.00’s.


While +3500 pips profits were banked, actual targets failed to achieve but targets are mathematical certainties so no worries and fear not my friends as I bring correct trades and profits to all as I did in 2012. The difference from 2012 is I learned how to factor trades much easier and for far more profits using literally a Pen, paper and $5 calculator.


While focus today is USD/JPY and JPY cross pairs, 12 currencies remain to targets and trades.


As written, if I had my way and means, I would earn every trader fortunes and start a conveyor belt of profits but nobody is interested in trader profits these days. Not websites, trade services, currency analysts. Everybody earns money in markets from not trading.


All possibly understand the “Lost Price” and all this central bank Macro pabulum is meaningless to a market price.


Targets were posted in increments to follow trade to targets. This is done for daily and weekly trades.


Trade Results and New Trades.


USD/JPY targets 138.39, 137.15, 129.65, 125.58. Highs 138.00’s to 131.98. +700 ish pips.
GBP/JPY targets 166.21, 164.10, 159.87, 159.77. Highs 168.00’s, lows 160.27. + 800 ish pips.


EUR/JPY targets 141.49, 137.88, 135.31, 134.48. Highs 145.00’s, lows 140.14. +500 ish pips.
CAD/JPY targets 98.26, 96.07, 95.03. Highs 103.00’s or 101.00’s, Lows 96.68. +500ish pips


AUD/JPY targets 92.46, 89.31, 88.45, 87.93. Highs 93.00’s, lows 88.00. +500 ish pips
NZD/JPY targets 84.79, 82.29, 81.19. Highs 88.15, Lows 83.72. +500 ish pips.


USD/JPY
Continue shorts to target 129.56. Big line break is located at 125.78. Current range 125.78 – 136.95.
Strategy. Allow a correction. Any price above or near 136.95 then short again to target. Much profits remain.


GBP/JPY Big line break now 156.62, 153.00’s and 152.00’s. Continue shorts to target 159.83 and 159.72. Solid lines 164.01 and 165.72.


EUR/JPY big lines 135.30 and 131.00’s to 129.00’s. Target 137.46, Any price above 141.58 is game for shorts.


Upon target completion, reverse the trade immediately and hurry for extra pips.


Next posts: CAD/JPY, AUD/JPY and NZD/JPY. Same strategy, continue shorts.

Brian Twomey Contact brian@btwomey.com

SPX: Short and Long Term Targets

SPX as written from the September 28th post to short and long term averages:


SPX trades between 2 vital averages at 3774.69 to 3534.40.


Below 3534.40 targets the 5 year average at 3367.25 then 3193.52. Above 3774.69 confronts 4121.26 and 4316.71 then on the way to 4511.52 and 4598.46. At 4500’s is top and maximum top range.


SPX from September 28th traded from 3491.76 to 4103.62 or 611 points at 203 points per month. SPX traded above vital 3774.69 and target at 4121.26 fell short by 23 pips.


The 5 year average in September at 3367.25 is now 3451.53 and a rise of 84 pips.


Maximum tops in September at 4511.52 and 4598.46 are today 4359.65, 4412.99 and 4496.59.


SPX today trades a 230 point range between 2 vital averages again at 3860.40 and 3629.79. Above 3860.40 targets 3867.65, 3897.78, 3999.85, 4118.44, 4257.52, 4359.65, 4412.99 and 4496.80.


Below 3629.79 targets the 5 year average at 3451.53 then 3307.81 and next averages at 3287.14, 3187.29, 3118.38, 2985.07 and 2869.44.


SPX is slightly overbought at the 2700’s average at the 10 year and oversold from 3860.40 and 3639.79 to match the same reading in September.


Targets at tops are located at 4496.59 however 5000 won’t trade anytime soon and is actually off by 503.41 points.
The ultimate best trades are located at the 3860 break to target higher levels at 4000’s then begin a short only strategy.


Overall, SPX is looking at 200, 3 and max 400 pip ranges per month for the next 3 months which means tops from 4200’s to 4400 will struggle to achieve destinations.


EUR/USD Vs SPX


EUR/USD for January trades to its seasonal lows and SPX will match EUR/USD’s downtrend. As SPX is established, all stock markets will trade the same result. An overall, short only strategy for the next months would also hold as viable.

Brian Twomey

Long Term Targets: GBP/NZD, EUR/NZD, AUD/NZD, GBP/AUD V EUR/AUD

EUR/NZD dropped 1195 pips in the past 3 months from 1.7500’s to 1.6300’s or 398 pips per month while GBP/NZD fell 1290 pips from 2.0313 to current 3 month lows at 1.9023 or 430 pips per month.


As EUR/USD, GBP/USD and NZD/USD traded higher over the past 3 months, EUR/NZD and GBP/NZD dropped. EUR/NZD and GBP/NZD followed DXY lower from DXY 114.00 highs.

The rise to NZD was derived from NZD/EUR and NZD/GBP.


EUR/NZD higher must break 1.6647 and many averages at 1.6700’s starting at 1.6723, 1.6767 and 1.6797. Above 1.6700’s targets 1.6800’s then averages at 1.6900’s to prevent the next hurdle to travel higher.


EUR/NZD targets 1.6519, 1.6592 then the vital break lines at 1.6640 and 1.6647. EUR/NZD trades in maximum 200 pip ranges to match DXY ranges. EUR/NZD trades on the oversold side however the accurate reading is range bound and without a significant target for immediate entry.

GBP/NZD


GBP/NZD trades deeply oversold however higher faces significant averages at 1.9288, 1.9439, 1.9451 and 1.9548. GBP/NZD’s problem to massive oversold is to match EUR/NZD at 200 pip ranges. GBP/NZD fails to trade its full capacity and was transformed as a wide range and big mover currency to no different than EURGBP and USD/CHF.


GBP/NZD above 1.9288 targets 1.9318, 1.9336 and 1.9347 then becomes stuck in 200 pip ranges from 1.9200’s to 1.9400’s.


GBP/NZD for the week targets 1.9160 and 1.9200’s while EUR/NZD trades as long from lows due to lack of targets.


DXY found supports at 104.35, 104.60, 104.69, 104.94 and 105.35. Above 105.35, DXY opens a 200 pip range from averages at 105.00’s to 107.00’s then 108.00’s and 109.00’s. For the week, DXY higher targets 106.09 vs bottoms at 103.15 and 103.09.


The GBP/NZD, EUR/NZD and DXY road higher remains significantly difficult.


AUD/NZD


AUD/NZD is the exact same currency as EUR/NZD and GBP/NZD and bound by 200 pip ranges.

AUD/NZD matches GBP/NZD to deeply oversold from averages at 1.0766, 1.0807, 1.0815 and 1.0889.


AUD/NZD targets 1.0665, 1.0675 and 1.0694. For the week, 1.0615 remains the best target. AUD/NZD brick wall of averages is located from 1.0700’s to 1.0900’s.


GBP/NZD 1.9023


GBP/AUD 1.8192


EUR/NZD 1.6591


EUR/AUD 1.5824


AUD/NZD 1.0518


GBP/AUD Vs EUR/AUD


GBP/AUD and EUR/AUD 5 year averages are located 1.8186 and 1.5871. For the week, EUR/AUD trades deeply overbought and targets 1.5600’s.


GBP/AUD significant tops are located at 1.8223, 1.8246 and 1.8286.


GBP/AUD vital breaks for lower are located at 1.8186 and 1.8151. The next nearest averages below are found at 1.8075, 1.7999, 1.7982 and 1.7843. GBP/AUD requires a break at 1.7843 to target much lower levels at 1.7700 bottoms.


The break at 1.8186 and 1.8151 places GBP/AUD in a 76 pip trade range from 1.8186 to 1.8075.


GBP/AUD exists the same as EUR/NZD by trading and wandering around without a significant purpose except to follow EUR/AUD.


From the lineup above, driver currencies are GBP/NZD, AUD/NZD and EUR/AUD while GBP/AUD and EUR/NZD exist to move as markets demand and to follow counterpart currencies.


The commonality to all currencies above are 200 pip ranges. In months and years past, above currencies traded ranges from 800 to 1200 pips.

Trading 200 pips ranges is a new low never seen before but its also a further commentary on Central Bank creation in 2016 to slow price speeds and flatten ranges.


Widest range currencies above are the final results. The word volatility to describe price movements no longer exists and actual volatility may never return.


Actual volatile currencies remaining are USD/JPY and JPY cross pairs due to USD/JPY’s relationship to DXY as either a follower or significant leader. If USD/JPY breaks its Correlations to JPY cross pairs then the range and character of USD/JPY will change drastically to slow price speeds and shorter ranges.


Overbought EUR/AUD targets 1.5300’s and 1.5200’s and GBP/AUD will follow. Next GBP/AUD target is located at the average break at 1.8075 then 1.7900’s.

Brian Twomey

Long Term Targets: NZD/JPY, AUD/JPY and Lost Prices

GBP/USD failed to break above 1.2537 and traded to highs at 1.2445 then dropped 300 pips. EUR/USD is now challenged at 1.0830 to break or trade much lower. USD/JPY big line break at 138.61 failed to crack yesterday at 138.17 highs then dropped. USD/JPY breaks higher then targets 140.00’s 140’s is an exorbitant target.


EUR/AUD achieved target highs at 1.5808 but then decided to travel 85 pips higher. The 85 pips are free money pips for shorts. Free money happens from the point when prices leave the range. Termed the lost price for lack of a better word to describe another nuance of trade concepts. Or better highlighted as a lost star that left the constellation of normal prices.


All financial instruments suffer the same lost price phenomemon at some time in time. A lost price is generally a free money trade from 3 to 800 points or pips as it applies to currencies. Only requirement for the trade is time as mathematical certainty means targets must achieve by no other choice.


JPY cross pairs trade in the lost price category currently. Lost price trades are most specifically found in currency cross pairs and rare exceptions to USD Vs Non USD pairs however USD/JPY above 137.15 applies as well as USD/CAD. GBP/CAD currently applies to a lost price.


SPX 500 fails to offer a free money trade but the lost price concept was demonstrated in years past. Fails at free money trades means a price ranges around and traders must earn the money. This is the last aspect we want to earn money.


Known from the lost price trade is direction. GBP/CAD and USD/JPY for example are short only trade strategies. CAD/JPY was a lost price and dropped 300 pips this week.


NZD/JPY and AUD/JPY


Both NZD/JPY and AUD/JPY trade massive overbought and both are lost souls. NZD/JPY targets 84.79, 82.29 and 81.19. NZD/JPY trades against averages at 80.00’s and 78.00’s. NZD/JPY and AUD/JPY view as 3 to 500 pips max as both don’t hold the range power as GBP/JPY and EUR/JPY. Which means both will achieve destination targets but much slower.


Watch NZD/JPY for a break at 86.11.


AUD/JPY targets 92.46, 89.31, 88.45 and 87.93. Caution at 87.93. Watch for a break at 93.25 as AUD/JPY just broke below at the time of writing.

Brian Twomey

Long Term Targets: GBP/JPY, EUR/JPY and EUR/CAD V EUR/JPY

Today’s currency market battle is located between 1.4400’s EUR/CAD and 144.00’s for EUR/JPY. Both correlate at +68%. However EUR/CAD middle averages at 1.4400’s reported Tuesday held and EUR/JPY traded above EUR/CAD. EURCAD averages 1.4465, 1.4452 and 1.4447.


EUR/CAD for today: 1.4451, 1.4460, 1.4469, 1.4478, 1.4486, 1.4495, 1.4505 and 1.4514. Bottom 1.4369. EUR/CAD trades every 9 pips.


EUR/JPY for today: 144.71, 144.80, 144.89, 144.98,145.07, 145.16, 145.25, 145.35. Bottom 143.89. EUR/JPY trades every 9 pips.


As same exact currencies, another crossover lower is in the works as EUR/JPY trades below EUR/CAD.
EUR/JPY and EUR/CAD currently trade above USD/JPY and USD/CAD however EUR/JPY and EUR/CAD provide from 144.00’s insight to above resistance points. A day will come as in past years when USD/JPY and USD/CAD trade between EUR/JPY and EUR/CAD.


GBP/NZD 1.9348
GBP/AUD 1.8216
EUR/NZD 1.6653.


All retain the exact same currency and trading features but deserves the longer term view in tandem for possible crossovers on a larger scale. The question is GBP/AUD as GBP/NZD and EUR/NZD crossovers are impossible for each must trade a shared range from 2600 to 3300 ish pips. Its the difference between oversold at 2600’s and overbought at 3300’s for each currency without a deeper inspection.


GBP/JPY


Deeply overbought GBP/JPY on a break of 166.21, targets 164.10 and eventual 159.87 and 159.77.
Holding GBP/JPY at current levels are averages in the 150’s. Not much to report except shorts from today until 159.00’s trade.


Last long term GBP/JPY trades written prior were 1000 and 700 pips. The trade duration was 6 and 7 weeks. See btwomey.com for past 15 years of trades and verification.


EUR/JPY


Massive overbought EUR/JPY targets are located at 141.49, 137.38, 135.31 and 134.48. Deep caution to 135.31 and 134.48 as vital averages at 135.21 and 131.71 must drop further but not much. Best target is 137.38 and 136.34.


Both GBP/JPY and EUR/JPY trades are clear to overbought and much lower from current levels.

Brian Twomey

Long Term Targets: EUR/AUD, AUD/USD, NZD/USD

USD/JPY big break line for higher on Monday was 138.89 and today 138.64. DXY must break many averages at 105.00’s to target 106.00’s. Currently 106.00’s are located at far extremes and 105.00’s holds as steel walls. Since DXY’s top at 114.79, averages were built above into DXY’s price at about every 100 – 150 ish pips.


As DXY and USD/JPY trade lower then averages will continue to drop. USD/JPY at today’s 138 will eventually become 137.00’s then 136.00’s. This nullifies 140 as this price doesn’t exist except as a possible target above 138.


Today’s inclusion to EUR/AUD, AUD/USD and NZD/USD counts as 10 currency pairs and about 8 more currencies remain. Prevailing currencies include JPY cross pairs, EUR/NZD, GBP/NZD, GBPP/AUD and CHF/JPY. Not much ever happening to USD/CHF and CHF cross pairs year after year.


EUR/AUD


EUR/AUD correlations to AUD/USD runs – 0.21 and +67% to EUR/USD.


EUR/AUD averages are located at 1.5543 and 1.5576 above and below at 1.5382 and 1.5364. From 1.5576 to 1.5364 ranges 212 pips.


Upside targets above 1.5576 and 1.5543 are located at 1.5670, 1.5726, 1.5806 and 1.5808. Trade strategy is long above 1.5576 and short at high 1.5700’s and low 1.5800’s.


Below 1.5382 and 1.5364 targets 1.5280, 1.5058 and 1.5038. Most vital is 1.5364 as this average is perfect.
EUR/AUD is neither overbought or oversold as it exists to trade around as a market creature by EUR/USD and AUD/USD movements. Overall, EUR/AUD is a terrific currency pair.


GBP/AUD contains the same trade strategy as EUR/AUD


AUD/USD


AUD/USD averages are located at 0.6729, 0.6970, 0.7138, 0.7438, 0.7626.


AUD/USD targets are found at 0.6744, 0.6888 and 0.6952. Above 0.6970 targets 0.7094. Above 0.7138 targets 0.7388. Above 0.7438 targets 0.7626 then 0.8158.


AUD/USD trades oversold from long dated averages and overbought from 0.6729. Above 0.6729 contains a long only strategy.


Below 0.6729 targets 0.6637. Overall, AUD/USD is another great currency pair and never to exclude in the repertoire of traded currencies.


NZD/USD


NZD/USD averages are located at 0.6212, 0.6452, 0.6633, 0.6820 and 0.6905. NZD averages begin convergence at 0.6800’s and 0.6900’s.


Targets are located at 0.6359 and 0.6471. Above 0.6452 targets 0.6569. Above 0.6633 targets 0.6722. If 0.6820 and 0.6906 breaks then targets becomes 0.7169 and 0.7241.


The brick wall to NZD/USD is located at 0.6905 and 0.6907.


Below 0.6212 targets 0.6058.


NZD/USD is overbought from 0.6212 and oversold from 0.6820 and 0.6905.

Brian Twomey

Long Term Targets: USD/CAD, EUR/CAD, GBP/CAD, CAD/JPY

Today is CPI. Tomorrow is Wednesday.

CPI 10 minutes after the release, the market price becomes irrelevant.


Trade the market price to CPI to understand CPI is irrelevant. The market price knows today’s CPI number. As CPI numbers drop, the release will provide less and less range to market prices. CPI will look like USD/CAD and the BOC at 40 pips or RBA and AUD/USD at 30 pips. And both central banks changed interest rates.


As we run through long term forecasts, any requests are gladly filled and free of charge.

USD/CAD

The question to USD/CAD is what’s the problem with a terrific currency pair stuck in tiny ranges and not moving to its full potential. USD/CAD for the past 2 years traded monthly ranges at 3 and 500 pips.
Deeply overbought USD/CAD trades in contention to a dropping DXY, severely overbought CAD/JPY and EUR/CAD and GBP/CAD trading at middle ranges. USD/CAD should trade much lower in relation to DXY’s drop from 114.00’s. While USD/CAD traded in relation to DXY at 114.00 highs in September but then rose 1000 pips.


USD/CAD Vs EUR/CAD and GBP/CAD


USD/CAD runs +78% correlation to EUR/CAD but EUR/CAD also runs +88% correlation to EUR/USD. USD/CAD is paralyzed to EUR/CAD movements and EUR/USD disabled to EUR/USD. No need to run GBP/CAD correlations as the same results to correlations prevail. If one currency is affected, all are sympathetic to the exact same numbers especially when the currencies are located in the same universe.


USD/CAD Vs USD/JPY


Deeply overbought USD/CAD offers a validation to short USD/JPY and DXY. USD/CAD is actually trading perfectly in tandem to USD/JPY at current 137.72 Vs 1.3628 or 1.3772 Vs 1.3628. USD/JPY offers USD/CAD above resistance points while USD/CAD offers USD/JPY bottoms.


USD/CAD averages driving current prices are located at 1.2519, 1.2700’s, 1.3033, 1.3101 and 1.3416. All averages are severely overbought.


USD/CAD targets: 1.3346, 1.3238, 1.3203 and 1.3082.


USD/CAD will continue to trade in 2 to 500 pip ranges and USD/CAD ranges will match EUR/CAD and GBP/CAD while CAD/JPY will easily outperform.


CAD/JPY


Averages holding CAD/JPY are located from 95.00 to 89.00. CAD/JPY contains enormous trade ranges by almost 3 X USD/CAD.


CAD/JPY from 103.00’s trades at the top of a 23 year range and targets 98.26, 96.07 and 95.03.


EUR/CAD


Significant averages 1.4465, 1.4452 and 1.4447. Above 1.4400’s ranges from 1.4400’s to 1.4800’s. Below 1.4400’s, ranges from 1.4400’s to 1.4166 then 1.3831.


EUR/CAD last evening broke 1.4400’s and traded to 1.4335 lows.


EUR/CAD strategy is short highs below 1.4400’s.


GBP/CAD


GBP/CAD is the exact replica of EUR/CAD. GBP/CAD trades from 1.6392 to 1.6767 or 1.6767and 1.6892 to 1.7300’s.


GBP/CAD also broke last evening at 1.6767 and traded to lows at 1.6670.


Trade strategy is short highs below 1.6767.

Brian Twomey

VIX and Trades Strategy

VIX traded 3.51 points last week Vs SPX at 133 points. VIX matched SPX at 3.51 X 38 or 133.38. VIX traded 4.67 % lower than SPX. 

VIX trades its natural location inside the Yield Curve. All financial instruments to include currencies trade inside the yield curve. DXY and USD/JPY are best examples and offered at X 100. The percentage of the currency price must align with the percentage of the yields and yield curves to properly align financial instruments. 

The yield curve averages trades at 4.07 or right around the 3 year yield. The word around because rare days when an average falls exactly on a specific yield so to allow range for a financial instrument to trade. 

The 3 year yield at 4.04 falls between the range of the 2 and 5 year yield at 3.71 for the 5 year and 4.71 at the 2 year. 

To align our numbers: 3.71, 4.04, 4.07, 4.71. Yields X 5 = VIX. 

3.71 = VIX 18.55, 

4.04 = VIX 20.20, 

4.07 = VIX 20.35, 

4.71 = VIX 23.55. 

Overall, 18.55 to 23.55. 

The yield curve average at 4.07 factors to highs at 4.83 and 4.90 or 76 and 83 points higher. This offers VIX at 24.15 and 24.50 for next week and lows at 16.55. 

The numbers may re arrange to understand the tiny range to VIX / Yield relationsips. 

3.71 = 0.2695 = VIX 0.0539

4.04 = 0.2475 = VIX 0.0495

4.07 = 0.2457 = VIX 0.0491.

4.71 = 0.2123 = VIX 0.0424. 

An inverted yield curve is irrelevant to a daily and weekly VIX trade since the focus is not inversion but specific yields. 

VIX is performing its current natural market function.

Brian Twomey

Long Term Targets: EUR/USD, GBP/USD, USD/JPY

EUR/USD Long term target posted November 11 at 1.0594 traded last Monday at 1.0592. The November 11 range for the day was 1.0182 to 1.0363. Add this trade to the gazillions of long term target trades posted over the past 12 and 15 years.


Long term targets posted Nov 11: 1.0592, 1.0798 and 1.0967. The big line break Nov 11 was 1.0805. The new line is now 1.0830. EUR/USD averages are rising however slowly yet this is normal currency market movements.


The new long term targets are located at 1.0653, 1.0834 and 1.0989. Most vital averages driving EUR/USD are 1.0830, 1.1109, 1.1386, 1.1643. EUR/USD trades deeply oversold from 1.1100’s. 1.1300’s and 1.1600’s

.
Above 1.0830, targets 1.0989. Above 1.1100’s targets 1.1332.


Nov 11 below targets 1.0375, 1.0417 and 1.0592. Last week, EUR/USD traded to 1.0442.


New low targets 1.0309 and 1.0328 and below targets 1.0224 and 1.0138.


Targets at 0.9800’s and 0.9700’s are at deepest extremes. EUR/USD strategy above 1.0309 and 1.0328 is long only.


Long term model is written in stone, correct and should hold for the next 6 months or longer. Only a 500 ish pip move changes targets.


EUR/USD range 1.0328 and 1.0309 to 1.0830.


EUR/USD Vs Commodities and Risk assets


XAU/USD = EURUSD
XAG/USD = EURUSD
SPX/USD = EURUSD


Copper/USD = EURUSD
NaturalGas/ USD = EURUSD
Yields/USD = EURUSD


GBP/USD


GBP/USD for the most part trades within the confines of the Brexit vote drop from 1.3600’s to 1.1900’s.
Long term targets are 1.1961, 1.2314, 1.2544 and 1.2721. GBP/USD big break line is located at 1.2537 then 1.2894, 1.3325 and 1.3771.


GBP/”s driving averages are found at 1.2894, 1.3325 and 1.3771. GBP/USD trades oversold from all averages.


The current range 1.1950 and 1.1961 to 1.2314 and 1.2537. A break below 1.1950 targets 1.18935 and 1.1719.


GBP’s strategy is long only and the same as EUR/USD.


USD/JPY


USD/JPY trades deeply overbought from averages 125.00, 119.00, 115.00 and 112.00.
Long term targets: 138.89, 137.15, 129.65, 125.58, 122.66. USD/JPY contains ability to trade 1000 pips easily and trade strategy must be viewed in 1000 pips.


USD/JPY’s big break above 138.89. to target 140.20 and 141.51.


USD/JPY is following DXY lower on a slow crawl and a sell high strategy.

Brian Twomey

EUR/USD V USD/CAD: 7 V 24 Hour

The 7 Vs 24 hour trade is a trade within a trade and for day trades only. Trust this point. The 4 hour chart doesn’t work, won’t work and its impossible to maximize the full profit potential. Over past months, deep research focus is 7 Vs 24. Instead of 24 hours, trades can factor to seconds and minutes. A 4 hour chart covers 240 minutes. The primo time to trade according to the ECB and the new 2016 interest rate rules is 7 and 24 hours. I don’t make the rules but instead follow the ECB dictates.

Current question. Can I factor the 24 hour trades easier and only for 24 as factoring 10 and 12 daily trades is a time monster. At what point may a 24 hour trade clash with a weekly vital level. While we trade a price, the gamble is to trade a market price to market price. Many traders do this and maybe they are right or maybe wrong. If wrong, most traders don’t know how to repair and profit from what appears to be a loss. A loss requires a doubling of profits to reach breakeven in the account.

USD/CAD yesterday full weekly 1.3379, 1.3419, 1.3500, 1.3581, 1.3662. Today: 1.3390, 1.3431, 1.3514, 1.3597, 1.3680.

USD/CAD is no different from all currencies as range points currently affect day trades. Currently is the key word. Normal weeks. range points distance is never this close. The 7 and 24 hour trades within 2 larger levels. A normal week is seen for example as 1.3379 to 1.3581 or a larger distance.

Yesterday’s 7 hour top 1.3493 and 24 hour 1.3521 Vs bottoms 1.3357 and 1.3365. The trade was normal for normal price movements. Any price over 1.3493 and 1.3521 was in extreme to overbought. Then USD/CAD traded to 1.3644 in an extraordinary move.

We had 1.3500, 1.3581, 1.3662. The smart approach is to take 1.3521 to its full conclusion to understand our levels and price location.

Next 1.3552, 1.3560, 1.3568. Every 8 pips to full conclusion is 1.3677. Seen from USD/CAD yesterday isn’t just a rare event but an event not seen since the 2016 changes. Prior to 2016, USD/CAD traded yesterday’s price range a gazillion times and more on rare days.

The only answer to yesterday’s move was add 1 lot and add anywhere as overbought was at extremes above 1.3493 and 1.3521.

USD/CAD Today

USD/CAD

 Long Short Line 1.3557

 Most Important 1.3523 and 1.3543 Vs 1.3565, 1.3574, 1.3582, 1.3591, 1.3608, 1.3617, 1.3626

Bottom 1.3488 achieves by 1.3505 and 1.3523

Upper target 1.3626

Continuation Fail 1.3591

USD/CAD today traded lows at 1.3521. Isn’t that interesting but also at breakeven plus profit on add 1 lot.

Today 7 hour bottom 1.3488 and 24 = 1.3383. Vs 1.3626 and 1.3668.

Known to USD/CAD automatic is overbought and short is the only strategy.

Brian Twomey

EUR/USD Validation

Information for the sake of information. My friend tells me currency analysts began working for currency brokers and later somehow picked as currency analysts. I see this as interest for increased salary and benefits and failure to learn about markets and price movements. Obviously an understudy fails to exist at these currency brokers and client profits remain luck strokes. Analysts today speak at universities for $300 per hour. The Daily Fx crook who stole my trades and commentary spoke at Duke University law school.

Que sera sera as they say in Barcelona as 70% traders remain losers. Charts, entry = profits remains the only game in town and this began the downfall. The computer allowed the poison to spread.

Set up below serves for any financial instrument on the planet.

EUR/USD 52

 Long Short Line 1.0369 

 Most Important 1.0329 and 1.0360 Vs 1.0375, 1.0382, 1.0388, 1.0395, 1.0408, 1.0414, 1.0421

Bottom 1.0317 achieves by 1.0330 and 1.0343

Upper target 1.0421

Continuation Fail 1.0395

Proof: 1.0317,1.0343,1.0395,1.0421 = 1.0369.

7 numbers for upside prices is required for balance. Factored from interest rates and counted in your head or your fingers. 3 bottom numbers is required for bottom balance. The shorter the time frame traded then the more numbers are required.

The 24 hour trades requires 6 numbers but I offer every number to target in the price series. EUR/USD yesterday was a 200 pip profit trade and done by 6 numbers.

Balance is seen by math as proof to the numbers in the series are perfect and correct.

Balance is also seen in the concept as what is done at the top is also done at the bottom.

Today USD/CAD serves as a perfect example

USD/CAD 68

 Long Short Line 1.3425

Most Important 1.3373 and 1.3413 Vs  1.3433, 1.3442, 1.3450, 1.3459, 1.3476, 1.3484, 1.3493

Bottom 1.3357 achieves by 1.3374 and 1.3391

Upper target 1.3493

Continuation Fail 1.3459

See top 1.3459 = 1.3357 bottom. Bottom 1.3374 = 1.3476 top. Bottom 1.3391 = 1.3493 top.

The daily range number decides if a 1 to 2 pip discrepancy exists in a price series as seen by USD/CAD. Tomorrow’s USD/CAD may or may not trade perfectly or against a 1 to 2 pip discrepancy.

GBP/JPY lives daily with a 2 pip discrepancy.

We’re not dealing with rocket science yet lacking today is understanding. Markets weren’t designed for complication but designed to be able to trade and profit successfully.

If I showed the deeper interest rate part to today’s commentary, all would say OH, I see, I now understand. But this won’t happen. Better to maintain a man as honest than to allow a crook access as happened to my friend Peter years ago.

Brian Twomey

FX Weekly: Gaps and Trade Opportunities

DXY big breaks this week are located at 106.30, 106.65, 106.79, then 108.30, 108.46, 109.26, 109.42. DXY lows target 105.18 and 105.09. DXY 106.79 becomes most vital as 107.00’s fail to register this week. DXY last week 107.81 rose to 108.30.


The DXY information is not only accurate but DXY levels serves to trade every weekly market price on the planet from stocks, commodities, interest rates and any currency. Nothing more is required and we may submit as is.


Economic announcements are located inside the price. Don’t surmise what is the level of GDP or NFP when the actual number is located within DXY. Possibly GDP or NFP is located from DXY 106.30 to 106.79 or maybe 105.18 to 106.30. Fed Funds 12 and 25 point daily movements maybe found within the same DXY levels.


The obvious GDP route is enter the 108 numbers for perfect accuracy and 300 numbers or 25 years for NFP averages as NFP was first introduced in February 1939.. Normally 20 and 25 years serves as an accurate NFP forecast to include actual and off sync. The statistical agencies in charge to factor and release economic data forecast anywhere from 3 months to barely 1 and 2 year averages. NFP requires a minimum of 5 years data or 60 months.


EUR/USD


As DXY opposite, EUR/USD levels are located from 1.0351, 1.0316, 1.0271, 1.0235. 1.0199 and 1.0056. EUR/USD trades overbought and a short only strategy for the week to target 1.0253. Last week’s target at 1.0215 traded to 1.0354 lows from 1.0446. This week is a continuation short from last week.
EUR/USD traded 226 pips last week Vs DXY 245. This week is expected 170 to 184.


GAP Opportunities


Last week Gap opens occurred in AUD/NZD long, AUD/CAD and NZD/CAD short. This week Gap opens include short GBP/CAD, EUR/CAD, AUD/CAD, NZD/CAD. Further opportunities include long CAD/JPY, CAD/CHF, USD/CHF.


Problem pair USD/CAD traded 179 pips last week Vs 375 for GBP/USD. USD/CAD as problem currency lacks ability to trade 1/2 GBP/USD and underperforms to EUR/USD and DXY.


GBP


This week’s stars are short overbought GBP/USD, GBP/CAD, GBP/AUD and cautious short to GBP/JPY while no thrills exist to GBP/NZD and GBP/CHF. EUR/NZD is the best currency rather than GBP/NZD.
Overbought GBP/AUD will assist EUR/AUD lower. Watch EUR/AUD 1.5278.


JPY Cross Pairs


Overbought to GBP/JPY and NZD/JPY while oversold to CAD/JPY and CHF/JPY. EUR/JPY and AUD/JPY at fairly neutral will follow the crowd. Overbought GBP/JPY as leader should assist JPY cross pairs lower on a short only strategy for the week.


USD/JPY weekly levels: 137.81, 139.25, 139.97, 140.69. USD/JPY 140.69 should match to DXY 108.30 and 108.46 and EUR/USD 1.0235.


SPX 500 traded 101 points last week or just shy of 1/2 DXY. Low target this week is located at 3918.


Overall, an average trade week.

Brian Twomey

FX Next Week and Yield Curve Inversions

Since the Fed’s last raise November 3, Fed Funds rate opens and closes at 3.83. The Fed Funds rate once traded freely on its own with highs and lows as any financial instrument. In 2000, Central banks implemented meetings every 6 weeks. Prior to 2000, central banks met anytime they desired and changed interest rates at their own discretion.


Traders were forced to factor Fed Funds for oversold and overbought status for possible changes to an unknown date to meetings. Fed Funds then was known as the discount rate and this rate is discounted to headline. The question was the spread and insight to possible interest changes.


Bernanke and Big Sis Yellen changed Fed Funds into an immovable fixed rate. Fed Funds moves every 12 points with every 25 point change to headline and remains fixed.


From 3.83, Fed Funds trades daily at its maximum 25 points and minimum 12 from 3.80 to 4.05. Yields are priced from Fed Funds and normally trade much higher rates.


The question to past yield curve inversions occurs particularly when higher yields trade below lower yields especially the 10 to 2 rates. How serious is an inversion must be measured by the 10 year to 3 month to determine where was Fed Funds location in relation to inversions. Avoidance of recession in 6 months on a 10 to 2 inversion might nullify recessions by money supply adjustment.


Due to Fed Funds at Fixed rates, speculation to inversions under a completely different system as existed in past years happens when yields trade below Fed Funds rather than the old definition of 10 to 2 year crossovers and imminent economic danger.


Under the new speculation to inversions, the 30, 10 and 7 year yields meet the criteria to inversions as Yields trade below Fed Funds by 11, 15 and 3 points at 3.72, 3.68 and 3.80.


Further, interest on reserves or IOR trade 3.90, SOFR 3.80 and 3.76 for Tri Party and Broad collateral rates.
Fed Minutes released yesterday revealed Treasury Markets were functioning normally.


The overall assumption is yesterday’s inversions and recession no longer applies as the criteria pertains to a systemic condition that no longer exists.


The Week


Best trades for next week are short to severely overbought EUR/CAD, GBP/CAD, AUD/CAD and NZD/CAD. All are subject to Gap openings on Sunday night.


Next is deeply overbought EUR/USD, GBP/USD and NZD/USD.


AUD/USD is excluded as it imposes a different set of circumstances than EUR, GBP and NZD/USD.
When AUD/USD traded 0.6500’s and 0.6600’s, AUD/EUR also traded in lock step to AUD/USD at 0.6500’s and 0.6600’s. This marriage left EUR/AUD paralyzed to movements over months.

AUD/EUR now trades 0.6480 or EUR/AUD 1.5413 and AUD/USD at 0.6700’s. AUD/USD lower must break 0.6673 and AUD/EUR 0.6552 or EUR/AUD 1.5262. AUD/USD and AUD/EUR remain in a tight relationship.


EUR/AUD or AUD/USD requires a wider range movement to break the AUD/USD and AUD/EUR relationship and force a better trade for both currencies. Until this happens, AUD/USD and EUR/AUD will suffer to total range movements and reduced profits.


Overbought EUR, GBP and NZD/USD is the direct result of DXY. Last week big lines above were loacted at 107.81 and 108.34 and DXY traded to 108.01. DXY above averages now exist at 106.81, 108.27 and 108.42 and 109.29. DXY averages above are dropping slowly as weeks progress.


DXY traded 232 pips this week Vs EUR/USD at 226. DXY targets 105.05 this week and another 200 pip range week.


USD/CAD as a result of DXY averages, faces many and massive lines at 1.3400’s and 1.3500’s on a short only strategy. USD/CAD first major line is located 1.3329. USD/CAD averages above are dropping slowly every week along with DXY.


USD/JPY last week 139.44 to 140.29 or 141.15 and 142.01. Highs traded to 142.24 and lows at 138.02 on the break ay 139.44.


USD/JPY this week: 137.76, 139.29 and 140.05. Above 140.81 then higher for USD/JPY. Overall, USD/JPY will follow DXY lower.


EUR/NZD long for next week anywhere at 1.6500’s. AUD/NZD trades massive oversold while GBP/NZD also heads long but least favored. EUR/NZD is the best of the 3 currencies.


GBP/JPY and NZD/JPY trade overbought while EUR/JPY waits for a resolution at 143.29 and oversold to AUD/JPY and deeply oversold CAD/JPY. JPY cross pairs lack uniformity.

Brian Twomey

EUR/USD V USD/EUR

EURUSD Topside: 1.0340, 1.0347, 1.0353, 1.0360, `1.0373, 1.0379, 1.0386,


EURUSD Bottom 1.0282, 1.0288, 1.0295, 1.0308, 1.0323.


EURUSD Topside as USD/EUR = 0.9671, 0.9664, 0.9659, 0.9652, 0.9640, 0.9634, 0.9628. As EUR/USD rises, USD/EUR falls.


EUR/USD Bottom as USD/EUR = 0.9687, 0.9701, 0.9713, 0.9720, 0.9725. As EUR/USD drops, USD/EUR rises.


USD/EUR topside: 0.9682, 0.9688, 0.9700, 0.9706, 0.9712, 0.9718, 0.9725.


USD/EUR topside as EUR/USD = 1.0328, 1.0309, 1.0302, 1.0296, 1.0290, 1.0282. As USD/EUR rises, EUR/USD drops.


USD/EUR bottom: 0.9627, 0.9633, 0.9639, 0.9651, 0.9667


USD/EUR Bottom as EUR/USD = 1.0344, 1.0361, 1.0374, 1.0380, 1.0387, , As USD/EUR drops, EUR/USD rises.


Every financial instrument currency, stock, commodity, whatever contains an equal opposite to assure ranges are tightly bounded, derived from interest rates and shown, proven by math perfect. Markets trade perfectly as scientific financial instruments and again proven by math.


Slight discrepancy between USD/EUR and EUR/USD levels. EUR/USD deals today with 52 while USD/EUR 49. Broken down to lowest common denominator, EUR/USD perfect at 6 pips and USD/EUR at 6.5 to explain slight difference at 0.5.


From academic research papers years ago, today’s number 6 is called bounce patterns. USD/EUR and EUR/USD trades in 6 pip intervals which means every pip break must reside within the interval before the price moves again. The why is explained by EUR/USD and USD/EUR levels.


Note for example EUR/USD 1.0308 Vs USD/EUR 1.0309 or 0.9700. EUR/USD 1.0295 vs USD/EUR 1.0296 or 0.9712.


EUR/USD trades in a constant battle with USD/EUR as each side to movements is responsible for each other. Pips truly matter as every traded pip holds important commentary to the next traded price.


While this all may look simple and easily explainable, the upside and downside price are 2 completely separate animals. Downside prices must factor completely different from upside levels to capture opposite levels to the financial instrument.


SPX for example is viewed as 4003.58 but its also 0.0002497. Easier to view and trade SPX as 0.0002497 as only 5 points and 5 levels must convert to cover tops and bottoms.

Brian Twomey