CHF/JPY achieved triple tops at 118.00’s in 2016, 2017 and 2018 then dropped 1600 pips in 2016 and 1200 pips in 2018. Characteristically, CHF/ JPY is a a trend currency and not normally in our purview as margins are low and movements are slow. The 2018 drop to 106.00’s lasted 4 months or 300 pips per month.
The broader analysis to CH/JPY is the ongoing drop from 157.00 highs in 2015 to 102.00 lows in 2016 or roughly 458 pips per month. Today’s currency markets however are dealing with a much slower price speed from 2016 interest rate changes.
The last long term CHF/JPY trade and posted on FXstreet in 2018 was short 118.00’s to target 112.00’s. Trade duration was 3 weeks.
The same exact 600 pip trade is upon us however we’re short from 120.00’s, high 119.00’s or anywhere to target 114.43. Vital to break lower begins at 117.79, 116.86, 115.87, 115.45 and 114.67.
The main break is located at 117.79 then CHF/JPY gains speed to downside targets. CHF/JPY’s price above 118.00’s doesn’t exist therefore 600 pips of shorts are available until 114.00’s trade.
CHF/JPY’s price is found by USD/JPY divide by USD/CHF. CHF/JPY correlates to USD/JPY at + 88% and USD/CHF +44%.
The currency to view next is CAD/ZAR as the perfect opposite pair to EUR/USD.
GBP/CAD on going trade +92 pips and running. EUR/CAD from 1.4761 lows runs +77 pips.
Common themes for this week’s currency markets are 11 of 28 currency pairs at crucial support and resistance levels to include USD and non USD pairs. As drivers to currency markets over many past weeks, particularly cross pairs, the moment is here to determine a resolution to USD much higher or EUR, GBP, AUD and NZD much lower.
Analytically, 3 categories are responsible as main arbitrators to USD and non settlement: overbought JPY cross pairs, oversold GBP/CAD, EUR/CAD, AUD/CAD, NZD/CAD and EUR/USD, GBP/USD, AUD/USD and NZD/USD. For GBP/CAD, EUR/CAD, AUD/CAD and NZD/CAD are middle and end currency pairs and traditional neutral currencies.
The USD side of the equation is confused to clear direction as USD/CHF sits just below its vital high / low point while USD/CAD is deeply oversold and massively overbought to USD/JPY. For CHF/JPY as the perfect complement to USD/JPY also retains the position at overbought. USD/CAD and USD/JPY are clear while USD/CHF matches EUR/USD position at a do or die moment.
DXY trades between 90.24 and 91.57. Above 91.57 then 92.89 and 93.70.
Added to the USD problem is the 10 and 12 EM currency pairs followed every week as all sit at highly neutral positions. Last week, the majority of EM currencies began the week deeply oversold. Wide range currencies USD/ZAR and USD/BRL both begin the week at perfect neutral while USD/TRY as outlier to EM begins the week overbought.
USD/TRY is running Correlations to EUR/USD at +56%, USD/ZAR at a correct -60% and -55% for USD/BRL.
The 2nd currency market theme is ranges remain severely compressed to include EM currencies. Currency prices contain severe noise problems inside current prices, particularly cross pairs as cross pair prices are underperforming to counterpart USD Vs Non currencies.
The break out is coming as prices cannot retain current positions.
Problems to EM include USD Vs DKK, HRK, HUF, MYR, RON, RUB, BGN, KRW, PHP, SGD.
Problem pairs to G28 include EUR/USD, GBP/CAD, AUD/CAD, NZD/CAD, GBP/NZD, AUD/NZD and GBP/AUD. Stand clear GBP/AUD yet watch closely as GBP/AUD price is set to explode.
USD/CAD Vs EUR/CAD +96%, GBP/CAD +49%, AUD/CAD +26% and NZD/CAD +51%. EUR/USD Vs EUR/CAD -36%, GBP/USD Vs GBP/CAD -20%, AUD/USD Vs AUD/CAD +0.01, NZD/USD Vs NZD/CAD -0.21%.
Trade order this week is EUR/CAD, GBP/CAD and NZD/CAD while AUD/CAD is lost without a clue. Seen over last week’s is USD/JPY dominates correlations to JPY cross pairs while USD/CAD owns by correlations EUR/CAD, GBP/CAD and mildly to NZD/CAD.
Note cross pair arrangements as one side to a risk pair and the other side to non risk. Examples include EUR/JPY, EUR/CAD, GBP/CHF. Cross pairs are perfectly balanced to serve currency markets from either side of the currency arrangement to 17 of 28 currencies. Broken down, the recommended view is risk pair as in EUR, GBP, AUD, NZD Vs USD/JPY, USD/CHF and USD/CAD or overall EUR Vs USD.
Correlations must retain associations to the risk or non risk side of the currency pair and boundaries are clearly defined to the correlation and to the currency price.
8 outliers exist: EUR/NZD, GBP/NZD, EUR/GBP, CAD/CHF, AUD/NZD, EUR/AUD, GBP/AUD and CHF/JPY. When correlation fail or retain low readings to counterparts then above pairs become USD pairs and move with DXY. GBP/NZD as the clear example.
Underperformance to cross pairs over many past weeks is the result of CAD, CHF and JPY dominating correlations while outlier pairs became USD. Good question to cross pair Realignment as cross pairs move back to rightful correlation owners as EUR/USD and EUR/JPY, GBP/USD Vs GBP/CAD, EUR/USD to EUR/CHF, AUD/USD to AUD/CAD and GBP/USD to GBP/NZD.
When USD as in CAD, CHF and JPY dominate correlations to cross pairs, ranges trade quite small while EUR, GBP, AUD and NZD govern cross pairs then ranges expand. All decided long ago by price arrangements and associations to currency pairs.
EUR/USD 1.2006 decides higher or lower GBP/USD 1.3763 AUD/USD 0.7673
NZD/USD 0.7129 AUD/CHF 0.7015 NZD/CHF 0.6517
USD/CHF 0.9141 GBP/CAD at Richter Scale oversold. Watch for possible Gap opening higher. EUR/GBP 0.8726.
USD/TRY Short 8.3241 and 8.3321 to target 8.1479 then 8.1159. USD/PLN 3.7930 break below targets 3.7709 and above 3.8101 then 3.8156
USD/BRL Long 5.4240 and 5.4170 to target 5.4727 USD/DKK long 1.1684 and 6.1617 to target 6.1886
USD/HRK Long 6.2655 and 6.2619 to target 6.2910
USD/CZK Long 21.4730 and 21.4590 to target 21.6404. Long above 21.6962 to target 21.7520.
USD/HUF Long 298.94 and 298.23 to target 300.71
USD/MYR Long 4.0879 and 4.0864 to target 4.1002
USD/RON Short 4.1012 and 4.1039 to target 4.0881. Short below 4.0862 to target 4.0749. Long 4.0749 to target 4.0825.
USD/RUB Long 74.99 and 74.99 to target 75.23. Long above 75.31 to target 75.56. Short 75.56 to target 75.40
USD/ZAR Above 14.5039 targets 14.6052, below 14.5039 targets 14.3013. Weekly ranges are extremely wide this week.
A sad sad day to announce the passing of Welles Wilder April 18 at the age of 85 in Christchurch New Zealand. Welles commuted between Greensboro NC ,home base of the Delta Society, and New Zealand. Perry Kauffman ran the Delta Society when Wilder was away and I imagine alongside Wilder’s son David.
Most would know Welles Wilder as the inventor of RSI, Average Directional Index, Average True Range, and Parabolic SAR. Author of New Concepts in Technical Trading Systems, 1978, The Delta Phenomenon, Or, The Hidden Order in All Markets, 1991
I interviewed Welles Wilder for Stocks and Commodities magazine in 2008 and had a few conversations. particularly as I not only live close to Wilder but also to John Hill where Wilder visited 1000’s of times. The giants of giants of markets met and hung around John Hill’s 60 acre compound in Hendersonville NC over decades. John Hill is my buddy, a good man and a giant of markets over the past 60 years. John Hill wrote the forward for Inside the Currency Market.
Wilder’s market expertise among many was calling perfectly market turning points, reversals. He was a master of reversals.
Surviving The Test Of Time
J. Welles Wilder
by Brian Twomey
J. Welles Wilder is an author, market technician, and inventor of indicators and trading systems that have become classics over time. Without Wilder’s contributions to technical analysis, it would be hard to imagine what we would have in the field, considering so many of the basics are derived from his work — relative strength index, average directional movement index, directional movement index, average true range, parabolic stop & reverse… and there’s more that will influence traders for many years to come. Wilder also founded Delta Society International, expounding the theory of the delta phenomenon in the 1980s, about what he refers to the perfect order of the markets.
Wilder is the author of four books: The Delta Phenomenon; Wisdom Of The Ages In Acquiring Wealth; Adam Theory Of Markets; and his most famous work, New Concepts In Technical Trading Systems. Stocks & Commodities contributor Brian Twomey conducted this interview in July 2008.
There is so much technical analysis out there that it is not easy to come up with something different anymore!
Earlier interviews alluded to your degree in mechanical engineering from North Carolina State University and your prior work as a real estate developer before your career in trading. Were you born and bred in North Carolina?
I was born in Norris, TN, in the middle of the Great Depression. My father, who had a master’s degree, worked on a Tennessee Valley Authority coffer dam with a pick and shovel. In my first three years, we moved from state to state before we ended up in Greensboro, NC. And that has been my home for the last 70 years. Since 1986, I have also had a home in Christchurch, New Zealand.
Using work from your book The Delta Phenomenon, could you expand on the perfect order of markets in relation to movement and time? What does this say about today’s market watchers and technicians?
All markets have a perfect order in five different time frames. The shortest time frame is intraday or a four-day series. The longest time frame is 19 years. There are only two markets with enough data to solve for the super long-term delta order. Those are the Treasury bonds and the stock market.
Each perfect order relates to two things. First is the number of turning points in the series for that particular market, and second is where the inversion comes. The inversion always comes at point 1. For example, let’s say that a market has 10 turning points. From point 1 to point 10, there is a high/low order or a low/high order that this particular market follows.
This order of the markets is the number of points and at which point the inversion can occur. This order is perfect, and once it is discovered, it will never change. Although the delta points have a perfect order according to these parameters, the exact placement of the points is not perfect.
The way we handle this is to take 10 series of turning points for a certain market. The placement of the turning point is the average of the placement of the 10 points. In a strong market move, we would expect the next turning point to come late because of the momentum. If a market is moving sideways, we can expect the turning point to be very close to its average position.
Regarding movement, the biggest moves often come on either side of point 1. There are intermediate-term points, the medium-term points, and the long-term points. The distance between these three sets of points increases with each set. When you get two or three different turning points coming at the same time, high or low, most of the time this will be a significant high or low point.
…Continued in the March issue of Technical Analysis of Stocks & Commodities
Sadly, I cannot access the remainder article nor can I find in my records due to Stocks and Commodities paid access.
Here are the questions written and a few were submitted by traders at the Market Technician’s Association chapter in Charlotte NC.
1. Earlier interviews alluded to your degree in Mechanical Engineering from North Carolina State University and prior work as a real estate developer before your career in trading. Are you born and bred in North Carolina?
2. From your 2001 book the Delta Phenomenon, would you expand on the perfect order of markets in relation to movement and time. What does this say to today’s market watchers and technicians.
3. Would you also expand on your founding of the Delta Society in 1984. What is the purpose and functions, products and services offered.
4. Your classic 1978 book New Concepts in Technical Trading Systems gave us standard indicators used today such as Relative Strength Index, Average Directional Index and Directional Index, Average True Range and Parabolic Stop and Reverse. You were light years ahead of your time. Can I ask what you saw in 1978 that helped you develop these indicators that survived the test of time. Was your main focus on prices, market volatility, trends, market behavior.
5. Because these indicators are so popular today, are markets any different today than in 1978. If so how.
6. Regarding these classic indicators, do you have a favorite? Any one you like above all others. One that has really withstood the test of time.
7. Do you still believe these indicators should be used as stand alone indicators or used in conjunction. And which ones.
8. From New Concepts, I notice your Volatility System and Volatility Index with the use of the Parabolic time/price system. I know this is your methodology for trading. Has your system for trading not changed over the years. How do you trade today with your systems.
9. Would you expand on the Parabolic Stop and Reverse indicator. What is the basis for its reliability.
10. Before writing New Concepts in Technical Trading Systems, how long were you trading and how successful were you.
11. What books would you recommend to read for today’s markets that would help traders become more proficient.
12. If you were starting out today as a new trader, what indicators would you recommend and what methodology would you recommend . How would you advise a new trader to approach today’s markets.
13. Any advice for the trader today not trading with a system.
14. Can you expand on the three classes of traders. Who are they.
15. From New Concepts. We all know you gave us accurate and time tested indicators. Did New Concepts also introduce trading systems for the first time. How has trading systems changed over the years.
16. Today nobody appears to have invented a new and time tested indicator. Rather many are using old indicators and playing with parameters and settings to adjust to their particular market. Any comment regarding this phenomenon.
Weekly Currency trades contain 4 trades per 18 currency pairs in order to trade continuously throughout the week. Possibly only 2 trades may exist but we’re prepared for any market event including possible crashes.
On 18 currency pairs, 4 trades each is 72 weekly trades. If only 2 trades exist per currency pair equates to 36 trades.
As seen here over many years, trades are not only self explanatory but entries and targets are provided as well as vital levels in order to watch the trades but also to exit at any point along the way. All account sizes are accommodated in this regard.
Weekly profit per currency pair is around 150 pips for 2 trades per currency pair. 1000 pips per week is quire common. Our best week was 2500 pip February 2019 at Brexit time but we traded 10 and 12 currency pairs then.
Essentially, we trade the entire currency market every week and certain EM currencies. Those busy during the week and no time to watch charts or prices then our trades are perfect.
Daily trades amount to 80 trades per week for 8 currency pairs, 90 to include AUD/EUR or EUR/AUD. Day trades represent extra pips for the week while waiting for weekly entries and targets.
All required for traders is click on entry and target and this is carefully factored every week and over many, many years.
After 17 years and much time and effort to study the currency price, its understood and mastered. We trade numbers, not charts, nor are stops required. As I always said , whatever you think you know or thought you knew must be discarded at the door because its all wrong.
We’re miles past and far more experienced than the trading crowds, trade services and crooked websites. This is my benefit and my hindrance because I’m out of step to the trading crowds.
No need for trade rooms, nor am I able to post on youtube. Post what?, numbers. Crowds require pictures when this is not used by us. I’m not here to waste your time.
Currency and all markets are in transition stages from Libor elimination to adopt and implement risk free interest rates. The new interest rates represent a floor to overall interest rates however the common theme among central banks is creation of compound interest rate indices as in SOFR for the FED, Sonia for the BOE, AONIA for the RBA, NZONIA for the RBNZ.
Japanese Call Rates so far remains as is without adjustment. The SNB appears so far without adjustment however the SNB’s current system of interest rates is a sound and beautiful system as no need exists to change. Minor adjustments were implemented to Saron swap rates without changes to daily CHF currency prices.
The BOC falls into the same category as the SNB as Corra was already constructed as an index. and no changes required, particularly as Canada’s Overnight Money Market Finance Rate serves as the Floor to Corra.
The ECB however is in transition from Eonia to the new replacement STIR interest rate. Eonia once represented an interest rate top and STIR becomes an interest rate floor.
The key word is floor as the new interest rate location is below daily overnight rates but floor also means interest rates never trade to 0 or negative, particularly Treasury bonds at the short end of the curve. The purpose of the new interest rate is to create a new overnight borrow rate to offer treasuries or any nation’s bonds as collateral. Daily overnight rates in past decades represented the borrow rate.
While Fed Funds trades 0.07, SOFR traded 0.01 since March, the SOFR index 30 day average is located at 0.01000, the 90 day average at 0.02167 and 180 day average at 0.05101. The interest rate then trades 1.01, 1.0267, and 1.05101. All trade below Fed Funds as the new Floor rate.
The ECB STIR rate at -0.566 or 0.434 matches against Eonia at -0.481 or 0.519. STIR as the lower rate trades below Eonia as the floor rate.
The STIR rate is then compounded in the Index at -0.56474, -0.56617, -0.56426,-0.56118 and -0.5539. Rates above represent the new EUR/USD pricing scheme to trade in the future as Eonia transition completes.
Below is the STIR rate calculated to pre 2019. Vital is 2019 onward.
Weds 29 July 2020 0.25% 242.277178142510
Thurs 30 July 2020 0.25% 242.278837575237
The current Index price is 242.732286.
The Greatest changes so far is to EUR and DXY by adding an extra interest rate to the price path only forces slower price speeds as a price path must contend with a new interest rate to act as a new support or resistance point.
An exchange rate is a glorified interest rate operating in traded markets under a different name and number.
The purpose to view long term is to determine if long term trades exist in the vicinity of 5 and 800 pips as was demonstrated before many times. Long term trades with 6 and 800 pip targets is defined as a guaranteed and easy trade and targets achieve perfectly.
Since at least last October, long term trades on the caliber of guaranteed and easy failed to exist as currency prices began to break 5, 10 and 15 year averages and sent currency pairs in horrendous positions both by themselves and in relation to cross pairs. The easy and guaranteed trades surrendered to longs and shorts in weekly trades per currency pair. More effort involved as work is required to achieve correct trades.
GBP/NZD as the king of wide rangers among the 28 currency pair line up, contains a trade range from 1.9067 to 1.9309 or a paltry 242 pips. Slightly improved from yesterday’s EUR/NZD from 1.6693 to 1.6786 or 93 pips. GBP/NZD due to wider ranges is the better pair to trade.
The common theme among the 21 cross pairs is current prices are surrounded by MA’s to severely contain movements. The compression of averages began in January, now exists in April and may exist long into the summer.
GBP/NZD to move higher must break 1.9309, 1.9385, 1.9424 and 1.9669. The only trade range exists is 245 pips from 1.9424 to 1.9669.
GBP/NZD below maintains a trade range from the 5 year average at 1,9067 to 1.9309. Only viable trades are range trades to short 1.9309 and long 1.9067. A break below 1.9067 would coincide with EUR/NZD break at its 5 year average at 1.6693.
GBP/NZD correlations to GBP/USD at +24 % and -0.06% to NZD/USD places GBP/NZD as a USD currency pair to move with DXY until correlations turn more positive to GBP/USD. This will happen eventually as GBP/NZD’s history to GBP/USD works on a positive to negative relationship.
Negative correlations always turn positive and positive correlations always turn negative. Imperative is to know correlations to determine if GBP/NZD trades with DXY or GBP/USD. The double trade always exist but trades are correlation dependent as GBP/NZD runs through its traditional transformations.
GBP/NZD Vs NZD/GBP
While GBP/NZD data with time and effort ran through the system to determine a 242 pip range, only requirement was to assess 2 minutes from NZD/GBP’s 27 pips to determine a trade range from 1.9334 to 1.9135. Below 1.9135 targets the 5 year average at 1.9067 or if 1.9135 holds then targets 1.9286.
NZD/GBP informs exactly how hard GBP/NZD was hit by surrounding averages as 242 pips should be 8 and 1000 pip ranges after running through the data. Instead, a day trade exists.
But in the words of Arthur Conan Doyle: “its a capital mistake to theorize before one has data.
As wide range currency pairs are analyzed to long term targets, the problem with movements is current prices are surrounded by vital MA’s and stuck in 200 pip ranges. This again explains why USD Vs Non USD pairs are driving currency markets and contains wider ranges.
For EUR/NZD the price path is clear. Above requires a break at 1.6795, 1.6840, 1.6851 then 1.7042 and 1.7048. Overall strategy on the long side is long on a break at 1.6851 to target 1.7042 area and overall range from 1.6851 to 1.7042.
Below, EUR/NZD from current 1.6703 trades just above the 5 year average at 1.6693. Break lower at 1.6693 targets the range from 1.6693 to 1.6458 and first target at 1.6575.
Failure to break the 5 year average at 1.6693 then range remains at 1.6693 to 1.6795
NZD/USD from current 0.7258 trades just below the 15 year average at 0.7268 then the 10 year average at 0.7348. Both EUR/NZD and NZD/USD are at crucial inflections points.
As written in FX Commentary Sunday, 12 EM currency trades offered and results below. USD/HRK or the Croatian Kuna is a terrific currency pair. The majority of trading action to price moves are located in the EM space as G28 currencies are located in horrendous positions to force slow price speeds. The difference to EM currencies is allowable to wider trade ranges. Otherwise no difference except the currency name and exchange rate number. Its all the same.
USD/PLN Long 3.7596 and 3.7530 to target 3.7827 Actual 3.7596 to 3.8070 + 474 pips
USD/MYR long or short at 4.1098, below targets 4.0937 and higher targets 4.1219. Actual 4.1098 to 4.0950 +148 pips
USD/CZK Long 21.27 to target 21.67 Actual 21.30 to 21.53 +23 pips
USD/DKK long 6.1474 to target 6.1868 Actual 6.1372 to 6.1667 +295 pips
USD/HRK Long 6.2582 to target 6.2967 Actual 6.2463 to 6.2773 +310 pips
USD/HUF Long 299.28 and 298.88 to target 300.85. Actual 299.80 to 300.85 +105 pips
USD/RUB Long 74.79 and 74.66 to target 75.46 Actual 74.64 to 75.16 + 52 pips
USD/TRY Short 3.3774 and 8.3930 to target 8.1589 Actual 8.4822 to 8.1528
As written in FX commentary Sunday , USD/JPY fails to break 107.58 then targets 108.95 easily. USD/JPY not only achieved highs at 109.07 but at current prices sit at overbought status.
EUR/USD began the week overbought from the close at 1.2096 and traded to higher overbought status at 1.2115 highs. EUR/USD remains done and overbought.
EUR/JPY from the close at 130.47 rose 119 pips to 131.66 and followed USD/JPY higher. Drivers to currency markets are USD vs Non USD and the cross pairs follow. Correct is cross pairs must outperform USD Vs non USD counterparts as is their purpose.
EUR/USD, EUR/JPY and USD/JPY all sit at deep overbought to current prices and this relationship must break wide open in order for prices to move again.
The problem lies at vital MA levels at EUR/JPY 128.98, EUR/USD 1.1994 and USD/JPY 107.54. All trade incorrectly above.. Until EUR/USD breaks below 1.1994 or USD/JPY cracks 107.54 then currency markets will maintain ailing status and slow price speeds.
EUR/USD for example correlated to USD/JPY at week’s beginning at -10% and now the relationship is positive at 0.04%. This situation cannot hold as correlations trade beside each other.
USD/JPY shorts today are located at 109.48 and 109.44 to target 108.83 easily then 108.51. Note 108.83 in relation to the weekly target at 108.95. A break at 108.83 is required for a lower USD/JPY.
EUR/USD Any price at or above 1.2068 are short entries to target 1.2019 and 1.2006. A break at 1.2043 is required for EUR/USD lower. Any price above 1.2068 is free money.
EUR/JPY Any price at or above 131.48 are short entries to target 130.64 easily then 130.53. Required is 130.64 to break to target lower levels. Any price above 131.48 is free money. Overall, 128.98 remains a solid line and is matched alongside the 15 year average at 127.83.
As for Powell and the Fed today, whatever Powell says or not says is located inside the price path. Trade the market price is my advice and trades will be just fine. Powell’s words will be measured to address the public so not to move markets.
The concern is not economics but the political system under Democrat control.
Written in January.
As Biden continues where America’s bummner Obama left off in 2016 to advance a bankrupt agenda under obstinate false ideals, the road ahead for America will be fraught with massive spending in the name of climate change and stimulus. And given a Democrat congress for at least Biden’s first two years, Biden must move fast to spend the money as 2022 could see the Democrats gone from congressional majorities.
Biden will ride free and unaccountable to not only spending but the disasters ahead as the wizard won’t be seen nor will he ever have to answer to anybody, particularly the American public. Between the news media and big tech, Biden will be shielded to hold news conferences.
And Correct. The only deviation is Democrats learned how to steal elections by computer manipulations so 2022 is under question to switch to Republican control.
Modern day finance and economics began in America during and after the Civil War around 1868. Each state operated as its own central bank until the National Currency Act of 1864 passed to create national banks and the position of Comptroller of the Currency to supervise banks. City and County banks then formed.
Banks then began trade in money as in Southern and State Bank Bills, stocks and state bonds for states in the Southern United States. Banks were exempt from taxes.
Money markets were the primary market vehicle to price money and currency, particularly the Southern Confederate currency backed by Treasury Notes and the Northern Greenback Currency. Today’s Greenback term for USD originated in 1860’s America.
Money market rates were quoted in Fractions and New York markets and rates dominated the United States as is the operation today. For example, Interest bearing Bankers Bills for a 60 day duration traded on the New York Money Market at 109 3/8 – 109 1 /2. Bank loans were then priced based on Money market rates.
Headline and Discount Interest rates per nation were quoted in Fractions until the 1990’s. Today, interest rates are traded and quoted by an actual number rather than a fraction.
Note today’s price for Gold in any currency is higher than actual exchange rates. No difference in 1860’s America. The question then was the premium to Gold in relation to the currency. No difference today.
America in 1860’s concerns were purchases to state bonds in currency then paid in interest from the currency or paid in Gold. The answer was found in the convertibility price from currency to Gold and Gold was the primary payout to bonds. The operation ensured banks and government would turn profits and government would never go broke.
Currency prices free floated yet backed by money market rates. Same scenario today since 1972. While the masses operated on a depreciated currency value, banks and governments turned constant profits and dealt on a higher standard.
The overall headline interest rate recommended at 5% and was key to what governments and banks receive in issued bonds. If the rate of interest was to high then banks and governments receive less than what was originally issued.
Current DXY at 0.9097 vs 1781.55 Gold trades at 0.05% and Gold trades at 195 % to DXY. DXY as a percent to 1781.55 factors to 1620.67.
1860’s economics factored: as 2019 Currency in Circulation in billions $1759.8
Gold bullion $10,920, 429, 099.23
GDP in Constant Dollars $21.48 trillion
Total debt $28 trillion
The next question is to payout in bond interest then the relationship to imports to exports by a Gold valuation. Tariffs were recommended by the price of Gold to reduce the currency. The result is surplus or deficit.
The contrast to 1860’s to today is Andrew Johnson in his 1868 State of the Union address sought to align GDP to Currency in circulation. Today, the difference is massive.
Overall disparity to today is the extraordinary brilliance of the 1860’s to all aspects of life in the written and spoken word, dress, respect and mannerisms, economics and politics and brilliance to thoughts, processes and analysis. Today’s society lost a great deal of the 1860’s thought and may never return.
Recall the last Gold trade posted in February, short 1815.65 to target 1728.91 for 80 + points. Gold then languished for 2 weeks at the bottom of its 1642.17.
February Gold range 1815.65 to 1642.17 or 173 points. Today, 1846.05 to 1693.27 or 152 pips and a 21 point range compression. Most vital for higher / lower is 1769.67.
1846.05 is the top average among 10 years of monthly averages. All remaining averages are lower which means the trade strategy is short. Above 1846.05 targets 1870.01 and Max at 1937.62.
Below 1693.27 targets 1572.54, 1524.19 and the 5 year average at 1484.48. Caution at the 5 year average as Gold is replete with many averages and a brick wall of averages at 1.1400’s.
Gold and the S&P’s trade above 5 year averages while DXY trades below at 95.53. Explains DXY Vs Gold negative Correlations from monthly averages to 10 years. Gold is misplaced and should trade alongside DXY with positive Correlations. DXY must break above 95.53 or Gold must trade below 1484.48.
The proper alignment is S&P’s above 5 year averages and DXY and GOLD below. Or S&P’s below 5 year averages and DXY and GOLD above. Gold is the problem and completely misplaced. Negative Correlations means DXY longs and Gold short or Gold longs and DXY shorts as proper trade arrangement.
Bottom for February 89.95. Today, 90.24 or a 39 pip rise. From 94.00’s and 95.00 are many averges and a brick wall of averages and the same from February. DXY in February rose from 89.95 to 93.40’s then dropped to current lows at 90.70. DXY price is low and oversold and a buy drop trade strategy.
Higher DXY must break 91.57, 92.89, 93.70 and 94.55. Below 90.24 then next comes 89.80, 89.75 and 88.06.
DXY from current 90.80 and GOLD 1776.95 offer a trade range from 1731.55 to 1822.35.
USD/CHF 0.9157 offers next breaks at 1777.86 and 1776.03. USD/CHF trades above DXY.
USD/CHF also offers 1731.17 and 1822.73.
Gold daily trade range is 18 points. Supports and resistance are located at barely 4.5 points.
EUR/USD again begins the week deeply overbought and severely compressed ranges. USD/JPY begins the week deeply oversold and fairly normal ranges.
The most vital relationship this week is found at USD/JPY 107.58 from the close at 107.86. USD/JPY breaks below 107.58 not only targets 108.89 easily but JPY cross pairs are in question to follow USD/JPY lower.
EUR/JPY for example correlates to USD/JPY at +95%., AUD/JPY at +94% and NZD/JPY at + 92%, CAD/JPY at +98% and GBP/JPY at +96%.
USD/JPY holds at 107.58 then targets 108.95 and higher USD/JPY brings down EUR/USD. USD/JPY below 107.58 finally rightsizes the EUR/USD Vs USD/JPY relationship from severely off kilter when USD/JPY broke above 106.00’s at the end of February.
USD/JPY traded above 106.00’s while EUR/USD was above 1.1800;s misaligned the relationship for the past 2 months. Proper is USD/JPY and EUR/USD must trade on opposite sides to most vital MA’s. From current prices, EUR/USD at 1.1977 and USD/JPY 107.58 defines the MA arrangement. The misaligned EUR/USD Vs USD/JPY relationship completely paralyzed JPY cross pair movements as defined by Correlations.
GBP/USD Vs GBP/JPY +96%, AUD/USD Vs AUD/JPY +94%, NZD/USD Vs NZD/JPY +88%, EUR/USD Vs EUR/JPY +10% and USD/CAD Vs CAD/JPY -97%. The only viable JPY cross pairs operating correctly are CAD/JPY and EUR/JPY.
Proper is EUR/USD correlates to EUR/JPY, GBP/USD to GBP/JPY, AUD/USD to AUD/JPY and NZD/USD to NZD/JPY and USD/CAD opposite to CAD/JPY. When USD/JPY and EUR/USD trade on opposite sides to vital MA’s then the relationship is defined as a long risk market as JPY cross pairs provide supports to higher prices and short when USD/JPY owns the correlations to JPY cross pairs while USD/JPY and EUR/USD trade on opposite sides of MA’s.
The current USD/JPY, EUR/USD and JPY cross pair paralysis now in its 2nd month is about to end and allow far better movements, particularly JPY cross pairs. The current range compression is the result of MA’s concentration due to inability to move and affected all 28 currency pairs.
EUR/USD Friday broke the 10 year average at 1.2067 and explains the sudden 30 pip rise before the close. The wider range is now 1.2067 to 1.2607 with vital points at 1.2100, 1.2134, 1.2202, 1.2337 and 1.2472. EUR/USD below must break 1.2067, 1.2028, 1.1977 then 1.1800’s and 1.1600’s.
Maintain short JPY cross pair strategy, long USD/CAD, short CAD/JPY. While NZD/USD is neutral to overbought, NZD/CAD watch 0.8976 from the 0.8978 close. NZD/CAD below will assist NZD/USD shorts. NZD/CAD 0.8976 vital point coincides to 0.8977 at the 5 year average and represents a huge break.
AUD/CAD just broke below at 0.9673 and next watch 0.9616 at the 15 year average and 0.9683 at the 5 year.
GBP/CAD begins the week deeply oversold, along with GBP/NZD and GBP/AUD. EUR/AUD however will offer better trades and movements than GBP/AUD.
USD in the EM space is massively oversold and it applies across the board to EM currencies.
USD/BRL Long 5.4597 and 5.4426 to target 5.1195.
USD/CNY Long 6.4753 and 6.4661 to target 6.5165
USD/CZK Long 21.27 to target 21.67
USD/DKK long 6.1474 to target 6.1868
USD/HRK Long 6.2582 to target 6.2967
USD/HUF Long 299.28 and 298.88 to target 300.85.
USD/MYR long or short at 4.1098, below targets 4.0937 and higher targets 4.1219.
USD/PLN Long 3.7596 and 3.7530 to target 3.7827
USD/RON Long 4.0647 and 4.0598
USD/RUB Long 74.79 and 74.66 to target 75.46
USD/TRY Short 3.3774 and 8.3930 to target 8.1589
USD/ZAR Long 14.2612 and 14.2544 to target 14.3838
EUR/USD enters next week again into deeply overbought and a problem currency pair as Noise ratios inside EUR/USD’s price are exorbitant. Its means range problem persist and high noise ratios are the result of a price not performing to range expectations. EUR/USD traded 133 pips this week and not enough to solve Noise problems.
Same story to high noise ratios to GBP/NZD, GBP/AUD, AUD/NZD, NZD/CAD, AUD/CAD, GBP/CAD. Big winner this week was GBP/CAD as it rose 300 pips and dropped 300. Stand clear of high noise ratio currency pairs as they are subject to unexpected spikes or drops.
Next week’s economic announcements and central bank speakers need not concern traders as it doesn’t matter one iota to the market price. Its fluff information nor dies it dictate a market price direction or target.
A trade begins at entry and ends at target and everything in between doesn’t matter. USD/JPY 107.59 vs EUR/USD 1.1976 vital points dictate both for direction. USD/JPY below 107.59 finally right sizes an off balance USD?JPY for many months. Watch CHF/JPY 117.29 to coincide with USD/JPY 107.59.
GBP/USD to 1.4000, doubt it, high 1.3990’s at best. AUD/USD 0.7750 decides high/ low for AUD. 0.7750 decided AUD/USD all week. Nothing changes upon a new week. NZD/USD 0.7176 high low decides NZD/USD’s fate.
Deeply oversold GBP/CHF and GBP/JPY will assist to a possible GBP/USD rise unless GBP/USD breaks 1.3795 then GBP/CHF and GBP/JPY travel lower.
EUR/JPY 130.42 decides higher or lower next week.
EUR/AUD and EUR/NZD clearly the better trades than GBP/NZD and GBP/AUD.
As usual, long USD/CAD and short CAD/JPY and CAD/CHF.
USD/CHF watch 0.9162. EUR/GBP 0.8718. above then look out below GBP/USD.
Nothing special to next week except persistent range problems.
AUD/CHF, NZD/CHF and CAD/CHF are not only 0 point currencies but utilized in currency markets both to actively trade and to forecast higher exchange rate currencies. My term is Signal Currencies due to ability to forecast perfectly accurate exchange rate trades.
O point currencies contain smaller ranges however all trade well to entries and targets. AUD/CHF and NZD/CHF maintain permanent positions in weekly trades over many years. Excellent currency pairs.
AUD/CHF and NZD/CHF belong and are positioned well to the AUD and NZD universe as both trade below AUD/USD and NZD/USD. AUD/CHF and NZD/CHF contain only 2 options in currency markets to positions, either to trade above AUD/USD and NZD/USD or below. Positions are permanent due to exchange rate numbers assigned to the currency pairs.
CAD/CHF also belongs and is positioned well to USD/CAD and CAD/JPY however CAD/CHF is the exact opposite currency pair to USD/CAD and the exact same pair to CAD/JPY.
USD/CAD stands alone against CAD/CHF and CAD/JPY yet USD/CAD dictates prices, entries and targets due to wider ranges than CAD/CHF and CAD/JPY. The trade arrangement to selection for money trades is USD/CAD, CAD/JPY then CAD/CHF.
For AUD/CHF and NZD/CHF the money trade arrangement is AUD/USD then AUD/CHF and NZD/USD then NZD/CHF.
GBP/CHF only difference to AUD/CHF, NZD/CHF and CAD/CHF is a 1 point exchange rate number. GBP/CHF trades below GBP/USD and the exact same positions as counterparts. GBP/CHF is normally the better trade selection due to wider ranges than 0 point brothers.
Overall, GBP/CHF belongs in the wide range category compared to all G28 currencies against counterparts GBP/NZD, EUR/NZD, EUR/AUD and GBP/AUD. And again why GBP/CHF earns a permanent place in the 18 weekly trade arrangements.
Viewed from highly accurate long term models.
GBP/CHF Since January, GBP/CHF rose 1150 pips from 1.1919 to 1.3069. Consequent short term averages rose 194 pips while long term averages rose 62 pips.
GBP/CHF is derived by GBP/USD X USD/CHF.
GBP/CHF sits at a crucial inflection point at 1.2815, above places the range from 1.2815 to 1.3266. Below 1.2815 the range becomes 1.2815 to 1.2593 then 1.2447. Big break for lower is found at 1,2593 however any price in the vicinity of 1.2508 represents an excellent long term long position as GBP/CHF must remain above 1.2508.
AUD/CHF is found by AUD/USD X USD/CHF.
Since January, AUD/CHF rose from 0.6740 to 0.7251 or 511 pips. Counterpart AUD/USD rose 410 pips from 0.7595 to 0.8005. Rare day for AUD/CHF to outperform AUD/USD. AUD/JPY rose 660 pips from 78.87 to 85.47 .AUD/CHF rose from its January average at 0.6770 and a perfect long term trade.
AUD/CHF as well sits at a crucial point at 0.7097 and the 5 year average at 0.7103. Above 0.7103 then the wider range becomes 0.7103 to 0.7406 and the next vital point at 0.7388.
Below 0.7103 and 0.7097, the range becomes 0.7097 to 0.6887. Lower AUD/CHF must break 0.7014 . AUD/CHF however must trade above 0.7054 and 0.7039. Any price below is subject to good long trades.
Overall, AUD/CHF like NZD/CHF, GBP/CHF and CAD/CHF prices are located middle range from a longer term perspective.
Since January, NZD/CHF rose from 0.6300 to 0.6767 or 467 pips and explained by the January average at 0.6351. NZD/JPY 73.69 to 79.17 or 548 pips while NZD/USD ranged 0.7463 to 0.6950 or 513 pips.
NZD/CHF is derived by NZD/USD X USD/CHF.
NZD/CHF sits at vital inflection points at 0.6604 and the 5 year average at 0.6653. Above 0.6653 then the range becomes 0.6653 to 0.6744 Vs a vital point at 0.6707.
Below 0.6653 and 0.6604 the range then trades 0.6604 to 0.6440. Must break for lower is found at 0.6503. NZD/CHF however must trade above 0.6571 and 0.6547. Any price in the lower 0.6500 is a good long opportunity.
Since January, CAD/CHF rose from 0.6946 to 0.7528 or 582 pips and consistent to AUD/CHF and NZD/CHF. USD/CAD dropped from 1.2875 to 1.2373 or 502 pips and a 700 pip rise for CAD/JPY. CAD/CHF is derived by USD/CHF divide USD/CAD.
CAD/CHF also faces crucial points at 0.7403 and the 5 year average at 0.7410. Above 0.7410 the range becomes 0.7410 to 0.7684 with a vital point at 0.7514. Below 0.7403 then a massive wall exists at 0.7253 and 0.7241 and an excellent long opportunity.
Written yesterday was USD/CHF Peg by SNB to DXY. This statement cannot hold as valid due to DXY creation in 1998. DXY failed to exist before 1998.
JPY cross pairs sit at vital inflection points as tops are here and JPY cross pairs are heading lower. Begin with GBP/JPY due because its not only a special pair to JPY cross pairs but vital break just occurred.
GBP/JPY just broke most vital 150.90 and the next vital averages are located at 148.57 and 146.94. Next targets are located at 149.23 and 148.08. A break at 148.57 targets easily 147.75. Last 3 months, GBP/JPY rose 1413 pips from 139.42 to 153.55. Above 150.90 targets next 152.93, 153.94 and 154.96. Strategy is short.
EUR/JPY last 3 months since January, EUR/JPY rose 585 pips from 125.10 to 130.95. Current supports are located at a massive brick wall at 125.00 as 125.00’s are many and massive.
January as written, massive supports 124.00’s and 125.00’s. Range top 128.84.
Strategy. Short as break 129.03 targets 127.79, 127.74 and 127.37. Above 129.03 then short only strategy.
CHF/JPY. Short and must trade to 114.32 on breaks at 116.61, 115.70 and 115.32. A brick wall of supports are located 114.52 and 113.74. Good long point to target 116.61.
Why CHF/JPY is the same exact pair as USD/JPY and CHF/JPY is a trending currency. Its not often to find the big trends but when the time is right, CHF/JPY moves well and straight to target. As an example, 2018 posted a 500 pip CHF/JPY trade and target achieved in 3 weeks.
USD/JPY Must break 107.75 and 107.67 to target 106.86 and 106.75. USD/JPY tops are located at 109.55 and 109.93. Any price above then adopts a short strategy. Big lines below are 108.40, 107.76, 107.67 and 106.33.
Since January, USD/JPY rose from 102.61 to 110.91 or 830 pips.
NZD/JPY. Massive supports are located from 73.00’s to 75.06. The 10 year average is located at 75.71 and 5 year at 74.63. NZD/JPY target is located at 76.31 on breaks of 77.28 and 76.73. any price above 77.28 then adopt a short strategy.
Since January, NZD/JPY broke above 5 and 10 year averages and ranged 73.63 to 79.17 or 554 pips.
AUD/JPY. Above 85.18 and 84.69 adopt a short strategy. Since January AUD/JPY ranged from 78.91 to 85.34 or 643 pips. Massive supports are located from 78.00 to 82.00’s. Lower AUD/JPY must break 82.40 and 82.31 to target 78.77. CAD/JPY. Since January, CAD/JPY ranged from 80.60 to 88.21 or 761 pips and stands as the 2nd big winner to GBP/JPY.
The strategy is late as short 88.27 was perfect short entry to target 86.89 and 86.13.
However fresh shorts are located at 85.84 to target a big break point at 85.12. Break 85.12 targets 94.87 and 84.11. Next big short strategy is located at 88.27 or in the vicinity. Overall, short strategies for JPY cross pairs.
Brian Twomey, btwomey.com and contact email@example.com
Viewed from long term models is provided long term targets and vital breaks. Overall as usual, nothing changed in 6 and 9 months and rarely does a need exist to view and run the model until at least 6 months to 1 year due to non movements.
New information. What is USD/CHF? Exactly the DXY. Gold levels and targets are factored from DXY and USD/CHF using a $4 calculator and 3 seconds. Same story for Silver. A 3 second calculation eliminates 95% of all the false levels, targets and baloney stories heard and written everyday and allows traders to finally make money.
EUR/USD big line break to target 1.2259 and 1.2252 is located at 1.2028. January and the prior 6 month line was located at 1.2020. In 6 months +, EUR/USD big line moved 8 pips. Longer term ranges compared to January dropped from a long term perspective 28 and 41 pips. Short term ranges dropped 26 and 27 pips. EUR/USD in 3 months since January traded 1.2342 to 1.1711 or 631 pips or 0.0006. or 0.0145 %.
Lower EUR/USD must break 1.2070 at the 10 year average and 1.2052 to target the break at 1.1950 then targets become 1.1899 and 1.1853. Break 1.1853 targets 1.1786 and 1.1762. Current EUR/USD is not only deeply overbought but the only strategy available is short to challenge the big break line at current 1.1950.
AUD/USD big line break for higher is located ay 0.7867 and previously 0.7820. In 6 and 9 months, AUD’s line moved 47 pips. Longer term ranges dropped 45 and 43 pips while short ranges expanded by 82 and 43 pips.
Above 0.7867 targets 0.7997, 0.8105, 0.8244 and 0.8344. Below must break 0.7761 and 0.7750 to target the next big line break at 0.7641 to then target 0.7500’s easily. AUD/USD is most overbought at the 5 year average at 0.7300’s.
GBP/USD big line break is located at 1.4308 and previous 1.4300. GBP/USD big line rose 8 pips in 3 and 6 months. Long term ranges dropped 93 and 81 pips while short ranges expanded 183 pips and dropped 50 pips. The explanation is short averages expanded 256 and 91 pips.
Above 1.4308 targets a break at the 10 year average at 1.4401 then 1.4574, 1.5189 and 1,5299. Lower GBP/USD must break 1.3907, 1.3863 then the big line challenge at 1.3714 to target 1.3606 easily. Overbought is located at 1.3256.
NZD/USD big line break is located at 0.7080. In 6 and 9 months, 0.7080 rose 32 pips. Long term ranges dropped 29 and 32 pips while short ranges expanded 54 pips and dropped 33 pips. Explained by short average expansion by 122 and 55 pips.
Above 0.7080 targets caution at the 15 year average at 0.7268 then the top at 0.7305. Below must break 0.7182, 0.7180 and 0.7145 to target the next big line break at 0.7083 to then target 0.6800’s. NZD/USD is most oversold from 0.6800;s and 0.6900’s. Current 5 year average is located at 0.6861.
USD/CAD big line break is located at 1.2365 and a 21 pip drop in 6 and 9 months. Long term ranges dropped 48 and 59 pips while short averages expanded 130 and 33 pips. Explained by shorter term averages dropped.
USD/CAD must break 1.2561 to target the next big line break at 1.2654 to then target 1.2755, 1.2914, 1.3012 and the 5 year average at 1.3116.
Below 1.2365 targets 1.2215, 1.2064, 1.1993 and bottom at 1.1763. Deeply oversold and driving USD/CAD higher are averages at 1.2900’s and 1.3000’s. USD/CAD strategy is long only to target higher levels.
Previous USD/CHF information is located in massive piles of past trades and currently not retrievable.
Big line breaks are located at 0.9764, 0.9576, 0.9537 and 0.9418. Recall the DXY post and the massive resistance lines reported at 95.00’s. And a 94.00. DXY 5 year average 95.54 Vs USD/CHF10 year average at 0.9504.
DXY ranges 89.95 to 95.00 Vs USD/CHF 0.8900’s. Above DXY 95.00 targets 97.00’s and USD/CHF top line at 0.9764.
DXY lacks ranges, USD/CHF lacks ranges. Gold lacks ranges. DXY and USD/CHF is the same pair yet constructed as DXY with a difference to move the decimal. GOLD, DXY and USD/CHF are married at the hip.
Driving DXY and USD/CHF higher is 0.9500’s and 95.00 as most oversold. Higher for USD/CHF must break 0.9181 to target 0.9327, 0.9369 and 0.9379. Nothing wrong with USD/CHF as the SNB strategy to Peg USD/CHF to DXY was smart.
USD/CHF and DXY Vs Gold
Add and subtract DXY and USD/CHF to Gold and voila, support, resistance and targets are found. Its just that simple.