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

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

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

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

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

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

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

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

Brian Twomey

Advertisements

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Below breaks are 111.52, 110.70 and 110.18.

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

Here’s averages.

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

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

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

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

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

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

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

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

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

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

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

Brian Twomey

 

Realignment Part 2

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

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

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

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

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

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

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

EUR, JPY and Realignment: Levels, Ranges, Targets

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

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

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

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

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

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

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

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

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

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

Brian Twomey

 

 

Fed Monetary Policy 2015

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Brian Twomey

 

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

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

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

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

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

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

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

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

Brian Twomey

EUR/USD Peaks and Turns, 2013

 

Original Published 2013

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

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

 

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

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

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

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

Figure 1 is a daily EUR/USD chart.

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

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

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

Figure 2 is a weekly EUR/USD.

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

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

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

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

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

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

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

Brian Twomey, Inside the Currency Market, btwomey.com

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

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

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

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

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

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

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

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

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

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

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

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

Brian Twomey

G10 and Defined: Levels, Ranges, Targets

 

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

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

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

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

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

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

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

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

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

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

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

Brian Twomey

G10 and Finance Committee: Levels, Ranges, Targets

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

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

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

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

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

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

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

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

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

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

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

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

 

Brian Twomey

GBP, EUR and Senate Rules: Levels, Ranges, Targets

Passage of Trump’s Tax Bill was performed by Article 1, Section 7 of the Constitution as the House of Representatives is solely responsible for ” All Revenue Bills ” to include taxes and budgets. Specific to the House of Representatives is Amendments, an attachment to a biil, must be specific to the issue. An Amendment such as to allow oil drilling in the Atlantic ocean attached to Trump’s Tax bill wouldn’t be allowed as this goes against rules of the House. An Amendment must be “Germane” to the specific bill.

Only the House has a Rules Committee to decide by vote of Members if a bill other than a revenue bill will allow an Amendemt. Certain bills fall under a Close Rule which means no Amendments allowed as opposed to an Open Rule to allow Amendments.
The main reason for the Germane issue and a creation by the Founding fathers is to ensure annual budgets pass. Imagine the damage caused to a bill if 435 persons attached special projects to a revenue bill. The second reason for the Germane issue is to ensure the process to passage of budgets is performed in a timely manner. The Senate is a far different animal.

The Senate operates under Unanimous Consent agreements. Unanimous Consent means “I block” therefore every procedure, every institutional move must be approved by both parties, Dems and Republicans. Failure to pass a Unanimous Consent agreement closes the Senate for the day, hour, minute until its approved. Trump’s Tax bill must pass and begin by Unanimous Consent to structure Senate Floor debates, time limits and Amendment process.

Trump’s Tax bill is located in the Senate Finance Committee where even then the committe operates under Unanimous Consent or the committee disolves until agreement passes.

Trump’s Tax bill in the Senate Finance Committee must go through Hearings and Markup by Unanimous Consent. A Markup of the current Senate bill is a line by line, word by word agreement to a bill to ensure the specific purpose and meaning of a bill intent is carried out explicitly. Then it goes to the floor for a vote by Unanimous Consent.

If wording in the House and Senate bill is different then the bill must go to A Conference Committee where agreement is reached on words. Then each bill goes back to the House and Senate for another vote on the Conference agreement.

The issue to Amendments in the Senate is attachments lack requirements to Germane or non Germane on the topic of the bill. The Democrats can attach an Amendment to raise taxes on Trump’s Tax cut bill in which case, Trump’s bill will die as it won’t see a vote. The Democrats can attach Amendment after Amendment for days, months and years to ensure either vote delay or the bill dies by not ever coming to a vote. The Dems and Republicans must agree by Unanimous Consent the rules to accept or not Germane Amendments.

Democrats can easily Filibuster Trump’s tax bill by any 1 Senator to speak on any topic on the Senate Floor. A Senator can read the names in phone books, recite Aunt Sally’s chicken soup recipe, sing a song. As long as a person speaks, Trump’s tax bill vote is delayed. or unless the reason for a Filibuster is to force a certain Amendment.
A Cloture Vote from its 1917 origination stops a Filibuster but 60 Senators must vote to agree and Trump doesn’t have 60 Senators in which case the Democrats can stop Trump’s bill by Filibuster. Before an actual Cloture vote on the floor, 16 Senators must agree to stop a Filibuster and this takes place 2 days after the Filibuster begins. Another delay.
Democrats can place Trump’s bill under a Hold. A Hold is the new Filibuster began under Clinton. A Hold says to the bill sponsor Trump’s bill will be Filibustered if introduced. A vote delay for Trump’s bill. A Hold overall delays Floor action, Agreements and bill votes.
Last is delay by Quorum Calls. If all Senators aren’t present on the Senate Floor then the Senate Clerk calls attendance of all 100 Senators. Quorum calls can go on all day and Democrats can issue Quorum calls everyday to doomsday and stop Trump’s bill.
Senate Rules and procedures lack association to arcane. A law is not supposed to pass so to protect the public from Tyranny from 100 Senator, big ego, power hungry Collusion.

GBP/USD. Overall break points 1.3142 and 1.3117. Below 1.3117 then 1.3084 comes next.

GBP/JPY Break Points 147.87 and 146.38. If GBP/USD breaks 1.3117 then GBP/USD becomes the leader to drag GBP/JPY lower. The daily break point is 149.01 and must break above at 149.19, 149.38 and 149.63.

EUR/USD. Broke overall vital point at 1.1623 only to see a 40 pip follow through 3 days later. God help the currency markets. Follow through on a significant break as 1.1623 should’ve seen already a 200 pip move to the downside.Today, 1.1565 must break to see 1.1558, 1.1541 and 1.1527.

EUR/JPY overall break points are located at 131.30 and 131.06. Most significant point below to break today is 131.10 means 131.30 will struggle to break.

 

Brian Twomey

 

 

GBP, G10 and Sonia: Levels, Ranges, Targets

Sonia bounced another 6 points to 0.46 to now trade between the 8 and 9 year averages from 0.42 to 0.47. Previous severe oversold is now relieved and as price broke all averages from 1 to 8 years, Sonia remains quite low yet in good shape.
The 1 year average at 0.21 remains miles overbought. The average must travel higher over months ahead to offer support to the 2 year average at 0.3075 and to relieve severe overbought conditions. Above the 9 year average comes miles of distance to 0.94 at the 10 year. On the surface, a price at the 8 and 9 year average is far to high but viewed from stifled averages under zero interest rate rises over 10 years, its questionable. The 9 year Sonia average is actually within range Vs GBP from 0.67 to 0.39 against a mid point at 0.53.

A further view over 20 years might be the way to determine a terminal or Natural rate and if the current rise really is a one and done. Viewed from Fed Funds for example, 1 to 12 year monthly averages are miles overbought since May and August 2016. Monday’s calculations for Sonia final results are support points and the forecast will be re factored. Its the support points that should hold over the next year easily unless the UK implodes or disaster strikes.

GBP/USD overall break points are located at 1.3141 and 1.3126. Below 1.3126 targets range points at 1.3104, 1.3098 and 1.3016. GBP must first break 1.3111 then comes 1.3104. Above 1.3141 targets 1.3158, 1.3179 and 1.3223.

GBP/JPY overall break points are located at 147.94 and 146.35. The big break below is found at 149.44 and 149.34 and above targets 150.21 and 150.48.

EUR/USD break points are located at 1.1629 and 1.1790. A break at 1.1594 targets 1.1549 and 1.1533.

EUR/JPY break points are located at 131.27 and 131.05. EUR/JPY challenges break points by 131.64 and 131.46. If EUR/JPY breaks 131.05 then far lower over days ahead.
Brian Twomey

GBP/USD and G10: levels, Ranges, Targets

If the past is prologue and under a perfect market structure in place for decades upon decades, how can Sonia not jump as usual its 20 points overnight to break 0.3075 and now trade at either 0.4179,0.4004 and 0.3839. At 4175 is the 7 year monthly average then the 6 year and 5 at 0.3839.

Its almost impossible for a current market structure to change but the question to normalization after an interest rate adjustment is of profound concern. USD is a fairly perfect system and its ability to normalize is seen within 1 to 2 days. USD holidays and the 1 day radical drop in Fed Funds takes 1 to 2 days to normalization. Sonia at 40 is non normal as its severely out of bounds to its monthly averages from 1 to 8 years. My belief was 3075 would break and slowly trade higher because 40 bumps dead against the trend line. Sonia plowed through its resistance points.

The side bar issue and lazer focus is I’ve been calculating for all nations interest to exchange rates 2 and 3 times per day for almost 3 years. Interest rate normalization means it includes or not the exchange rate. Prior to the new interest rate structure, central banks allowed exchange rates to roam freely and the market decided the proper price. Under the new market structure, central banks decide plans, levels, ranges and targets for exchange rates.

GBP/USD. So far GBP is okay. The break points above remains 1.3129, 1.3136 and 1.3139. To add to upside resisance points, 1.3158 was included as the bext break point. Below, GBP must break 1.3064 to target 1.3037 and 1.3018. In days ahead, we should easily see a break of 1.3139 to target upper 1.3200’s. I’ll continue follow through until the GBP situation is complete.

EUR/USD. Below 1.1599 then comes 1.1582, 1.1568 and 1.1554.

EUR/JPY first break higher is located at 132.91.

AUD/USD faces massive resistance at 0.7673 and 0.7675.

USD/JPY 114.45 must break to target 114.59 and 114.87. Below watch 113.95.
Brian Twomey

GBP/USD V Sonia: Levels, Ranges, Targets

 

Carney raised Bank Rate 25 basis points at the exact time when Sonia and GBP/USD Correlated 24% at the 1 year monthly average. The explanation is Sonia and GBP/USD both sit directly and hug each other on the trend line. The 1 year monthly average will drive the Sonia and GBP relationship shortest term as Correlations in successive monthly averages from 2 to 10 years run a solid 75% to 85%.

Sonia 0.2145 at the time of raise was located a few basis points above its mid point as the daily Sonia range traded from August 2016 to current day at 0.2034 to 0.2207. Both rates are extreme outliers in 15 months of daily trading. Sonia at 0.2145 trades at the lower end between the 1 and 2 year monthly averages from 0.2118 to 0.3075.

The timing of the raise was perfect yet smart from a UK money market position perspective and the why not now quip was aptly stated. Bank rate was positioned 91 basis points below the Fed, 40 basis points below Europe, 66 points below the BOJ and 77 basis points below CAD.

Sonia ‘s 1 year simple monthly average at 0.2118 is perfectly priced as the true average is actually 0.2117. The next bottom points are located at 0.2129 and 0.2105. Above levels are located at 0.2175, 0.2195, 0.2215, 0.2297 then 0.2335 and 0.2342. The next average above the 2 year at 0.3075 is the 3 year at 0.3553.

The overall Sonia range from a larger perspective is located from 0.2697 to 0.1500 which informs 0.3075 won’t break for months and possibly years in the future. Sonia rises become overbought and contained from 0.2118 while 0.3075 reveals a downtrend just underway. longest term, Sonia averages are located from 0.2118 to 0.4253 and 0.4719 while the trend lines are found at top points from 0.34 to 0.36’s.

From current 0.2145, Sonia is massively overbought and hits the overbought richter scale at 0.2154. To align, Sonia must trade lower to 0.2129 and 0.2130. While the 1 and 2 year monthly averages are current price drivers, averages from 3 to 8 years are deeply oversold.

Overall average targets are located from 0.1844 to 0.3163 and 0.3281 at the 7 and 8 year period averages. If Sonia remains in a tight trading range as suspected then targets and averages will slowly drop over time. Sonia faces upside hurdles from trade able price points and trend lines yet the downside becomes more oversold on price drops. We’ll watch how the BOE handles themselves as the last July 2007 rise saw a 0.06 move for the month from 5.8434 to 5.9127.

The bottom points for GBP/USD are located from trend line averages at 1.3067, 1.3020, 1.2993, 1.2962 and 1.2942. Below 1.1942 then the path is wide open to 1.2794, 1.2767, 1.2681, 1.2652 and 1.2643. Monthly average drivers are the 1 and 2 year at 1.2804 to 1.3285 and neither are overbought nor oversold.

Upside break points are located at 1.3113, 1.3148, 1.3168, 1.3223 and 1.3344. Despite oversold from monthly averages 3 to 10 years, GBP/USD runs into solid trend lines at 1.3343 and 1.3400’s. GBP above 1.3223 and 1.3344 becomes out of bounds.
From a daily perspective and for the week, GBP/USD must break 1.3130 then comes 1.3137. From averages 5 to 50 day, GBP is oversold and targets 1.3111 and 1.3134. Caution to shorts at 1.2962 and 1.2942 as long becomes the only trade.

Long term forecasts below, forecast may hold for 1 to 2 years or longer. Sonia 0.3075 represents the vital break and may require another BOE raise to challenge and break the average. GBP/USD 1.3300 an 1.3400 meet the trendline and if broken would see 1.3600’s to 1.3900’s.

Sonia Vs GBP/USD means, high and low ranges offered. From Sonia 0.2105, GBP below

1 year Mean = 1.2708, range above 1.3058, Below 1.2358
2 year Mean = 1.2745, Range above 1.3201, Below 1.2289
3 year Mean = 1.2760, Range above 1.3399, Below 1.2121
4 year Mean = 1.2899, Range above 1.3923, Below 1.1875
5 year Mean = 1.2918, Range above 1.3861, Below 1.1975
6 year Mean = 1.2978, Range above 1.3862, Below 1.2094
7 year Mean = 1.3026, Range above 1.3856, Below 1.2196
8 year Mean = 1.3043, Range above 1.3845, Below 1.2241

Sonia Vs GBP/USD, from 0.2195

1 year Mean = 1.3345, Range above 1.3695, Below 1.2995
2 year Mean = 1.2795, Range above 1.3251, Below 1.2339
3 year Mean = 1.2835, Range above 1.3474, Below 1.2196
4 year Mean = 1.2994, Range above 1.4018, Below 1.1970
5 year Mean =1.3017, Range above 1.3960, Below 1.2074
6 year Mean = 1.3073, Range above 1.3957, Below 1.2189
7 year Mean = 1.3117, Range above 1.3947, Below 1.2287
8 year Mean = 1.3132, Range above 1.3934, Below 1.2330

Sonia V GBP, from 0.3075

2 year Mean = 1.3284, Range above 1.3740, Below 1.2828
3 year Mean = 1.3570, Range above 1.4209, Below 1.2931
4 year Mean = 1.3924, Range above 1.4948, Below 1.2900
5 year Mean = 1.3978, Range above 1.4921, Below 1.3035
6 year Mean = 1.4001, Range above 1.4885, Below 1.3117
7 year Mean = 1.4011, Range above 1.4841, Below 1.3171
8 year Mean = 1.4006, Range above 1.4808, Below 1.3204

From GBP/USD 1.2977, Sonia rates below

1 year Mean = 0.2115, Range above 0.2127, Below 0.2103
2 year Mean = 0.2688, Range above 0.3375, Below 0.2001
3 year Mean = 0.2693, Range above 0.3343, Below 0.2043
4 year Mean = 0.2861, Range above 0.3589, Below 0.2133
5 year Mean = 0.2872, Range above 0.3528, Below 0.2216
6 year Mean = 0.2893, Range above 0.3536, Below 0.2250
7 year Mean = 0.2888, Range above 0.3526, Below 0.2250
8 year Mean = 0.2873, Range above 0.3496, Below 0.2250

GBP 1.3177, Sonia Below

1 year Mean = 0.2117, Range above 0.2129, Below 0.2105
2 year Mean = 0.2941, Range above 0.3628, Below 0.2254
3 year Mean = 0.2865, Range above 0.3515, Below 0.2215
4 year Mean = 0.2968, Range above 0.3696, Below 0.2240
5 year Mean = 0.2978, Range above 0.3634, Below 0.2322
6 year mean = 0.3004, Range above 0.3647, Below 0.2361
7 year Mean = 0.3008, Range above 0.3646, Below 0.2370
8 year Mean = 0.3057, Range above 0.3680, Below 0.2434

GBP 1.3284, Sonia rates below

2 year Mean = 0.3076, Range above 0.3763, Below 0.2389
3 year Mean = 0.2958, Range above 0.3608, Below 0.2308
4 year Mean = 0.3025, Range above 0.3753, Below 0.2297
5 year Mean = 0.3034, Range above 0.3690, Below 0.2378
6 year Mean = 0.3064, Range above 0.3767, Below 0.2421
7 year Mean = 0.3072, Range above 0.3710, Below 0.2434
8 year Mean = 0.3121, Range above 0.3744, Below 0.2498

 

Brian Twomey

EUR/USD, EUR/JPY, GBP/USD, GBP/JPY, 5 Day Rule

The 200 year 5 day rule concept in FX trading failed to signal for the second time under GBP and USD interest rate changes. A 200 year standard concept could never fail. The 5 day volatility trade rule shifted and it reallocated under the new central bank interest rate changes as well as the early 2015 market realignment. Under the new metric , the old 5 day rule as a speculation may last at most 2.5 days and 2.5 days represents 1/2 the distance to a 5 day average. Further speculation is the full move was complete yesterday as was the case for DXY.

Why the old 5 day rule held was all nation’s Libor rates had to readjust to new interest rate changes and all nations were affected. Under Libor elimination, internal focus on nation specific interest rates became the norm. GBP pairs made the big move yesterday but remainder pairs failed to follow. The new structure bifurcated currency pair prices from an all inclusive move in each pair to a specific move in 1 pair. Currency markets truly live under not only a realignment but a vastly different world than what was known since the 1972 free float.

Here’s an example directly from the BOE of a non serious, distorted and non tradable GBP/USD and GBP/JPY.
GBP/USD most vital break points today: 1.2903 and 1.2969 vs 1.3179 and 1.3246. GBP/JPY: 147.06 and 148.69 Vs 150.22 and 150.97.

View GBP/USD as above most vital break points from 2 lines at 1.3137 and 1.3134. At 1.3179 is reinforcement to contain GBP/USD lower. Shorts below 1.3134 should be the way over coming days. View today’s bottom at 1.3008. The 5 day rule will be quite interesting.

More realistically to trade complementary pairs to GBP/USD and GBP/JPY is EUR/USD and EUR/JPY.

EUR/USD remains above its most vital break point at 1.1639 but EUR faces resistance at 1.1786 so range = 1.1639 to 1.1786. Higher today must break 1.1679, 1.1694 and 1.1708 to target our price at 1.1723. Below, EUR/USD must break 1.1651 then 1.1634, 1.1619 and target at 1.1606.

EUR/JPY. Resistance points remain built into a higher EUR/JPY. Today’s break points are located at 133.12, 133.55 and 133.79. Look for 133.55 and 133.29 to contain the upside today.

EUR/JPY bottoms are located at 132.13 to 133.29. Overall most vital break points are found at 131.18 and 131.01.

EUR/JPY is vastly oversold yet EUR/USD faces next 1.1786 point 121 pips higher. GBP/JPY is vastly oversold from its support points at 147.86 and 146.25 Yet GBP/USD break points at 1.3134 is only 60 pips away. GBP/JPY and EUR/JPY have room to roam but GBP/USD and EUR/USD lack real estate to break points. Will Cross pairs drive EUR/USD and GBP/USD or will we see a reverse scenario.

Brian Twomey

GBP/USD, GBP/JPY, Sonia, Fed Funds: Levels, Ranges, Targets

The non interest to trade UK money markets Monday and Tuesday was caused by the Fed Funds close Tuesday at 1.07. Editorilly, non interest is defined as pure absent for interest rate traders and extremely rare days as UK money markets are highly active and widely traded daily. Mondays are understandable as a short range day due to remaining nations to adjust interest and exchange rates but Tuesday provided an early warning to problems as central banks under the new market control systems refuse to allow a currency price to travel to the extent of the ranges presented Monday and Tuesday.

Monday was recommended extreme caution in GBP/USD and GBP/JPY as ranges were set exhorbitantly wide for both pairs and enter under discretion Tuesday. GBP/USD was the driver Monday and Tuesday as Monday’s break points were located at 1.3128 and 1.3132. Today, GBP/USD is safely above its break points at 1.3136 and 1.3137. Further, Sonia dived from Monday’s 2147 to Tuesday’s 2140 and 2131 on Wednesday. We don’t trade question marks especially when EUR and other pairs are available.

Fed Funds over the past 2 years in every month drops radically 2 to 3 days per month and usually in the 2nd and 3rd trading week. Drops radically means for example a close from 1.16 to 1.07 as was Tuesday’s example.

The 2 to 3 day pattern changed in the last 6 months to a 1 to possible 2 day in the month radical drop. Last time 1.07 closed was September’s Non farm payroll day and now is seen 1.07 at month end. The radical close pattern changed to 1 day per month and at the worst possible times as Non farm Payrolls and month generally may see heightened volatility.

I cannot stress how important Fed Funds, USD and Monetary Policy affects the entire world. The Fed holds every card played and the remainder nations follow. Number 2 doesn’t exist because every money market system was designed based on the USD standard. UK monay markets finally normalized today after a 2 day absence. NZD as next in line to follow USD interest rates has seen a flux in its own money markets as NZD barely moved 100 pips for the week. AUD is far less thrilling as OIS rates are in unrest. The unaffected is Europe as they remain in comatose mode.

GBP/USD currently trades between 2 daily break points at 1.3238 and 1.3319. The overall top for today is 1.3382 and is 23 pips higher than yesterday’s break point at 1.3359 while 1.3319 is 35 pips higher than yesterday’s 1.3284. Below 1.3319 exists a large tract of real estate to the next break at 1.3238. GBP/USD must break 1.3278 for any shot to 1.3238.

Along the way to see lower the breaks are located at 1.3278, 1.3246, 1.3238, 1.3228 and 1.3212. Overall break points are located today at 1.3136 and 1.3137. Only a break here would see higher 1.2900’s quickly over next days. Overall upper target for today is 1.3346 on breaks at 1.3312 and 1.3319. We’re long at 1.3212 to 1.3228.

GBP/JPY remains far above its vital supports at 147.81 and 146.21. Support and break points today are located at 150.06, 150.47, 150.64 and 150.86 while breaks above are located at 151.70 and 151.94.

Brian Twomey

 

GBP/USD, GBP/JPY, Sonia: Levels, Ranges, Targets

 

UK’s Sonia and other interest rates are undergoing massive massive 3 year reforms to complete April 2018. Consistent with past commentary is market action is seen not in FX but in interest rate markets and the UK is no different but the BOE is most aggressive.

From Sonia’s 10 billion per month volume is now seen 17 billion daily volume with projections to 40 billion. The idea is a true Sonia futures market will develop in order for banks to forecast and draw forward curves. This is a first in BOE history and it was the Libor scandal to force central banks to re work internal interest rate markets. Sonia’s 17 billion matches against GBP/USD daily 500 million factored as 100,000ish contracts USD. Niot bad GBP but in relation to 17 billion, its quite paltry.
In interest rate markets, traders can do anything they wish to exchange rates.

Against interest rate reforms particularly when banks are adjusting to new changes, I don’t see the BOE raise the Bank Rate. Consider many banks are resisting the new changes. To raise means banks must re work current interest rate lines. Consider further, the only change adopted by the BOE since 1963 was introduction of Sonia in 1997. Never has the BOE revamped wholesale changes to interest rates in their long long history. Explains why the 3 year mission and not 2 as did the ECB but it also explains why slow and steady is correct to get it accurate.

What interest rate reform means to exchange rates is more of the same dull daily moves as the payoff goes to banks and interest rate traders at the expense of exchange rates.

Excuse extraneous as my deeper work into interest and exchange rates now attracts multitudes of banks, hedge funds and academics. This post will see 2000 views within max 2 days. To leave interest rate markets unattended is to restrict easily 2000 daily views. And all I ever posted was Sonia and 1 Eonia article. Wait until OCR, Fed Funds and other markets post.
Markets are literally starving for information oh and the correct information. The aspect to buy this, sell that, here’s a picture and Warren Buffet is made is finally leaving us in favor of true and correct information against logical calculations and a correct thesis behind the methodology.

For the past 2 days, zero interest to trade in UK interest rate markets existed especially yesterday as GBP/USD ranged a measly 51 pips from 1.3267 to 1.3310. In interest rate markets, traders can do anything they wish to exchange rates and the BOE system is no different.

GBP/USD’s big line breaks below are located at 2 rising lines at 1.3132 and 1.3131. Neither hit the overbought stage. Today’s target is 1.3321 and this falls just prior to the next big break at 1.3359. Below 1.3284, Targets 1.3269, 1.3243 and 1.3226.
Lines at 1.3132 and 1.3131 won’t break today as 1.3195 will stop any drops. A break in days ahead then the window is open to upper 1.2900’s.

GBP/JPY remains GBP/USD’s best friend as Correlations at 88% form a solid partnership. GBP/USD and GBP/JPY then remain double trades.

At current 151.71, the only other break is located at 152.04. GBP/JPY ranges were set quite wide today as the break below is located at 151.20. GBP/JPY sits on solid supports at 147.74 and 146.16. GBP/JPY supports is what holds GBP/USD from further drops and its the driver to GBP/USD.

I wouldn’t push my luck on GBP/JPY longs however as averages are hitting overbought. Current GBP/JPY at 151.70’s achieved today’s targets and we are looking for a drift back to near 151.20’s.

 

Brian Twomey

Sonia: Levels, Ranges, Targets

Upon the Brexit announcement, Sonia in monthly average terms dropped from 0.4577 to 0.2478. At the August 2008 crisis, Sonia dropped from 0.8973 to 0.5224. Sonia’s overall slide began in Oct 2007 at 5.7751 and since, Sonia never looked back as it trades today at 0.2141. Since Sonia’s 1997 introduction, it traded lifetime highs at 8.60 in April 1998 but only for 1 day.
The sidebar issue is at Sonia 0.89 during 2008 crisis time, GBP/USD traded 1.98 and it appears the exchange rate was deeply misaligned to the interest rate. OCR and AUD/USD suffer the same consequences today. Against Sonia reforms, GBP appears, appears aligned correctly. Libor as the overall driver to GBP in 2008 was possibly misaligned.

Sonia currently trades between the 1 and 2 year monthly averages from 0.2119 to 0.3179. Next averages above at the 3, 4 and 5 year monthly comes 0.3613, 0.3772 and 0.3876.

At 0.30 bumps against current UK CD rates. At present 0.30 is down from July 2016 at 0.35. How vital is the drop to 0.30 is 0.35 CD’s traded from August 2016 to July 2016 then came the current drop at 0.30 since July 2016.

Below 0.2119 then daily Sonia must be viewed. For the past week, daily Sonia traded 0.2100 to 0.2400.

Sonia targets from monthly averages 1 to 10 years and every successive month range from 0.1954 at the 2 year to 0.3336 at the 8 year monthly average. Sonia is most oversold from the 6, 7 and 8 year monthly averages.

Why longer dated averages is current 4th Quadrant since 2008 runs 12.5 years with a mid point at 6.25. The point at 6.25 is a cycle, period average and overall driver to current Sonia as well as all market prices. The 6, 7 and 8 year averages are located at 0.4048, 0.4214 and 0.4277.

The 10 year is located at 0.9876 and is overall am irrelevant average as well as the 9 year at 0.5108.

Inside Sonia’s price is a Signal and currently far far to high. What drives far to high is new overnight rate reforms hold rates in tiny ranges. The price is contained and for now.

If an implosion ever hits markets, overnight rates will travel to exhorbitant levels. Its a location dilemma that drives the signal as overnight rates lack ability to trade at their proper levels. If a signal is to high, it means inside current price is nothing as the price just wanders and is completely lost. It needs variation in order to relieve the high signal conundrum. All overnight rates in every nation suffer the same effects. But other maturities as well are under the same dilemma. Interest rates are misplaced. If interest rates are misplaced then exchange rates and all market prices are misaligned. The signal dilemma is a constant from 1 to 10 year averages.

Sonia under current BOE guidance is undergoing  a massive 3 year reform and completes April 2018. Can the BOE raise or even lower Bank rate under such a reform. My answer is no way as far to much is invested to see reform end dates.
What is expected from Sonia is more of the same dead trading ranges.

Brian Twomey