Wednesday, November 06, 2013

Making sense

Look at the bigger picture, if what you see makes no sense

Monthly 2013-11-06

You are looking at monthly charts (left to right, top to bottom)

EUR / Pound / Yen

Gold / S&P / Dow / Oil

These charts go from 2009 to 2013 and they tell a story.

The pound is rangebound, while the Euro failed to reach the channel highs, instead stalled below the 61.8% Fib

Euro monthly 2013-11-06

or not?

20 years Euro and GBP side by side

Euro and GBP monthly 2013-11-06

The Yen building a base for the next leg up. Look at 20 years of Yen trading to see it building.

Yen monthly 2013-11-06

Gold is another story. The once mighty has fallen from the grace …
There are two lines in the sand, and they are not so far away.

Like the Yen, Gold might be building the base to break lower, but while I see the Yen reaching above 125 on the next long term leg up, I see Gold struggling to break below support. I see Gold moving in a range between 1200 and 1450 in the years to come, supported by the realisation, that pysical gold remains finite, while paper can be printed (as long as others are willing to buy).

Gold monthly 2013-11-06

Can stocks go higher? Sure they can! Does it look so? Well, there is a 4 year trend now in place.

But let’s look at 20 years S&P

ES monthly 2013-11-06ES monthly 2013-11-06-2

We are at the 138.2% extension of the 2002 to 2008 leg up, which was followed by a “false” breakdown and move to new All Time Highs. Next target is 1937, lets call the round number 2000, which will provide a lot of resistance.

But to get there, we will need a base in the 1666-1602 area. And when we break down to this area, the newsies will call it the end of the world as we know it. Down is such a strange conception after 4 years up.

At last let’s talk about oil. It’s back into its year long channel. Its going down to 90-88 and will bounce.

Winter is coming

Oil monthly 2013-11-06

Enjoy it cheap, while it lasts and trade the range.

Wednesday, October 16, 2013

US Default 1 Day ahead

Noone really belives that! Markets are irrational, but if any other country in the world would dare to mention

“Sorry folks, there might be a chance, that coming Thursday, we will not be able to pay our bills. It’s not because we could not print any more money, but because we are not allowed to use our printing presses any longer.” …

Well, the Euro was doomed in the eyes of the markets, because Cyprus had to close it’s banks for a few days. Tomorrow the US of A might not be able to pay its bills, and my charts look like this:

Default

These are daily charts from left to right EUR/USD, GBP/USD, USD/JPY and below Gold, S&P, 30y Bonds and Oil.

Given a rumor of the magnitude we are faced with, I would expect the USD and S&P in the cellar, while commodities are soaring, with a relief rally afterwards.

In numbers I would expect

EUR/USD at 1.48, GBP/USD at 1.68, USD/JPY back to 0.93, Gold at 14xx, S&P barely holding 1600, Treasuries around 125 and Oil around 120 at least.

Instead we get: Euro and GBP on hold for a month, Yen on hold, Gold down, S&P reaching new highs, Bonds trying to reclaim lost territory (they came already down from lofty highs earlier in the year) and Oil down

Never try to outthink the markets. I will stay out of this, as it makes no sense to me.

But …. Maybe, just maybe the markets have reverted to: Buy the rumor, sell the bad news … Kind of what you would expect from a rational market….Markets are irrational, can’t be that reasonSmiley

Friday, August 16, 2013

News-Trading

Sometimes a tradeplan isn’t worth the feeling after.

Trading oil with the knowledge, that dead people in Egypt will spike the oil price is one. There is talk about a lot of unrest today in Egypt and it will affect the oil price. The more horrifying the news, the stronger the spike, so I thought.

Oil  1min 2013-08-16

When I took the entry, Oil was trading up to a resistance, took out the high of the previous bar and I entered long. In hindsight: it was looking good, but early! I should have waited and taken the entry at the Tenkan-Sen (orange).

Then nothing happend, the trade went south with prices supported at the Tenkan, then Kinjun, then 50% H/L. Every tick down was met with steady buying until

 

15:42 image

 

15:44image

Now we see strong buying

15:52image

… Spike … Exit into spike … Plan worked … feel bad

In trading feelings should be left at the door! There is no room for that, but I think, I will refrain from tradeplans involving gruesome acts of violence to provide the fuse for my trade. It’s not worth the bad taste in my mouth after it worked.

Ps.: The times seen on the tweets updated, while I was writing the article. That’s why the numbers on the left and in the tweet itself don’t add up.

PPs.: The 1 minute chart above shows the 15 minute Ichimoku chart. I like the 1 minute for the look inside the formation, but I need the longer timeview on the Ichimoku to trade.

Wednesday, July 31, 2013

EUR/GBP summertime

It’s summertime. Expect fast, sudden moves, which retrace without reason, no volume, no moves for hours. Go away, as noone is in town. It might be the best advice for the next 5 weeks.

But if not, trade 1/2 size, take the longer view.

EUR/GBP is trading at highs prior the the FED and ECB decisions due later today and tomorrow. Monday the Pound took a swandive, while the Euro held. The Euro area is in no better shape than the british economy. No reason for the exchange-rate to make a sudden huge move. But in a low volume environment it sure is possible to move first the GBP/USD and then a day or 2 later the EUR/USD, producing a wide swing in the cross.

The daily is testing a breakout level and might actually try a run up.

EURGBP daily 2013-07-31

But that’s not the whole picture. Looking at the daily, you want to look at the weekly as well.

EURGBP weekly 2007-2013-07-31-2

And here we see some warning flags: The Tenkan crossing below the Kinjun and a falling trendline around 0.8750. And that’s not the only trendline we can draw.

EURGBP weekly 2007-2013-07-31

Looking at a weekly chart starting in 2007 we see a huge triangle, which was broken to the upside in April 2011, but later resolved to the downside only to test the support becoming resistance blue line right now again.

This fuzzy resistance is around 0.88 right now, right where the EURGBP started trading 15 years back.

EURGBP monthly 2007-2013-07-31

But enough, the FED is coming up tonight and I want to trade the retracement of an extreme move

EURGBP 15min 2013-07-31

The breaking of the cloud will trigger my short entry, as will a touch of the 0.8750 , 0.8775 and 0.8800 levels for a return to 0.8550.

EURGBP daily 2013-07-31-3