So, here we are, Greek election is around the corner…and tis analogy reached support just before the week end.
I was waiting to reach support on my last post :
We’re currently reaching it :
I’ve just started to build a long $USD position. I will add later today. I stay cautious because of the volatility expected on Sunday’s opening. I started to sell $GBPUSD and $EURUSD. I’m planning to add into my positions today and to catch a long $USDJPY on Sunday.
Following my last post, This is a serie watching an analogy developping on the FXCM Dollar index (A basket of 4 currencies against the USD).
It all started in March with this post and that chart :
I was staring at a move similar of what happened in 2011. My guess that we were at the eve of a strong move up for the $USD
My second post and second chart :
My third post and …third chart
My fourth post and fourth chart
The fifth
The sixth
You can see on all this charts that the move occured but, at a slower pace than I was imagining. I was worried in my post 5&6 that the technical levels for the analogy would be cancelled if we’d broke the area I identified as the last resistance area. It didn’t hold and so, I thought I could put away this idea in the garbadge, but it proved to be a false break :
This chart is form the 10th of June around midnight GMT.
We can see the powerfull move that followed the false break, the Announcment of the Spanish bailoutmade the $USD heading south.
If we’d be in the same blue circle than in 09/2011, we could face a serious correction.
My guess is : like that last blue circled area, we’ll touch the former resistance turned support, and bounce for the last move up before the correction.
It will come fast, the beginning of the week should be enough time for the correction to occur, followed by a good move up before a large correction, maybe not in pips, but in time, let’s see.
Since last Greeks elections, Mr market can’t stop talking that the Greek exit is eventually a strong possibility.
After years of “there is no laws/mechanisms set up for a country to exit the Eurozone”, in 2 weeks , the Grexit is presented as something logic and already written.
But it’s stupid !
Just take 2 minutes, Syriza wants to keep the €, as most Greeks! The 3 main political groups want to keep the shit. It implies :
99% chance that Greek election result in a situation where Greek government wants to keep the €.
So, after years of “it’s impossible for a country to quit the Eurosystem” we have “We’ll kick the Greeks out against their wish of the Eurosystem”
It’s a fallacy
Where the legitimacy of that? On which legal basis ?
If a country cannot leave the Eurosystem, it is arguably more difficult to kick out one country of it ? Especially against its will !
No?
What the point is , as Greece could not be kicked out. It will force out Germany , Finland and other countries that think the Eurosystem belong to them. It doesn’t, the Eurosystem belongs to everybody and so to nobody. When the reality will eventually emerge , Mr market will see that a German exit is at least as much sure than a Grexit.
Following my last post , The topic is an analogy in place on the FXCM $ Index, you can find here the 1,2,3,4,5.
Let’s start with the chart of my last post (episode 5) :
I was pointing out on this chart that we were approaching a very strong resistance area. If this analogy was to work, the $USDX had to stabilize and regain some strength.This chart has been made the 27th of March. Today, it looks like that :
We had had a strong rally followed by a significant pullback. I didn’t write any post when we rallied because I had some other indicators that did not validate the rally. So, we’re back here, on the resistance.
Things look easy from here, we break it or we rally hard. I’m in for the rally. I don’t see the greenback loosing grip right now. It wouldn’t make sense when the Fed lost a bit of its dovish tone…in fact, this analogy -considering the magnitude of the correction- would suggest that we’re going to rally hard.I suggest that you read the 4th episode of this analogy where I detailed on a bigger time frame the descending wedge in place for the $USDX since 1985. If the $USDX fail at those levels….it would be an epic fail.
Time will tell, but it will be quick from now.
Following my last post, I comment on an analogy developing since mid-2011.
I was expecting a move up last week in the index but it didn’t come. I’m at a point where there is the ultimate resistance area that is being tested , if lost this analogy would become a nice memory .
We’re currently testing the former red box, we are really close to a test of the former descending channel. This week is decisive time. I will personally get long the first day we daily close under the upper boundary of the descending trend line : the red one. My stop would be right under the purple ascending channel.
You can find the 3 firsts posts here : 1 , 2 & 3
The analogy has worked well last week,
It’s not possible right now to be sure that the 2nd interpretation that I favored was the good one, it will be possible just in hindsight the next few weeks. Nonetheless, this analogy works exceptionally well until now .
It can be summarize like this :
So, what to expect for next week ?
I wrote last week : “This interpretation means that we could have a spike Sunday/Monday and a moderate choppy pullback for the rest of the week in the FXCM Dollar index, (it’s the black dotted circled area).” and “The 2 say next week would be a consolidation week for the $US.”
The move up really accelerated on Wednesday, but we finished the week basically where we started.
For next week, we should see Monday/Tuesday with an up FXCM $ , a correction on Wednesday and a rally at the end of the week. But as it is trading and not weather forecast, I would say that the $ should go up moderately the beginning of the week and try to test the resistance. Once this resistance would have been tested, the FXCM $ will rally strong .About levels, the $ has to close over the blue dotted line, if it will, it should retest this line of resistance that would become support and after, it should rally really powerfully.
I’m a big fan of the St Louis Fed indicators and have been watching a dollar index that they produce : The value of the USD on this index is determined by the exchange rate of foreign currencies of countries that trade with the US. Their relatives part in the basket is due of their share of the total American trade. We’re breaking ultra long term trend lines :
If you zoom in, you can see that the last rally since the middle of last year has had its support line retested several times :
We already broke the triangle, pulled back, we’re in fact right now retesting the descending trend line after having tested the ascending one. We’re currently in a channel :
More precisely at the bottom of this channel .
Because the analogy that I’ve been presenting since 2 months and those last charts, I’m hyper-bullish the USD…and Bernanke helped last week on the fundamental side…
It’s the 3d part of an analogy that has been developing since last year, you can find the firsts parts here and there.
Basically, this analogy worked really well, but I’m at a point where there is 2 interpretations…
On this chart the yellow areas are a retest of the former lower highs, the red circled area.In that case, In my second post, I underestimated the size of the correction.
And this one :
Here, the yellow areas are just a pause in the move up, close to the former high. I favor this second interpretation because in the first one, the yellow area should have been higher that the former former highs, the orange areas. It’s little messy because, in the second interpretation the yellow areas are, in one case over the former low and in the other case, higher. But it’s important to note that the yellow areas in the laft part of the first interpretation came after a retest of the former former high , the orange areas, in the second part, on the right , the yellow area is not a retest of the orange highs. In the second interpretation, I was wrong in my second post, I have been too early to mark the retest.
I favor the second interpretation because some trend lines reinforced this interpretation :
This interpretation means that we could have a spike Sunday/Monday and a moderate choppy pullback for the rest of the week in the FXCM Dollar index, (it’s the black dotted circled area).
The first analogy -that I don”t favor-means that we could have a straight powerful day up on Sunday/Monday and a pullback, but I would enjoy this interpretation too because it looks faster and I don’t have any more colors available to circle areas.But both saying the same thing:
I’m writing this post just after a small part of the CDS have been activated.
People think it’s all over when it’s just the beginning . Don’t forget that a lot of those bonds belonged to Greek pensioners, for which party do you think they will vote for when they ‘ll notice that if they chose to not participate in the PSI, they could have used their insurances (CDS) ? Greek elections are coming nearly soon.
The 95.7 % participation rate looks suspicious, just 0.7% over what the Eurozone was asking for ….we’re talking about Greece, remember, the country whom statistical office have lied since more than 10 years…but, maybe, it’s the real numbers….
I was reading an article on Bloomberg that talked about an Austrian bank that needs 1 Billion € in refinancing, the article has been deleted…
Investors have now a track to watch for in the incoming other sovereign defaults, you think they like it?
There is the legal attacks on Greek rail bonds that could came really fast.
Greece is said to have a temporary governmental deficit of 7.5% this year.
For sure it’s an orderly default, but it resolves no problems, just no Financial panic, but no problems have been resolved !
European economies are in recessions, elections are coming. Maybe the S&P 500 can rally, but, don’t expect $EURUSD to rally nearly soon, I think 1.3360 has been an important top on the way down.
We’re entering the “unknow unknown”, caution.
Following my first post , The analogy on the dollar played out good , it’s the Daily Fxcm dollar index:
The $ broke the descending trend line, we are right now retesting it. As the right side of the chart looks a miniature of the left side, we should experience a moderate drop in the dollar (maybe this drop is already over) and continue to go higher this week, apparently a big move up could take place Thursday or Friday.
I use the Fxcm dollar index because it’s way better than the $USDX in my opinion, EUR just represent 25% of the basket. Jpy 25%, GBP, 25% and AUD 25 % too.
So, it’s not like the $USDX that is just an inverse $EURUSD . For me, after the index from the St louis FED, it’s the second most accurate.
I’m watching a chart where there is a beautiful analogy, it’s the Daily FXCM Dollar Index :
It’s USD bullish and accelerating.
This analogy says : Pullback on Sunday/Monday and after a powerful leg up should take place.
Let’s see.
So, here we are, Greek election is around the corner…and tis analogy reached support just before the week end.
I was waiting to reach support on my last post :
We’re currently reaching it :
I’ve just started to build a long $USD position. I will add later today. I stay cautious because of the volatility expected on Sunday’s opening. I started to sell $GBPUSD and $EURUSD. I’m planning to add into my positions today and to catch a long $USDJPY on Sunday.
Following my last post, This is a serie watching an analogy developping on the FXCM Dollar index (A basket of 4 currencies against the USD).
It all started in March with this post and that chart :
I was staring at a move similar of what happened in 2011. My guess that we were at the eve of a strong move up for the $USD
My second post and second chart :
My third post and …third chart
My fourth post and fourth chart
The fifth
The sixth
You can see on all this charts that the move occured but, at a slower pace than I was imagining. I was worried in my post 5&6 that the technical levels for the analogy would be cancelled if we’d broke the area I identified as the last resistance area. It didn’t hold and so, I thought I could put away this idea in the garbadge, but it proved to be a false break :
This chart is form the 10th of June around midnight GMT.
We can see the powerfull move that followed the false break, the Announcment of the Spanish bailoutmade the $USD heading south.
If we’d be in the same blue circle than in 09/2011, we could face a serious correction.
My guess is : like that last blue circled area, we’ll touch the former resistance turned support, and bounce for the last move up before the correction.
It will come fast, the beginning of the week should be enough time for the correction to occur, followed by a good move up before a large correction, maybe not in pips, but in time, let’s see.
Since last Greeks elections, Mr market can’t stop talking that the Greek exit is eventually a strong possibility.
After years of “there is no laws/mechanisms set up for a country to exit the Eurozone”, in 2 weeks , the Grexit is presented as something logic and already written.
But it’s stupid !
Just take 2 minutes, Syriza wants to keep the €, as most Greeks! The 3 main political groups want to keep the shit. It implies :
99% chance that Greek election result in a situation where Greek government wants to keep the €.
So, after years of “it’s impossible for a country to quit the Eurosystem” we have “We’ll kick the Greeks out against their wish of the Eurosystem”
It’s a fallacy
Where the legitimacy of that? On which legal basis ?
If a country cannot leave the Eurosystem, it is arguably more difficult to kick out one country of it ? Especially against its will !
No?
What the point is , as Greece could not be kicked out. It will force out Germany , Finland and other countries that think the Eurosystem belong to them. It doesn’t, the Eurosystem belongs to everybody and so to nobody. When the reality will eventually emerge , Mr market will see that a German exit is at least as much sure than a Grexit.
Following my last post , The topic is an analogy in place on the FXCM $ Index, you can find here the 1,2,3,4,5.
Let’s start with the chart of my last post (episode 5) :
I was pointing out on this chart that we were approaching a very strong resistance area. If this analogy was to work, the $USDX had to stabilize and regain some strength.This chart has been made the 27th of March. Today, it looks like that :
We had had a strong rally followed by a significant pullback. I didn’t write any post when we rallied because I had some other indicators that did not validate the rally. So, we’re back here, on the resistance.
Things look easy from here, we break it or we rally hard. I’m in for the rally. I don’t see the greenback loosing grip right now. It wouldn’t make sense when the Fed lost a bit of its dovish tone…in fact, this analogy -considering the magnitude of the correction- would suggest that we’re going to rally hard.I suggest that you read the 4th episode of this analogy where I detailed on a bigger time frame the descending wedge in place for the $USDX since 1985. If the $USDX fail at those levels….it would be an epic fail.
Time will tell, but it will be quick from now.
Following my last post, I comment on an analogy developing since mid-2011.
I was expecting a move up last week in the index but it didn’t come. I’m at a point where there is the ultimate resistance area that is being tested , if lost this analogy would become a nice memory .
We’re currently testing the former red box, we are really close to a test of the former descending channel. This week is decisive time. I will personally get long the first day we daily close under the upper boundary of the descending trend line : the red one. My stop would be right under the purple ascending channel.
You can find the 3 firsts posts here : 1 , 2 & 3
The analogy has worked well last week,
It’s not possible right now to be sure that the 2nd interpretation that I favored was the good one, it will be possible just in hindsight the next few weeks. Nonetheless, this analogy works exceptionally well until now .
It can be summarize like this :
So, what to expect for next week ?
I wrote last week : “This interpretation means that we could have a spike Sunday/Monday and a moderate choppy pullback for the rest of the week in the FXCM Dollar index, (it’s the black dotted circled area).” and “The 2 say next week would be a consolidation week for the $US.”
The move up really accelerated on Wednesday, but we finished the week basically where we started.
For next week, we should see Monday/Tuesday with an up FXCM $ , a correction on Wednesday and a rally at the end of the week. But as it is trading and not weather forecast, I would say that the $ should go up moderately the beginning of the week and try to test the resistance. Once this resistance would have been tested, the FXCM $ will rally strong .About levels, the $ has to close over the blue dotted line, if it will, it should retest this line of resistance that would become support and after, it should rally really powerfully.
I’m a big fan of the St Louis Fed indicators and have been watching a dollar index that they produce : The value of the USD on this index is determined by the exchange rate of foreign currencies of countries that trade with the US. Their relatives part in the basket is due of their share of the total American trade. We’re breaking ultra long term trend lines :
If you zoom in, you can see that the last rally since the middle of last year has had its support line retested several times :
We already broke the triangle, pulled back, we’re in fact right now retesting the descending trend line after having tested the ascending one. We’re currently in a channel :
More precisely at the bottom of this channel .
Because the analogy that I’ve been presenting since 2 months and those last charts, I’m hyper-bullish the USD…and Bernanke helped last week on the fundamental side…
It’s the 3d part of an analogy that has been developing since last year, you can find the firsts parts here and there.
Basically, this analogy worked really well, but I’m at a point where there is 2 interpretations…
On this chart the yellow areas are a retest of the former lower highs, the red circled area.In that case, In my second post, I underestimated the size of the correction.
And this one :
Here, the yellow areas are just a pause in the move up, close to the former high. I favor this second interpretation because in the first one, the yellow area should have been higher that the former former highs, the orange areas. It’s little messy because, in the second interpretation the yellow areas are, in one case over the former low and in the other case, higher. But it’s important to note that the yellow areas in the laft part of the first interpretation came after a retest of the former former high , the orange areas, in the second part, on the right , the yellow area is not a retest of the orange highs. In the second interpretation, I was wrong in my second post, I have been too early to mark the retest.
I favor the second interpretation because some trend lines reinforced this interpretation :
This interpretation means that we could have a spike Sunday/Monday and a moderate choppy pullback for the rest of the week in the FXCM Dollar index, (it’s the black dotted circled area).
The first analogy -that I don”t favor-means that we could have a straight powerful day up on Sunday/Monday and a pullback, but I would enjoy this interpretation too because it looks faster and I don’t have any more colors available to circle areas.But both saying the same thing:
I’m writing this post just after a small part of the CDS have been activated.
People think it’s all over when it’s just the beginning . Don’t forget that a lot of those bonds belonged to Greek pensioners, for which party do you think they will vote for when they ‘ll notice that if they chose to not participate in the PSI, they could have used their insurances (CDS) ? Greek elections are coming nearly soon.
The 95.7 % participation rate looks suspicious, just 0.7% over what the Eurozone was asking for ….we’re talking about Greece, remember, the country whom statistical office have lied since more than 10 years…but, maybe, it’s the real numbers….
I was reading an article on Bloomberg that talked about an Austrian bank that needs 1 Billion € in refinancing, the article has been deleted…
Investors have now a track to watch for in the incoming other sovereign defaults, you think they like it?
There is the legal attacks on Greek rail bonds that could came really fast.
Greece is said to have a temporary governmental deficit of 7.5% this year.
For sure it’s an orderly default, but it resolves no problems, just no Financial panic, but no problems have been resolved !
European economies are in recessions, elections are coming. Maybe the S&P 500 can rally, but, don’t expect $EURUSD to rally nearly soon, I think 1.3360 has been an important top on the way down.
We’re entering the “unknow unknown”, caution.
Following my first post , The analogy on the dollar played out good , it’s the Daily Fxcm dollar index:
The $ broke the descending trend line, we are right now retesting it. As the right side of the chart looks a miniature of the left side, we should experience a moderate drop in the dollar (maybe this drop is already over) and continue to go higher this week, apparently a big move up could take place Thursday or Friday.
I use the Fxcm dollar index because it’s way better than the $USDX in my opinion, EUR just represent 25% of the basket. Jpy 25%, GBP, 25% and AUD 25 % too.
So, it’s not like the $USDX that is just an inverse $EURUSD . For me, after the index from the St louis FED, it’s the second most accurate.
I’m watching a chart where there is a beautiful analogy, it’s the Daily FXCM Dollar Index :
It’s USD bullish and accelerating.
This analogy says : Pullback on Sunday/Monday and after a powerful leg up should take place.
Let’s see.
