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Friday 11 August 2017
US CPI and growing negative sentiment
One of the reasons I wouldn't recommend trading data releases for the novice is the potential for whipsaw and a trap but come as it may too many people out there are gung ho to press that trigger for the thrill of it and enjoy the joyride!
Breaking down this week it comes as no surprise that finally the EUR/USD made another big push to consolidate at the 1.19 handle.
The week started brightly and then what happened? North Korea. How quickly reality can become distorted and before you know it all sense of proportion was lost and before we knew it funds were clearing out the weaker longs and we were defending he 1.17 handle. US equities took a dive and crude WTI became sticky at the 49 level That being said the bluster and fluster now seems to be waning and the more sensible traders yesterday were starting to repick their entry points for a long position and all that was needed was the US CPI.
Overall the sum of all inflation; US CPI (MoM) Jul at 0.1% down from 0.2%
So the US economy is slowing down. No doubt about that. But is that a wonder? The last 12 months traders have seemed to expect new stellar growth rates in the jobs market. The economy is at peak level in the business cycle of economic activity. The US economy can only grow at a rate of diminishing returns from now on.
I advocate trading the 15 minute charts within context of the daily charts. 15 minute charts give a good snapshot of the emotions going on around the dealing rooms across the globe.
In the chart above we see the usual lull and then the data release is marked by the huge green candle. Usually what happens after a huge spurt is a little drift back to the 50% Fibonacci and then an upward consolidation near the top of the day. Or the opposite if the case of a huge red candle downwards and then a price climb and gradual consolidation near the bottom of the day.
Sentiment is gradually becoming negative over US markets. The FOMC is repeatedly becoming dovish in statements and speeches and it seems that the US economy is in the final phase just running on vapour with an empty tank.
Across the ocean all the potential is in Europe. Economic reorganization is well underway with political consensus. Where hedge funds drove the EUR/USD down from 1.40 to 1.05 from 2014 to punish Europe for the lack of direction now hedge funds are set to reverse that move and pile back into the EUR/USD as the value currency for 2017.
EUR?USD closed strongly and a push above 1.19 will certainly come sooner than later once all the Korean bluster saga fizzles out and economic reality comes to the fore again!
Breaking down this week it comes as no surprise that finally the EUR/USD made another big push to consolidate at the 1.19 handle.
The week started brightly and then what happened? North Korea. How quickly reality can become distorted and before you know it all sense of proportion was lost and before we knew it funds were clearing out the weaker longs and we were defending he 1.17 handle. US equities took a dive and crude WTI became sticky at the 49 level That being said the bluster and fluster now seems to be waning and the more sensible traders yesterday were starting to repick their entry points for a long position and all that was needed was the US CPI.
Overall the sum of all inflation; US CPI (MoM) Jul at 0.1% down from 0.2%
So the US economy is slowing down. No doubt about that. But is that a wonder? The last 12 months traders have seemed to expect new stellar growth rates in the jobs market. The economy is at peak level in the business cycle of economic activity. The US economy can only grow at a rate of diminishing returns from now on.
I advocate trading the 15 minute charts within context of the daily charts. 15 minute charts give a good snapshot of the emotions going on around the dealing rooms across the globe.
In the chart above we see the usual lull and then the data release is marked by the huge green candle. Usually what happens after a huge spurt is a little drift back to the 50% Fibonacci and then an upward consolidation near the top of the day. Or the opposite if the case of a huge red candle downwards and then a price climb and gradual consolidation near the bottom of the day.
Sentiment is gradually becoming negative over US markets. The FOMC is repeatedly becoming dovish in statements and speeches and it seems that the US economy is in the final phase just running on vapour with an empty tank.
Across the ocean all the potential is in Europe. Economic reorganization is well underway with political consensus. Where hedge funds drove the EUR/USD down from 1.40 to 1.05 from 2014 to punish Europe for the lack of direction now hedge funds are set to reverse that move and pile back into the EUR/USD as the value currency for 2017.
EUR?USD closed strongly and a push above 1.19 will certainly come sooner than later once all the Korean bluster saga fizzles out and economic reality comes to the fore again!
Tuesday 8 August 2017
How long will the EUR/USD correction last?
Would you
bet against the Euro this year? Think again. it could be like standing in front of a train. Yes the German production data was a bit of a shake of the head but looking across to US markets it would be easier to imagine European growth from an undervalued economy than the US economy to reach further heights. Last Friday’s positive US NFP data
was a correction overdue yes, as the EUR/USD halted it’s march that started in
April. But with many hedge funds seeing trouble ahead for the US economy the
bets are back on for a push to the 1.30 mark by the end of this year. How many more US jobs can you add? The signs are still on for EUR/USD as a growth value currency for 2017. Why is
this happening? A/ The political risks of Grexit and Frexit and Brexit have vanished and
the call to European unity is working B/ The Euro economy is in a lot better shape
except for the banking sector C/ Central banks have diminished holdings of Euro
and will need to plough back into the value currency of the year. Strong
support lies at 1.1728 (04/08/2017 high) and once the weaker longs have been
shaken out we are looking for a resumption of growth and a target of 1.1910
(02/08/2017 high).
Cable
GBP/USD is at mischief and more to do with uncertainty and Brexit with the
spate of ugly airport scenes as a foretaste of future economic chaos driving
investors into a panic over Sterling stability. All eyes on the UK inflation
report. GBP/ USD was marching nicely in the trail of EUR/USD but the correction
has been deeper and now support is given at 1.2933 (20/07/2017 low but a test
of this can come today and tepid inflation data could break the support.
In US markets crude stockpiles have declined by
7.84 million barrels according to the American
Petroleum Institute but traders
are wary as the summer draws come to an end and the EIA is forecasting a
large US output thereafter. WTI did his $50 last week but quickly retreated
with a glut in view over the horizon. Be wary of $50 crude as the market
threatens to weaken.
Tuesday 1 August 2017
The March of the Euro
Is this the case of the relentless march of the Euro currency or perhaps is it something more about future perception of Dollar weakness?
EUR/USD bullish pressures continue The hourly resistance at 1.1777 (25/07/2017 high) is now broken and become the new support. Yes the Trump bet on reflation is weakening immensely and traders are increasingly skeptical of a Goldilocks economic outlook but now we're at the 1.18 smart traders are increasingly wary of a snapback. Position traders should be wary of piling long term longs at the 1.18 as the Dollar is largely oversold. Structural flaws in the Euro zone and a banking mess dims my outlook of a rapidly increasing Euro. So this was more of a case of a downward glance at the new Trump era and the political uncertainty. Woe the day Trump does convince Wall Street he has got it right and investors flock back into the USDX. That day could be coming sooner than Euro investors would think. Swing traders on 15 minute charts are looking for quick shorts on bearish engulfing patterns and other similar reversal candle setups for mood swings signalling a lull and chance for a pullback.
The smarter long term trade is the GBP/USD which increasinly looks like it has shrugged off the Brexit headache with firm support at t 1.3159 (27/07/2017 high).
Happy trading!
EUR/USD bullish pressures continue The hourly resistance at 1.1777 (25/07/2017 high) is now broken and become the new support. Yes the Trump bet on reflation is weakening immensely and traders are increasingly skeptical of a Goldilocks economic outlook but now we're at the 1.18 smart traders are increasingly wary of a snapback. Position traders should be wary of piling long term longs at the 1.18 as the Dollar is largely oversold. Structural flaws in the Euro zone and a banking mess dims my outlook of a rapidly increasing Euro. So this was more of a case of a downward glance at the new Trump era and the political uncertainty. Woe the day Trump does convince Wall Street he has got it right and investors flock back into the USDX. That day could be coming sooner than Euro investors would think. Swing traders on 15 minute charts are looking for quick shorts on bearish engulfing patterns and other similar reversal candle setups for mood swings signalling a lull and chance for a pullback.
The smarter long term trade is the GBP/USD which increasinly looks like it has shrugged off the Brexit headache with firm support at t 1.3159 (27/07/2017 high).
Happy trading!
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