Thursday, March 9, 2017

First Look at Currencies

Recently, I've taken to the Currency Futures as a form to practice a few techniques I've been acquiring.   Nice thing about the Currencies is that they're global so it's usually easy to find a market that's displaying activity.

It didn't take long to rediscover that without understanding proper context, trading results are haphazard at best - So early this morning, I began an exercise to better frame currencies.

This is a survey of currency markets from a large overview perspective.   Precious metals are included.

Summary:   Many instruments are either currently at or forming major points of control (fair value) and likely to remain that way until some event causes imbalance.   In getting here, the US dollar has increased in value by 20% in the last 3 years while the rest of the world tanked.

Values are rounded to the nearest US nickel for simplicity.

The US Dollar is rising, presently at 1.01 from 0.80 in 2014 (+20%)

Looking at Gold & Silver, we find these near their 20 year Points of Control.   These fair value levels appear very well defined:

Australian Dollar: After  a defined fair price of 1.05 in 2011, value has declined around 0.75 (-25%)

British Pound: Forming fair value around 1.25, a 37% falloff from 2007 highs (~2.00)

Canadian Dollar: Forming fair value around 0.75, a 25% falloff from 2007 highs (~1.00)

Eurodollar:  Was around 1.30 , now around 1.10 (-15%)

Japanese Yen: Settling between 0.0085-0.0097, after a 40% drop from 0.0128

Mexican Peso.   Falling like a brick from 0.08 to 0.05 (-38%)

Sunday, March 5, 2017

Start of Month Gold Review

On of the room's upper class man passed along a fibonacci worksheet and asked me where the price of gold was going to go.  Scott sort reminds me of Otter in Animal House, interestingly wise in his ways.  Spending the day off drawing fib levels, I've got to admit after awhile getting confused which way was up.   Nonetheless....

Gold has been moving nicely, inversely correlated with recent equity action.

In the long term, Gold has settled near its 20 year, 5 year, 1 year and 20 day point of control (meaning churn)

Recently demonstrated support levels at 1220  and signs of a short term long trend have been observed.

Short term trading respecting this rotational market appears wisest for now.

Intermediate and long term signals are mixed and will probably remain this way until some event takes place.   Details, observations & ruling reasons are on the pictures.

Long (monthly) View
- Price is at "fair value", awaiting a major event

Intermediate (daily) View
- Price is entering a squeeze at this multi time frame point of control
- Based on prior action at this level (from the other side), a pullback before continuation long?

Short Term (30 minute) View
- Until a major breakout signal is observed, trade the rotational market between visible levels