I am not the only one slightly puzzled by reaction to Yellen.
This was two hours ago:
B – It’s almost as if bond traders and economists are watching different versions of Janet Yellen’s testimony to Congress this week[/B].
At such times it pays to be nimble, no overnights, play off the 15min, wait for clearer direction.
And finally,
Post 3039, on that 15min chart, I have just extended the lower purple trend line - thought that was cute how price stopped there.
W/s again in action, I showed earlier the divergence giving the entry, here it is for the exit.
The vertical yellow is the exit candle, the point where it crosses the line, but the important thing is to note where it was coming from. It was falling all the while that price was rising, the crossing of the line only confirms if the entry was on 15min then exit on the 15min.
Would I enter now that price has re-bounded? hmmm… even if it crosses back up I think like Napoleon - “not tonight Josephine” 
Hey guys.
Wednesday’s results.
NZD: +681///+6.3
AUD: +214///+2.1
CAD: +106///+.82
GBP: +11 ///+.46
EUR: -212///-1.46
CHF: -168///-2.08
JPY : -318///-2.94
USD: -314///-3.2
Comms all the way. +9.22%
Well, we have all 3 Comms up on top. That’s a first, in a while. Cause there’s always been at least one pretty far back. So, it’s looking like the playing field is slanting towards the Comms. I don’t know if it’s due to the strong Comms, or the weak Majors. Probably weak Majors, or absent of.
I want to remind you that the Majors were the dominant strong ones during the month of Jan. And so far this month (the first 3 weeks) all the Comms are in the top 4 positions, of the 8. And this week started out with the Majors eaking out Monday. Tuesday the Comms were over Majors by a pretty good bit. But today they have completely dominated them. So, I wonder if this is the first signs of the USD turning the bend, and other than the GBP, (which might be taking over their spot), the Comms to generally be stronger.
Well, we’ll see.
0025
Mike
Hi Peter,
you could make your last three posts in an economic newspaper. Very nice analysis! I really enjoyed how you put it all together.
I have two questions. 1. We discussed many times how different it is to analyse and to manage the trade. So one quesiton is how many trades did you enter? I only see one exit signal you discussed but I do not know where you entered and actually if you made this ride with one position, scale in or even trading it both directions because if we get a signal and then the extreme reading on the last chart it is a possibility at the same time to go long.
Your Josephine must be happy with all your winnings!
Congrats and keep them coming,
FE
PS: my NZD/CHF trade is developing very nicely
Hi FE,
Only one position, no adding - when the moves are related to one sector (was XLU) then no adding in, if the move related to a number of sectors then will add in.
If move is related to only one sector then will keep that sector on chart, it will confirm likelihood of sudden reversal, can help in making quick exit also has helped in ‘spinning’ reversing position.
I just spreadbet the cash daily on these, spread is 0.5
1 point (tic) movement is every 0.1, ie 1316.1 to 1316.2
Can speadbet each tic from 0.50 cents/pounds upwards, another broker 1.00 cents/pounds upwards.
Hmmm. gbp falling
A question here, should the SP 500’s lack of reaction to the solid US number be a cause for concern?
Hi Philip,
you can maybe explain me something. I checked the reaction of the USD because it made nice gains across the board. You also say “solid US number”. I just do not see it. Can you explain it? Seriously. I do not know why is the reaction strong. In my calendar there were three tier 1 events an hour ago and two of them were weaker than expected. Why is this positive reaction then?
Thanks,
FE
Well the change, and its a significant one, is in two main readings; first the durable goods (an important factor in GDP) gave a good reading. Of course the previous readings were abysmal. So the thing that really stood out was the wage growth, up 1.2%. This is the biggest increase since the financial crisis began all the way in 2008.
One criticism of employment in the US was the quality of jobs created, called Mcjobs. Simply because they were jobs in food stores or customer service. The growth in wages could suggest that there is also a return for more quality jobs while maintaining the quantity.
As a result, I think the market is expecting FED in their March meeting to remove the word ‘patient’ when addressing tax hikes. This means an increase in interest rate is most likely to be in June (that’s the market’s view.)
That’s my take on it.
Ok Philip thanks for your answer. Now I know what is what I see other. First, on forexfactory calendar, there is no wage growth news… Second the Durable Goods, which was basically the only really strong event is marked as unimportant.
Your explanation is logical, if it is like this then you might drop the “reversal theory” idea
FE
Or remain the arrogant trader that I am and say people are in for a shock in March 
Joking a side, this news has to put on alert that (at least for now from a fundamental POV) there shouldn’t be a USD correction.
We will have to see how things pan out because that view is diverging from what I see on the charts.
Energy pulled it down, wti now at support - so watch XLE
Economic sense attributes the USD action to the wages report (contained in the CPI report).
One thing to take on board though - is a similar debate to GBP about 9 months ago when there was a suggestion of a rate increase from BOE.
Everyone watched the wages, the theory is well founded, increasing wages put an increase in spending which in turn pressures inflation.
But then the CRB (commodities’ prices) took over, the continued downward prices easily overran any notion of better employment or wages causing upward pressure on inflation - the ecpectation of an interest rate increase faded into the mist.
So too today, take on board that consumer prices fell in Jan -0.7 ( have to go back to 2008 to see those type of numbers m/m) - that number ‘should’ have knocked the USD back.
The wages jump was greater than expected, or was it…
Below wages US including today’s numbers:
Those wages have not been impacting much on CPI, the CRB, on the other hand, is.
The USD action today, imo, is more to do with end of month, but the debate will continue
(btw that’s the only reason that I said about being short cable last night, it was either Eur or Gbp, figured some risk with Euro/Greece to the upside, so chose GBP)
And finally, has the falling stopped on S&P?
Hard to tell but there is a strong sign that it has (Oanda 2106.90) - I’ll check back after the close to see.
Price updated at edit time.
Current S&P with w/s (still indicating a sell)
Hi Peter,
I believe you many things but even you cannot tell me you remember what was in the GBP report 9 months ago Good bluff, you know we will not check the report Although I have to watch out with you before going all-in. It might even be true.
I will be interested to see if S&P is hitting at this moment support or is it going to fall further on. We will see.
FE
LOL - FE, I remember the whole debate, it’s almost a duplicate of the current USD debate.
Carney had been doing all the talking and the market initially believed him, on June12 he said:
“Interest rates may rise sooner than expected”, minutes later the Finance minister announced new BOE powers on mortgagee.
I’ll quote the experts:"[B]more experts are warning that the recovering economy risks overheating[/B]."
Video: Mark Carney tells Mansion House: Interest rates could go up sooner - Telegraph
So all the experts began to dig to confirm the overheating (inflation, higher interest rates), and of course GBP duly did a brilliant high jump that day.
The wages numbers were watched, employment levels scrutinized, it all looked exactly like the experts were saying.
United Kingdom Average Weekly Wages | 2000-2015 | Data | Chart | Calendar
Then Carney did another little talk - 2.5% - on the 27/6/14 - 4 days later GBP peaked.
It has been falling since.
BBC News - Mark Carney: ‘New normal’ for UK interest rates is 2.5%
So what happened the overheating of a few weeks earlier? - the CRB happened.
Mr Carney finally threw in the towel in October and admitted the CRB took care of any notion of interest rate increases “sooner”.
CNN: “Is one of your concerns that there’s some sort of global deflationary impulse that’s going around the globe right now?”
MR Carney: "There is disinflation, a persistent disinflation in a couple of major economies of the G4, so clearly that’s coming through. The commodity outlook in some commodity spaces is a product of sharp increases in supply, certainly in the oil market, certainly the shale revolution in the US is material.
But yes, there is weaker global demand relative to global potential- that is producing a very benign global inflationary environment".
And GBP continued it’s downward path.
Ok, little S&P experiment over. Price finished not quite back to the entry level (as per the green horiz line that mt4 paints on trade entry), but it was close.
If that is a short then profit is almost gone, back to b/e, if a long then it was underwater but has come back.
If short then exit around the last candle on my post was good, if long then an exit would have been a panic measure and I would have lost, then I would be screaming at the close because price came back up.
The interesting thing is the TA, two candles after my post and a hammer is painted - I don’t read those patterns but just thought it interesting.
Anyways here is the close, the yellow up arrow is the last candle on my post.
Hi Peter,
this last post was something unusual and I see things like this in crossword puzzles. It made me think a lot. I think with your secret telling story I read your post at least 3 times and stared long at the chart to understand it. For sure longer than usually.
I only do not really understand your last sentence. Does it mean you closed the trade there?
Anyway I ignore the last sentence and tell how I interpret your decision with what W/S is telling me and with the knowledge I know about you:
I think you went short. Actually I am quite sure about it. The question is more where you went short? I know I would have taken the signal at the very large white candle and my SL would even be hit at BE when it came all back up or I would have survived with the SL a bit higher. But knowing you, you would have not let your trade come back. The problem is though, later on there is no cross signal of the zero line from above, just very late to the down side. Still short is more probable, because you looked at the Sector chart probably and saw many red columns. So another possibility that you shorted at the top, basically at the best price and you were thinking not on crossing the middle line in W/S but the extreme high reading. As soon as you had some pips in your pocket, you put SL under BE to protect yourself and when it turned against you in the end you exited before SL was hit.
Here comes the yellow arrow into play as I am not aware exactly what it means. If I ignore that arrow the only possiblity for me to imagine you went long is at the very end, actually when it came from below and went up and the green lines are TP levels at recent high. I do not find it probable though as you would not present the whole chart, you would not close the trade where you did and mostly, you would have one more line on your chart at entry
The two lines at the same point are strong indicators, lets see why:
I have to say there is only one misunderstanding on the chart. There are two green lines. It could mean two positions to the downside but your main concern is limited DD so I would be very surprised if you opened to positions at the same point. I would automatically say you went short on the higher line and put SL just under it to protect yourself. This idea seems logical but in my MT4 the entry and SL/TP lines have different colors so I am not 100%.
So I am waiting for the solution or maybe we can wait if the other give their votes.
Nice homework!
FE
Hi FE,
Yeah I deliberately chose the live action to remind myself how easily it is to get hung up on rules.
In post 3054 the chart was effectively saying that price IS falling, that w/s IS saying that all is well for the downside.
There was nothing to indicate that the fall would stop, yet I was pretty sure that a turnaround was about to happen, and yes you are correct about sectors.
Armed with being pretty sure I am pointing out how this info is of enormous help in either a sell or buy trade.
All the rules actually kicked in a few candles after my post (the hammer and the crossing up of w/s) which is nice, but I hadn’t got these earlier, what I did have I recorded.
I could see that the fall was our friend XLE, a single sector fall/rise is like the breadth indicator of intraday, it is the general without the soldiers.
So the simple thing to do is watch the general, when he realizes he is on his own he will take fright and fall back.
I know this sounds awful simple, I knew it would, but there you go.
Here was the strong signal on a 15min as recorded at time of post:
