The US Dollar and Japanese Yen have broken sharply higher versus the Euro and British Pound. Here are the levels that quantitative strategist David Rodriguez is watching next.
EUR/USD
[ul][li]Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)
[/li][li]Length of bar indicates the sum of Buy and Sell volume[/ul]
[/li]
Chart source: The Weekly Volume at Price Report on DailyFX.com
The Euro has broken major levels of volume-based support and currently trades just above noteworthy congestion near $1.0900. A larger breakdown leaves little in the way of a test of $1.08, while former support is current resistance starting at $1.10 and extending through $1.12.
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GBP/JPY
[ul][li]Total Buy Volume Executed, Total Sell Volume Executed, Net Volume Executed (Buy-Sell)
[/li][li]Length of bar indicates the sum of Buy and Sell volume[/ul]
[/li]
Chart source: The Weekly Volume at Price Report on DailyFX.com
The Sterling has traded below important congestion versus the Yen at the Ā„190 level, and support is now seen at December, 2014 highs near Ā„188ālikewise an important volume-based congestion zone. Our focus remains to the downside, and former support turns to resistance starting near Ā„190.
Well the FTSE rallied intra-day hence why my shorts would have come with more confirmation. I am not a fan of trading the indices, I just use them to guage sentiment. Unless you trade the eminis on the CME, no point but the tick volume is indicating the rally wonāt last.
The market God stepped in, saved Oil, saved the FTSE, saved the Euro cleared some weak shorts out of the way. The blood drain before the feast ahead. Hold tight folks we all have that feeling of the feast approaching, donāt kill the capital.
Nicely spotted on the Yen. As the clamour for safety returns after that brief appetite for risk, expected a summer of safety. So the Yen will be back on the agenda. As well as Bondsā¦ Blame it all on Greece Doomsday part 2, till all the Euro finance ministers get back from their Caribbean holidays.
Nothing will save Yen crosses, bonds, and equitiesā¦ The Chinese markets have lost 30% of their value in a very short time, and we are still having to listen to the petty power games of tit for tat by a European Unionā¦ It is not to be forgotten that Greece was a signatary to the debt cancellation for Germany in 1953ā¦Ironic that the EuroZone treaties do not have exit rules for countries unable to sustain their monetary union membershipā¦ It is bonkersā¦ No money God or Goddess can save markets so complacentā¦The S&P500 scraped its knees all over the 200-day moving average yesterday, and it is utterly failing to go higher, and has done so for several weeksā¦ You are right to be cautious, Emerald, but if anyone wanted to go short the FTSE100, this is probably as good a time as there will ever beā¦
Recently, Chinaās Shanghai Index has seen a 29% drop from mid-June highs taking it negative for the year and hurting regional sentiment. There is also risk-off sentiment due to concerns over Greeceās potential exit from the Eurozone and hard assets, such as Oil moving aggressively lower. Earlier today, the Thomson Reuters CRB Commodity Equity Index hit a 5-year low today. This risk-off environment has created a sell-off in AUD/USD.
In his article today on DailyFX.com, forex trading instructor Tyler Yell highlights how retail FX traders have aggressively and unsuccessfully fought this downtrend, as you see from the picture above. This fight has taken place as AUD/USD continued lower. Sentiment favors further downside as you can see when the client positioning is heavily leaning one direction, it often aligns with a strong trend that theyāre hoping is about to reverse.
Additionally, you can see that Retail Open Long Positions have increased and are at their greatest exposure since the market peaked in spring of 2014. The changes in long and shorts show additionally that the long view is getting more aggressive. The increase in retail long positions are 23.7% above levels seen last week showing the fight is only accelerating.
You can see above that the recent break of support shown by white lines attracted a relatively large amount of volume. With an increasing amount of support or multitude of buyers, a sustained move below that 4-month support of 0.7550/0.7600 could develop.
According to David Rodriguezās latest analysis of the Speculative Sentiment Index (SSI), the US Dollar and the Japanese Yen remain in position to hit fresh highs.
Greece has been an interesting affair. I think Germany is a little mean, after all the Greeks happily signed off 50% of Germanyās debt in 1953, without that action Germany will still be in the dust.
This is case of LOTR. āOne ring to bind them and in the darkness smite themā. The whole Euro affair is looking like this. England of course the last free kingdom in middle earth wants to sail away from it all.
IMO Greece goes nowhere. They have sworn allegiance to the ring.
This weeks weekly preview. How did you like the live trading video. I know it is pretty long, working on editing these to get a summarized video.
It will be busy for me post August as I will be nearly trading most days and educating the rest so no time for forums but weekends should give me a few minutes to share with you guys.
Hello Emerald, a great video, thank you for your time and effort to explain what āvalueā means (or should mean) to Forex retail traders. Keep up the good workā¦ I am shocked that I was the only one to like your video or leave comments! Come on Babypips peeps, you can do better
Thanks Pip. It is a new community and this thread is quite old and volume is as new then as it is now but a few years on a lot of traders are not feeling the business, so it seems like just noise but I look forward to getting the live room. I have a huge pot I am trading so we have a couple of hundred K allocated just for live trading via a serious MT4 broker which is never easy to get as MT4 is every brokers wet dream, so as insiders we had to push to get the best stuff from the best guys who can handle it.
On to the videoā¦ Yes, the more time you spend trading professional, the more you know what it takes to succeed. Looking back I realized, I have been around here for 5 years and in that time I have seen so many traders come and go. I feel most of my career has been shared on this platform (some of it anyway). In the end only 2 kind of traders exist Commercial big money traders and Day traders or Retail.
Most institutional retail stick to what they know, trading ladders on the futures market or buying ETF shares to gain currency exposure, the rest are in the options market going left or right. Then there are the top 1% who are in the HFT world just doing arbitrage, which isnāt really trading (taking candy from babies more like it). In the end if you are not arbitrage, your exposure has to be limited to the day time frame. In the end success will be down to mindset and the ability to raise money to trade, it rarely has anything to do with skill. Skill is a bonusā¦
[QUOTE=āemeraldorc;712185ā]In the end success will be down to mindset and the ability to raise money to trade, it rarely has anything to do with skill. Skill is a bonusā¦[/QUOTE]
So youāre saying that itās possible to become a successful and profitable trader through hard work without talent? I feel Iām struggling with trading even though I work hard. (Been trading for 4 months)
That is not what he is sayingā¦ He is saying that if you do not have sufficient capital to invest in trading, you may be very skilled but you may end up a victim of under-capitalisation, which is separate from being skilledā¦
Hi Zizo it is natural to struggle in any industry that requires huge amounts of capital. 4 months is not a lot of time trading, consider you need 4 months to decipher all the necessary educational material and another 6 months of continuous practice, then comes the mental discipline aspect.
The fact you are still trading after 4 months is testament to your strong will. There is hardly any talent involved it is just a question of time and capital. If you have both those things I will gladly have this same conversation with you. Sadly most people with the capital have no time (Were I come in), those with time have no capital. Talent has nothing to do with it. In fact my clients donāt want to make more than 3-4% a year, they just donāt want to lose money. You can make 4% a yearā¦ Just donāt over-trade and stop trading when you hit 4% for the year. You would have outperformed all the mutual funds.
[QUOTE=āemeraldorc;712228ā] Hi Zizo it is natural to struggle in any industry that requires huge amounts of capital. 4 months is not a lot of time trading, consider you need 4 months to decipher all the necessary educational material and another 6 months of continuous practice, then comes the mental discipline aspect. The fact you are still trading after 4 months is testament to your strong will. There is hardly any talent involved it is just a question of time and capital. If you have both those things I will gladly have this same conversation with you. Sadly most people with the capital have no time (Were I come in), those with time have no capital. Talent has nothing to do with it. In fact my clients donāt want to make more than 3-4% a year, they just donāt want to lose money. You can make 4% a yearā¦ Just donāt over-trade and stop trading when you hit 4% for the year. You would have outperformed all the mutual funds.[/QUOTE]
Thanks that was really helpful it gave me some motivation to keep at it
I have been shorting this pair again this month, after much waiting(!), in anticipation of risk-aversion and liquidation of overleveraged positioning across equities, e.g. S&P500, and ācarryā forex pairs, e.g. NZD/JPY.
I am up 60pips on my latest FTSE100 short, and expect to ride it for as long as the trend continues.
As I highlighted in my video yesterday, the FTSE100 and the NZD/JPY are moving in parallel, so if you overlayed them on your chart, you would get a clear sense that this bearish sentiment is spreading across from equities, to currencies, and possibly other asset classes: could this be, as Merlin Rothfeld said, the ābeginning of the endā for buy-and-hold positions, after a record six-year bull run (S&P500)?
I am ready for itā¦and so are a lot of peopleā¦the trick is to time it right and avoid getting chargrilledā¦
Happy trading (and, by the way, keep your eyes on the Kiwi tonight if you are going to be watching the RBNZ rate decision)ā¦
The S&P500 has lots of tech stocks. A lot of people are calling the top. I remember the old quote, buy when everyone is bearish and sell when everyone is Bullish. One of my clients just got into GoPro. A solid stock, a company with no liabilities, most of the tech stocks are quite strong, Apple is undervalued at the moment at $124. IMO this buble keeps inflating till Yellen can no longer breathe and then the interest rates will come, maybe 6% gets wiped but then, you will buy the dip.
Where else can you invest other than stocks? Property?
You are right on the FTSE the up move was likely covering ahead of Greece. The volume was falling all the way.
