Well I do have something to report, I read a financial report from a Middle-Eastern bank about the oil situation.
The bank expects the prices of oil to stabilize by the beginning of 2015. The report, released Saturday, said that further falls in oil prices were unlikely.
It said that the stabilization of oil prices should lead to increased demand in 2015, as investment in the production of Shale Gas becomes less lucrative than in oil. If the latter does not happen, the bank concludes that oil-producers would decrease their production in the second half of 2015.
So the bank is basically saying that we should wait until the third quarter of 2014 before we see OPEC step in.
I also have nothing to report out of all the instruments that I cover. So since commercials are still in the buy mode. We could go with the specs - the existing trend. Specs are bearish on all of the following pairs including Russell mini.
AUD - none
GBP - none
CAD - none
CHF - none
AUDCHF - none
Russell 2000 mini - none
If I do have settings accurately yes I see a bullish sign. We could go long on lumber.
COT index set at 26 and MA at 21. I compared last weeks value to that two weeks prior. Its higher.
Yesterday, I finished Murphyās book. Although I grew fond of it, Iām still having a hard time wrapping my head around the content.
I understand the relationships presented in the book, even the reasoning behind them. But I think it is extremely difficult to actually turn those ideas into profits.
So, I did some research today to come up with some more correlations that I could actually act upon.
Mr Murphy claims that the mining shares are usually the leaders.
These are close relationships with little lead times. I actually have a couple more, but Iām saving some for tomorrow. I think we could use these to trade divergences or filter COT signals.
that was a very nice analysis. I enjoyed it a lot. I am waiting for your tomorroās thoughts. Would be also good if you looked at the Lumber COT as we did with Rookie. What do you think? And you did not write anymore recaps.
Rookie,
the MA for the 26 week COT index is also 26 and not 21.
I checked the COT index half year for silver, it is on the direction for giving a signal but not there yet. However it is good to watch. Are you going to enter it?
I checked from technical and COT perspective what BB said and I will entere Nat Gas. Something what I really like is that I can easily see if I am right or wrong. When the market opens I buy and SL goes right under the strong support line. The success is never in our hand and we are responsilbe for our own trades. So no matter how it ends, thanks BB for spotting it.
Peter thanks for the link, Read it but honostly I do not find that article clear and easy to read. Do you have an opinion to share? Maybe you can read ābetween the linesā a bit better than I can.
I would never have guessed, had I not read the book.
Another interesting chapter was about the role of Copper in Intermarket Analysis. According to the book, Copper can be used as a measure of economic health. If itās up, the economy is fine, if itās down, something is wrong. It is kinda confusing, to be honest. Since Copper is a commodity and usually follows the lead of Gold, how could possibly we use it to see how the overall economy is doing. Peter?
Todayās last pick is the correlation between Wheat, Corn and Soybeans.
I especially like it since all of them are included in the COT report. Iāll investigate the relationship further in the future.
BB, copper is commonly referred to as DR Copper, slang for the fact that copper demand should reflect overall economic activity, especially in manufacturing. China is a major user of copper, it is used in the automobile, electronic, household products, electrical motors etc etc.
But it is back to context, oil is taking all commodities down with it, aside from a lessening demand in China. So the falling Copper price could mean that the good doctor might not give an exact prognosis on world economy at this time - aside from the fact that we agree that the outlook still hangs in the balance.
Hi guys.
Well, Iāll tell you what Iāve been up to.
As you know Iāve been preparing for next year. And if thereās anything that should be known about me (Iām sure you know by now) is that I like to put things into perspective. Well, up until now I havenāt really been. Iām finally getting to the end of it all now. You could call this āintercurrency analysisā. I have been learning lately that I need to be aware of the monthly trends. Long term perspective. (I just donāt know why I have not been doing this a long time ago.) Well, I have started. And I hope to be all done by the end of the year.
I have the USD done now. (1 down 7 to go) Itās the long term (monthly) trend perspective. Across the board. Their relationship that has been going on against all the other currencies for the last many many years. It is eye opening. And I canāt wait to see the big picture of ALL of the other ones also.
Iāll give you my summary notes. (not the detailed big picture notes)
Against: AUDāMajor trend change in place now (since Aug. '11). Prior to that is a 10 year USD bear market to them. Which now it is USD high. The latest run for USD is from July '14 with no major corrections yet.
Against: CADāMajor trend change in place now. USD high. Prior to that is a 9 yr downtrend USD bear market. Been trending high since Aug, '11. On their third leg up now.
Against: NZDāHas been in a 9 yr major USD bear downtrend market up until Aug. '11. Been ranging since then. At an inflection point now. Continued lower will change trend out of a ranging to bull USD market. If to rise, then back to ranging long term.
Against: CHFāFrom July '01 to Aug '11 been in a major downtrend. 10 yr bear market. Climbing slowly out now. A close above .9770 will be leg #2.
Against: EURāFrom Feb '02 to Jun '08 in a major downtrend. Since then been consolidating. USD has the last bull leg now, and at a major inflection level (supported since '08). Actually they are in a pennant or flag pattern. (not to educated on the correct term) They are in the area of a major change now.
Against: GBPāIn a major downtrend from Feb '02 to Nov 07, USD quickly erased all that depreciation from Aug '08 to Nov '09. And been in a ranging condition since then. With GBP mostly stronger. Latest strong run is USD, with this month being the first possible pull back month.
Against: JPYāBeen in a long term bear market downtrend since the '70ās, and hit bottom Jul '11 to Sep '12. Started to climb out Oct '12. Presently on their 3rd leg up.
So, that might be a lot to take in, BUT, to see the big picture, the USD is just been slowly (across the board) coming out of a lot of bear markets.
The only ones they are struggling against is the GBP, and the NZD. Now I understand, Philip, why you think the USD can possibly go lower (up trend) against the NZD.
This is just the USD. I think I will get a more clearer picture when I put all the other currencies into perspective, and then to compare.
I call this intercurrency analysis.
What do you guys think? Worth knowing?
And I also wonder if the other markets (intermarket analysis) are in step with the intercurrency market.
I think I had a very memorable day today because I do not remember some many trades turning against me what of course I thought all to be a good setupā¦
I was mostly long with USD and short with JPY. I had also CHF shorts. Only trade which is in positive territory is EURAUD long, but not so huge. I do not have to say USD was weak and JPY very strongā¦ good start.
This is not enough, when we see a weak USD then usually we see at least rising commodities. Well, all of the commodities turned against me today. Funny how weak commodities come together with weak USDā¦ Why not the opposite? The really big surprise was for me Nat Gas trade we discussed on the weekend. I waited to market open, it gapped huge on the upside. I checked all last times how did market react when there was an upside or downside gap. It always continued to the direction of the gap. So it was a great chance to make pips. I entered and of course until now there is not further movement but filling the gap.
The best part of the day was my hedging trade. I am used in MT4 to make hedging which I know is a questionable strategy but it can be used effectivel in some cases and I calculated everything through. I had āx lotsā short on USD/RUB so I decided to buy ā2x lotsā USD/RUB with hedging. However I did not know (my fault!) that I cannot do hedging on my brokerās platform so my first position was liquidated and I am rest with āx lotā long.
These are important to mention so maybe you guys can also learn from it.
The week goes further on we live and trade another day,
FE
I wanted to share how my thinking on the markets change and may hear what you guys think on the topic as we work long together now. Some months ago I thought fundamentals are the most important. I did not understand what is behind JPY today. I searched on it and as I read quite a lot of fundamentals every day I recognize it slowly that most people have no idea what is going on in the forex market. I mean fundamentals. If USD is rising they always write that strong US economy gains again. When USD is falling they say it is profit taking. They have no idea but they always tend that they exactly know what is going on.
The same with the yen. The news I found about the Yen was the election the second the drama in Australia. The first reason (election) is something I can imagine and as I am not so involved how that election influences the market, I can imagine that. But the second reason makes me laugh. I find it always very sad if people are in danger because of some other idiots (in this case terrorists). Still, in the world financial markets no one can tell me that commodity currencies lose everywhere in the world because some people in Australia are in dangerā¦ Looking at this year if the JPY was rising it is only risk off. If there is a Russia, ISIS, Israel etc. war out there I might even believe that and also think like that. But every single time JPY rises they make up something with Ebola, terrorists in Australia etc. Just a joke. Is it so hard to accept that there does not have to be a reason for everything and it is only a correction? Haha. I tend to rely more and more on technicals and what Peter writes. I will slowly eliminate more and more of my fundamentals perpective and rely on price action. I follow some sources in which I trust but such stupid make ups does not show any knowledge. I can come up with āusual USD rallyā or āprofit takingā or āterrorist in Australiaā reasons without any forex knowledge.
