Hi Peter,
thanks for the useful explanation. It got me interested if my broker makes a difference between countries so I wrote them to see what they can say about it.
Update on my COT comment from yesterday: gold arrived to the mentined levels, silver is on the way. Now it gets interesting. Wonder when that rally starts. Will be watching the charts carefully. Peter, any wisdom on gold these days?
Have a nice weekend,
FE
One final not on gold. I checked the AUD in COT as a main gold producing country. Surprise surprise.
AUD is at the net position extremes and COT Index is just about to arrive there. I now will try to find a good site which shows all inflation developments in the world for the last months. If those are showing a positive sign/trend then I see no reason why no to try a probe bet. That would be a final green signal for me.
Hey FEā¦guysā¦
Well, Iām still in the middle of crunching them. But, this is something I have done. The months progression so far.
Top # = The total running % for the month. Bold lower # = that days result.
Oh yeahā¦and uhā¦we should mention that Rook was right about thinking the Comms just might be making a come back. (remember him showing us his charts last week? )
Good job buddy!!
Iām hoping to see it continue.
Mike
P.S. āsorry thatās not clear!
Hereās a blow up of this past week.
One more noteā¦check out NZD. Are they on the climb? I originally thought not. Maybe we have a change coming for them. Huh?
OK guys, one more pic.
This is in regards to the Majors vs. Comms. This week.
Uhā¦it went to the Comms. Stronger, collectively, over the Majors.
Mike
Hi FE,
I do watch gold, mainly as an indicator of USD sentiment.
I have a terrible habit of setting arrows without notes, looking back on a daily gold chart I have a big up arrow back on Aug 14, why I put that there I just cannot remember other than that I was watching either Gbp/Usd or Eur/Usd or both, likely it was something to do with USD.
Anyways, as Iāve posted on Clintās Gold painting itself thread, I usually use GDX for guidance on near term risk appetite on Gold - my theory is that the investors in miners are generally not retail, are always trying to second guess bullion direction so I look to price and volume on that particular ETF.
I donāt trade a long term view, only about 5 days ahead, even the S&P these days - but from a long term perspective Iād guess there seems to be bottom pickers in GDX currently.
Many thanks Mike for the hard work, see more guys are becoming interested in the idea of individual currency buying/selling instead of just looking at TA on crosses - I suspect that your work is not terribly dissimilar to some of the algos.
GDX daily from tradingview:
Hi Peter,
you bottomr picker idea lines up with my inflation findings. I checked all inflation report from early September if I could see something interesting (was looking for an increase as it would indicate also higher gold prices).
I did find interesting results. While in Sepember and early October, the main trend was still seen everywhere, which is red inflation numbers. However the second part of October and then November is another story. Not that the reports were positive, but surely they were already mixed at least. The falling oil prices might have ended their negative influence and it is time of finally better reports to come out.
FE
Now that is funny! Forex Gump also decided today to analyse a bit inflation! Here is the article:
Hi Peter,
how do you interpret the US GDP report from yesterday? It was better than expected, but the sentiment is bearish vs. USD. Besides the GDP, consumer sentiment came out which was quite bad actually.
An update on gold: until now the support holds good, I am wondering if/when the rally might begin. Sitting patiently there.
Yesterday was interesting also for TRY pairs which took a hit. Most likely it was because of a Russian jet shot there. Interesting how people react right away on news like that. I will be interested to see how long such a reaction can hold ground against the main ongoing trend.
FE
Hi FE,
I figure that it will take a massive shock to change what is already set, regardless of any numbers, well at least it seems that the bankers agreed with the above thought.
That post was two weeks ago, I was referring to the recent moves as in Eur/Usd and the push up, it climaxed on the previous eveningās close, that was the set up for the banksā shorts, price has fallen since that post.
The one thing to watch, probably the reason that fundamentals get a bad name, if the bankers took it up in order to sell it down, after the knee jerk next month there is a good chance theyāll do a little buying.
Decided to do a little joining up of TA and FA, since itās the weekend and Iām taking a little holiday.
Many TA guys like to look back and draw lines on the charts, which is great, so going back on Eur/Usd to the post about Dudleyās speech and how the banks interpreted same, we need to go back a little further, to the first Friday of this month to be exact.
The tone was already set even before that by Ms Yellen and her hawkish speech, then out came NFP, now looking at that chart and the down arrow, you have to get a good chart to see what actually happened in real time, not a big long down bar as depicted, but a gap.
That means sells not filled, but gapped through - decision time, pull those sells or get price back up - orders get pulled because of FA, not TA - no change in FA so sells stay.
Impossible to get orders filled without price coming up, so up comes price. The guessing part is to figure where the sells are, well they are def in the gap, so wise to just place a sell in there and wait.
First up a 15min of NFP, and the yellow dotted is a guess where the sells are that the poor bankers didnāt get filled 
Then the same chart, over to hr1 and to the evening before my Dudley speech post, now maybe a seemingly smart a** post is now actually very simple - TA and FA combined 
Edit: the place to set the sells is the round numbers, the 20ās and the 50ās, maybe the 80ās - this case the round and the 20ās, I did also set at 0850 but price never made it up there which in itself was a big bear sign.
Hi Peter,
I remember you saying already after NFP that you expect a stronger retracement before you think price will head down again. That was a great analysis already at that time, but the one now with the explanation and charts is just perfect. Maybe slowly we can also discuss a gameplan for the December FOMC meeting minutes and what might happen at that time on the markets.
I remember once you posted a link from the CFTC website based on some news about the COT Report. I couldnĀ“t find it on the website, can you please post it again? The COT Report did not come out yesterday, wanted to see the update and new information on gold. I guess it has something to do with the Thanksgiving holiday, however it would be good to know when they publish the report.
Take care and enjoy the weekend,
FE
Hi FE,
Fed holiday, they release the dates here in advance:
As often happens your post causes further thought, my last posts were trying to put into forward thinking how the bank algos are programmed, so came across this release this week, donāt really think it will change a whole lot, but still worth a read.
CFTC Unanimously Approves Proposed Rule on Automated Trading
Hey father Peterā¦
I have a question for ya.
How much influence do you think the Chinese Yuan affects the Comms? (talking about intermarket relationships)
I mean, we all know there is some. Remember back in the summer when they cut rates and all? The Comms all took a dive big time. But, Iāve been thinking, that if there is a real correlation, then why am I not uncovering this? I donāt have them on my charts. Yet. And why am I not watching the Yuan like the USD?
I have even read, very recently, that they will be joining the Majors in the currency market soon. Like in a year or 2. I think they have been approved by the IMF, or something like that.
We all know their currency is becoming a player now in the world. Should we be looking at that as much as the USD?
Do you think the major banks and players are watching them? And making (monetary) decisions because of what their central bank does?
And if so, wouldnāt they be taking the AUD, and NZD along with them?
And how about their correlation with the USD? Inverse?
I just would love to hear your thoughts on them. Have you thought about this? In regards to intermarket relationships.
Thanks.
Mike
Hi Mike,
Bottom line is that China is a user of commodities, at least that is how the market perceives it. The market views China as a manufacturer and the US as a consumer. The third player, the EU a combination of both.
When there are difficulties in China then the market will discount commodities, the big question is why the difficulties in the first place.
Likely many things, a follow on of the ācredit crunchā in the US when there was a (perceived) decrease in demand for manufactured goods, also a transition in China from being solely manufacturing to becoming also a consumer. then too, in no small way, the advent of fracking for energy.
Western banks most def react, or perhaps better word is act, to the numbers coming from China, but early days - watch closely Aud/Usd, back at 7065 I imagined, after some poor numbers in mid Nov from China, that a turning point was at hand, price has risen since then, so will it now fall, is there a H&S on hr1, with the neck line broken.
As far as the Yuan is concerned, itās controlled by a communist government, so will the market embrace it ā¦I just donāt know, only time will tellā¦
China stocks trader counts his losses: āNever trust the governmentā - BBC News
Thanks Peter!
I searched and found what I read recently. Check it out.
Chinaās yuan takes leap toward joining IMF currency basket | Reuters
Hey guys.
Hereās what it looks like as we approach US session
Now oftentimes we have heard or even experienced ourselves how chaotic and unpredictable intraday moves can be. And for someone whoās tried it for a while I can attest to that for sure. But somehow in the back of my mind I believed (or hoped) that there was a way to trade the intraday moves profitably and if luck strikes it can turn into a nice swing position.
AUD and NZD had a good start from Asian session I had them on my track list YEN appeared somewhat stronger but looking back it was mostly due to Shanghai composite I took it as a medium term strength. Then came London, things were as chaotic as youād expect it to be for a Monday and the last day of the month - month end flow. USD popped up from down below all of a sudden YEN sank as if had been in the negative for months EUR traced back up again stock market correlation Footsie opened in the negative. Then comes the afternoon, this is where things stand.
The secret recipe to intra day trading you ask ? I associate it with no other than the weak and the strong combo more or so than anything. Well its easier said than done. If I (we) had known YEN and GBP to be weak I would have went long AUDJPY, NZDJPY, short GBPAUD. GBPNZD. But as Iām typing this weāre somewhat late to the move, well provided that things donāt take a turn to the opposite direction we may get a chance at it again when US traders come back after lunch.
But how can we know for sure ? Is there a way to tell and get yourself in on a strong/weak combo ?
Well I have worked up two points one for identifying (this part needs more work) market sentiment second for timing
:: Keeping track of how things progress from Asia - Europe can be really helpful
:: A breakout pattern can be used as a confirmation and a timing tool
hereās an example on 30m chart AUDJPY
Now the problem is how do we know for sure ? In my personal experience I was on the screen when all of this happened, AUDJPY breakout , similar pattern on CADJPY presumably CAD was weak as opposed to AUD should i have taken it as a sign that YEN was going to sink ? (Iām sure there were other signs that I should have taken note that sentiment was changing especially with YEN, Shanghai composite came in the positive after lunch sometime after London open things such as this) I decided to wait on lunch break, hoping for a pullback on AUDJPY and but demand was in and the momentum was there it ticked back a few points before raging up.
All of this wasnāt completely random, both AUD and NZD had some positive data came out during Asian session, and tomorrow is the big day for NZD GDT data a better number is expected so traders are probably pricing in early on. This way of trading means basically going with the flow you canāt go wrong with that, and there you have your timing a breakout alongside a pattern. Now the trouble is how do I efficiently keep track of market sentiment. So that when a breakout occurs Iāll know for sure which ones to take.
::The last paragraph was edited::
Hi Rookie,
happy to see you again. I completely agree with you on the breakout part and the analysis. I have to say though, that most likely Peter is the one who will give the best heads up for you as he also concentrates on shorter-term trades.
I also work on shorter-term strategies to master it, however I do concentrate on my long-term trades. Those are a lot more successful for me. I do a lot of things the same way as you do, but in other time frames. As you said yourself, it is hard to keep track of the current market sentiment (there are many indicators though). In a longer-term trade it is easier as we just follow the main trends and fundamental drivers.
FE
Hey guys!
Rookā¦good work man.
And Iām like FE, I work mostly on longer time frames than shorter. (Thatās two years from now, daytrading all the way then)
Butā¦okā¦letās talk market sentiment anyway. Iāll give you my thinking on it.
For me, I must see it (the market) from the top down. Big, to small.
I donāt see it any other way, first, by looking at the Major / Comm sides to it. Basically I view the Majors (not totally completely though) in the risk off light. And the Comms in the risk on light. If you put the field into the 2 groups, you will have a seesaw affect. Money flows more strongly when the Comms are in control though. Because you have 5 against 3, itās tough to see the Majors all agree with one another.
Believe me, thereās a lot of different correlations happening at the same time. Like when the Comms are more in control, the CAD usually tails the USD. I rarely see the CAD follow both the AUD, and NZD. (It is very frustrating for me, cause I see it almost on a daily basis).
I can go on and on about those different correlations, but, it is undeniable about whether there is a risk-on/risk-off situation. So, knowing that, is having some kind of edge in the market.
Then what else makes sense? OKā¦whoās stronger to weaker in their respected camps.
This is what I see many times.
The USD, the EUR, or the GBP, will take the lead. I mean, when they get strong, their strong.
The JPY usually is a follower. To the USD. (Of course not all the time)
The CHF usually is a follower. To the EUR. (Of course not all the time)
The CAD usually is a follower. To the USD. (Of course not all the time)
But, I guess I should retract that one statement I made above. The FIRST thing that should be on all minds is whoās up first for an interest rate change? That moves the market most. Remember when the NZD kept upping their rates not too long ago? And when China dropped them? (Comms lost their butts)
Well, maybe Iām just stating the obvious. And sorry about that. But, back to the question at hand. How do we determine the market sentiment? In the intraday view, I guess you must have to be looking at the pip/% count being developed. I think itās best to look at how the week is progressing. I will show you what I look at.
Hereās what the AUD has been doing so far this week. 1hr time frame since the open.
Got to run guys.
Be back.
Mike
Guys.
Risk on & off is a huge help. But it can be fickle changing from one to another in an instant depending on market condition and fear level. So canāt depend on that entirely. And somedays you can never be sure whats going on - days where correlations that we know of go out the window - its probably best to avoid those scenarios.
Yesterday for instance was comms day all the way from Asian session through Europe. Major comms split does play its part into the equation.
One thing for sure from session to session things can vary āa lotā but it all starts with Asian session and the highlight is Shanghai composite. Thereās a flow. I guess my point is how do I keep track of that flow. Is there a systematic and simple approach to do this ? (Iām thinking there isā¦)
Hereās what went through my head yesterday after everything had happened
Shanghai composite in the negative YEN up-> Then comes London opened in the negative but back into the positive when Shanghai composite came back in the positive after lunch -> Scan majors and see whoās up against the $ : AUD and NZD is up against dollar the rest flat or down -> Move onto EURGBP then AUDNZD hmm theyāre all flat by now I know that " AUD and NZD is about equally strong " and "EUR , GBP equally weak "
Then all of a sudden everyone even the weak ones went higher against YEN. Then YEN must be the weakest a sure tell sign. AUDJPY , NZDJPY there you have your strong/weak or hot/cold combo. Now the patternā¦.
Thereās always a strong/weak combo to trade everyday regardless of the fundamentals.
I wonder what Peter has to say.
