Thanks for the great feedback, and you’re spot on. I’m trying to appeal to the middle ground…it’s not easy…half my time is spent trying to word my sentences so that more experienced traders don’t lose interest in the basics, but the newer folks can learn at the same time.
Not easy, so I appreciate the feedback and support.
I’ll keep, that in mind next time around.
I’m thinking about putting together a glossary of terms I use.
And, each time I make a post, include a link to the glossary.
Not a traditionally, word- definition type page, but something more like that plus strategy and a bit more detailed explanation of commonly used terminology.
All my posts have focussed on GBP and the continued rise of the UK economy.
The outlook on the USD is also changing, US gdp (often quoted as the barometer of economic health) is rising strongly.
Bullard is talking of inflation rising to 2% and the prospect of rate increase, Yellen states that QE taper is on course, Draghi has backed himself into a corner, he may have to act or see the Euro rise, and worse, will know that the market will not take him seriously in the future.
All this will lead to some USD buying, so strong USD, strong GBP means range bound for cable in the near future imo.
GBP/USD data reaction muted in the immediate (15m.) aftermath of the CPI data …
Mixed data shows a sluggish, disappointing retail print and a slightly improved YoY and MoM CPI… not the stuff that will send the bulls on a mad charge…
We shall see what the market will do, but this is not going to put the BoE under any pressure to burn the steps forward and rush to a rate hike.
There is one particular problem, has been brewing not just in London, locally we have seen new houses jump in price overnight, very much echoes of the recent past.
The absolute worst thing for Carney or the Govt is to do nothing, Carney knows this, thus his recent interview.
There are a number of causes, not least the fact that much of the purchasing, as noted by the lenders, is by cash buyers.
Deposit holders are getting almost zero returns, take away 1.8% from the miserable interest and there’s nothing left, in the meantime they are seeing headlines like today’s.
Making the mortgage hurdle higher will make things worse, up goes the rental demand, in come more cash buyers eying the rental returns.
I’m holding my long GBP for now until the techs tell me otherwise.
Bought @ 6768, booked some profit and am targeting 1.7. The probability of getting up there–not 100%.
But, momentum may just be about to pick up. If we can breach 1.69 there’s a good chance 1.7 can be at least retested.
As for the fundamentals (I don’t pay attention to housing data, but do look @ overseas equity markets and fixed income):
Compared to a year ago, yields are up across the board (2, 5, 10, 30 YR). (If yields are up, bond prices are down)
FTSE100 is up around 3% YTD- almost 5% as compared to a year ago.
GBP is up almost 3% YTD, 11% as compared to a year ago.
The GBP is strong and investors are seeking yield in equities. Inflation levels may have recently risen, but how much of that is attributed to seasonality affects with holiday travel / rising energy costs.
A housing price bubble will be a destabilizing factor according to Carney, he is viewing it as “the biggest risk to the UK economy”, so too is the fact that inflation has just exceeded wage increases.
If both continue on their current path, and there is every reason that they will, then then The BOE will have to move on interest rates - sooner rather than later.
Today’s news is a reflection of all the ‘good news’ being reported on the UK economy in recent months, the very reason for the bull market on GBP - we are now beginning to see the early signs of the effect of that news.
And finally, is it possible to get a whisper on retail sales before the release time of 09.30 by ONS?
Yes, completely legal and free of charge, and available usually one week beforehand.
Look either to the CBI (Confederation of British Industry, or to BRC (British Retail Consortium) who do their own surveys and release the numbers earlier than the ONS.
Pipme, indeed you could be right about the barrier - typical price behaviour inter day - news poor, but price reaches up to yesterday’s high - then down, happens a lot on cable.
I see DB are now in the short camp, mind you so was DailyFX back in Feb/Mar.
When I read your post it immediately reminded of another of Jesse Livermore’s lessons, one that I freely admit is difficult for me to learn:
“Do not use the words ‘Bullish’ or ‘Bearish’. These words fix a firm market direction in the mind. Instead, use ‘upwards trend’ or ‘downwards trend’ when asked the direction the market is headed”.
So I am trying Mr Livermore, I am neither bullish or bearish, I will just follow the trend.
I’ve been toying with the idea of completely cutting myself off of external analysis and solely relying on my own.
I understand the benefits, just wanted to see what that looked like “written down” and read aloud by myself.
For every 5 reads on why you should buy, there will be 5 more on why you should sell. And 5 more on why you should not be in the market right now.
I think that most traders (including myself) can sometimes ‘ignore’ which ever piece contradicts your current market position and only focus on analysis from others which supports your bias to give you that warm feeling inside. At the end of the day, it’s pointless and a zero sum game if you think about it.
I visit FXStreet’s currency poll from time-to-time, mainly for entertainment, but, if you look @ it, my aforementioned notion is plain and simple in sight. Out of the 30 professional analysts queried, some are bearish, some are bullish, and some are sideways on the cable…what does this do for the average retailer but cause nothing but confusion?
Nice post Jake, I’ve learned to use analyst’s for one purpose - thought provocation.
It amazes me how often when I read someone’s view that their comments will cause me to go and look up something else entirely, something from which I can learn just a little more.
A current example is the US bonds, I think it was your good self mentioned their rising - this caused me to think, I had simply missed the fact that they should have been falling - stupid of me, just looked at a chart but never stopped to think.
Obviously this is important, when you look at the current levels on USD/JPY and then look at 10yr. (Today’s moves on cable seems a tad more usd than gbp).
Anyways your post led me to this, so maybe, just maybe we could be seeing major trend shifts ahead?
Agreed 100% - most of the time, I end up clicking through 4 or 5 different links and learn something new about the markets or gain some type of perspective which I hadn’t previously considered.
And, btw, I’m a huge Peter Schiff follower- been listening to his radio show / podcast for about 3 years now and subscribe to his premium content. He’s great. If you want to hear some cool stuff of his, hit up this on youtube: Peter Schiff londonreal podcast.
These markets are all related, and a lot of newer folks don’t even consider that- not at the beginning, and if they’re lucky enough to last, not for years afterward. Capital is constantly flowing wherever the money managers “think” they can get the most bang for their buck. For example: Everyone loves to try and call tops and bottoms in markets. There are even perma-bears. Look @ the run up on the S&P500- who in their right mind would try to hold a long term trade to the downside against that type of buying pressure and momentum. We’re seeing more and more investors pile into the 10YR (as discussed before), and the USD may just see some strength depending how this week / next week pans out. What does that potentially equate to?
It’s tough to sell, when everyone is buying.
And yes, there is great potential for major trend shifts ahead.
I watch bond yields closely, alongside equity markets, emerging markets, volatility (VIX index), commodities and of course currencies. Intermarket relationships and strategies built off the movements is a WHOLE 'NOTHER ballgame- one which takes years to master. Primarily because it’s not always black and white and the correlations can be confusing @ times, which leads to frustration, which leads to bad trading habits.
The relationships aren’t always clear cut though, and I always advise newer folks to simply not short gold if the DXY or USDollar is gaining topside momentum.
you are right about the inter-relatedness of the markets; the only problem is that for some of us part-timers, there is so much to do and learn that if you had to be a ‘proper’ expert you would just have to give up on trading all together: if you have a couple of hours a day, between managing your trading account, reading trading news or watching videos, checking the BabyPips discussions, and planning for the next trading day according to the trading calendar, how much more time is there left to THEN go and look up equities, bond yield charts, etc. etc. You would either say goodbye to your loved one (if he/she was still awake around after you had finished with your after-hours Forex stuff) or you would have to quit your day-job… I am not in this category of choice, and I have to pick sanity over the rest…
The trouble is that there is not a person around when we, lonely retail traders, release our wit and logic over a demo Forex chart for the first time: nobody there to say “Stop, this is not what makes the markets move: it is bond yields, capital flows, and the S&P500”… We all learn it backwards, from the charts, to lagging indicators, and so on… EVENTUALLY, in the bits of spare time that we may have, we will start to sniff the air outwith the Forex enclosure and sense that other forces are at play… But to then try grasping the enormity of this world outwith our Forex domain is not all that easy, and when pushed for time, we may well choose to just remain stuck to our old ways… I, for one, fear leaving the safety of my current approach because it has taken so many months of slow work to find a good balance between the market, my work-life balance, and my own psychology, that I am not about to start throwing it all up in the air again…
It really is difficult sometimes to grapple with the enormity of articles and information on trading that is out there… We may forever search and doubt, and never find: it comes to a point where we must be content with having achieved a good balance, and only throw it up in the air if it fits with our ambition.
Indeed, if someone could sit here and explain to me how to link Forex with bond yields, e.g. which ones to watch, and how to make it all less (not more) time consuming than it would be if I tried to do it all myself blindly, then I would jump at the opportunity… But this is a lonely business, and we ourselves must be guiding our ship to success, in the end… Whatever others tell us, whatever promised lands they may show us, we must only steer our prow off course when we may have truly reasoned that this is possible, that we may veer off to a new, possibly longer journey, without coming to damage - our health, our time, and our resources all come into play.
Thus, Jake, when you say that you thought of cutting yourself off from external analysis and just trusting your own, you find me sympathetic to this feeling, as it is sometimes bewildering how much contradiction there is even among the experts in the field…
As Jessie Livermore said: there is only one way to know that I am right, and that is when I am making money… So if you are profitable, it matters little whether you are with the bullish crowd or contrarian to their buying, or vice versa…The size and consistency of your profits will speak for themselves…
As for keeping on track of everything…you don’t need to watch the charts all day. I only check them 3-5 times per day (to gauge capital flows I’m saying). I bookmark some sites where I have watchlists and can quickly see how price trades for the day.
