I do not personally subscribe to the belief of EMA or any indicator for that matter their delayed and only spit out a value after price is delivered. Reading raw price action is the way to go!
Good luck everyone on your journey!
Jason aka DealingRanges
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Sept can be a shaky period for risk - seems this many years past stocks have fallen (for various reasons).
Seasonal trends can have a self fulfilling factor - worth watching later part of next week and the following week - investors will be quick to sell, then after that quick to bargain hunt.
Maybe Mike has some stats on s&p for sept?
As of Fridayās close I have the respective currencies in the following order, strongest at the top -
CHF
USD
JPY
NZD
EUR
GBP
CAD
AUD
Despite the aggressive risk-on moves, the safe haven currencies remain long-term strong, the commodity currencies remain long-term weak.
I agree, however, if you look at SW ranking numbers, AUD has gone from -4% to -0.8% in the past week. It is getting much stronger and the difference between the strongest and the weakest currency is only about 1.2%. I think it may be wise to stay out for now.
Hey guys.
Iām finding some more interesting things.
So, Iāll tell.
Tommor, me and you might be starting & ending our days at different times. That is the only thing I can think of why we donāt have exact 20 & 50 EMAās prices.
Anyway. Check this out.
This is my line up. And a way to be able to see prior history. Remember, itās important knowing what the current market sentiment is, but what I think is almost more important than that is, knowing where we came from. And to be able to see how things changed. So, keep this in mind as I show you all this.
And as you can see, all 3 of the safe havens have been in the top 3 spots this entire time. They just took their turns being on top. And look at the date. Ever since July 15th. Therefore, we can easily say that the risk - off sentiment has prevailed ever since. And the Comms are on the bottom, confirming the other side of things.
But.
Letās look back before this.
Why?
Cause I want to see how we got here. This should tell us. Or I should say show us.
Is interesting to see that the CAD (brown) fell big time around the time of the switching market, also.
The reason why this is interesting, is because at some time, weāre gonna be seeing a change in sentiment. Some of the risk on currencies might make a flight higher. Which will complicate matters much worse.
Thatās why this market is very complex. We think itās hard to know when a non normal day will come at us. Or even how many days out of the week will become normal vs. non normal. Yeah, no doubt, that is a tough thing to know before it happens.
But. We have to realize that we have it quite good right now. Itās a no brainer to know in which market sentiment is the normal, prevailing trend. But can you imagine when these trends start changing? Howās that gonna look like?
I got to run.
Sorry.
But I hope you at least see what Iām trying to make aware of here.
When the prevailing trend starts changing, itās not going to be all that easy to distinguish where things are wanting to go. Let alone one day goes normal, or non normal.
Iāll address this more at a later time.
Mike
It appears NZD and AUD are on the move and getting stronger. I think long term trends are about to change
Hey Meza
Yeah, I kind of agree. But Iām not all that convinced just yet.
Couple things.
First off, the week hasnāt finished. I think itās vitally important to know how the entire week progressed. You know how things go back and forth. Itās kind of like the scenario of waiting till a candle finishes completing. We get impatient. We think itās gonna turn out a certain way, but in the end, sometimes it doesnāt end that way.
Secondly, we are on the run up to NFP Friday. Iāve seen it before, actually, very recent (the beginning of Aug). Where the run up to NFP time didnāt get followed through, afterwards. Things turned for the rest of the month. So. Actually, I was thinking all of what you are, right now, at Augās start. Cause I have the data to show why. But then after NFP time came, the tide turned back around to the safe haven flow trend. And thatās what continued on that entire month.
So. Here we are again.
Just got to be careful, and see how it really turns out.
I am thinking along the same lines as you, but we really have to see how it turns out.
Remember, this is a month known for risk-off sentiment to fly.
Just be careful. And be patient.
These are some of the things Iāve had to learn.
Mike
Hi Mike
The NFP was lower than expected. We are not in an upward trend yet for the AUD and NZD but it looks like we are moving to a ārisk onā phase. I think next week would be critical in terms of confirming this.
Interestingly, on weekly charts the bullish trend hasnāt really changed for the AUD and NZD against USD, JPY and CHF. Perhaps we were just in a pullback phase for the last few months.
Normality score this week just 47%. So it managed to tick up marginally from the previous weekās 41 but conditions remain the same.
AUD and NZD are soaring away. So is the Nasdaq. So is risk. The USD is unloved, as they say.
Yes, next week will be a real test. It would be reasonable to see AUD and NZD pause, but the question is whether they will then continue to advance or whether they will collapse.
An interesting chart comparison is to put AUD/NZD against the other AUD and NZD pairs. Long-term AUD/NZD is super-bearish, a definite sell; as good a trade as all the other AUD and NZD pairs. However, look at the % price changes over the week - AUD/NZD was the 3rd most sluggish mover - it only closed down by 0.08%. The chart looks great, but a weekās fall of 0.08% is too small to even visualise - certainly didnāt justify holding a short position - better opportunities almost everywhere else.
Hey guys.
Very interesting stuff!
I just got done with all of my data collecting.
And man, do I have some thoughts on this.
Iām gonna show you all the reasons why I think we have a change coming.
Mezaā¦this would be like a response to what you last wrote.
Here we go.
Iāll start with the normality. Letās see how close I come to you Tommor.
Now for the bottom table. The line up. In the last 5 days weāve had some changes.
Well, for the top spot, no changes. The JPY was able to stick with all 7 of their Yen pairs trending high. Meaning, the 20 EMA is lower than the 50 EMA, on all of those pairs. But for the 6th and 5th spot the USD and the CHF were moving back and forth. Needless to say, all 3 of the safe havens kept the top 3 spots. Therefore, technically speaking, the safe havens still have the longer term bias. Need to remember that.
Cause look at the changes just below that. Here comes the NZD. They go from 2 to 4 quite immediate. Last Fri EOD to Mon EOD. Simply put, they boosted higher than the EUR and the GBP. Cause all they did was drop down in sync with one another.
Basically, the NZD was the mover.
Meza. You are right though, that the AUD did appreciate quite much lately. But not enough to change in this context. I will, though, show you in what other context they have. But, this should show us how much the NZD did move. Remember, itās all about the 20 and 50 EMA prices. On their respective charts. Itās been chomping away at it, and now crossed. This is how it looks. Numbers only.
The closing prices of the 20 & 50 make the NZD, against both of these currencyās (EUR,GBP) the dominant trending currency of the pair. And look at the strength in there. Against the EUR is the NZD stronger, because of the amount of pips separating the 2 lines. The week ends with them in the 50ās against the EUR and only in the 30ās against the GBP.
Anyway. This is what explains the move in the NZD. Remember, they moved up 2 spots. Just showing you the details and reason for that.
Letās step back a little. What are we talking about again?
ā Whatās the longer term prevailing trend?
That is the premise of what we need to know about normality.
Cause now whatās gonna be normal is the NZD a little stronger. More specifically, the EUR/NZD & GBP/NZD pairs should be moving higher for whatās considered normal now. See? That is all changed now. Cause just last week when those 2 pairs were going lower that was normal. Not anymore.
Now. When I think of trading purposesā¦these 2 pairs just might have an edge.
Now, if the NZD were to be continuing on with this strength, then thereās a really, really good chance that these 2 pairs will continue getting stronger (for the NZD that is). You could think of another scenario of, say, another NZD pair to eventually have their 20 EMA price cross over the 50 EMA price, for a strong NZD. Between those 2 trading possibilities, I would say the former would be more probable. I mean, hey, the 20 & 50 EMA prices are important. And since they already crossed, then why not continue on that way. Right?
Anyway.
This is just some ways of using this data for trading purposes. Like, which pair to trade? And in which direction?
Well, thatās all I have regarding normality.
Letās talk about some strength. And trend changing.
Meza. This is what I wanted to mention to you, in response to your last post.
What are we talking about, anyway?
Have we witnessed enough of a strong move from the Comm currencyās to change the tide?
āYesā.
Keeping daily track of all these currencyās, aggregately, shows me thatās the case.
This context is more from a shorter term perspective, than above. Thatās little longer, right?
All these, one charts, show me everything.
It all starts with the USD.
Next.
NZD.
Must look at the AUD.
How about the other safe havensā¦
CHF.
The JPY.
Ok.
I showed you the most important players in regards to the risk on, risk off, sentiment. And they all can plausibly agree, for a change in trend.
What will that be again?
Risk on.
I think weāre gonna see some things fly. Like, this week.
I am biased, as Iāve showed you my reasons, for the risk on sentiment to take over.
Hey, I donāt understand it. At all. All of the fundamental reasons for the contrary are so very prevalent in the world today. But what can I say?
Iām just following the technicals. But this is what the market is pointing to. At the present time. I canāt be wrong about that. But, I can be wrong about what might happen in the future. Of course.
Next week should be interesting. Or even in the next 2 weeks. But, the market will show us what it thinks.
Mike
Tremendously thorough as usual Mike and I canāt argue with what youāve posted above.
In light of the very low normality scores of the last 2 weeks I would expect a reversion next week, possibly a dramatic with-trend move across the board. But itās hard to see that continuing.
It could even be a 3 or 4 day event and then back to risk-on with a vengeance even before the end of the week.
Thatās very good question
Monday is a US hol so not much to go on - Tue may be more significant.
Many guys reporting NSQ new record post NFP so therefore risk def still on - s&p flattish.
Check Russell 2000 reaction to NFP - small caps are an indicator of investor risk appetite (there could always be another aapl or mfst lurking therein)
There are 2 other indicators - breadth and sectors - sectors acting unusual in that defensive selling on Friday and of course tech buying (hence NSQ performance).
Interesting few weeks up ahead imo.
That continued yesterday which is kinda unusual - reflecting some uncertainty perhaps and there is an old saying that the market doesnāt like uncertainty.
Longer term risk still looks ok - just these next days to get over imoā¦
Hey guys
Letās see what kind of week we had regarding normality.
Looks like Monday was the only day mostly traded against the trend. Aggregately.
Well, if you remember what weāve been saying lately. That the prevailing trend has been more risk off than risk on. Itās the narrative that weāve been putting these numbers to. So, coming into this week, thatās been the case. I think we need to keep an eye on what that prevailing trend is. Cause it can change.
This week has produced some changes. Therefore, when we are looking at whatās normal and not so normal we have to realize this. This is what I got.
We read this starting from the bottom moving up, to the present.
Itās the weekend standings. Specifically, how many of their 7 pairs are trending high. Which entails whoās the strongest down to the weakest. The 20 EMA over the 50 EMA being the indicator.
See how the prior 3 weekends that it was all about the safe haven currencyās in the top 3 positions? Now that has changed.
Whoās the mover?
The NZD.
At the present time, each of their 7 NZD pairs have the 20 EMA over the 50 EMA line, favoring the NZD.
I think the best way to realize this when you are looking at the pair is this wayā¦
If the NZD is the base currency (first) then the 20 above the 50 is NZD strong.
If the NZD is the quote currency (second) then the 20 below the 50 is NZD strong.
Hereās the charts.
ā20 above the 50 is NZD strong
In the pairs that have them as the quote currency:
āThe 20 below the 50 is NZD stronger.
You should be able to see that the safe haven 3 currencyās were the last to be crossed over. And that took place this week.
Look. The only reason why I make this point is that we need to realize that whatās normal now is going to be the NZD on top. They really moved on up. See that?
But whatās quite messy about all this is this. The AUD. They are known as a risk on currency along with the NZD. And normally they would travel in a similar direction.
But, they are not, are they?
Look.
āThe 20 is below the 50 which is bearish AUD. Although the CAD might be the first one to cross over.
The whole point here is about the divergence between those two. It was easy when they both were bearish, as it was a few weeks ago. But now that changed.
I think you just need to see whatās happening. See the change happening.
Frankly, I think it makes for some good trading opportunities.
But, I got to tell ya. When, and if, the AUD starts coming up off the bottom, then thereās gonna be some opportunities. Trading opportunities.
That would be a long AUD. And a short what?
Well, how about a safe haven currency?
AUD/USD
AUD/JPY
AUD/CHF
Then you can go to their respective chart and see those a little closer.
But it would only make sense if the risk on currencyās will get stronger, then the safe haven currencyās will get weaker.
I know I was stating last week that I believe the tide is turning. More specifically, that we should be having more risk on type scenario prevalent.
Did we get that this week?
Not really. It was mixed. We did have a strong Dollar along with a stronger NZD also.
How about some proof of that.
Top table is the daily individual results. Bottom is the cumulative weekly running.
What do we got?
A stronger USD. Ending the week at +3.69%. Only the GBP was higher +4.42%.
Although, I do have to say, these numbers are quite little. Thereās a lot of going back and forth lately. I mean, the average daily % should be right around 4% or so for whoever would come out on top, or bottom.
Thereās definitely something going on. I think weāre getting geared up for something. Itās a winding up. Or a waiting period for something. Be prepared.
I do have to say.
I am keeping track of another indicator. And Iām getting more and more interested in this. Itās volume.
On one hand, I realize that itās something that has happened already. Itās past data. How can this help us who are forward looking? I mean, the only thing that makes sense is to trade when thereās a lot more volume than not. And how can you do that when the day has ended and then you get the volume amount? Itās too late. What use is that to us?
But I got to thinking.
Maybe this can enlighten us in conjunction with how the market moved. Either with the trend or against the trend. These are the questions I am aiming to find the answers.
Look at what I got this week.
The only thing Iām looking at is whether volume is greater than the average. If it is, then I believe that is some kind of statement.
At the very bottom there, is the absolute total of every currency pair, hence totals.
The Run Avg is the YTD daily avg.
Look at Wed and Thurs. Those days were above average days. I believe that itās telling me something. Iām not exactly sure what, but, something.
What happened those days anyway?
Well, look above. Wed was the biggest trending day of the week (79%). And that day it was the USD and the JPY who were on top. But also the NZD was on the heels of the JPY. Needless to say, there was a lot of activity going on. The top dogs who have the prevailing trend on their side on top, but also the NZD who is currently moving their way up to the top. All that took place that day. It was busy.
Then Thurs. Which was the biggest volume day. What happened that day?
The 2 safe haven currencies (CHF, JPY) were in the top 3 spots. But also the USD was the most sold off currency that day. So again, it was a busy day.
What I really would like to know is whether we can see evidence of a change coming. And will this be shown in the volume numbers.
Iāll give you an example, this week, with me. I think it was Wed when I did my EOD numbers that one pair was shouting at me to trade. And of course, I took it. And made some money. It was the NZD/USD.
One of the indicators that jumped out at me was on Tuesday. If you look at the aggregate totals of each currency (boxed up numbers), you will find that the NZD was the only currency that beat their running average that day. Their daily average (at the start of the month) comes in at 962323. That day (Tues) it comes in at 994445. That is the only currency that beat itās daily average. I thought something was up with them. And well, thatās a pile on. Theyāve been moving their way up. Yet, the market, as a whole, was below the average for that day.
Avg = 4818359. That day = 4769313.
That just tells me that it wasnāt across the board. The NZD was singled out.
Oh, thatās right. The CAD was the only other currency trading above their avg., that day. Yeah, theyāve been showing some interesting numbers also. There is something up with them also. Them and the NZD.
Well, this is just one example of what Iām doing with the volume indicator.
Somehow I think this coupled with some normality numbers, I might have something.
Iām gonna be doing some serious research on this in the coming days.
Ok guys, weāll be in touch.
Mike
P.S. ā I do think we will be seeing some more changes coming. The risk on currencies are taking their time. Also the safe haven currencies, also, are slightly fading away. Just need a little more time.
My market normality score this week was positive, and actually quite high, 65%.
This follows 2 consecutive very negative weeks at 29% and 34%, which followed an even more positive week at 72%.
This is high risk territory. The markets are yoyoing from extreme to extreme within days. Hard to see next week as being anything other than negative, maybe very negative.
More comments from me later I hopeā¦
That s&p sector unusual buy/sell reverted back to normal Thursday close in that they werenāt selling staples - then Friday was ānormalā for this time of year in that risk continued to sell.
Now hereās the thing when you guys are thinking about commodity currencies - the S&P took a huge hit Friday which was a continuation of the selling all week, again which we figured would be normal back last week - Fridayās drop in the S&P was significant - but which sector was sold off least?
Answer is XLB - Materials.
Some further thoughts on where we are. This might be a bit episodic.
Weāve gone well away from long-term trends and Mike has taken us into exploration of volume data to shine a light on the market conditions. I never look at volume in either forex or stocks/indices trades - volume data is contentious in forex anyway - but a simple way of incorporating volume is to focus in on the 8 major forex pairs. Barring unusual geo-political circumstances, these are the most heavily traded so naturally their average volumes can be expected to be regularly highest of the league of 28 pairs.
Hereās a simplistic view of a āhealthyā long-term uptrend -
the 50EMA slope must be upwards
the 20EMA must be above the 50EMA
price must be above both the 20 and the 50EMAās
(vice versa for downtrends)
Which of the 8 major pairs meet all these criteria? Only 1 - USD/CHF - the other 7 are all over the place.
But look at USD/CHFās price behaviour - doesnāt look much like an uptrend surely? 10 of the last 12 weekly closes have been within last weekās range: which itself overlaps all the previous 12 weekly ranges: the weekly close was previously below the 50EMA and has only just got above it in the week. It might be tradable on the basis of this being a decent range but its just not a trend-following trade.
Hello Tommor,
On my feed I am getting the NU and USD/Cad meeting that criteria as well or am I missing something?
