What am I going to trade?
Let’s figure this out.
You’re gonna see my thought process.
Well, I know what’s been happening.
How do I know this? Cause I keep track of all 8 of them.
And that’s where we start. The present.
Let’s take a look at the field.
Note: do not be concerned with any other number there except what’s inside their either green or red (bull market or bear) area.
When I want to really know what’s going on, nothing tells me more (in one pic) than this. We got, from top to bottom :
- The strongest trending currency to the weakest
- The strength of their respective trends (the # inside green, or red)
- How they got there (this month)
- How long they’ve been trending
- How they all are relating to each other
I’ll tell you what I see.
— The Comm currencies (only 2 of them) started out the month most bought, till the middle of the month. And since the mid, they have turned down weak. Bear market territory.
— The GBP, EUR, CHF (all European) most bought currencies from the middle of the month to the present. They took turns being on top.
— The other Majors (USD,JPY,CAD) all in a bear market the entire month. Quite weak.
Now remember, these are their trends. It’s what has been happening over a length of time. Let’s look a little bit closer.
Top table is the cumulative running daily %'s. The bottom table is each day by itself.
Well, I don’t think I can summarize anything more, from above. It’s all painting the same picture, right?
So now what?
This is a very nice portrait. I know.
Do I know what’s gonna happen in the future, going on from here?
Well then, let’s go with what we do know.
- Trends will either continue, or change.
- We will have risk-on, or risk-off. Of some degree.
Wait. Let’s back it up a little. What sentiment are we in, anyway? Risk on, or risk off? From all of that nonsense up there, we should be able to tell, right?
Risk on = AUD, NZD, currencies most in demand.
Risk on = In regards to the USD/EUR pair. The USD is the safe haven. The EUR is the risk currency. So, in whatever way it tilts, would be more of the sentiment.
Risk on = GBP in good demand.
Risk off = USD, JPY, CHF, safe haven currencies being bought up.
Those are some rule of thumbs, to keep in mind. But, the market doesn’t always cut things so clearly. It bends, twists, contorts. Sometimes it’s easy to tell, and sometimes not. Like right now. It’s not all that clear. But I do have to tell you what I think.
The market started the month out being in a clear risk-on sentiment (as I’ve stated and shown). Then from the middle, things started to change. Some risk-on currencies have been dropping off. But some other risk-on currencies haven’t. And concerning the safe haven currencies, most of them have been continually being sold off, not bought. The different dynamics have been coming into play. Like the CHF. They do follow the EUR. Which contradicts it’s safe haven play. And I think that’s what’s been happening lately.
In any case, with all this nonsense that I’m putting out there, all I’m saying is this. I have my eye on the JPY. So therefore, let’s look at it.
This is how you read them. They’ve been in a bear market (red dots). But I think that’s been changing. See. Anything moving up (higher) means bullish (long JPY). You can plainly see that in the last 8 days or so that the JPY has done a bit of climbing. In their stated bear market, they’ve been doing some counter trending moving. Then they actually changed their stated market to a bull market (green dots). Maybe a good sign of things to come. But then comes Friday, and the numbers came out pretty negative. Back down to a stated bear market.
Don’t forget what Friday was. It was the last day of the month. Profit taking. A lot of shaking out going on. Basically, not a sure trend following play taking place.
I think now would be a good time to mention what the fundamentals are saying. And it’s all about the COVID-19 scenario, the new world we’re living in now, right?
I do know that the US is going through a transition phase now. Me, along with a million other unemployed people, have just gotten our last real big unemployment checks. I don’t even know what’s gonna happen now. We’re all off the boob now. Needless to say, there’s a lot of uncertainty ahead of us (I’m sure that’s the sentiment of a lot of Americans). I mean, that’s why Congress is scrambling to come up with another huge round of $$'s before they go back on break. It’s, really, the only thing in our news lately. Oh, and of course, the ongoing outbreak of cases in the states.
All of that nonsense tells me that it’s not out of the question for another round, bout, of some risk-off sentiment. Specifically the JPY to get strong. I mean, can’t you see it just in the AUD? Even with the NZD? Their tanking. We just might be on the eve of another huge leg down.
Oh! Man, I keep forgetting to mention this. Like anywhere on B.P’s. Has anyone been keeping an eye on what the bond yields are looking like? Let me tell you something. It’s not good. I keep a close watch on what the 10 year yields, and the 1 year yields are up to. Let me see if I can find a good snap shot to give you. Hold on.
I’m not an expert on bonds, yet. But just know that there’s definitely a correlation between what their bond market is doing and what their currency market is doing. It’s all money, right? And nothing but.
But take a look up there back in Feb. The bond market seen this calamity coming way before the currency market did. I mean, it wasn’t until mid March that things started to fly, with the currencies.
How about a comparison of some 10 yr yields.
Just know that low bond yields does not bode well for a currency. Who wants a low return for their money? Right? Anyway. You can see how everyone crashed, back in Feb, Mar. Then recovered. Some quicker than others. In any case, the US 10 yield has come back down to it’s low. Man…I just noticed how the U.K. is actually in worse shape than the US. Man. Oh boy. Sorry. Didn’t see that till just now.
Well, all I have to say is that it’s definitely not out of the question that we could have a risk-off environment come upon us. A running to the safe haven assets.
How about Gold! Unless you’ve lived under a rock, you should know that the price of Gold is at all time highs. That’s another signal of a running to safe havens. Let’s see if I can show it.
Ok. I’m done with the fundamentals. There’s enough confluence, for me, to hop on board with the JPY, for a good amount of time. Remember, when I get in a trade, I’m in it for the long haul. I’m not jumping. My only out is for a take profit.
Well, before something happens, I better ship this. Don’t worry, I’ll give details to my trades. All of that nonsense up there only says that I’m gonna get into a JPY trade, bull market. This is my first choice. Any others? Well, I don’t know yet. I have to think, and look at the others.
I’ll be back with more.