CCY Corner: USD Direction

On the final day of the month, the US Stock-Index Futures signal a continuing decline in the opening week of the new September month. Expectations for the FED to raise rates has obviousl been revived and may still be the certain stage message set at the Fed's annual retreat at Jackson Hole, Wyoming.

Concerns of inflation had diminished setting the pace for the rate hike contrary to many calling a probable delay due to the recent market conditions in the global stock market. Value on Asian currencies had been in focus led by the declining Malaysian Ringgit, contrary to the Yen's strength reaching a 116.07 against the USD. However, the USD has enjoyed a price recovery with the Yen as it is currently trading @121.16 as of this writing. The volatility of the currency market, likewise would continue as market vulnerability in te Chinese stocks at the opening Asian session have drifted lower; a sign of uncertainty as to what China regulators would do in the event of a massive price move in the markets.

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 CCY Corner: USD Direction

Correlated Indices, ETFs and Currency Strategies

Cross trading with a touch of Arbitrary Hedging -

In the financial markets, the ideal approach that investors tend to diversify their respective investment portfolio to meet goals or at least achieve a higher degree of return nearest to their financial objectives over a specified period of time. However, at the course of market conditions, certain time frames of exposure does not necessary follow due to changes in market sentiments and a variety of globally interconnected fundamentals that will always drive price action.

Weighing in which among these factors would weigh heavier which would likewise dominate the market place. Whenever these market drivers are in play, wider price ranges in both market direction could be difficult to identify and even to anticipate the session's price changes due to volatility, especially when they are fundamentally driven instruments either in stocks, currency or commodity. Let alone in stocks and commodity, a certain degree of difficulty selecting the right correlated financial instrument would be hard to do. With over 1700 ETFs to choose from would be similar to a novice trader trying to find a needle in a haystack, without the assistance of an experienced mentor /
trading partner is just an example.

However, ETFs are only one of the alternatives investors can consider contrary to the fact that ETFs do have some trading flaws especially so when trading limits and halts certain stocks are concerned. Although, this maybe only be a concern for inexperienced trader / investors not knowing what to do when extreme volatility are present in the market, the likes of Black Monday. That is why, we do encourage to spread investment risk not by stock or currency choices alone but addressing the overall investment portfolio. And at the same time "Capitalizing on Liquidity" that the Foreign Exchange market provides on extreme market volatility only when properly / Timely executed. Without these guidelines the end-results could be financially dangerous.

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Correlated Indices, ETFs and Currency Strategies

Validating USD Market Call August 23-29, 2015

Yes, indeed the price recovery or as we have termed a "Pull-Buy-Back" on the USD along side with the Dow Jones; where prices have opened lower and extended down towards the 92.62 for the DXY and a corresponding price reaction for the Dow @15370 low. Resulted to a price recovery thereafter heading towards the closing of the week.

A word of caution though, prices have reacted true enough to our market call; these market price swings across the board does not happen all the time. Only on certain market conditions where a contagion occurs and spills over to other markets. Price direction are uncertain and the recent price decline were extreme movements similar to catching a "falling knife" which we do not recommend at all. Certain valid reasons were anticipated and have drawn certain solid conclusion justifying our analysis.

Timing is very critical in executing this type of strategy, while choosing the right financial instruments  and experience have played a huge role in such strategy. Lucky enough we have learned from the best and likewise developed the necessary trading skills to implement this. A combination of futures US Dollar Index, the UUP vs. UDN have also been carefully utilized and corresponding appropriate  ETFs for the index funds have brought about net positive trades. Will provide additional information in our next market view on our website +megatrade101

However, it maybe the chart / graph clearly reflects the strategy to be applied during "Black Monday's Decline". The current closing for the week is a relief price recovery nearing the end of the month's trading which apparently is where institutional and professional traders /fund managers will take their normal position adjustments after these recent moves we have encountered.

As always....There will always be a major correction within a major trend!  Only the best for your trades! 

Have a great weekend!  Cheers!

Thanks for the Vote of Confidence!

FYI - Here are the stats as to MegaTrade101 combined number of our loyal clients and international traders that have been actively following our analysis for the months of June, July and August 2015. And so far have avoided getting washed out from the extreme volatility of the markets while gaining a remarkable experience of timing the market movements before it even occurred.Congrats!

Although, signals were there and proper positioning have simply walked through these price action that have contributed to some positive net gains well within a specific period of time. Lady Luck was again on our side of the market, but will still be glad to make them.

Much Thanks for the vote of confidence. It was your decisions and we are just your trading guide and mentor!

Point of Reference: US DOLLAR INDEX

Market Recall As of April 30, 2015

USD Weakness Confirmation was the first signal from its high and click on the "End of the 1st Quarter Review". The registered 92.62 basis point low would now be considered a trend reversal. Any upward momentum can only be considered a correction for the USD.

Note: The importance of keeping a trade journal is important for analysis and reference points moving forward into the trades.

Link:

http://megatrade101.blogspot.com/2015/04/usd-weakness-validated-confirmed.html

USD Confirmation and Validation on 94.00 Price Call

UPDATE: Today's low @92.62 basis point as of August 24 2015
On extreme market volatility

USD (DXY) Market RECALL as of JULY 30, 2015

As the chart reflects that once the prices fails to make a convincing resistance breakout; a lower closing below the support of the Andrew's Pitchfork below the 96.00 basis point handle, expect a corrective move with an attempt on the 94.00 on the low end of the previous leg; but would be a higher bottom on the chart when it does occur. On the other hand, other chart patterns are pointed out in our video support on the US Dollar as probable indicators for the next probable directional price action as the formation completes in the next few trading sessions.

A convincing volume and follow-through buildup would only be justified with a much stronger catalyst that can drive a direct candlestick bar that can make the butterfly formation be overshadowed making a substantial rally more justified when it does. Favoring a break higher would still be the primary direction from the consolidation and the recent decline.

As of August 23 DXY low @94.15 Today in Asia Trading Session
Link:
http://www.megatrade101.com/index.php/component/content/article/2-uncategorised/805-market-insight-usd-confined-above-range#dxy-index-weekly

Related Link:

https://www.youtube.com/watch?v=iKZnIAGKh2k 

Attention: Asian & US-PH Investors / Traders

Market Behavior & Price Reaction

For traders and investors in the Asian markets particularly for the Philippines start of the trading week. Take  a precautionary measures to be able to sustain and absorb the negative impact of the US market spill over sentiments on the PSEI sectors that would be affected from Friday's movements. Being able to fairly yet accurately predicted the DXY low @94.80 before it registered last Friday, the Dow break below the 17000 and the PSEI run through the 7500 levels; its now time to call the price below the 7000 moving forward for the week ahead.

As such moves would open deeply into the market's opening price the same manner that such bearish contagion would easily place the surrounding markets into hysteria that would force liquidation as prices reacts strongly. However, do not discount the case scenario where institutional may drive prices much lower after the opening bell and time a pull-buy-back from their lowest points. This is a common practice for companies with deep pockets to control stock prices by simply buying back what main street investors takes the loss when they throw in the towel.  

This would provide a rebound or a short-live temporary relief and a price recovery from short-covering positions not only for Asian investors and traders , likewise as an anticipatory reaction from last week's declines. This normal market reaction may not occur right away and may simply try to take time to build its price adjustment period within the three major market's trading session.

This is a brief case scenario waiting to happen! Not unless a stronger follow through of such declines would be carried over by bears which would add more insult to injury. Watch, Learn and just be on the side line for now, while waiting for the next few days. Due diligence is a must and take the necessary strategies available to you as an investor and/or trader.

Being A Step Ahead of the Market!

Entering negative territory for the year, has made investors frown deeply over the market' current moves as the bearish contagion have spread more than what most traders have expected. What analyst and investors should now focus on is the "Time Frame" or the length of time which this bear trend can hold its ground before a real recovery takes place.

The rally for stocks and the USD that extended till the first quarter ending of this year have remained a significant mark which can duplicate its momentum and sustainability to run the same on this decline. Something to think about as this case analysis should never really be discounted.

Again, the same period when we called the probable "Dark Cloud" forming at the end of the quarter which for some was too early to call  bear market in the making; yet time and again it has now been proven to be the real deal. As the European majors are now taking it's course cautiously, a slow yet better price adjustments are being undertaken after a round of data in Europe have taken this current market condition to recover from the doldrums of the past quarter. Will keep you posted as to where we see the market behavior would tend to flow while watching price action take a bigger bite of the market at the expense of some investors.

Play the market with caution and always consider taking a few small steps backwards to be able to move forward in greater strength. Have a great weekend and Only the Best for your Trades!

Learn to Arbitrage Hedge - Avoid Unnecessary Losses When There Are Trade Solutions

In an online meeting with some of our constituents trading both currency and stocks in Asia and the US; we were asked how do we manage to find certain market conditions that has distinct trade setups in trading the market. Particularly now that skeptic traders have finally realized that a declining stock and US Dollar trend have made its point.

The first answer is why it takes too long to accept that certain market forces can change even before any turning point can be reflected on the chart formation. This can be attributed towards most technical trading orientation and practices traders tend to follow once a resistance / support price level would be broken through price action.

Market conditions in global stocks have followed a bearish contagion since the start of the 3rd quarter this 2015. The correlation of the Dow Jones, US Dollar directly and indirectly comparing the indices with the price action of the Philippine Stock Exchange Index which have been associated with is a strategic plan well worth checking especially for Asian / US Asian investors involved in the financial markets. Not all traders present during our online meeting have had the opportunity to arbitrage trade positions in Manila in other markets; so to speak, As most traders either tend to hold individual company stocks or run a day-trade which obviously are on the red by these current moves since touching the 8100 levels of the PSEI.

What we do emphasize is that to arbitrarily hedge their total portfolio amount or funds traded correspondingly by using available trade positions in the US markets through foreign affiliated and licensed broker firms that carries an indirect/ direct link to the Philippine stock exchange index. It maybe a complex process for most without the proper training and introduction to the right financial instruments including strategies correlated with the major stocks traded in the local stock market in the Philippines. But there are methods of doing so that will be an advantage or at least minimize unnecessary losses. With the current decline seen with the Dow nearing the 17K mark, the PSEI well below the 7500 is on its way lower below the 7000 support mark in the near term. With a market holiday expected traders would now have to wait for the following week to be able to cover long positions or simply exit their long waited positions at a loss.

Strategies are open to all who simply try to do their due diligence in market research. Where and how to implement these trade plans are within reach is of course is the next step in keeping pace with portfolio / investment modernization.

For more information, email us at info@megatrade101.com

A Global Investment Banker's Relationship.

Does it Cut it?

A couple of months ago, we were invited to attend a market brief / presentation from one of the prominent investment banking institutions at the Shangrila Hotel conducted by their head director for wealth management. This is where they had the privilege to show how their expertise and access to a variety of information and tools that can be applied in their choices of financial instruments for their respective individual client's portfolio. This was a by invitation only for prominent Asian investors that can fork a minimum 6 figures and above as a low deposit placement to start with.

During the market presentation, China A shares and relative portfolio offerings were discussed as their focused-favorite stocks before all hell broke loose. Earlier signals were present even during the end of the 2nd quarter of 2015, and as a matter of judiciary duty to our constituent-clients attending that have seemed to be most attracted towards the presentation. However, these are mind-setting interests placed among investors being swayed to participate in their program funds being pooled by investment institutions. The normal strategies ‌in the event of a change in outlook are not covered during such market brief or market outlook.

With that said, the sales pitch was made and apparently have been quite successful for the bank sponsoring a full course luncheon in a luxurious hotel. Investment strategies brought forward was not enough for those who knows how wealth institutions makes their presentations. However, after the fact that accounts were initially opened the long awaited officers to managed these portfolio would now be entrusted to place funds the way they see fit for the individual investors without so much of a considerable meeting of the minds as to what specific interest would best suit the individual from their investment. What to expect from market presentations and what necessary precautions would be taken into consideration if and when the uneventful turn around comes into the market.

This is where the main responsibility of an independent wealth and investment analyst comes into the equation. Where an investor can search for an institution to park and invest their money with is the start. But to have a lasting relationship as to how these funds and strategies can help support to preserve and grow these funds is another step for the process in Wealth Management. Therefore, it is our mission to make certain that the right information can best be delivered for investors to make an informed decision other than where to deposit their funds. Having the connections of a global banker does not necessary ensure that growth would be achieved unless the full participation of investors takes place before, during and post investment strategies are made.

Being a responsible investor along with a trusted and independent financial advisor can do more good than harm. Consider the fees involve between investment banks and retaining an independent mentor on your side would be appropriate.  

Related Article: http://www.bloomberg.com/news/articles/2015-08-18/being-a-china-connected-global-banker-isn-t-what-it-used-to-be?cmpid=yhoo

What's Next for the Market

Taking a cue from the market while analyzing best strategies to apply trades to arbitrage price swings for investors interest from a wide ranging consolidation.

Stock Market conditions apparently have dwindled for sometime now. The trading range can now be found on the lower band of its price consolidation which have weakened since entering the 3rd quarter of the year's trading activity. And obviously affected US investors and spilled over to Asia.

Although, such declines have offered some window of market trades both on the long and short side of the market. However, some investors have failed to recognize such declining signals, yet others have continued to come though by being able to leave the market in a timely fashion before the decline in prices on the Dow Jones showed significant changes in its behavioral price divergences in both directions that added to more confusing signals. Ultimately following the fundamental drivers that led to the volatility of price swings and position adjustments.

As an investor, being able to trade both sides of the continent in the US and Asian markets have been an advantage. Since applying strategic currency hedges and stock market trading through the use of ETFs have apparently played out well since the last quarter. With a few exceptions and a net positive results been the most effective trade strategies applied. But with the present conditions in the market, until such time this consolidation  would find a way to breakout of its range, market price action would be confined within its levels. Nonetheless, there would still be some room to make money from the market in a shorter term contrary to expecting huge swings from a market that goes in both directions.  

UPDATE: Comparative Insight & Analysis On the DOW & USD

PRICE ACTION & MARKET BEHAVIOR

The third quarter of 2015 have proven to be an extended trading of a wide range consolidation for the Dow Jones Industrial Average, with a high @18351 and a low price @17039 levels respectively. In Reference to Market view on the DOW & USD 6.13.15  This has been established since December 2014 to the present. With the recent low @17125 which came quite close to the 17039 support before pulling back to the closing @17477.40 slightly below the benchmark @17500 levels and a retest on the next low would not be discounted. And the main catalyst for price action are commonly related to the fundamentals on Greece, Central banks policy, Ukraine, Oil, Gold and the Chinese recent cut in interest rates just to name a few.

With that said, the basic comparative analysis in line with the Dow is of course the USD recent decline and turning price point from a registered high @100.39 basis point last March 2015 and a low @93.13 in May. The current price still above the 95.50 remains well within it trend while a close below the 94.80 levels would tend to have a negative effect for a follow through. However, the contradicting case scenario may only the expectations of the rate hike which may already have been priced in the market for some time.

Corrective moves and daily price pullback may well be seen on a daily and weekly basis but still does not constitute a change of current market sentiments prevailing today. Market conditions for a continuing decline for stocks and the USD is still hovering with investors uncertainty playing a bigger role while continued position adjustments and liquidations would continue as we see prices moving in both directions. Volatility would still prevail with fundamentally driven market prices dictating the course on a daily and weekly activity.  

Bear Market Contagion - Indices Overview

The Hang Seng Index (HSI) and the Nikkei Average (JPN225) was not spared the contagion effects for the second consecutive declines in the market. And thus spilled over to commodity currencies affecting export oriented markets where the Chinese Reminbi have played a vital role. And for all intents / purposes for China to stay competitive and attract more with the export industry as part of their grand plan to include and be accepted  for the Chinese Yuan as part of the basket of currencies traded worldwide.  

Negative sentiments would still stay and be felt in the market today and succeeding days to come until a new economic data changes the overall picture of price behavior in the market place. With the USD Index @96.57 to this writing have softened its stance since our market call. Volatility will be present at this time where trade directions will remain on both sides of the trade. The Dow Jones decline is just a fresh round of a series of expected declines in the near term.

A follow-though on the Dow, HSI and the JPN225 charts would have similar trend fashion for the prices direction more towards a weekly summary compared to a probable daily price pullbacks that would provide price uncertainty for investors alike.

Fundamentally Motivated Market Justifies Technical Market Call...

ON THE USD & ROLLER COASTER RIDE FOR THE DOW

With China throwing in the mix of a 2% devaluation a new set of currency war are present particularly in the Foreign exchange market. Volatility in stocks and the FX market can be seen and obviously felt by investors as uncertainty to curb a declining China market will take its toll once the right opportunity comes into play. The Chinese government would do everything to tame and take control of its flagging market where exports have shown its weakness in the first place aside from the property market.

Although, one thing is for certain now is that the weakness of the US Dollar is reflected in the current levels trading below the 97.00 basis point have justified our market call supporting the three technically motivated chart formation we have shown on our market view analysis dated the 7.31 towards the 2nd of August, 2015 (Video support below). 

Contrary to its major trend of the USD; a collective effort of short-sellers and short-covering activities are being traded as of this writing. Expect daily pullbacks in the currency pairs across the board during the daily session moves. The ill-effects of China's move have dampened bullish traders on the USD as early as today's trading session in the US market. Spill over effects of trading would continue towards the Asia and European trading sessions before the week is over and affecting USDJPY and Yen related crosses at this junction versus the European majors included. Not to mention, the continuing Dark clouds on stocks that may eventually trigger a long standing correction once 17k is breached. Watch for the market behavior on all markets before making a serious trade execution to avoid unnecessary losses.

Recall Chart configuration as of 7.31.2015
Please refer to the Link:
https://youtu.be/tOXiL1GwN_c 

Buffet Making a Market Difference!

Roller Coaster Ride for the Dow Exist with volumes present in every corner of the trade. Expect Volatility in both directions of the markets, while the USD looses its steam moving forward.

Likewise, see how the Oracle of Omaha is at it again - Warren Buffet has been influential n building market sentiments that contributed to the industrial sector. His latest acquisition is the main catalyst of M&A. Every knot and bolt at its proper place!

Dark Clouds Over Dow - USD Lost Steam

In spite of China and Japan slashing down US debt by diminishing holdings in US Treasuries; the USD barely budge from its recent price recovery yet made no real significant signs as it declined lower from its closing week @97.56 basis point last Friday as of August 8, 2015

The USD resiliency has been supported with the continuing Oil and Gold's declining prices not seen for a long time as it extends bearish market sentiments moving forward well within the third quarter of the year. This was also accompanied by the recent export slump and bearish data coming from China contrary to the well received NFP figures from the US economy leading the FED to its first scheduled rate hike this September. With that said, US Stocks would continue to weaken as it now is below the 17500 and a retest below the all important 17000 may well be on its way. Depending on the current market conditions where investor's sentiments are uncertain contrary to last Friday's good reports on the jobs data. Prices on the Dow will now be as vulnerable towards the lower band of its price range where the 17039 first line of defense would be retested as it continues to decline. But this does not mean that the probable price pullbacks towards a daily price recovery can occur on recent decline. This proves the tug of war between bulls and bears to dominate on every up and downs.

Markets In The Red Across the Board

The Dow Jones and SP500's decline has indeed became a clear bearish signal after the fact that it has been led with Disney and Viacom. The SP media Index have been the primary driver of these negative sentiments as the Dow is again back below the 17500 all important levels.

With probable spill over declines in Asia on the last trading day of the new month; where Asian traders would have to be on the guard as the week would end down to be in negative territory. Without mentioning Nasdaq's decline the rest of the commodities including oil, and the precious metals are not an exception to the market's red color across the board. Interest in market opportunities have lessened in contrast to the increase in open interest with the USD for the past couple of days.

Watch for Dow's prices to re-attempt the 17000 support levels in the Asian towards the US Trading sessions. As the NFP figures would likely be positive for the USD and make a go for another high which may well be above the previous high @98.21 basis point made this week.

Price Action Analysis & Insight: USD CABLE / EURO Cross

The USD remains strong and trades at the higher band of its range. As we have seen a Tug of War between CABLE and EURO; with the Pound gaining over its Euro counterpart in the early US trading session.

While the USD is expected to trade within its range, the preferential choice decided upon this kind of market condition is to go with the GBPEUR cross rate instead of the regular inverse rate of the EURGBP cross. The obvious reason for a positive swap on a daily basis is just one consideration. Yet the established trend remains favorable to the upside. With daily pullbacks to remain and should not be discounted to occur. And defining a counter trade strategy is in place as a cushion against any adverse price fluctuation versus the primary trade position.

Price channel 2 (yellow shade) is way above the price consolidation / range and have managed to move to higher levels not discounting the correction and nearing its initial new price range objective @1.4400 - to- @1.4480. A resistance may emerge as it moves to higher grounds with some selling divergence to occur at these levels. Profit-taking would meet fresh position players moving forward. Wil be considering alternative pairs and stocks included to spread an even playing field.

Identify Chart Patterns: USD Market Insight 7.31.15