CCY Corner: #USD Still Key Driving Force in Market Volatility

US DOLLAR INDEX - DXY

With the most recent developments surrounding market price action in the CCY market, the prevailing catalyst over and above significant event risk has been the remarkable price movement of the USD as measured by the US Dollar Index - DXY marking a new low @91.90 on just the first week of trading for May 2016.

The relative market influence on increasing 'Volatility" have spread extremely well as turning points on price reversal, including follow through actions among certain currency pairs that have contributed a wider trading range, price target extensions / expansion from a technical chart perspective.

CCY Corner: #USD Still Key Driving Force in Market Volatility

Yen Strength VALIDATES USD/PHP Weakness in VALUE

Follow Up Analysis from 4.18-19 Market Call

Just as the Yen continues its strengthen against the USD, the weakness of the USD translated into the weakness of the Philippine Peso have given way for the exchange rate to accelerate higher with the JPYPHP now @44.00 & above. And aiming @45.00 or better for as long as the JPY gains value continues its course.

In addition the PHP weakness spilled-over the PSE Index where equities have moved lower which had difficulty pushing above the 7500 benchmark reference and currently below the 7000 level. Timing is an important factor which has a basis of reverence and not a speculative process 

From our April 18-19,  2016 call for OFWs strategy to carefully watch the prices @40.50 base price point to 42.00 and has now added to the value of PHP exchange rate. When investors do the math, for every 10k JP Yen equates to 4,050 PHP multiply as long as the Yen's strength continues.

Thus, the practical and effective process of saving while value investing over a time period makes more sense for OFW. The same methods applied with currency conversion for now with the value increase of the Canadian Dollar, EURO, Sterling Pound and the AUSSIE Dollar versus the Philippine Peso just to name a few.

NOTE: An advantage for Foreign companies that involves International Foreign Direct Investments is a huge contribution to the Philippine economy that creates jobs, and other business opportunities.

RESILIENCY of the AUSSIE DOLLAR Remains INTACT

TACTICAL Investor / Traders VERSATILITY & FLEXIBILITY to take action knowing when to adapt to certain market conditions DEFINES TRADING CONFIDENCE!

A clear cut relationship  of how the "RESILIENCY of the AUSSIE DOLLAR Remains INTACT, in spite of the price recovery of the USD. 

As mentioned in our previous market brief; the effects of the USD price recovery barely affected the AUDUSD closing above the 0.7700 . The bias bullish market sentiments remains even after its corrective move from the 0.7722 March high and the recent low @0.7498, as this has been its trading range to watch.

The fundamentals surrounding the currency market is well known almost to all traders and how these reports influence prices and market sentiments. However, a clear understanding of price action at times can outweigh what seems to be the most obvious. The subsequent analysis mentioned here is to have a clear and analytical approach of price action that goes beyond charting even before a major move occurs, particularly with the AUDUSD price direction relative to the rest of the financial instruments. And in the next market information below is more directed with the AUDCNH Cross rates.

RESILIENCY of the AUSSIE DOLLAR Remains INTACT 

TRADE Reference As Starting Point of Trend:
CCY Corner Strong GDP Lifts AUSSIE

CCY Corner: Validated Market Call AUDCNH

Aussie Dollar v. Chinese Renminbi

This chart looks quite familiar right?

From our previous post last March 07, 2016; it has now been validated and proven to have been overlooked even by a few of our constituents that now realized the importance of turning a speculative trade into a serious investment position strategy. Nonetheless here is a brief description. Current price of the AUDCNH as of April 15, 2016 is @5.005 from the base break out @4.8571 position on the way higher.

The fundamental correlation of the Aussie Dollar with that of the Chinese economy is quite relevant  as China have indeed slowed down likewise with a few mix yet, good reports have provided some price volatility in the AUDCNH Cross rates.

However, to some degree there is still the future outlook seems to have some light at the end of the tunnel to our assessment. And this is based on both how prices have played out since the 7th of March on the AUDCNH as shown on the chart and market call that we have made.

Click on the chart of AUDCNH.

A reverse call from a short to a long AUDCNH on the way up have been placed @4.8570 price break higher. Where the initial curve that has served as a basin for technical support was designated to have a substantial market potential nearest to the 5.000 levels. As this price would serve as the highest probable objective then and now has come to a fruition at the closing of this week ending the 15th of April 2016. Click to continue

USD Typical Price Recovery, then & now!

The three cluster of candle bars have indicated the first signal that a daily price recovery is in the making. This is also supported with an opening price gap last Monday's US session that followed with an initial registered low @93.62 basis point.  And currently above the 94.30 levels which would also be pressured with the recovery in Oil and precious metals.

Such formation have been easily identified which is typically described in technical chart patterns. The low also provided a divergent price trend when compared with the combined tech tool of the diagonal contrarian direction relative to the Stochastic / RSI.

With that said, the correlated effects would spill over with the EURO & the EURGBP Cross rates directly which is in fact at the stage of a corrective phase with the EURUSD @1.1306 & 0.7941 respectively. Thus the resiliency of the rest of currency pairs could be spared such as the Aussie which is still working at the higher band of its range.

Market Call: USD Key Driver for Major Indices Direction & Renew Higher Trend with Volume - Momentum signals would be the game changer!

Continuing Price Reaction on Yellen Dovish Remarks

AUDUSD

The early European opening after the Asian session has provided a continuation of USD slide from FED Chairperson J Yellen remarks and likewise supported a lift for the European majors.
@Megatrade101, we remain on course with our trade strategies on place with the AUDUSD conversion & leveraged position of the AUDCNH cross rate into the opening of the 2nd quarter trading as a carry over trades.

As of this writing, AUSSIE has made a new session high @0.7700 along with the crosses and the USD Index @94.80 session low.

These positions would now serve as a near -to- medium term positioning, while counting the linear cycle it would provide depending on their price movement and behavior. The end of the quarter is at hand while taking our trading break, still keeping an eye on the market for any sudden changes that may occur unexpectedly. 

Reference: Trend following the Top Heavy USD Comparative chart pattern.
Market Call dated March 07  CCY Corner: AUD EUR CNH & Crosses

ONLY THE BEST FOR YOUR TRADES!

USD Continues Decline Spill over Across the Board

Early European session have pushed the USD index below the benchmark support @95.05 and have reached a new session low @94.68 as of this writing. As of March 04, 2016 our market insight have indicated a probable low that was briefly described as follows:

MARKET REWIND FOR USD INDEX AS OF 3.04.16
Although, the session prices with the USD reacted positively the overall strength have fizzled out and lost steam as the new month may prove to be a top heavy for such a price recovery without the real momentum in spite of the good data from the NFP. Meanwhile, the strength of the Aussie Dollar have reached above the 0.7400 levels which have validated our trade call from our previous post analysis below which happens to be an effective trade analysis well in place that may probably make a follow-through by the coming week.

UPDATE: DXY @94.68 LOW AS OF 3.17.16

The continuing decline of the USD is in line with the USDJPY reaching a low @110.68 which resulted to the spill over effects and price action with the European majors. Adding to the recent price recovery are Oil & Gold likewise resuming their upward direction which have placed a serious cap on the USD. With a weaker USD, this would provide further lift for commodities as well and included here is the AUSSIE Dollar being a commodity related currency that has proven to be on the same trajectory moving higher currently trading @0.7605 with a high price @0.7650 in early US trading session. Thus, turning trade positions into a Value Investing Strategy. However, playing it with caution; watch for session pullbacks by Friday being the end of the week's trading towards the closing session.

VOLATILITY Remains on USD EUR CABLE & Crosses

Heading towards this week's FOMC rate decision, the USD steady price recovery has well been on track, especially coming from a recent 2nd higher low @95.93. The rapid pullback with the EURO post ECB was considered the catalyst of the market direction.

The currency market's behavior based on Price & Time cycle turns also remains well within its 7-14 days coverage, where the effectiveness of the Fibonacci time line have applied since the cyclical pattern was identified with a few +/- lagging turn over market sessions between the 3 time zones.

This is well in place for medium term outlook maintain overnight trade positons across the market with the European majors and Asian currencies as a risk spread strategy. Alternating price swings on the Asian currencies is reflective well with respective price action with the USDJPY pulling back @112.83 while the Aussie & the Kiwi or the NZDUSD remains in a corrective phase as of writing @0.7462; @0.6605 respectively. And the AUDNZD Cross rate still remains on the higher band price @1.1293 in Asian trading session.

Recognize Market Behavior Relative to Price Action

Supplemental Market Brief POST ECB on EURO...
Confirmation from COT Report

At the time of actual rapid price action, recognizing the market's behavior relative to price action was a critical time. Since most speculative Euro traders were already well positioned on the short side of the market. And eventually reloaded upon learning what the ECB had decided to do. That led the decline of the EURUSD back to the 1.0860 levels and made a sudden turn-around thereafter until the closing of the week ending the 11th of March 2016.

Sure enough the volumes supporting the rapid price change that led the upsurge was substantial, 892K contracts. And this was 2X the open interest that ended the session with just about 436K +/-. Open Interest were 4392 contracts by speculative day traders mostly coming from the retail, non-commercial markets.

And base on the CFTC - Commitment of Traders Report - better known as the COT report that was just released late afternoon. Indeed the speculative shorts were in the area of 91.3K as of the closing date of Tuesday March 9. That already provided some glimpse that the market positions were in fact over loaded. This alone was that confirmation before the data where the principle of selling the rumor and buying the fact still plays a role in the old school of trading combined with new technology-driven base trading does matter with these volatile markets.

Knowing when a speculative outlook turns into a smart trade position for value investing is indeed a edge over the market. Utilizing the important information and data on Volumes and  Open Interest in Spot, Futures and Options markets can only help derive a favorable investors with the right trading decision most of the time. 

Therefore, recognizing the rally was certainly a market short-squeeze for speculative traders which we do not encourage especially for new retail day traders that would simply get stop-out of the market without a reasonable fight. This is were unnecessary losses can be avoided. Due diligence is always good as it pays to walk the extra mile!

Sequence of Trade Strategies 2

Original Trade Position 1

CCY Corner: AUD EUR CNH & Crosses

AUDCNH Basin Formation 

As of 3.11.16
UPDATE: AUDUSD @0.7570 AUDH16 (LIQ) AUDEUR @0.6783 AUDCNH @4.9045

Interestingly enough, market focus is on the three correlated pairs the way we see a perspective on trading these pairs that is based on expectation of increasing market volatility in the near term. Light reports for the week with the exception of how China's massive cash outflow and the increase iron ore prices in commodity markets affect the AUD & CNH.

On the other hand, ECB speculation on additional stimulus and recent talks of BREXIT are increasingly crossing the wires as these would greatly affect the market prices moving forward in the near term. Fundamentally motivated markets will be the dominant factor affecting these currency pairs. For now the market front has been real quiet with the commodities market taking the limelight with iron ore and oil prices sustaining their rise to this writing.

CCY Corner: AUD EUR CNH & Crosses

CCY Corner: Strong GDP Lifts #AUSSIE

UPDATE: AUDUSD @0.7515 As of 3.9.16
UPDATE: AUDUSD @0.7425 VALIDATES TRADE CALL

The strong GDP data coming from Australia finally gave quite a good lift for the AUSSIE. Although, there were some previous doubts as to when momentum would begin to build to justify the technical trade setup that it presented itself at an earlier stage. 

 The closer relative correlation with China draws a dividing line compared with the USD as a major trading partner. But for position trading the Aussie Dollar aside for having a reasonable swap rate compared with the rest would be considered a market potential, as we made mention in our position trade setup to our client / constituents. 

CCY Corner: Strong GDP Lifts AUSSIE 
Related Info: Why Futures Matters

Brief Insight for 1st Quarter 2016

A similar market situation can be made or created with the new trading year and overlaying new contract month which at times can define or establish a new "high or low" simply based on the week and months traded. This is what we likewise impart with our training as traders need to know and go beyond simplified charting systems currently being used even with the best platforms in the market. 

As for the DJIA 2015 registered performance have generated a loss of 2.2% since 2008. While the Nasdaq ended with a gain of 5.7%. And the S&P 500 index, regarded as a benchmark indicator for the stock market, lost 0.7 percent for the year. For a complete report click on the link below.

Brief Insight for 1st Quarter 2016

EURO Rallys On ECB Draghi

@MegaTrade101 Ride a Continuing Trend!

When USD softens on a pullback the AUDUSD will continue its trend. But today's statements from ECB Mario Draghi have brought such disappointment of not delivering what was expected have provided a nice bounce back higher for the EURO near the 1.0900 and drove the 1st decline for the USD @98.62 session low. Its was the Euro's turn to shine back into the spotlight until Friday's NFP #'s.

Euro Chart on Cloud

The market reaction where more correlated with the European majors and crosses but not as much as with the Asian currency pairs and their relative cross rates. Media highlights were so centered on a more active move from the ECB, as they were all expecting a 'shock & awe' with the ECB transparent guidance on addition more stimulus was really played out well to their advantage. But still got the awesome rally of the EURO.

Thus driving the initial decline for the USD along side disappointing bearish US reports leading to an even lower price touching 97.60 basis point. Meanwhile, the spill over effects on CABLE were relatively milder with a modest bounce @1.5155/60 levels.

The direct effect on the Euro were affected with short-covering rallies have added to some decent profit-taking for previous trades taken the past week. The market were pretty much mix after the price swings brought about from the press conference.

TRADE SEQUENCE ll: SCALING UP Positions

"Ride a Continuing Trend"

The following series of trades are best defined with almost all respective positions on the AUDUSD, AUDJPY SGDJPY are in place; the next objective is to protect those gains by watching the reports real well this week.

Any sudden resurgence of the USD index higher above the 100.39 previous 1st high and 100.31 20d high would result to a pullback lower on the AUD and the SGD respectively. However, for as long as the overall secular market sentiments remain in favor of the USD, the degree of price recovery may well be in check. The Asian currency choice was pre-determined as the best probable choice compared to the European majors underlying negative / bearish sentiments. 

TRADE SEQUENCE ll: SCALING UP Positions

Trade Sequence Follows Trend On CABLE & AUSSIE

AUDUSD

UPDATE: Trade Sequence have Just been Validated As of Nov. 20  24, 2015 US Trading session EST

Anticipating a probable corrective move for the USD are in line with the daily session lows in stocks; the momentum has dwindled as investors digest some relatively bearish reports both in the US retail and ECB Mario Draghi's comments.

The spill over effects from the EURO dented Cable's gain which signaled a probable down turn for the European majors. The resiliency of the USDJPY was still holding above its bench mark levels since the BOJ statements were overshadowed with how investors viewed stocks including the Asian NIKKEI 225 Average staying above the 19850 levels.

AUDUSD Price Recovery & CABLE's Decline
Brief Insight: Behind the Strategy ll 

Trade Sequence Follows Trend On CABLE & AUSSIE

The Next #Risk_Event is Ripe for the Picking! #JOBS Data

Non-Farm Payrolls & Unemployment Report

AUDJPY CROSS RATE

Taking a cue from the next risk event on the NFP and Job #'s would dictate the direction of the USD for the fundamental. While an interesting technical configuration of the AUDJPY Cross Rate is carefully being watched for now and being compared with its correlated individual currency majors. 

Although, the Cross rate is indirectly relative to the majors; the influence of the USD's movement affects the currency majors directly and reacts more. Meanwhile, the DXY have regained lost ground and rebounded back above key levels @96.00 basis point to this writing prior to up coming reports.Carefully monitoring their price net changes and range trading per session on a pull back or rebound are as equally important that we have always emphasized. As we can determine the weighted percentage distribution versus the USD ahead of time with a fairly good assumption for each currency pair. This would likewise be the first part of the initial equation to derive its corresponding cross rate value and its projected price level moving forward.

Another Cross rate to look at is the current run of the AUDNZD that has made a tremendous.high @1.1428 in the Asian trading session and is obviously making this run all the way to the bank, so to speak. The fundamental catalyst to provide a lift would then provide a reinforced trend in the making depending on the volume and momentum that would take place. For now these two cross rates are set in place that would align themselves with the current market conditions. Ripe for the picking! Properly Choosing the Appropriate Currency Pairs to Trade

AUDNZD Cross rate as of July 02, 2015 Asian Trading Session

CCY Corner - AUD EURGBP Cross

After a series of European banks addressing monetary policy, Denmark and the Reserve
bank of Australia have joined the band wagon on slashing rates to its current
level @2.25%. This move is more for banks to meet a balancing act among the
rest of its peers worldwide. No one has really admitted a currency war but the
fact is that it does exist and makes its presence known particularly in the
financial markets.  

Even with market conditions such as this; having to pay banks for keeping European
deposits especially with interest rates at negative territory is not as
encouraging as it used to be for main street investors. The Aussie carry trades
has changed it tone while it is still beneficial to trade contrary to the Yen has
not been as lucrative like before. A substantial trade amount of volume would
be likened, except that the trading ranges have likewise been narrowing for
quite sometime now. 

CCY Corner - AUD

CCY Corner - AUDUSD

The Australian Dollar (AUSSIE) have shown some encouraging price action moves for investors and traders who prefer more of long positions on an Australian price recovery.

And we @megatrade101 is not an exception to this rule. As carry trades used to be a strong favorite of ours, the technical outlook and price levels are more inviting. The recent registered low @0.8540 levels (Yellow circle) was a significant price levels especially when prices recovered on the way higher. Although, some may find this on a lack of market conviction; the desired levels and prices are good enough for some longer term outlook against contrary opinions on the Australian Dollar. However, do not discount the possibility of price pullback since the major trend is still bearish.

The commodity currency alongside with the Kiwi have now more than ever influenced by China risk events and data. This currency pair and its corresponding cross rate of the AUDJPY will still be in focus. Needless to say the attractive strategies that can be played with a controlled risk on position trading. Conservative as it maybe but still delivers the goods. For now the 0.8540 would remain the base price moving forward. Fresh position would be held for over a period of time considering 'Time, Exposure & Tolerance' levels is key to this trade plan & strategy. It is how would be willing to play over a period of time.

Meanwhile, the AUDJPY remains resilient @98.86 to this writing, that reflects it is decided to stay on the higher band of the prices. Since this is supported by the Aussie Dollar's ability to recover from the price decline.

DOW Cruising Rally

Not Just Forex: 

The DOW and S&P continues to cruise towards making new highs at the beginning of the 3rd quarter. Entering the 1st days of the week already have signified the market's real sentiments at a significant sacrificial lamb for the USD still declining and opening a window of opportunity for the rest of its peers to gain more ground.

As CABLE have overtaken as the lead currency pair, alongside with the AUD (AUSSIE), and the CHF (SWISS) taking their cue on the USD weakness. And making 20 Pence for every 1 British Pound traded in the market since we called it; at these price levels can only get better while the market last. Cautious play can only be advised at this time!

However, the real highlight is still focused on our Stock Portfolio heading towards a remarkable price rally nearing the previous call we have made for the DOW @17000 and the S&P @2000 is in the making. Since it is a short trading week, we would be taking our end of the 2nd quarter trading break. As mentioned any positions left would then be carried-over for the third (3rd) quarter but likewise still be monitoring price action from the upcoming data.

Have a good 4th of July every one and again...ONLY THE BEST FOR YOUR TRADES!

Insights: CABLE, GBPJPY, AUDUSD

Market conditions post ECB and FOMC have had countless price swings across currency market in both directions of the chart. Directing an overall USD's reaction into a decline coupled with mix market sentiments among some currency pairs have again stalled market movement. Although, CABLE's resiliency and strength during the USD price recovery for the past 6 weeks since May 2014 has remained in focus.  

The disappointing figures from the Euro-zone PMI manufacturing have likewise missed-out expectations, Germany and France doing the same have kept a lid on the Euro and stayed within a day's tight range below the 1.3600 levels. While CABLE stayed above the 1.7000 contrary to the USD slight recovery on its price reaching an 80.40 daily high and currently stable for now @80.35 basis point. However, by the middles of the week's report on Consumer confidence slightly expected to be favorable, alongside New Home Sales contrary to GDP#'s -1.8% expectations probably offset any favorable price reaction if GDP misses out wider than expected. Click here