Global Stocks Tsunami - Asian Trading Session as of 02.12.16

JPN225 Asian Trading Session
as of 02.12.16

@megatrade101- PRICE ALERT: watch & learn - Global Stocks Tsunami Brings Yen Repatriation Back as JPN225 trade Update: @14770 low in Asian session. 

Take away:
In addition Japan Finance Minister Taro Aso watching Yen's rapid appreciation that hinders BOJ monetary policy. Cautiously watch as we all have learned from previous experience that BOJ manages to pull some stops when it is most unexpected by the market.  And this is due to the fact that verbal intervention may have proven to be soft after coming from a holiday schedule.

Market Brief: Observations & Sentiments

Volatility is all over the market place! The resounding support to stabilize the markets in China have shown that the strong fist of the government is in control of the intervention to stop further bloodbath in the market. With a full swing price recovery from the fresh round of measures both China and Hong Kong are paced for a recovery. The intervention by China government and the cooperation from institutional firms maybe compared to a concerted effort of central bank intervention when markets are derailed from its normal course. 

There are certain concerns about these actions compared to a free-flowing price actions in the market, where market forces are working under certain conditions. However, when the general flow of investors are hysteria the most logical action a governing body is to control and contain the situation such as what happened to the market at the middle of the week's trading. The only valid reason is to allow investors confidence to get back into the market.   

Surprisingly, the timing of a computer glitch in the US Trading market have also provided further decline from the Dow Jones, but still leaving a triple digit decline at the close of the day's trading. Meanwhile, in the currency market; Risk Aversion benefits the Yen's appreciation as it touched the 120.40 levels and a subsequent correction by pulling back towards 121.30 to this writing.

The DXY reaching a 97.23 basis point high have made a slight corrective move lower,  well within its daily range and have not been affected even with the statements from the Fed. The market have been focused more on the Grexit and the China measures that have kept investors uncertain reactions whether to come or go with their respective trades. Although negative contagion still prevails in the market.

So where will traders and investors take the next cue from? Recommendation: Watch and Learn! A good Reference Guide is still the best approach to "Measure Price Action" on a decline and a rebound of prices after a fundamentally driven market by China & Greece. Where Price Action Analysis is the next best way to project the next market call.

Comments: Whew! Sure glad lady luck was still on our side since calling it from the end of the first quarter dark cloud formation and the discipline to take our regular trading break before all hell broke loose. Avoiding such headaches surely pays well. Our two (2) quarter earnings are even more than enough! Knowing when to trade and not to sure does help even for experienced traders as well.

See you all after our break.
ONLY THE BEST FOR YOUR TRADES!. TRADE WITH CAUTION.

CCY Corner - EURGBP XRate & DXY

The Euro's decline continues as the ECB reports on QE have already been confirmed with an expected boost with a total amount of USD1.2T or an equivalent of 60B Euros monthly until September 2016. This has been the driving force of the markets where the highlights of market moving events have been dominated by central bank moves. A list of CBs monetary policies entering the 2015 is seen as a follow through were efforts of central bank decisions to control EU deflation or tame global inflation played well. 

Prices in the foreign currency market have been driven by these fundamentals more than a real free-flowing market. As we have mentioned that these are exceptional times with the US Dollar taking the lead currency pair in value among all of its global counter currency pairs. 

With that said, the choice of the EURGBP Xrate for the start of the year have seen a gradual decline because of the market's critical price levels and tensions created from the ECB QE program. And much to these Central bank moves; China's market talk of a similar move from the SNB would eventually curve a niche to stay competitive in value and keeping in check with global trade against declining foreign currency value. Somehow CCY value would have to find an equilibrium levels until such time when the USD would have to adjust from its current strong value.

CCY Corner - EURGBP XRate

Insight: Behind CB Rate Decisions

The newly installed US Fed Chairwoman of the Federal Reserve Janet Yellen, have stamped her marked on the market by mentioning the Fed's guidance on its decision of rate increases within 6 months. And moving forward within 2015 after delivering her statements on the FOMC meeting that prompted a strong rally for the US DOLLAR

A different stance was likewise stated by the Bank of Canada governor Stephen Poloz, not to rule out the possibility of a rate cute, have driven the Loonie lower after maintaining its higher price level as compared to where the USD was trading before the FOMC statement. While the previous weeks, the BOE have emphasized a rate increase that also supported the British Pound to its higher levels before the meeting after the same move was made when the Reserve Bank of New Zealand also raised rates.

Insight: Behind CB Rate Decisions

On Currency Wars:

The risk of Politicizing Forex rates

The free market base economy has been dominated by the dynamics of Political policy makers from the three (3) major markets. With Asia having two of the largest economy driving the present market conditions like China & Japan combined represents 21% of the world's GDP.
And the recent actions taken by Japan's Shinzo Abe pursuit of national self-interest to be able to pave the way for the recovery of the economy; has asked the BOJ for a 2% inflation target figure that would result into a stronger and aggressive stance for more monetary easing.
As a matter of record, Japan has come from a trade surplus to a trade deficit,

Market Analysis: SRO 10.9

Indeed, the spill-over reaction from last Friday's unemployment report have had a more direct impact with the USDx opening with a gap Monday at the 79.50 basis point versus the closing price of 79.30.

Undoubtedly small, but the reaction made across the board where unexpectedly stronger with the direct effect seen more with the Sterling Pound plunging to it lowest price of 1.6000 as of this writing. This added on top of the BoE unchanged stance with their monetary policies on Quantitative easing regarding their Asset Purchases that remains the same.

Sequential Trade plan & execution:

This move affected the GBPJPY cross rates retreating down to its previous support price at the 125.50 and registering a low extension at the 125.10. However, this was undoubtedly been expected based on our Market view dated the 2nd of October; as Friday's closing lower from the high alongside with the GBPUSD have indicated an exhaustive price action when the unemployment data was released. Which prompted us to settle before the closing the two (2) GBPJPY long position still above the average price entry with a net positive end-result on the way lower. Which still was an excellent strategy while leaving the AUDUSD well within it target levels to be able to maximize the market's potential heading down to the 1.0150 target objective. It only takes one (1) very good trade to be up every month spread over a well risk defined trade plan.

While the AUDUSD have indded achieve this objective registering a low at the 1.0148 at the opening of this trading week. And is currently on a corrective mode working at the 1.0203 as of this writing. This would prompt us to consider liquidation of the short-position of 1.0409 before the closing of today's North American trading sessions that would provide us a substantial net gain of over 200 pips the least. Although, the Aussie still remains bearish; following our trade plan would make more sense in doing so while watching for the next probable set-up. 

Market Behavior:

Tug of War 3 - ECB vs. FED or Bundesbank

Is Mario Draghi - the new sheriff in town?

The strong statement by the ECB President-Mario Draghi has placed him to our opinion, "as the new sheriff in town!" The Tug of war between European government policy makers has been dragging on for quite sometime with the unresolved crisis between the other neighboring countries in Europe has had a nibbling effect on the global economy. But for now those statements made have given some relief for the Euro in managing to gain some ground from its initial low price of 1.2041, as compared to the 1.1875 dated last June of 2010 and in November of 2005 were it touched a low at 1.1640. Which we believe that the ECB would not allow such price levels to go any further. 

Although, a weak Euro is as constructive as it can get for manufacturing sector, which is extremely good for Germany and France, as well as Italy for that matter. Especially in these critical times where exports are encouraged to spur-up growth for Italy. Nonetheless, Draghi's have caught a lot of traders and investors by surprise and is subsequently being challenge to show what he really has in store. Meaning, what else would he do with the up coming meetings by both the ECB and the Fed this week.

Please continue.....

Battle of the Decade!

Let's get ready to crumble*!

Trading the forex market for over 2 and a half decades have never been as dramatic as a concerted central bank intervention ever stand-out in the mainstream even before the battle have started.

The aim of stabilizing a global financial market in an orderly fashion has always been the main objective, making certain that fresh cash liquidity would always be present in the market place. This was indeed a learning lesson from the credit crunch during the Lehman Brothers debacle and the Housing bubble. And would serve as the one of the most important strategy being applied today in a worst case scenario.

Weighing the factors of a Greek election, an emergency meeting of Finance ministers from the G7 nations could be held on Monday / Tuesday depending on the severity of the market response following this weekend’s elections were the highlights in the news wire. Not to mention the readiness between the Federal Reserve, and the ECB in providing the liquidity infusion needed in any eventuality and an IMF sanction for a Japanese intervention efforts are all being taken up in the unfortunate event of a financial meltdown. And how often do we get the real chance of being in one is another thing to think about. One of the most memorable events that occurred was the concerted central bank intervention, please refer to:

http://megatrade101.com/megatrade101/fundamental/383-finally-a-concerted-central-bank-action

With that said, the financial big wigs are in it to win it! With their arsenal of leverage trading and the ability of a High frequency trading would make things worst or better than what it is today. As more low to high latency trading software and hardware are being built while main street investors try to catch the tail of the storm in any given market timing. Meanwhile, the law of supply and demand in the free market arena has never been so tightly contested on who has the better trading system's analysis.

And this is the addition on top of the Political turmoil that has disrupted the behavior, market sentiments and volumes of transactions of investors/traders in the financial market which would be harder to keep track of in a rapidly growing market volatility. Systems failure, delays and price transparency would be re-tested time and again. Although, market strategies would be well in place and better-off for those who apply a stringent and plausible trade position that could weather the storm whenever the case may be. Thus, permitting us to outlive this would-be turmoil and cultivate it in a lucrative manner at the end of the day is the best.

*crumble: British and Irish (European origin) that can be made into a sweet or savoury version.