Tuesday, March 14, 2006
Monday, March 13, 2006
USDJPY: has brought me face to face with my nemesis
USDJPY: can this pair be the ultimate gift to the alienated cognoscenti?
We know or have read about NZDJPY and AUDJPY and now recently, CADJPY -- but this is a new ballgame. Why? The downtrodden, written-off, despised, retrograde USD has risen from the dungeon and delivered a comeback, upstaging all heretofore stars, except for perhaps CAD, among the majors.
nemesis, the applicable definition here .... one that inflicts retribution or vengeance.
To me, this pair represents the foundation of what Forex is all about -- namely, a resting place for one's funds, wherein one earns a Return, directly proportional to the degree of leverage used. Capital gains are a bonus in this regard, as the primary motivation and underlying foundation of the Forex is "Carry" -- aka a comfortable, relaxed and enjoyable ride.
Depending on how much you go in with, you could earn more than what most working stiffs in America are slogging their assess off for -- Americans are masters at converting Equity into Debt, having no savings, living from paycheck to paycheck with a window of no more than 2 months before its Salvation Army time -- that 50k in equity financing, applied to USDJPY -- with leverage -- could give one of these working stiffs his ticket to eternal financial salvation.
But we gots to get the direction correct!
Amen!
That's why I'm urging all technicians not to be too flippant about their analysis -- give it careful consideration and deliberation.
This is the mother of all opportunities and we are sitting right at the threshold.
Somewhere between 122 and 101 there ought to be a clear message as to intent.
My call stands as-is but it is no mental picnic knowing that ID's analysis, which I respect more than any I do any other elliottician's, is dead against my call.
Am I destined to go down in ignominous defeat in the face of the opportunity of the decade?
We know or have read about NZDJPY and AUDJPY and now recently, CADJPY -- but this is a new ballgame. Why? The downtrodden, written-off, despised, retrograde USD has risen from the dungeon and delivered a comeback, upstaging all heretofore stars, except for perhaps CAD, among the majors.
nemesis, the applicable definition here .... one that inflicts retribution or vengeance.
To me, this pair represents the foundation of what Forex is all about -- namely, a resting place for one's funds, wherein one earns a Return, directly proportional to the degree of leverage used. Capital gains are a bonus in this regard, as the primary motivation and underlying foundation of the Forex is "Carry" -- aka a comfortable, relaxed and enjoyable ride.
Depending on how much you go in with, you could earn more than what most working stiffs in America are slogging their assess off for -- Americans are masters at converting Equity into Debt, having no savings, living from paycheck to paycheck with a window of no more than 2 months before its Salvation Army time -- that 50k in equity financing, applied to USDJPY -- with leverage -- could give one of these working stiffs his ticket to eternal financial salvation.
But we gots to get the direction correct!
Amen!
That's why I'm urging all technicians not to be too flippant about their analysis -- give it careful consideration and deliberation.
This is the mother of all opportunities and we are sitting right at the threshold.
Somewhere between 122 and 101 there ought to be a clear message as to intent.
My call stands as-is but it is no mental picnic knowing that ID's analysis, which I respect more than any I do any other elliottician's, is dead against my call.
Am I destined to go down in ignominous defeat in the face of the opportunity of the decade?
Sunday, March 12, 2006
See chart. Great video, nice work. The sound is OK too; who says it has to be perfect? It was clear sounding to me and all I have is dialup. Thanks ID.
Don't know if anybody even appreciates the fact that this gent is going out of his way to educate us and he's doing it for no money. That in itself, after my experience thus far in Forex, is ..... rarified RARE!
Upto 1995 everything is OK as even the alternates match reasonably well.
What comes thereafter makes me old and crippled.
But I'm happy. Why? Because Prechter is calling for wave V down and is therefore in ID's camp.
Therefore that is the last place I want to be. :) :)
Great difficulty accepting the 2 key waves as impulsive. Not for lack of trying; I gave them the benefit of the doubt every which way I could; but ultimately I cannot buy it!
(1) Cannot have a triangle in wave 2 position. Two locations where I see them. See chart.
(2) The non-EW monthly chart is goddamn BULLISH!
(3) Correction to 116-106 range highly likely and welcomed, but then we're going to 135, 150, 180 and maybe 260. The first sign of reversal and strength, I'm in with tight stops until the large triangle's upper trendline and 122 are taken out.
(4) If 100 breaks, Prechter will have earned the right not to be considered a contrary indicator no more.
Can see ID's point of view clearly, but I just simply cannot go along with it. I'll be forced to if the bottom trendline support of the triangle breaks convincingly.
Bottomline: I believe that USDJPY is the golden pair for the rest of this decade and is a carrytrade player's ultimate wish come true -- I could earn USD 40K per year in Interest alone. But to do this comfortably I've got to be right in my direction call, otherwise loss of capital will kill the carry quickly.
This is a dilemma and as usual I'm alone. Same shit, different day, hehehehe!!!
Friday, March 10, 2006
Tennis Anyone?
Idejan,
Thank you for the video, very nice!! I guess months from now we all will be sitting back, studying them charts and saying ”That’s what was going on”. Until then the hunt continues.
Late last year I was convinced that we were ending a 5th and headed north for a correction, and although price has headed north from the first of the year it has done so with reluctance. And while it has been hard for me to number some of the smaller degree 5 waves in some of the earlier price action, either motive or larger corrective zigzag, I’m now starting to think there’s more south to come.
Price has held again today on yet another sliding parallel from the prior daily fork, as long as this holds it’s making me think that more range trading is to come. Now wondering if we are in the final wave of an ABC correction from the end of last year.
Thinking that this is like a failed ‘C” wave triangle or perhaps a flag?( A bear's thoughs). If this view is correct we could have another test of the top the “c” followed by a test of the low “d” and then a brief run to “e” and then the bottom would fall out.
Just trying to stay a step or two ahead…..
Well for some reason I can’t add a picture again will edit when able…………problems solved
USDJPY: The fundamental aspect.
Its Price, Price, Price, but the Interest Rate scenario is tied very closely to investors' purse strings -- that's the reason I pay attention to monetary policy in Japan.
Another compelling reason is that the Yen dances to nobody's tune. It is one heck of a loner; ninjas, yakuzas, Mafia, gurus and everybody worth anything has tried to come up with some sort of correlation that would provide clues to how the Yen works. So far, zilch; a dead end.
With the dollar, you could look into bond yields, Libor differentials, Forward Rates, Fed funds Rate etc., to get some idea of what is going on. With CAD you look at the Toronto Stock Exchange for clues along with fund inflows and the CRB component of the Stock Exchange etc.--
But with the Yen, there's not a single thing that comes even close to giving a halfways decent clue.
What all players want to know now is this:
"Will the end of Quantitative Easing be followed quickly by the ending of the zero interest rate policy?
That's the ticket, guys.
Japan has flooded the universe with liquidity, & has been a main source of capital and savings for the world. Now that looks like it is going to change.
I have an answer to the dilemma and therfore one more key point in my ongoing decision whether to buy (long) USDJPY or not!
The Quantitative Easing policy did not begin in earnest until 2003, four years after interest rates were reduced to below 10bp in 1999 and two years after they fell to absolute zero in mid-2001. Thus a gradual reduction in bank reserves from the present ¥35 trillion to ¥15 trillion (where they were in 2001) or even ¥5 trillion where they were in 1999 would be perfectly compatible with zero or near-zero interest rates.
It is highly likely that BOJ will reduce liquidity while maintaining a zero Interest Rate policy for this decade.
There is a good reason for sticking with the zero interest rate policy.
Japan has a huge government deficit and a very high level of public debt relative to GDP. Thus when the economy gets strong enough to withstand a deflationary impact, the Japanese will want to hit it with fiscal rather than monetary tightening. Tax increases are already in preparation for 2007 or 2008 and to make sure that they can be implemented without causing a 1997-style economic disaster, Bank of Japan and Ministry of Finance officials have agreed that monetary policy should remain ultra-loose for the foreseeable future.
All the discussion about ending Quantitative Easing seems to have persuaded many investors that the zero rate policy is also about to be abandoned. The Japanese yield curve is now discounting a very aggressive increase in interest rates, with short rates expected to rise by 75 bps this year and 150 bps by the end of 2007.
I am stating that Interest Rates will remain under 50 basis points or so for the next few years.
I'm satisfied with my fundamental analysis of the situation and furthermore, one more point in its favor is that now the herd is going strongly towards rising Japan Interest Rates. I certainly don't want to go with them. The opposite is the more likely scenario, namely, rates will stay close to zero!
Another compelling reason is that the Yen dances to nobody's tune. It is one heck of a loner; ninjas, yakuzas, Mafia, gurus and everybody worth anything has tried to come up with some sort of correlation that would provide clues to how the Yen works. So far, zilch; a dead end.
With the dollar, you could look into bond yields, Libor differentials, Forward Rates, Fed funds Rate etc., to get some idea of what is going on. With CAD you look at the Toronto Stock Exchange for clues along with fund inflows and the CRB component of the Stock Exchange etc.--
But with the Yen, there's not a single thing that comes even close to giving a halfways decent clue.
What all players want to know now is this:
"Will the end of Quantitative Easing be followed quickly by the ending of the zero interest rate policy?
That's the ticket, guys.
Japan has flooded the universe with liquidity, & has been a main source of capital and savings for the world. Now that looks like it is going to change.
I have an answer to the dilemma and therfore one more key point in my ongoing decision whether to buy (long) USDJPY or not!
The Quantitative Easing policy did not begin in earnest until 2003, four years after interest rates were reduced to below 10bp in 1999 and two years after they fell to absolute zero in mid-2001. Thus a gradual reduction in bank reserves from the present ¥35 trillion to ¥15 trillion (where they were in 2001) or even ¥5 trillion where they were in 1999 would be perfectly compatible with zero or near-zero interest rates.
It is highly likely that BOJ will reduce liquidity while maintaining a zero Interest Rate policy for this decade.
There is a good reason for sticking with the zero interest rate policy.
Japan has a huge government deficit and a very high level of public debt relative to GDP. Thus when the economy gets strong enough to withstand a deflationary impact, the Japanese will want to hit it with fiscal rather than monetary tightening. Tax increases are already in preparation for 2007 or 2008 and to make sure that they can be implemented without causing a 1997-style economic disaster, Bank of Japan and Ministry of Finance officials have agreed that monetary policy should remain ultra-loose for the foreseeable future.
All the discussion about ending Quantitative Easing seems to have persuaded many investors that the zero rate policy is also about to be abandoned. The Japanese yield curve is now discounting a very aggressive increase in interest rates, with short rates expected to rise by 75 bps this year and 150 bps by the end of 2007.
I am stating that Interest Rates will remain under 50 basis points or so for the next few years.
I'm satisfied with my fundamental analysis of the situation and furthermore, one more point in its favor is that now the herd is going strongly towards rising Japan Interest Rates. I certainly don't want to go with them. The opposite is the more likely scenario, namely, rates will stay close to zero!
Divergence study is now complete! Thanks.
Wow! You took it even one step further than I was envisioning -- I had not even considered a divergence between 5th of (iii) and 5th of 3.
Man, I tell you, this is one heck of a top-notch class I'm fortunate to be in.
Its the basics that are popping out at me and all my failed purposes with EW are getting rekindled.
I believe that in a year or so, I'll be a force to reckon with.
Thanks buddy.
Man, I tell you, this is one heck of a top-notch class I'm fortunate to be in.
Its the basics that are popping out at me and all my failed purposes with EW are getting rekindled.
I believe that in a year or so, I'll be a force to reckon with.
Thanks buddy.
NEW EURUSD video analysis
I posted a new Video Analysis on EURUSD and you can find it by clicking on the link in the right sidebar.
While I was prepearing the files for publishing, uploading the files to the pages price made a strong spikes down, stil it can't be taken as a confirmation. I'd prefer this to clear up before it can be clear if we have a confirmation down or we can expect this to be still part of the correction.
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ID
While I was prepearing the files for publishing, uploading the files to the pages price made a strong spikes down, stil it can't be taken as a confirmation. I'd prefer this to clear up before it can be clear if we have a confirmation down or we can expect this to be still part of the correction.
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ID
Joseph: divergences in 3rds
This chart was prepared for that previous post, and I was confused when I saw your post today, since I was not aware I've missed posting it.
So here it is, and as you can see I agree with your observation about the divergences in 3rd waves, actualy as I wrote in previos post in my observation, 3 wave cycles are not producing divergence and any 5 wave cycle (which means not only IM) are giving divergence.
Divergences in the substructures are reflected too depending od the degree and the time frame you are observing.
I haven't done a study on this, but when I've mentioned observing patterns on RSI I was reffering to this.
I dont have MACD on my charts so I can't speak much about it but it is clear to me that you can't play divergences on their own, but reather use them for inforcement on price patterns.
Now Joseph, I became aware that there are questions I've missed answering, so if it's not too much of a trouble to you, could you please mail me all of the questions by mail so I can have them addressed one by one.
Dejan
Myth busting # 3 (contd) Fed funds Rate
How did the moron try to kill a bird?
He threw it off a mountain cliff !
-----------
See my earlier post on Fed funds Rate going way, way up into the clouds.
And what were the geniassssses saying then? 4.5, perhaps 4.75 tops and then we go down, down, down!
What are they saying now?
"Over the course of the current tightening cycle, many market participants have been repeatedly surprised by the magnitude and duration of the Federal Reserve’s action. Several times the market has gotten it into its collective head the Fed was done — including in the immediate aftermath of Hurricane Katrina, or the “one-and-done in 2006” sentiment — only to reverse itself later. Analysts are now forecasting additional hikes to the 5.00-5.50 percent range before this cycle is over."
Why can't a moron dial 911?
They can't find the 11 on the phone!
He threw it off a mountain cliff !
-----------
See my earlier post on Fed funds Rate going way, way up into the clouds.
And what were the geniassssses saying then? 4.5, perhaps 4.75 tops and then we go down, down, down!
What are they saying now?
"Over the course of the current tightening cycle, many market participants have been repeatedly surprised by the magnitude and duration of the Federal Reserve’s action. Several times the market has gotten it into its collective head the Fed was done — including in the immediate aftermath of Hurricane Katrina, or the “one-and-done in 2006” sentiment — only to reverse itself later. Analysts are now forecasting additional hikes to the 5.00-5.50 percent range before this cycle is over."
Why can't a moron dial 911?
They can't find the 11 on the phone!
Myth busting # 4: Trade Deficit & USD
If you mow your lawn and find a car, you're a redneck.
But a Moron? .... that's a whole different ballgame .....
Why did it take the moron an hour to eat breakfast?
Because the orange juice carton said, "Concentrate!"
How many times have I heard the dollar's problems blamed on the Trade Deficit? Hundreds of times ... and by every single major News org and TV station to boot.
Recent examples: (plucked from EWI site; I have my own charts on this subject but their's are superior, so I present it here instead of my own)
“The US trade data for January is due on Thursday and may trigger some selling if it draws attention to the structural problems facing the US economy.” (AP)
“With expectations for a wider-than-expected result in the US trade gap, there is enough scope for disappointment, making the dollar vulnerable.” (Forbes)
“The widening of the US trade deficit was a key factor behind the dollar’s three-year decline through the end of 2004 and currency analysts warn it may send the US currency falling again.” (Reuters)
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