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Archive for November, 2007

georgio-stoev.jpg     As the ECB is due to announce its decision on interest rates, the central bankers face on of the biggest dilemmas. To do it or not?

    On one side is the pro-inflation factor of the growing petrol prices, as the inflation in the eurozone reached 3% in the November. On the other, the concern of the credit crunch on the other side of the Atlantic spreading over in Europe and thus threatening the economic growth. Granted, European officials expect slower growth next year.

    The credit crisis, the petrol prices and the strong euro are seen to moderate this expansion.

    Therefore some economists are calling for the central bank to lower rates. They also indicate that the Fed has done it twice and it’s about to do it again in December. The fear is the USD will move lower as a result, thus, further increasing the chaotic movement of the currency in the market. This of course, may lead to a further slow down for the exporting economies of the EU.

– Georgio Stoev

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    Sometimes it gets ridiculous how many lines you draw on a chart. My colleague Blake Young, for example, likes to draw so many lines on his charts that he’s sure to always be right about support and resistance!

    So it goes with me for the kiwi right now. I couldn’t resist drawing lines everywhere. In fact, I even just removed some because I had too many.

    The pair is scrunching into a tight corner where lines meet. The interesting thing is, it also looks like it could be heads-and-shoulders’ish with the neckline at the 50% Fibonacci level. That’s all Greek for “it could really go down”. We’ve talked about this on the GBP/JPY for a while. The consolidation according to the lines favors an upward move, but it looks so wimpy (I don’t see a great triangle, for example). If it turns into a head and shoulders, well, there is a wonderful pattern! And it would break thru these resistance lines, too.

    For now I just have to shrug my shoulders. We react to the market; I’m not going to predict it too much. But those are my lines as drawn on the battlefield…

kiwi.jpg

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The pair definitively jabbed thru its double top support a few days ago. Yes its a double top, be ye not fooled by its hunchbackedness. The question is whether to get in short now (if you didn’t already).

It feels like it’s gone a bit far for a retest of old support, but then, it does make long moves without pausing. I think it may try. That means I would be inclined to wait to get in until it’s caught its breath and get in as it bounces lower.  I’m leery about it continuing down at present because 1) it’s super oversold on the studies 2) it’s at the 200 day MA (light, thick red line where the price is now).

Don’t go running off and using the 200 day MA on everything if you already have a system you’re trying, remember these are examples of how to trade and use things. The 200 day is watched by lots of folks. It’s technically significant and is almost always a big support/resistance. So let’s watch and see if the price rebounds up now, bounces down and a breach in the 200 MA with less oversoldness comes along. Still plenty of room to run downward (to at least the red oval) – the aussie was not helped by a lower high on GLD a couple days ago.

audnzd.jpg

 

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I was not able to load this up yesterday, so here it is late:

Today on InvestoolsFX Audio:

New intro music, review of the $VIX=USD/JPY correlation. Don’t be fooled, institutional commentary and the ever-talented Pat Mullaly breaking down more psychological techniques to improve the bottom line. Successful Trading.

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istock_000003943762xsmall.jpg One of you good FX students, Mona, gave me permission to share this with everyone: so here it is thrown out into cyberspace!

The question was:

    On your blog article yesterday on the USD/JPY you were using a slow stoch 14-3. What is the difference between that and a full stoch 14-6-6? That is what I have been using, on hourly and daily charts – but temporarily switched to the slow to see if it offered me any more clarity

    I answered this way: Theoretically 🙂 there is a difference. The full has one additional item, a smoothing factor, which enables one to do more adjustments to the indicator. That’s great if you’re s super-stochastics scholar and have been using it for a long time, long enough to really understand how to approach that and where it is advantageous.

    The reality is that the two are actually dang similar. They can be used interchangeably so see it as just “either/or”. What’s important, as always, is to stick with one or the other long enough to let experience dictate whether you should tweak it – you can feel how it helps. If you tweak it on the fly outside the context of that experience-born intuition, then you somewhat reset the learning curve in “getting good” at your system because you can see the difference but can’t feel what that does for you.

    Please chip in if you are a Stochastics expert and have anything to add.

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That dollar sure is a turkey

    The poor buck, here’s a funny cartoon one of you sent one of us and floated among us in email, courtesy of the commentary section of the Christian Science Monitor:

csmonitor.jpg

    Speaking of, my adventurous wife and I spent hours last night drooling over our next vacation; we ran into a website (homeexchange.com) that hooks people up in exchanging their homes around the world. So only pay airfare and don’t pay for hotel fare. The problem is that blasted dollar – some American tourist abroad I am, it’s horrible timing for us to run around the globe spending money..

    Oh, and check out the guy who seriously thought he could cash a bogus “million dollar bill” … one of those stupid criminal stories.

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don_kohn.jpg    The Fed (VP Donald Kohn) said today that they would be using

 

“(these uncertainties require) flexible and pragmatic policymaking — nimble is the adjective I used a few weeks ago.”

and carry trades got a shot in the arm as stocks jumped – no matter that durable goods and housing data came in wimpy, all is well apparently(!)

    The test will be if good fundamental (economic) news comes in to support this. Investors shall not live on rate cuts alone.

    Read the whole thing here if you are bored tonight and can’t sleep.

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