Hello All !
Back when I was first starting out and only trading futures (those were the days),
I allways looked for patterns and one of my favorite patterns was the Head-and-Shoulders formation.
It was and still is one of the most misused trading patterns and very often, while forming
it is signaling a consolidation, a 4th wave, an "expanded flat" or something of the sort
and UNTIL H/S is CONFIRMED, very often it's not a top at all.
By confirmed I mean a clear BREAK of the neckline and then preferably,
a re-test following the break which fails to resume the prior trend and then follows thru.
Using the daily closes instead of the daily extremes to draw the neckline was another thing
that I found to be a useful filter against intraday market noise.
Without the confimation, many times I found myself thinking,
".... Oooweee, Head and Shoulders !!!.... Here we go !!! "
only to see the left shoulder broken, the prior top challenged, sometimes taken out and on to
a new high for the move. I found that when the "B" wave of an "A-B-C correction" was violated,
usually that was a good indication that the H/S pattern was just a consolidation
and was ready to resume it's previous trend. I realise that some of that is
a bit too Elliot for some of you, but, it's what I used, often still do,
and it worked for me and I find it easier to explain in those terms. SO, that's that.
Now, having said all that, I would like to address the Pound Yen.
If I could actually speak to the Pound Yen, I would tell her,
"...I love you... I could have never done this without you...You mean the world to me...
everything I've come to know about forex, I owe it to you, baby..You're the greatest !!! "
I would also tell her, " You B**ch, I hate you !!! I've never seen anything worse than pound/yen...
You give me money and then take it back and give it to someone else....
What kind of monster was your mother ? Did I mention I HATE YOU ?
Anyway, I've attached a image of what MIGHT BE a "you know what".
I've been looking at this develop for nearly a year now and although fundamentally the
carry-trade is still the main game in town, an unwind is likely to occur.
Of course, it would be an excellent opportunity to buy it again and ride it back up there,
but, I'd still want to see the 220's decisively broken with closing prices (5pm est) confiming the move.
Otherwise, even with the BOE in easing mode, the BOJ eventually raising rates after 6 years
of ZIRP, the Bps spread is still hundreds of basis points and will be exploited.
Even if BOE eases down to say, 5.00% or even 4 and 1/2 and Japan goes 100-150 bps more,
the yield is still considerable. So the carry trade will not die, it will simply evolve.
I'd welcome a 2000 pip drop in G/J. I'd buy it with both hands.
If we see 200 yen to the pound, I wanna own it. 285/300 by the end of the decade.
So here's a chart. It's worth every penny you paid for it. :-)
Back when I was first starting out and only trading futures (those were the days),
I allways looked for patterns and one of my favorite patterns was the Head-and-Shoulders formation.
It was and still is one of the most misused trading patterns and very often, while forming
it is signaling a consolidation, a 4th wave, an "expanded flat" or something of the sort
and UNTIL H/S is CONFIRMED, very often it's not a top at all.
By confirmed I mean a clear BREAK of the neckline and then preferably,
a re-test following the break which fails to resume the prior trend and then follows thru.
Using the daily closes instead of the daily extremes to draw the neckline was another thing
that I found to be a useful filter against intraday market noise.
Without the confimation, many times I found myself thinking,
".... Oooweee, Head and Shoulders !!!.... Here we go !!! "
only to see the left shoulder broken, the prior top challenged, sometimes taken out and on to
a new high for the move. I found that when the "B" wave of an "A-B-C correction" was violated,
usually that was a good indication that the H/S pattern was just a consolidation
and was ready to resume it's previous trend. I realise that some of that is
a bit too Elliot for some of you, but, it's what I used, often still do,
and it worked for me and I find it easier to explain in those terms. SO, that's that.
Now, having said all that, I would like to address the Pound Yen.
If I could actually speak to the Pound Yen, I would tell her,
"...I love you... I could have never done this without you...You mean the world to me...
everything I've come to know about forex, I owe it to you, baby..You're the greatest !!! "
I would also tell her, " You B**ch, I hate you !!! I've never seen anything worse than pound/yen...
You give me money and then take it back and give it to someone else....
What kind of monster was your mother ? Did I mention I HATE YOU ?
Anyway, I've attached a image of what MIGHT BE a "you know what".
I've been looking at this develop for nearly a year now and although fundamentally the
carry-trade is still the main game in town, an unwind is likely to occur.
Of course, it would be an excellent opportunity to buy it again and ride it back up there,
but, I'd still want to see the 220's decisively broken with closing prices (5pm est) confiming the move.
Otherwise, even with the BOE in easing mode, the BOJ eventually raising rates after 6 years
of ZIRP, the Bps spread is still hundreds of basis points and will be exploited.
Even if BOE eases down to say, 5.00% or even 4 and 1/2 and Japan goes 100-150 bps more,
the yield is still considerable. So the carry trade will not die, it will simply evolve.
I'd welcome a 2000 pip drop in G/J. I'd buy it with both hands.
If we see 200 yen to the pound, I wanna own it. 285/300 by the end of the decade.
So here's a chart. It's worth every penny you paid for it. :-)