GU, GJ and EU Analysis Thread

Good day to you,

Crisp, Clean. Good trading!

Regards

Much the same as your good self. Of course, it is now a question of patience.

Okay, have another evening in a hotel, and feel the itch to make comment upon US debt held by China. Or the football - a fan of rugby, really.

Afternoon/evening All,

Some very nice analysis posted today..

Had a good upmove eventually on both EU and GU today....I’m attaching a post outlining a EU trade I took today...well the only trade I took. Sat the GU move out due to being in heavier than normal on EU and not wanting to compromise MM.

This is more to outline how Vol spread analysis can be used for those unfamiliar with it.

Hourly chart shows Low vol churn candle at 4am during Asia...This indicates supply drying out and demand coming in. A good sign the retrace is coming to an end....We approach support at 2579/2563 during London open and form a series of hourly dojis....

11am we get a 'climax up bar' which indicates the start of an up trend when it occurs at the bottom of a down move and vice versa...the climax up bar is showing volume and demand entering at 2563 support....There was a nice pullback to 2563 support which was the entry point with a stop 20pips below the low of the climax upbar.

3pm candle we have another hourly climax up bar which is the cue to exit at 2636.

entries 2567, 2580 closed at 2636 for 105pip

Notice how we dropped straight after....not the end of the overall upmove by any means but exit at the hourly close was a good idea if your scalping....VSA does not always work a smooth as this but it is excellent for early indications at what the market may do.

Hope some find that helpful

keep the post coming

Stocky

Good day to you,

Always interested and reading your fundamental analysis and comments. If you have the time, please post.

Yip, Soccer Wold Cup coming to an end here in good old ZA.. We then start the Tri-nations.. UP THE BOKS!

Have a good evening

Regards

some of them arrows werent very clear so here it goes again....

clear as mud I here you say...haha

Stocky

Good day to you, Stocky

Good trade!

I will be studying this post for some time and will do a little investigation.. You know your stuff. Thank you for the full explanation and for the time and effort you put into your posts in terms of detail and scenario.

Top quality

Have a good one

Regards

Hi Tau,

thank you for your kind words once again....have a good evening....im done for the day....football next

oh and well done on the trading result over the last 2 day...nice work!! keep it up!

Stocky

Currently drafting comment, but do we have triple top on GU on 4hr, triple/quadruple bottom on UC over extended 4hr and major support zone, and triple bottom on UJ 4hr forming?

as a pre match aside from the Iberial Peninsular.....potential is a small comment.....and further comments during the next couple of hours will have a redish / yellowish bias.....as long as the vibrations from the arial barrage by certain northern neighbours dont influence my ability to hot my keyboard....

PS: last long just closed in an euphporic pre kick off up thrust with € dragging a reluctant cable behind...

I am trying to ignore correlations and charts as much as possible – it will be the death of this post – and just think about what should happen.

This morning it was announced by the Chinese State Administration of Foreign Exchange (SAFE) that, ‘Gold cannot become China's main channel for foreign exchange reserve investment." Hmm, if that be the case, why are you buying so much of it? Is it because you fear the decline in the Dollar – of which you hold some $2477 billion – and so need to diversify your portfolio? Or simply, to cover your back when paper currency is worth more as pulp to insulate the walls during winter, than to buy the turnip from the farmer for the evening meal’s main dish of soup? And while I am again on my high horse, hey, Mr. President, what’s all this about China holding only $900 billion? Come on, which one of you is right… I fear it is the Chinese, and you are not letting on about the true figure, whilst dumping gold onto the market in order to shore up the Dollar in order to appease Beijing? A buyer that is probably looking at that pile of Dollars in their vault, and wondering if it will become more valuable in the future if turned into paper lanterns which are then sold back to the West at a profit.

Moving on, can someone please tell me how we go from recent high in gold and equities a week or so ago, and then as equities drop off a rock, so, too, does gold? That is, at such at uncertain juncture in the direction of the next six months, double dip rumours, gradual realization by the public that our political masters are as inept as first considered, and generally, global fears over holding stocks, gold hasn’t shot through the roof? As I have commented upon before, you’ve more chance of getting hold of the shiny stuff if you pan for it in a river. And yet the charts would tell us that it is coming into supply? Hmm…

Okay, having read an article on one of the gold dealer websites, I understand that the Bank for International Settlements (BIS) have just received a record volume of gold from Central Banks – assumed to be European in nature – to be used as gold swap currency. This gets a little more alarming, as it is apparently the first such swap since the 1970s – anybody remember those times of recession and austerity – and represents, as just noted, the largest ever swap, at 346 tonnes.

Now, this is no different from going to a pawnbroker, as under the swap agreement, the BIS get to keep the gold if the borrower fails to pay back an agreed amount. It is essentially a loan; one that has raised a reported $14 billion. Come again, only that much was raised for, if it is European Central Banks, a collection of entities that need a whole lot more than that? In addition to this, under the terms of the BIS gold swaps, if the borrower goes bust, they, quite obviously, do not see any gold returned. Gulp!

The Financial Times states; “According to monthly data from the International Monetary Fund, the swaps have surged since January, when the Greek debt crisis erupted.” The BIS affirms that no such swaps occurred in 2009.

This recent gold dump on the market, and comments by the Chinese that I believe are only delivered in order to steady their own positions of foreign currency holding, can account for the recent drop in the price of gold; but, this supply is surely going to be bought pretty damn quickly.

SAFE do state that "Gold has high international approval, and its store of value function is good." However, SAFE also assert: "…gold cannot become China's main channel for foreign exchange reserve investment." Comforting words, perhaps, but China’s national gold reserves are approximately 1054 tonnes. Apparently unchanged from a 75% increase reported in April 2009. SAFE maintain that in the event of gold perhaps doubling in value, China could only put $300-400 million of its foreign exchange reserves into the shiny stuff. Hmm, not sure this is not just verbal placation of those taking an interest in their growing reserves. SAFE also mention that global mining capacity stands at just 2400 tonnes, and so limits large global investment capacity. Not sure about that cocker… if something is limited in supply, and more and more people want it, the price will rise. It’s called real-world supply and demand. The interesting comment from SAFE at this point is: "If we buy up massive quantities of gold, it would definitely push the international gold price higher, which would harm the domestic consumer." Ah, and it is why private Chinese citizens have purchased 1659 tonnes since 1994. Basically, trying to get hold of as much of a sure thing as they can. And then SAFE make the comment: “We hope the U.S. take responsible policy measures to fully consider the budget deficit pressures and inflation risks.” In other words, get your house in order pretty quick, or we might have to bring out the whip.

Now, this is the second time this week that SAFE have seen fit to discuss China’s foreign reserves. Tuesday’s comment was that China had kept it foreign reserves ‘generally safe’ during the recent fiscal calamities around the world. What do you mean, generally? I’m generally a placid, easy-going chap who likes wine, one woman, and song. However, I am prone to being a malcontent about certain issues – as readers here will know – and so as the adverb implies, can sometimes veer from my general behaviour.

So what we have is China at least twice in one week saying that there is no need to panic about debt – generally – and the other side saying the debt is not as great as those owed it, say it is. This is not the first time this commentator is confused…

Perhaps we will be saved when China – and Saudi Arabia, another recently exposed large buyer of gold as of late – realize that once they own the gold, we will have nothing left to buy from them with, and so it will pretty useless to take away what is fast becoming the only stable ‘currency’ that the West posses. Well, when I say West, I’m not sure where, exactly. As far as I can ascertain, no US President has entered Fort Knox for something like 50 years, and no reserves audit is reliably corroborated.

The FED may say they have X amount, but for all we know, there might only be a single coin left, on the left in the back corner…

Good day to you,

This makes for very interesting reading. Thank you for taking so much of your valuable time to have shared these numbers and thoughts. I thoroughly enjoy your writing style and this was both very informative as well as refreshing.

Thank you again.

Regards

Valuable time... this week finds me on site during the day, and then stuck in a hotel during the evenings. So, it is a case of after work, losing a hour in the gym, and then having time on my hands to study editorial.

It could be worse... I could be unemployed.

Looking forward to the weekend - return to European sun, wife and hopefully, a realized move in the EU short taken earlier. Yep, I'm sucking them in and riding a touch of drawdown this morning as I check the charts prior to going to work.

PS. Happy to see your analysis back on a forum that I frequent.

Good day to you,

Closed my previous short taken on GU. I am now placing a small long here @ 1.5184. The angle of the PA looks like we may see 1.5220. Should we gain momentum, we may even continue to 1.5320 area by tomorrow?!

Will keep an eye on the weekly opening price @ 1.5203 - as well as yesterdays high @ 1.5217. Will cut this if we break back below the 50% line of this week @ 1.5153.



Regards

Good day to you,

For those trading Metatrader Platform, I attach the following indicator. This is an excellent tool to show you levels of importance. These are factual and correct. To me, better than the general pivot type indicators. Therewith a list of the levels given on this screenshot. I have numbered the chart, and the explanations are given below:

1) Here we have 2 levels paired - The high of last week and the Tuesday high.
2) Yesterday's high - also indicated as a strong trendline
3) The weekly open
4) Today's opening price ( this in itself is a nice level to watch - price below may indicate bearishness - price above may indicate bullishness)
5) The 50% line of the week's PA - this should be similar to the weekly pivot.
6) Tuesday's closing price
7) Monday's closing price
8) The high of last month
9) Tuesday's low - also indicated as a strong trendline.

2) and 9) combined forms a sideways channel.

The indicator will give you this information when you move your mouse over these lines. When the indicator is installed, you need to put all " true" lines under the " input" tab, to false.

Hope this can add come value

Regards

I joined you with a small long, to be closed before LO when I have to leave for the airport. Nice to go with a few extra pips banked....http://cdn.forexfactory.com/images/icons/icon12.gif

Good day to you,

Closed for +50. I need to leave now to go up the coast. Can not monitor. Depending on time, I may not be able to trade for the rest of the day.

Wish you all success.

Regards

- Great!

Regards

Daily secondary channel resistace has been broken...we still need to close above for today to confirm break. A pullback to 110.86 support and then 113.15 is next target.

Stocky

GU is approaching yesterdays point of control...5138....would expect us to slow down or bounce around here.

Stocky

EJ broke out of its down channel as EU broke to the upside. Didnt quite make it down to 110.86 but strong support was found at the daily R1.....Plenty of momentum behind this one...

VSA used for entry on 10min TF...

12.10 candle was a high vol churn candle at R1 support...shows demand coming in.

1pm candle.... climax up bar shows volume coming in on buying pressure..

1.20pm candle.... downward trendline breaks and price pulls back to old resistance...buy order position executed at 111.59 for exit at 112.40...81pips

There was a 2nd climax bar at 1.30pm and this could also of been used for entry if you wanted to be more cautious...key thing here is identify volume and momentum entering the market.

Reason for exit is this break is induced by the EU move in my eyes...although my target was 113.15 I exited when I seen voume drying up at 1.27 on EU....this is strong resistance area for EU of the weekly...a strong pullback could see the EJ trade turning also...

EJ is attemping a retrace at the moment...R2 area would be a decent point to look for entry providing EU start showing increasing volume on the up bars around 1.27....or wait for the break before entry.

Stocky