GU, GJ and EU Analysis Thread

Thanks Germany - what is it, you had to make yourself feel good today with the figures after losing last night?

Pipped out for 50, Sl 10 shy of the triple zero level. Yes, should have pushed the stop a little in view of this, but stuck with a 50 SL.

Wish I'd trailed this one when taken. Could have made around a 100 pips.

Right, next trade. Looking at a short on EY

And yes, still familiarizing myself with VSA...

Christine Lagarde, French finance minister, stressed today: "The criteria have specifically included an element that foresees a degradation of the situation of some states so as to push the hypothetical conditions to the extreme,"

‘A lie with a purpose is one of the worst kind, and the most profitable.’ Finley Peter Dunne

Baby, I dig your panache, and think you're rather chic, but you can't add for s**t, and you have abdicated your moral responsibility to the tax payers of Europe.

Good day to you,

Just a general question for the more astute traders.

There is normally quite good correlation between these pairs. Looking at my 30 min charts, theres something up... as EUR/USD is looking long, but so does USD/CHF.

What's up with that?

Any ideas?

Regards

I think people are expecting the Euro to break out of this rising wedge and the Swissie to go bullish off 1.05 but I think it could be hanging in the balance because the Swissie is making lower highs on the weekly and falling very fast - and could be on the way to parity (and beyond).

Good day to you,

Thank you for your viewpoint. Very valid observation. I personally think the Swissy has found a temporary bottom and we may see a decent retrace there.

My weekly chart on Swissy tells me this is a good area for a long, going into August / Sept.:nerd:

Thank you again for taking the time.

Regards to you

A few GU charts just to outline the mass of resistance we are facing just above the 5240 level. There are numerous daily and weekly TL's along with monthly/weekly horizontal support zones.

We have a monthly Inside bar setup which has 5315 as the resistance zone. If we trade as high as that the break may initiate the momentum and volume that will be needed to pass the various resistance running upto 5471.

link to insde bar setup chart:
http://www.forexfactory.com/showpost...&postcount=106

Looking at the daily candles we can see the 1st July was a climax up bar often seen at the top of an uptrend...this shows an attempt to push prices up where hidden selling can take place...the fact that the next daily candle is a high volume churn bar indicating supply entering the market this combination is a classic topping pattern.... I wouldn’t jump in short of the back of that pattern but instead wait for the market to become exhausted by showing a series of low volume tests...5th July was a low vol down bar which indicates the market may try and push higher....we then form a 2 higher lows but fail to make a higher highs on the daily and break 5240 res...today’s candle seems to be a low volume test in the making. In theory with the VSA signals the market dropping from here is quite likely BUT this is where I would expect market makers to be getting involved...they have the ability to push us through this resistance zone and it wouldn’t surprise me if they did that just as the entire market is shorting...That would play out the break of the monthly inside bar and leave 5780 and 1.60 as medium term targets.....patience on entry will probably be key around here....Im still out of any medium long term positions.

Stocky

EDIT: 3rd chart should say HL's on dojis not HH's ...sorry

Thank you. I am sure you are right. I am also sure you have seen this chart?

Stocky I have to post again to thank you for your observations on cable which I have read and (mostly) understood. Anything I add may sound glib but who cares? Call me glib!

We're in a downtrend, there's no doubt there. Longs are out and shorts are very annoyed by the false break up July 1st which you mentioned leaving us with 6 indecision days. However, the H4 chart is showing some consolidation around 1.5175 and a substantial break out is possible. I don't trust this pair with break outs but if I see a clean close on the H4 below 1.5090 then I would consider looking to add shorts. 1.5230 is the level I see for the contrarians.

One question I would like answered is why this pair lost its loose correlation with Dow in January and if the correlation is to return, is cable going to rise to correct it or is the Dow going to fall massively?

Hi Mike,

Sorry for the delay...been overseaing a GU scalp.

Glad you found the daily GU outlook helpful.....As per your question cable loosing its correlation with the Dow....

answer: I don’t think there is anyone specific reason the correlation was lost but more a combination of market fundamentals and extreme economic scenario’s....Jan 09 was the point at which GU took a real beating and was the beginning of a 1200 pip drop outside its 9 monthly daily channel, I don’t think the dow was able to keep up with it under a confused market situation. With QE dept looming over us and unemployment still rising GU was being sold....On the other hand in America although there debt is alot higher a series of better than expected (exaggerated)) non farm payrolls etc may have caused investors to come out of fixed income assets and back into stocks causing the Dow to rise temporarily.

The dow rose during feb to may as GU dropped....since may the dow ahs been making LL's and LH's so the correlation is returning although not as strong as it previously was...I have th eDow rising through July which ties in with GU.

I tend to use Eurostoxx, Dax and S&P500 as inverse correlations when trading Bund Futures...correlation was even weak with these during the mentioned period....

I use the negative and positive correlations until they stop working.

hope some of that explains my thoughts on the matter.

Stocky

I think a little caution is required for the next week or so, as we have the European bank stress tests - all know my appreciation upon this - and also, earnings for Goldman Sachs. The latter must surely be sending jitters around the markets:

http://www.telegraph.co.uk/finance/n...-forecast.html

Just having a quick read of the headlines for the FTSE performance, ‘best week so far this year’, ‘confidence is back’, ‘coalition confidence’ and so on and so on.

Erm, why has some $35 billion been pushed into cash funds last week by hedge funds? Hmm, perhaps because of the situation in Europe, American deficits' predictions, Chinese tremors regarding its growth predictions. Other intentions aside, I think this time, these boys know a major correction is on the way, and so pulled out of equity towards the end of last week. Where will they go, I think gold; and I also think this nonsense capping of price will be ended, and we will see the shiny stuff rocket.

It is no wonder that the Chinese want everyone to think that they have enough gold. It put’s everyone off buying the stuff, and thus allows China to buy at a pace that does not raise the price too much, nor increase investor interest in the commodity, as everyone else thinks it is not the safe haven it, in my opinion, quite obviously, is.

Good day to you all,

Looking at where we are on GU - Trading in a sideways channel for the last week. The "weakness" I mentioned is still present on the 4hr, but time is needed to see if this is more substantial / sustainable that what we saw so far.

I am of the opinion that it just may be...

Chart one shows the " channel" we have been in. A pullback should happen during the early part of Monday trading - back to 1.5126 ( to test the high of last month) or to 1.5100 ( Thursday past low / round number). I believe we will then see an attempt to head lower - even to test 1.4943 ( July opening price).

Chart two shows the strength of the move up since 11 June and for the first time now, there is a sign of reversal. The key to this will be the strength of the pullback north - to come on Monday. Should the above numbers mentioned provide the block, we may well be on our way down for a while....

Patience - as mentioned by some others, will be key.

Just my opinion.

Regards

Hi All,

I was wondering as I read through copy today and reflected upon plans for next week via charts; is the real move in markets going to come from full-blown quantitative easing on the part of the ECB? And perhaps the FED in the not too distant future.

Jean-Claude Trichet’s comment concerning how future acquirements of bonds are "progressively diminishing" is typical fare for commentators to speculate upon, and is quintessential Trichet vagueness. My own appreciation is that this comment could well be: ‘I have nothing positive to say at the moment, but I’m damned if I’m going to come clean over the true nature of the European situation.’ He then let’s the cat out of the bag somewhat by insisting that the ECB would continue to throw unlimited cash to banks – for the time being. Ah…

The IMF seem to be continuing to pull out their hair at the way in which Europe works, insisting that Europe fully implement the $500 billion rescue fund now. They also ask how the ECB will support those banks that fail the stress tests. It is notable that Credit Suisee regard the stress tests as more of an insight into whether the ECB is prepared to help any bank declared to be incapable of surviving a dip into recession.

Trichet the Timid goes one to state that the recent good numbers from Germany will avert any double-dip recession. "I see perhaps a tendency from the outside to be excessively pessimistic. The numbers we have are not confirming this pessimism," said he of Brussels bullshit. Well, I would like to know what the German public now think about being relied upon to work harder, for less, and then for the profits of their labour to be whisked away to save the bankers and politicians in countries that do not pull their weight in this team effort. Hmm, wait, I think I know, after Merk the Berk reneged on her promise to lower taxes, the public voted elsewhere in regional elections earlier this year. I understand that Merk had to go along with this reversal of promise, but I am not sure that she will do it again – her coup d’être for another term in office would be to surprise Brussels and put a stop to anymore German assistance.

This may come sooner than anyone thinks if the Centrum für Europäische Politik from Germany get the ruling that they want from the German Constitutional Court. Readers can find details elsewhere, but essentially, several challenges to the European aid package are currently being lodged, as, if one reads all that is related, the aid package is illegal under various European treaties – in particular, the Lisbon Treaty - but more specifically in these cases, German Law. Hey, Germany, the public expect you to live up to our stereotypical view of your efficiency and probity, and not let politics and rampant European corruption spoil the party for EU and EG bears.

Ideal situation: The market reject the results of the European stress tests, the ECB announce full quantitative easing, Germany stops all further aid – citing legality of such assistance – and the FED start the printing presses again.

Hmm… I wonder if Cable is anticipating such possibilities, and just taking a little breather/pullback… in which case, I may long Cable.

Also watching events in Japan this weekend whilst monitoring Geppy and UJ, and am aware of potential bad earnings’ results from various Swiss institutions, which may adversely affect the expected behaviour of Cable.

Looks like a 15min HnS pattern on EJ.

Stocky

One has to wonder why the delay in this article.

http://www.telegraph.co.uk/finance/m...he-market.html

I have no special sources, but this was news last week: http://www.forexfactory.com/showpost...&postcount=150

Last weeks range support holds as resistance....5080 is also 50 % fib zone of drop since last week.

VSA gave a climax bar followed by a high volume churn candle at resistance 5080 indicating supply entering market...good topping pattern.

If you missed entery at 5080 then the 4hr has just completed a Pinbar...a retrace to 5040/60 would make great entry if your looking for shorts.

Stocky

http://www.telegraph.co.uk/finance/c...AA-status.html

Here’s a little proverb for all those ‘Western’ businesses that have fallen over themselves to get a foothold in China’s economy: Once on a tiger's back, it is hard to alight.

I am no fan of China, this I make clear now. However, I have watched, with equal degrees of alarm and curiosity, at the growing tentacles of their new state capitalism. I am no fan of current Western Governments, either. As such, any opinion that I form is often riddled with diametrics. However, I currently find myself in agreement with Dagong Global Credit Rating Co. That is, creditworthiness should reflect more a company’s, or, indeed, country’s, capability to create wealth and have sufficient cash flow. As we have seen as of late, Western credit rating agencies, with their self-regulation and frequently proven staffing from fiscal and political elites, often seem to be playing the ‘game’. Granted, China play a game, too, but I think for this period in history – whether this lasts 10 years or fifty – they have favourably weighted direction.

As the IMF state, Asian growth is expected to grow by 7.7 percent in 2010. The US at 3.3 percent. Europe by 1 percent. Irrespective of current reports of trouble when investing in Asia – particularly China – and then being able to expand against local competition, I would still, if my only moral was return on capital investment, place my money in Asia; principally, China.

Chinese president Hu Jintao said in April that the world needs "an objective, fair, and reasonable standard" for rating sovereign debt. Dagong appears to have stepped into the role, saying its objective was to assess countries using methods that would "not be affected by ideology".

"The reason for the global financial crisis and debt crisis in Europe is that the current international credit rating system does not correctly reveal the debtor's repayment ability," said Guan Jianzhong, Dagong's chairman.

The agency, known in China for rating companies, said its goal is to "correct the defects" of the existing system and offer a counter-weight to Western agencies.

I find it hard to disagree strongly with the aforementioned in Italics. Yes, I am constantly considering ulterior motives, but this applies to Western proclamations, too. I think the bottom line is, who do I trust to be able to keep my money safe? Well, from a sovereign debt perspective, not good old Blighty, that’s for sure. With a reported £2 trillion in public debt, and threat yesterday of downgrade by S&P, it is difficult to see how big money wants to invest in a virtually broken economy. Expanding on this, we have Moody downgrading Portugal today. As we know, UKPLC has a lot of debt in the PIGS, and so, if proved to be correct, further downgrades to remaining PIGS transpire – particularly Spain – Sterling may be in a little trouble for a while.

Of course, one could produce a dissertation stretching many pages, but the one thought that I have at present is that yes, until China attain the same living standards as Europe and America, with all of the associated costs, both socially and regulatory, that have to be borne by business and government, the expansion of China will continue somewhat unabated.

I read somewhere that the true value of income per person, when measured against material attainment, in the traditional West, is declining. Now, in this coming age of austerity, this must surely increase. By association, Western governments may see that their projected incomes from the taxpayers is not realized, thus exacerbating the decline in revenue reserves.

Granted, China is beginning to encounter threats from inflation and social pressures such as property expansion and greater demand for social welfare. However, it is well known that democracy in China is a totally different beast. I feel that the Chinese Government are not interested purely in financial power, but in power, raw. Big money is not interested in social justice, and so will seek out the most stable economies to lay down beside.

The pen is often mightier than the sword: when one holds both, and uses both ruthlessly, there is no competition.

Nice post mate...Interesting

Stocky

EJ has finally traded down 110.84 and tested the daily channel resistance as support.

There is an decending hourly channel also which looks like a flag pattern for the bigger 4hour picture... I would be careful selling the top of this channel again as bounce of 110.84 has has strong momentum behind it which is visble from the spread of the up bars....110.84 may provide the spring board needed to get price upto 113.14.

Obviously the strong GU upmove from this morning CPI figures has taken Euro/USD with it today and also E/J so a close eye on all 3 pairs is needed.

Stocky