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EurAnalysis Kindergarten 24 replies

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EurAnalysis

  • #8,141
  • Edited 10:39pm Nov 7, 2011 10:28pm | Edited 10:39pm
What's this?? I went to school with open +125 pips...
I thought Berlusconi was really going to resign and that I'd probably drive the pair towards 1.3900-1.3950

But when I came back from school...

Surprise!... my 2 positions were closed at BE

I even told mom, come here and see what your kid's doing
  • #8,142
  • Nov 7, 2011 10:56pm Nov 7, 2011 10:56pm
Quoting Pipsforall
I'm beginning to think the Euro won't really collapse until next year after the holiday season is over. The US markets want to rally higher so that the Wall Streeters can all get their big Christmas bonuses, if the street rallies, so does the Euro, which I think is the primary reason why the Euro is so resilient in the face of continuing bad news, sure the USD is basically at 0% interest rates already, and Bernanke printed trillions, but the US economy is in better shape, and the Euro is going to be following suit with the prospect of major sovereign...
I'm more inclined to think it's your second point - US dollar weakness due to Bernake's love of printing/currency debasement, combined with the fact that the ECB is not printing their way out of this crisis. Simply because the supply of Euros isn't increasing at the same rate as USD, the demand/supply dynamic props up the Euro more than any economic fundamentals.

At least, my understanding of the markets leads me to think that hedge/pension/managed funds wouldn't be able to manipulate the Euro to keep it buoyant just for their christmas bonuses that said, the financial news sure has a lot to answer for in terms of false rumours these last few weeks.... In any case, I put the october strength down to a combination of:

 

  1. Buy the rumour, sell the fact (EU summit).
  2. EU banks repatriating funds for recaptialisation.
  3. A little help from SNB with reserve accumulation.
  4. The difference in monetary policies between the two currencies.

Anyone agree, or am I being silly?

Also, can anyone tell me whether the correlation between the EUR and DJI/indexes is the effect of the Eur on DJI, or is it that the DJI affects the EUR?

When I first started I thought the stock markets affected currencies, but the more I watch the markets it feels as if the currencies drive the stock markets.

"Don't Panic..."
  • #8,143
  • Nov 7, 2011 11:11pm Nov 7, 2011 11:11pm
Quoting Halifax
Also, can anyone tell me whether the correlation between the EUR and DJI/indexes is the effect of the Eur on DJI, or is it that the DJI affects the EUR?

When I first started I thought the stock markets affected currencies, but the more I watch the markets it feels as if the currencies drive the stock markets.
It's actually risk appetie, risk aversion sentiments... They are both against the USD which is a safe haven currency..

therefore, risk appetite, USD weakens, them both (indexes and EUR) go up
risk aversion, USD strenghtens, them both (indexes and EUR) drop

Pbh
  • #8,144
  • Nov 7, 2011 11:24pm Nov 7, 2011 11:24pm
Quoting Pbh
It's actually risk appetie, risk aversion sentiments... They are both against the USD which is a safe haven currency..

therefore, risk appetite, USD weakens, them both (indexes and EUR) go up
risk aversion, USD strenghtens, them both (indexes and EUR) drop

Pbh
But, does one cause the other to move?

I watch the AUD and the XAO/XJO quite often (I'm Australian), the two seem to follow each other in roughly the same pattern throughout the day quite often.

I understand risk sentiment, but I also feel like risk on/risk off is just a way of the financial media saying "We don't know what the F**k is going on, but someone is selling USD."

What I'm trying to figure out, is selling USD/Treasuries etc, is that the cause of a rise in risk assets, or in other words would it be like this:

UST get unloaded by say Societe Generale --> Swap USD for EUR ---> EU/USD rises --> Algo's see this as bullish for stocks ---> Algo's buy index, index rises.

Or it could just be a chicken/egg question
"Don't Panic..."
  • #8,145
  • Nov 7, 2011 11:34pm Nov 7, 2011 11:34pm
Quoting Halifax
Also, can anyone tell me whether the correlation between the EUR and DJI/indexes is the effect of the Eur on DJI, or is it that the DJI affects the EUR?

When I first started I thought the stock markets affected currencies, but the more I watch the markets it feels as if the currencies drive the stock markets.
The DJIA and S&P500 correlation with the Euro is a US$ move. Just like in FX when we buy one currency we are selling the other.... Basicly buying stocks, commodity futures (which BTW are priced in US$) and other risk assets is selling dollars (increasing supply of USD which drives $$$ price down). Selling stocks, commodity futures and risk assets is buying $$$ (increasing demand for USD which drives $$$ price up)
I don't care which way the market is going as long as it's going my way
  • #8,146
  • Nov 7, 2011 11:43pm Nov 7, 2011 11:43pm
Quoting PipKiller
The DJIA and S&P500 correlation with the Euro is a US$ move. Just like in FX when we buy one currency we are selling the other.... Basicly buying stocks, commodity futures (which BTW are priced in US$) and other risk assets is selling dollars (increasing supply of USD which drives $$$ price down). Selling stocks, commodity futures and risk assets is buying $$$ (increasing demand for USD which drives $$$ price up)
My personally opinion is that this is driven by trading bots that use correlations in multiple markets. Watching the Euro dance with the Dow...moves timed to the second... across hundreds of market... it just isn't natural.

This is something new. PT says it dates from 2008.
Kill the ego, or it will kill the mission.
  • #8,147
  • Nov 7, 2011 11:54pm Nov 7, 2011 11:54pm
Quoting PipKiller
The DJIA and S&P500 correlation with the Euro is a US$ move. Just like in FX when we buy one currency we are selling the other.... Basicly buying stocks, commodity futures (which BTW are priced in US$) and other risk assets is selling dollars (increasing supply of USD which drives $$$ price down). Selling stocks, commodity futures and risk assets is buying $$$ (increasing demand for USD which drives $$$ price up)
"Don't Panic..."
  • #8,148
  • Nov 8, 2011 12:56am Nov 8, 2011 12:56am
Quoting Halifax
It is in fact exactly as PipKiller and Pbh say, but it is not exclusively that... just mostly.

Obviously there are other factors because if there weren't, then the EUR/USD would move precisely with the Equity indices, but it doesn't. There is always some divergence from the correlation.

Also, it is not a chicken and egg situation. It is all about capital flows in and out of safe havens and risk assets. You notice this when the USD Index is rising during a Risk-Off market and at the same time the USD/JPY is falling. The JPY is considered the primary safe haven. So when capital flows out of risk assets, most of it goes to the JPY and the rest goes to the USD (Some also goes to Gold). The portion that goes to USD is what effects the EUR/USD and other USD denominated risk assets (Commodities, Equities etc.).

Lately the EUR has not been that closely correlated to other risk asset classes. It has been falling faster and not rising as fast as the other risk assets. This is due to the rate cut and the risk aversion due to the Euro debt crisis. Normally such a situation would de-couple the correlation but that d-coupling has been offset by the repatriation of capital by Euro banks.

Knowing that, it is logical to assume that once the European financial institutions have completed their repatriation, the Euro will start to fall and completely decouple from the other risk assets. If you compare the EUR/USD to the SP500 you will notice that there was such a decoupling in late 2009 / early 2010.

This needs to happen again because Europe cannot make an economic recovery with the Euro where it is now. It needs to devalue to at least the low 1.30's to mid 1.20's. The longer it takes to get it there, the longer it is going to take for Europe to start its recovery from the growth slow down and will also mitigate the chances of a recession.

Anyway, understanding exactly how and where capital flows is a huge task to take on and can get quite complex. The good thing is that you don't have to go far to get that info and you don't need specifics. It's all in the charts in front of you. You don't really need to know why. It is only imperative that you know when and can recognize it as it is happening.

Cheers
PT
Those who say it cannot be done should not interrupt those who are doing it
  • #8,149
  • Nov 8, 2011 1:32am Nov 8, 2011 1:32am
Quoting PipTrapper
Anyway, understanding exactly how and where capital flows is a huge task to take on and can get quite complex. The good thing is that you don't have to go far to get that info and you don't need specifics. It's all in the charts in front of you. You don't really need to know why. It is only imperative that you know when and can recognize it as it is happening.

Cheers
PT
Bravo PT

Thanks for that. Well I hope I can understand it one day merely for interests sake, which is why I'm studying economics at uni. Problem with that degree is it is too general in a lot of areas, and often ignores the finance side of things, which I want to know about!

But I try and avoid thinking about the fundamentals when I put on a trade, since it always makes me worse at trading... I'm all technicals.
"Don't Panic..."
  • #8,150
  • Nov 8, 2011 1:33am Nov 8, 2011 1:33am
08 Nov 2011
Forex Market Analysis (Forex Technical Analysis and Forex Fundamental Analysis)

1) Forex Technical Analysis.
a) Monthly - Bullish Pennant +ve
b) Daily - Evening Star Candlestick Chart Pattern with Key Support @1.3700 the figure +/-
c) Hourly – Bearish Pennant -ve


2) Forex Fundamental Analysis:

a) No major US event today

Attached Image (click to enlarge)
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  • #8,151
  • Edited 2:28am Nov 8, 2011 2:18am | Edited 2:28am
Morning all
Attached Image
If there was easy money lying around,no one would be forcing it into your
  • #8,152
  • Nov 8, 2011 2:29am Nov 8, 2011 2:29am
Quoting FXMindset
Morning all
Good morning bro.
I am still looking for 1.39 area
Maybe today
We'll see

.
Attached Image (click to enlarge)
Click to Enlarge Name: eu-h4.gif Size: 17 KB
Those who say it cannot be done should not interrupt those who are doing it
  • #8,153
  • Nov 8, 2011 2:32am Nov 8, 2011 2:32am
Quoting PipTrapper
Good morning bro.
I am still looking for 1.39 area
Maybe today
We'll see

.
Yes..1.3914? Btw Seem that my Fibo Is Different with you Bro..I dont have any price level on it and complete like you,do we need reset on it or ?


Thanks
If there was easy money lying around,no one would be forcing it into your
  • #8,154
  • Nov 8, 2011 2:34am Nov 8, 2011 2:34am
Quoting FXMindset
Yes..1.3914?
Somewhere between 1.3880 and 1.3950
Those who say it cannot be done should not interrupt those who are doing it
  • #8,155
  • Nov 8, 2011 2:36am Nov 8, 2011 2:36am
Quoting PipTrapper
Somewhere between 1.3880 and 1.3950
My Fibo dont have any price level on it and complete like you,do we need reset on it or bro?
If there was easy money lying around,no one would be forcing it into your
  • #8,156
  • Nov 8, 2011 2:41am Nov 8, 2011 2:41am
is your 1-2-3-4-5 elliot wave ?
Quoting PipTrapper
Good morning bro.
I am still looking for 1.39 area
Maybe today
We'll see

.
not euphoria follower
  • #8,157
  • Nov 8, 2011 2:42am Nov 8, 2011 2:42am
Good morning.

Guys could you please stop looking at those shoulders, flags, short squeezes, h4 trendchannels etc, and just sell this crap? I am doing it since yesterday. No profit so far , yet no loss, 3 opened short positions now, as price still hovers @ my entry zone and keeps hitting my SL.

T
"I know one thing, that I know nothing." Sokrates
  • #8,158
  • Nov 8, 2011 2:46am Nov 8, 2011 2:46am
Quoting iqyu5an
is your 1-2-3-4-5 elliot wave ?
Seems like - Are you looking the right shoulder bro?would be appreciate your Fibo level on right Shoulder
If there was easy money lying around,no one would be forcing it into your
  • #8,159
  • Nov 8, 2011 2:52am Nov 8, 2011 2:52am
PM you mate
Quoting FXMindset
Seems like - Are you looking the right shoulder bro?would be appreciate your Fibo level on right Shoulder
not euphoria follower
  • #8,160
  • Nov 8, 2011 2:59am Nov 8, 2011 2:59am
Quoting Tom_D_Trader
Good morning.

Guys could you please stop looking at those shoulders, flags, short squeezes, h4 trendchannels etc, and just sell this crap? I am doing it since yesterday. No profit so far , yet no loss, 3 opened short positions now, as price still hovers @ my entry zone and keeps hitting my SL.

T
Might want to try a bit of scalping. We are still in correction phase from last Mondays drop. That means there will be an enormous amount of up and down.

Waiting on fundamentals is a bit like waiting for your grandmother to die to get rich. It could take a while.
Kill the ego, or it will kill the mission.
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