EurAnalysis

The sellers were are 32870.

I will give you a quick overview and if you have follow up questions please ask them. We all learn together and the more we share the more we can learn. Learning requires the desire and the interest to improve always having an open mind towards new things.

Let's start by looking back over the last 24 hours when Risk was on as the markets showed by being mainly positive. Markets include the stock market, commodity market and the bond market.

The US Dollar is still the reserve currency of the world. Things are changing in that Gold is also a form of currency or better explained a store of wealth as it has throughout history. This also applies to silver however silver is also an industrial metal.

When we have Risk On the US Bonds which act as a safe haven to park money short term with safety against loss with a yield being paid as well.

Whenever there is uncertainty the money heads towards the US Bonds. I follow mainly the following three US Bonds. The 2 Year US Bonds and the 10 Year US Bonds and the 30 Year US Bonds. The more uncertain which means they will keep it in the US Bonds longer for safety than more money will flow to the longer tern US Bonds such as the 10 Year US Bonds and the 30 Year US Bonds.

Yesterday the Yield on the 2 Year and 10 Year US Bonds were higher than they are today. At the moment the Yield on the 2 Year US Bond is .25% and the Yield on the 10 Year is 1.98% with the spread between the two being 173 basis points. If you kept your money in a 10 Year US Bond of say $100,000 US Dollars you would earn $1,980.00 US Dollars in 10 Years.

As The US Bonds are Sold when Risk is back on the US Bonds are sold and as the price of the US Bonds comes down then the Yields go up. Now the US Bonds are attracting MONEY as this morning as we can see from the negative markets that Risk is off for the moment so US Bond Yields GO DOWN as the MONEY is being put into the US Bonds for safety of capital and Yield for the moment.

The thing to keep in mind is that whenever an Asset Class is sold off the money from them is converted into US Dollars if not already in US Dollars and then those US Dollars buy the US Bonds and that causes the US Dollar Index to GO UP for the moment. This is NOT ALWAYS 100% as sometimes other factors are in play. The REVERSE is true with again some exceptions like we have now with regard to the major problem in Greece. That is why the EUR/JPY is going up as the USD/JPY is getting weaker by going up in price and away from Japan Intervention and this causes EUR/JPY to get stonger however for the moment the sales of EUR/USD is overcoming the effect of EUR/USD moving up with EUR/JPY as I pointed out in a post last night.

When Risk is on then the US Dollar Index tends to GO DOWN as the same US Dollars that went into buying the US Bonds now are used upon the sale of the US Bonds to buy other Asset Classes including Commodity Currencies and Currencies with better Yields than the minimal Yields on the US Bonds.

I have given a detailed answer so that you can understand things better and learn more. I could not trade forex without watching the change in values in the various Asset Classes as the FLOW OF MONEY ALWAYS CHANGES the Charts and is more reliable since it is IMMEDIATE than getting trapped in a chart which goes up and down and is only the market pyschology at that exact moment. Using charts in my opinion should only be used for the right reasons such as Support and Resistance and Supply and Demand. Of all the tools that I use technicals make up 25% of my toolbox. MONEY FLOW is a leading indicator.

I welcome all comments, questions, feedback so we can all improve our knowledge base. Risk is definitely off for the moment. You may notice Gold is also down. That happens because of INTERVENTION and from time to time Profit Taking in order to cover losses from trading other Asset Classes. More MONEY PRINTING from the Federal Reserve and the ECB with help from the FED causes currencies to be made less valuable in a race to the bottom for the Fiat Currencies as Gold has moved from near $250 US during 1999 to over $1700 US at the moment onroute to near $2500 US in my opinion and others by my 69TH Birthday on December 31 of this year.

Good Morning and Good Trading. Use a Trade Plan,Common Sense along with Good Risk Management. Be patient and learn and be profitable.

How about 1.3184?

Confirmation was at 32795.

today formation respected well
Lucky close 2%

For those that missed it. Chinese trade balance data number came in much higher than expected last night which is bad for commodities. This is what started the risk off environment last night with the Aussie, Kiwi and the Canadian dollar selling off against almost everything else. Money flow is seeking safety of the US$ and US bonds right now.


Still have a little more high impact data this morning as well as our friend Benny Cakes Bernanke speaking today.

The current demand zone and range was broken which could see this pair back down to 1.3060 demand zone below.

Pretty slow drift south at the moment anyways.

This is how technicals should be used. Thanks for your charts and the picture posted in movements of the asset classes. Have a good trading day and you can watch my back anyday.

I hope you and the lady are well.

So far my technical crystal ball seems to be working.

Let's see if we hit 1.3130

Finally down and some volatility. I was wondering has world gone crazy or something.

Now important day is 13th of February, which is final deadline for G-Spot. Prepare some ranging and possible rally - Up or down, depending on sunday results.

Midnight (GMT+2) between 12th and 13th once we start getting some quotes will be very interesting.

Golden cross right at the pivot. Nice

Possible continues down since break the 15M Inside Bar
Added Short again @ 1.3184 SL 1.3210 Trailing 26 Tp 1.3132
Note : Dont follow me

Trailing Locked in BE ^^
Hit or Not Jus let it Be - As long Survive with Green - No Greed here

Close +10
Trying long @ 1.3173 SL 1.3153 TP 1.3213

I having a loss just now when I buying at 1.32675. The reason of my buying is because EUR stock is dropping. From my understanding is if the stock is drop it will cause ccy USD weak. But just now its act differently. :-(

It's the other way round Kirk. If Stock drops, then it is risk-off
In risk-off, you buy USD and sell EUR, GBP, AUD and NZD
Not always but most of the time.

Hi PT,
Thanks for the explanation. If not always how we can filter this. I do see when the stock drops, EUR/USD is buying.

What I explained is the rule. What you saw was the exception.

Actually when I saw stocks dropping, I took that as a signal that a EUR drop was coming.

A good indicator of risk-on/risk-off is the commodity futures markets.
here --> http://www.finviz.com/futures_performance.ashx

If the histograms are mostly red, it's risk off and time to sell the Euro

If mostly green, don't sell the Euro. I would not recommend buying but that's up to you.

Thanks Kno for your as ever knowledgeable & helpful reply, and I've included just some extracts from it above to help with my follow up question.

Are you saying therefore when RISK is ON ...

that INITIALLY the Dollar strengthens ("whenever an Asset Class is sold off the money from them is converted into US Dollars if not already in US Dollars and then those US Dollars buy the US Bonds and that causes the US Dollar Index to GO UP for the moment)
BEFORE then weakening as would be expected when dollars are exchanged for higher yielding assets (When Risk is on then the US Dollar Index tends to GO DOWN) ....?

I'd thought the concept was ... Risk On, Bond Yields Up, Dollar Down. As I understand it you're saying Risk On, Bond Yields Up, Dollar Initially Up and then Down?