EurAnalysis

Partials taken, small pull back to minor S/R at 2912, so bought back and exited both on failure - for now - to make a new high.

Time for a break, back for NY.....

IMO you are not looking at the right picture. You are mixing too many advanced correlations in a linear chart ...it wont work like that.

Let me give you my 2 cents:

 

1. Trading is not 100% risk on/off trading. Because CAC40, FTSE, DAX, ES etc is moving a few ticks up doesn't mean that risk money is jumping in like mad. Risk on/off money will not even notice a tiny move in the middle of the european opening range... in simple words you are confusing long term conservative and mid term money with a tiny move intraday ..that's fundamentally wrong.
   
2. Gold can gauge "risk" sentiment more short term related. However, again not every tick up/down in gold is because risk. Second when you have panic or real uncertainty (i.e Euro collapse, Lehman, etc etc) GOLD is not proportional to risk as the only and most important haven is Treasuries. In simple words in case of panic investors run to Treasuries and to lesser extend holding dollar in cash selling everything else including Gold.
   
3. Although plotting a chart with both instruments is visually nice, is only USEFUL for analyst to explain something not for traders. Correlation is not about a 1 to 1 relation that you can see: yes it moves 1 tick up therefore the other move one pip down or etc.

You are trying to "arbitrage" disparities between both instruments to the tick which is WRONG by any statistical means (as Gold and Euro are not 100% correlated) and second if even if they are misspricing (they are NOT !!!) they will only be noticibale and "tradable" by super fast and powerful algos (I am talking about less than milliseconds).

You need to put those charts in perspective, try to mark key S/R levels at least or FA S/R levels in Gold for example, and only there you can see that this or that is approaching or breaking, etc Resistance or Support with a important news for example and you can expect that to carry over other markets, etc ....

In simple words, you are making a huge mistake (and IMO I have read many in this thread making the same mistake) trying to simplify trading in only risk on/off and therefore xx in a linear outcome....Answering your post "I REALISE CURRENTLY RISK IN ON" no not all...why you are saying that? ....my 2 cents, you know where and when the next FA trigger is coming ECB/NFP / Spain combo so why don't you take the opportunity to find your Gold lines mark what you see before the news, wait until the after and compare with your GOLD and Euro charts....you may find your own conclusions and start understanding correlation....

I hope it helps

sisse

The KEY today will be which way will the Dow go?

RISK ON or RISK OFF ?

We also need to be aware that ADP can change the direction at 8:15 AM

The operative word is CAN.

Where is support and where is resistance?


What is the market EXPECTATION or PERCEPTION?


GOOD MORNING

Excellent post Sisse... as always

Many on this thread (No Disrespect) do not see the purpose in understanding how Gold fits into forex trading.

I Agree with your point of view. There is work and experience needed to understand.

Have a good day! !!

The hourly chart is starting to look very Head & Shoulder ish

E/U H1

Some uncertain volatility is waiting for the Month.

This will give overall picture of what is going on as it shows the gain/lose in percentage.

http://finviz.com/fut_image.ashx?rel...48027868068750

Bulls are buying on dips to major pivots & rising channels across the board..
GBP consolidate above the daily 21ma tag dancing with a rising EURGBP could re-print 1.30~1.31 near term..

Euro EURGBP GBP D1

PT where u calling the Neck Line?

1.2875

sissie many thanks for the comments,
as always i'll absorb and digest.

Glads to say i do use s/r extensively.
Also now a volume cals too.

The money management is next!
Thanks again.

Looking at the bigger picture shows that the divergence may have just been a correction in the channel & given the range still on the table reaching the top of the channel is a high probability, also if one takes into account that the ADP numbers are more likely to be positive then I think we will see 2850 being breach before afternoon tea....

Always with some new thoughts and well thats the reason i follow your posts. You and gator have a tremendous hold on Price action movements most of the times .

Here is what Real Americans are saying. Will we listen ?

Bill Gross says only gold and real assets will thrive in fiscal ‘ring of fire’

The latest round of quantitative easing made gold “even more attractive” and owning the metal should be considered as part of a diversified portfolio, analysts at bond giant Pacific Investment Management Co. said in a white paper posted Tuesday on company’s website.

Pimco founder and co-chief investment officer Bill Gross, in his separate monthly investment outlook also posted Tuesday, said only gold and real assets would thrive in a “ring of fire” of U.S. fiscal problems.

Gold elicits black and white responses, the Pimco analysts said. Some investors “have a deep, almost religious conviction that gold is a useless, barbaric relic with no yield,” while others “love it” and see it as “the only asset that can offer protection from the coming financial catastrophe” always just around the corner, they said.

“Our views are more nuanced … Our bottom line: given current valuations and central bank policies, we see gold as a compelling inflation hedge and store of value that is potentially superior to fiat currencies,” the analysts said. ”We believe investors should consider allocating gold and other precious metals to a diversified investment portfolio.”

Everyone at Pimco is on the gold bandwagon these day...and this marketwatch.com piece from yesterday is another example of that...and the link to that story is here. But if you want to go directly to PIMCO's "white paper" that the MarketWatch article talks about, the link to that is here. I thank Ulrike Marx for her final offering in today's column.

USD Daily Pic..

DXY D1

http://www.merkfunds.com/merk-perspe...-10-03-insight




Fight the Inflation Boogeyman


Investors are concerned about inflation. But how can investors attempt to inflation-proof their portfolios? Buy TIPS? Short Treasury bonds? Stocks? Real Estate? Commodities? Gold? Currencies? Or should investors regard those warnings about inflation as fear mongering?
http://www.merkfunds.com/images/2012...ing-dollar.jpgIndeed, as the Federal Reserve (Fed) announced its latest round of quantitative easing (“QE3”), gauges of future inflation expectations spiked. In our assessment, the market reacted strongly as it became apparent that the Fed is moving away from its focus on inflation to a focus on employment. We believe the Fed wants to raise the price level so as to bail out millions of homeowners that are ‘under water’, i.e. owe more on their homes than they are worth. Fed Chair Bernanke considers a healthy housing market to be key to healthy consumer spending (see our Merk Insight Don’t worry, be Happy).

Judging from the market reaction to QE3, fears about future inflation are warranted. Having said that, market fears about looming inflation have calmed down a bit since the initial flare up. Could it be this calming of the market is due to the fact that the Fed is intervening in the TIPS market? TIPS are “inflation protected” Treasury securities that are linked to the Consumer Price Index. Investors buying TIPS do so in the hope that their purchasing power might be protected. When the Fed intervenes in the market to buy TIPS (or any other security for that matter), such securities are intentionally over-priced, raising doubt as to whether investors are truly “protected” from inflation. It’s not just investors that now have more limited access to measuring inflation expectations – it’s also the Fed itself. By managing the entire yield curve (short-term through long-term interest rates), we believe the Fed has blindfolded itself, as it has taken away one of the most important gauges about the health of the economy. Aside from the Fed’s intervention in the TIPS market, the government is free to change the inflation adjustment factor employed in TIPS before the securities mature. TIPS payouts are adjusted using the consumer price index (CPI), which has seen methodology changes many times. When the recent debt ceiling impasse was discussed, both Republicans and Democrats talked in favor of changing the CPI definition so that it would nominally live up to inflation linked entitlement promises while clearly eroding the purchasing power of such payouts. Even without such gimmickry, the CPI may not be reflective of the basket of goods and services consumed by investors as they approach retirement given, for example, that healthcare may comprise an ever-increasing part of one’s spending. Alas, much of investing is about trying to preserve purchasing power and, alas, buying TIPS may not provide adequate protection.

If one is negative about the inflation outlook, why not simply short Treasuries, either directly or through ETFs? While we are pessimistic about the long-term outlook of Treasuries, it can be very costly to short them, given that – as a short seller – one has to continuously pay the interest of the securities one shorts. If one buys an ETF shorting Treasuries, the cost of the ETF is to be added. Shorting Treasuries might make sense for investors that are good at market timing. However, calling the top in major bubbles is rather difficult, just reflect on former Fed Chair Alan Greenspan’s “irrational exuberance” speech years ahead of the stock market collapse in 2000; similarly, those that saw the bubble in the housing market coming didn’t necessarily get the timing right.





If TIPS don’t provide enough bang for the buck, and shorting Treasuries can be costly, what about buying stocks? Bernanke appears to use every opportunity possible to praise the benefits QE has on rising stock prices. While we agree that QE has pushed stock prices higher, it may be dangerous for the Fed to praise this link given that it raises expectations of more Fed easing whenever the markets plunge (see Merk Insight: Bernanke Put). For example, how many investors buy Cisco 1 shares because of the great management skills of CEO John Chambers as compared to those who buy because of QE3? We pose this question because stocks are rather volatile; not only are stocks volatile, but the volatility of stocks can be all over the place. Historically, the annualized standard deviation of the S&P 500 index hovers in the mid 20% range, with outbursts into the 40% range in 2008. So why are investors taking on the “noise” of the stock market, when the reason they invest is because of QE? Indeed, our analysis shows that investors appear to be ever more chasing the next perceived intervention by policy makers rather than investing based on fundamentals. That’s not only bad for capital formation (these misallocations are summarily referred to as “bubbles” these days), but also suggests that we might want to look for a more direct way to take a position on what we call the “mania” of policy makers. Talking about policy makers: you might not agree with them, but if there is one good thing to be said about our policy makers, it is that they may be quite predictable.

“If there is one good thing to be said about our policy makers, it is that they may be quite predictable” – Axel Merk

thoughts for sale 1/2 penny. cheap.

For this pair to get a move on south of the support at 1.2880 level, then the supply that is showing up at the 1.2940 level has to be willing to supply at that lower level. OK, Duh.

For whatever reason support for the Euro does not want the Euro lower where it can buy cheaper.. The supply demand equation is skewed by this reality. If it is a Political mega strategy to force the consolidation of independant Sovereigns under one flag, it is what it is.

So we really do need to see supply kicking in, below 1.2940, in a meaningful way to see the 1.2880 level fail and open up for a real move down to where it is hypothesized that true value is 1.2000 or lower.

So will focus on pa in that area ( 1.2840) to get a handle on the power of the bears. So far a small b in bear is more applicable.

... I'm also confused..not sure what u looking at? My chart is 1H...maybe I should have made it clear that as a scalper the bigger picture to me encompasses at most a week not years...trust that helps u