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AUD/USD

  • #53,181
  • Oct 4, 2012 8:09pm Oct 4, 2012 8:09pm
Quoting jplazard
Dab,

I like you a lot as a trader. Not because of your quality of post but because you pry and and ask the question of 'you make an argument now prove it' type statements. I respect that and you have shifted my Saturday piece of what I was going to talk about to now I will put out another paper kind of like the first week. This will answer your questions on the correlation or why AUD/USD should continue to fall even if dollar looks to resume a downward move. Most of it will be hard numbers and a small bit will be my thesis for the macro bear but...
I pry as I wish to learn!
Hope for the best, prepare for the worst.
  • #53,182
  • Oct 4, 2012 8:13pm Oct 4, 2012 8:13pm
I respect that. And I respect that you want to know more than just a general statement which is great. I have seen too many ppl in both mainstream and on the internet just throw out factual statements w/o any basis behind it on markets. Like Australian Dollar goes up with GOLD ALWAYS i debunked that baby real quick. I am not that guy and if I ever am I hope ppl call me out on it because I will correct it as soon as possible once shown the error
  • #53,183
  • Oct 4, 2012 8:52pm Oct 4, 2012 8:52pm
Let may say something before I go off for tonight Correlation and dynamic hedging work given the observed variables are highly inverse/direct related. However, lets not assume that S&P up dollar down and AUD up this is beyond fallacious to say because you need hard numbers to prove this. Nassim Taleb who is a brilliant economist former trader explains that black swan events occur and they create these model they think are in perfect observations and can be quantified but the impossible happens and the completely unobservable occurs causing boom/bust cycles. Yes if you pull a 20yr chart you can make an argument of the ES is direct with AUD/USD and dollar is opposite in certain times but what about

1997-2001 when AUD/USD went from about 0.82-0.47 while S&P was around 750 and traded to 1400 (noted this was the tech boom) I can give you several more examples where BLACK SWAN events occur and AUD/USD and ES DO NOT TRADE DIRECT.




the next time you hear someone say this crap tell them to create a option market with you where you bet 100K or less on correlation and if one market like AUD/USD and ES will trade direct or not at a given time till expiration. He wont' do it because he knows that this is not the case and that Dollar/AUD.USD/ES/GOLD ARE NOT THAT EASY TO SAY IF X DOES THIS Y WILL DO THAT!


I hope to show Saturday more in detail what I mean from the above but looking at the other AUD forum its a joke how ppl think that markets are that easy to observe if X market does this Y market will follow. At times it does not and when that happens is when accounts get blown or the government steps in ...Just ask LTCM
  • #53,184
  • Oct 4, 2012 8:56pm Oct 4, 2012 8:56pm
Quoting dab
Thanks Pair, totally understand the first bit, right up until you said "As those markets get stronger the US currency gets weaker". I've always thought that strong fundamentals in a country lead to strong currency. Your post has made me think though that strong AUD hasn't necessarily equated to strong ASX200 so understand it's far from perfect correlation. Would be interested in a chart showing USD against their stock market on same chart if you have it? (I need to look into adding USD to things I monitor but don't know how to plot several things...

hmmm... Alright.. the U.S. dollar is currently the world reserve currency as you know. So, just think about it like this.. When people with lots of money want safety, they buy U.S. currency.. For example if the stock market crashes, they need to put their money somewhere. So, they will park it in the U.S. or Japanese dollar. As more people buy the U.S. dollar as a safe haven it's value goes up. This is supply and demand.. So, even if the U.S. dollar isn't worth much.. it will go up for its safe haven status. Look at Japan.. Their economy isn't too great, but when people run to the Yen for safety they get mad because it artificially increases the value of the yen and then it makes it expensive for them to export.

Now, unless you have the best carry trade going on in the world, you probably want to risk your money when you feel that it is safe. So, you might risk it in the bond market, futures, stocks, commodites, etc.

As you know that is called risk on.. or appetite for risk. Now the people who have parked their cash in safe havens are moving their money from the U.S. dollar and Yen to take on risk for a bigger reward. So, as their money moves out of the safe haven the value of the dollar decreases.

So, even if a person lived in the U.S. and they knew that stocks were going down and they didn't know about currency pairs, they could still buy currency futures. Thus moving their money from risk on to risk off.

So, good stats in the U.S. is good for local investments.. stocks bonds whatever. Bad stats = risk off ---> take money and put it into the safe haven of your choice. U.S. or Japan.

I hope I didn't confuse you more.
Luck has no place in trading. Leave that for the poker table.
  • #53,185
  • Oct 4, 2012 9:14pm Oct 4, 2012 9:14pm
Quoting Pair-me-up
hmmm... Alright.. the U.S. dollar is currently the world reserve currency as you know. So, just think about it like this.. When people with lots of money want safety, they buy U.S. currency.. For example if the stock market crashes, they need to put their money somewhere. So, they will park it in the U.S. or Japanese dollar. As more people buy the U.S. dollar as a safe haven it's value goes up. This is supply and demand.. So, even if the U.S. dollar isn't worth much.. it will go up for its safe haven status. Look at Japan.. Their economy isn't too...
Thanks for all that Pair, most of that makes sense to me but I also take on board what JP said in post above yours ie that there are many factors at work and it's often difficult to predict exact reactions, especially in short term. That's why I trade more for medium to long term and am happy to hold losing trades until they turn. Where I have lots of room for improvement is trading different strategies for different environments (eg strong trend vs ranging).
Hope for the best, prepare for the worst.
  • #53,186
  • Edited 9:26pm Oct 4, 2012 9:25pm | Edited 9:26pm
Quoting dab
Thanks for all that Pair, most of that makes sense to me but I also take on board what JP said in post above yours ie that there are many factors at work and it's often difficult to predict exact reactions, especially in short term. That's why I trade more for medium to long term and am happy to hold losing trades until they turn. Where I have lots of room for improvement is trading different strategies for different environments (eg strong trend vs ranging).

I also concur with JPlazard's posts.

I was merely trying to help you understand while some of those econ numbers didn't give strength to the U.S. currency. Even though they say they are good for it. Also, the reason that gold won't always correlate well with the Aussie or New Zealand.. By the way New Zealand and Australia are the two largest exporters of gold in the world. There might still be other countries that would have stronger economies or better risk/reward.

A good example of this is Africa.. They export diamonds, but look at all the poor people there. Although diamonds are expensive,how often do we hear about the financial markets of Africa being flooded with risk for appetite investors?

Anyways... those are my views.

I could be wrong as I am constantly learning and updating my knowledge.

But we are all here to make pips and be self employed.

So, happy pips to you bro!
Luck has no place in trading. Leave that for the poker table.
  • #53,187
  • Oct 4, 2012 10:24pm Oct 4, 2012 10:24pm
Quoting Pair-me-up
I also concur with JPlazard's posts.

I was merely trying to help you understand while some of those econ numbers didn't give strength to the U.S. currency. Even though they say they are good for it. Also, the reason that gold won't always correlate well with the Aussie or New Zealand.. By the way New Zealand and Australia are the two largest exporters of gold in the world. There might still be other countries that would have stronger economies or better risk/reward.

A good example of this is Africa.. They export diamonds, but look at all...
Hi Pair,

I am new to Forex. Base on your conversion, can i say that a stronger gold price will lead to a stronger aussie currency?
  • #53,188
  • Oct 4, 2012 11:11pm Oct 4, 2012 11:11pm
Price is respecting the bottom of the channel.
Attached Image (click to enlarge)
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FF journal: Peaks and Troffs
  • #53,189
  • Oct 4, 2012 11:40pm Oct 4, 2012 11:40pm
Gidday Traders

Not my week

enter a short then it climbs

well see tonight

might have to hedge

help please
  • #53,190
  • Oct 4, 2012 11:46pm Oct 4, 2012 11:46pm
follow your plan but you wont have another chance for a short until NFP even then the PROFIT TAKING can still overcome.

The trend short is over for this week and a few days next week also look to 1.0340-1.04 for the new levels to short
  • #53,191
  • Oct 4, 2012 11:48pm Oct 4, 2012 11:48pm
15 min cup and handle playing out.
FF journal: Peaks and Troffs
  • #53,192
  • Oct 4, 2012 11:57pm Oct 4, 2012 11:57pm
Quoting bogus
Price is respecting the bottom of the channel.
It is still holding, okay barely holding. Nice chart. I think the lower channel line is very much in play right now. Good post.
  • #53,193
  • Oct 5, 2012 12:01am Oct 5, 2012 12:01am
Quoting prive
It is still holding, okay barely holding. Nice chart. I think the lower channel line is very much in play right now. Good post.
Cheers. Always a funny day, NFP.
FF journal: Peaks and Troffs
  • #53,194
  • Oct 5, 2012 12:22am Oct 5, 2012 12:22am
Quoting Snooze
Hi Pair,

I am new to Forex. Base on your conversion, can i say that a stronger gold price will lead to a stronger aussie currency?

I think it is best to not look at gold in isolation, because Australia isn't the only country that exports it, though many people think they are. You want to look at other things as well.

Look at the Australian Bear Raid thread by Jplazard.

He explains it better than me.
Luck has no place in trading. Leave that for the poker table.
  • #53,195
  • Oct 5, 2012 12:26am Oct 5, 2012 12:26am
GM ,
do you know at what time we will have the BOJ conf ? Thanks.
Don't be smart. Be rich.
  • #53,196
  • Oct 5, 2012 12:30am Oct 5, 2012 12:30am
Quoting dab
I pry as I wish to learn!
Thank you Dab, you posted some of the questions I wanted to ask. But not sure that I understood really the answers, but that is my fault and ignorance which one is unlimited.
You are in the good path. Don't be shy, post also your charts, you will make progress, there are some pretty good and helpfull members in this thread who will make you progress. GL.
Don't be smart. Be rich.
  • #53,197
  • Oct 5, 2012 1:01am Oct 5, 2012 1:01am
Quoting maximinus
Thank you Dab, you posted some of the questions I wanted to ask. But not sure that I understood really the answers, but that is my fault and ignorance which one is unlimited.
You are in the good path. Don't be shy, post also your charts, you will make progress, there are some pretty good and helpfull members in this thread who will make you progress. GL.
Thanks Maximinus! Agree that there are some very good & helpful members in this thread, which is also why it doesn't hurt to reask questions in different manner focusing on what you do & don't understand. There may well be others out there that benefit from your questions
Hope for the best, prepare for the worst.
  • #53,198
  • Oct 5, 2012 1:14am Oct 5, 2012 1:14am
Quoting jplazard
follow your plan but you wont have another chance for a short until NFP even then the PROFIT TAKING can still overcome.

The trend short is over for this week and a few days next week also look to 1.0340-1.04 for the new levels to short
yup but im gonna wait till 1.07 lol prob next year now but gotta see what happens during news then judge aftermath
  • #53,199
  • Oct 5, 2012 1:25am Oct 5, 2012 1:25am
Ya know, I have a feeling we will be getting into a tighter range for the next year or so. The supply imbalance has been restored, which is represented by the dark red line. The two dark green lines represent demand imbalances that have been restored. They stand to serve as areas of profit taking if price breaks south to the bright green line, which represents a demand imbalance that hasn't been restored. It's closest retrace is over 1000 pips away.

Too bad you pay swap for shorting this pair...

Monthly
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Play the players, not the cards.
  • #53,200
  • Oct 5, 2012 1:33am Oct 5, 2012 1:33am
The 200 SMA and 50 EMA suggest the daily is ranging. Also, consider the two recent highs, the bearish divergence between the highest highs and the highest closes. (These highs are on the TL.) The RSI (14) shows bearish divergence, as well. My feeling is that there will be one more hill to go over before traversing into the canyons.

The lines are from the monthly above. I also don't like indicators, ha.

Daily
Attached Image (click to enlarge)
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Play the players, not the cards.
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