EUR/USD Forecast &#x2013; December 3-7

Quoting Loadedgun

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This posturing over fundamentals is totally ignorant and sad. ONLY chaotic and pseudo chaotic methods make sense in the realm - PLEASE, PLEASE, PLEASE it is ignorant to persist in the face of informed research publications or simply because one needs to compensate for lack of educational attainment by wishing pass for a "knowledgeable trader".

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Great post. Two thumbs up!

shovon

Dec 3, 2012 7:15am

Quoting Guest

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We can all understand that when there is no major impact (like us unemp increased by 50k) it wont have any major effect and that any impulsive moves arising from such news would be immediately reversed. But when the US goes bankrupt, like it almost did in 2008, then there's is no technical tool in the world that can save you. go back see your charts from that year. see anything technical about that drop from 1.6 to 1.2 in a matter on 3 months?

Again if Hercules decides to fart on EU, no tech will tell you the bearish move coming, until of course...

Ignored

It's a good explanation you've made on your post. In my point of view, fundamentals are such a factor which moves the price and sometimes it could change the overall direction of the price. And technical s are calculation for future prediction of price movement.

It is true that, no analysis is fully authenticate to predict the future movement of the price, but which one is more reliable to use? I believe, technical analysis is much reliable in this case. Yes, there is no any technical tool, which can help you to predict instantly the fall of 4000 pips within 3 months, it's a step by step technical analysis which could lead you to get the idea of such fall. And also fundamental factors will also give certain alert that a massive fall is imminent, but not clear picture as technical....

Dec 3, 2012 7:47am

yes I will. Name a paper that you have read that has conducted these hypothesis tests and and I will show you how statistically significant they are. By the way the guest is me, I was using a VPN at the time i wrote the post

Dec 3, 2012 8:25am

My friend this paper just made my point. Firstly its a non-empirical paper about order flow dynamics. Now I will point you to relevant sections.
Page 2
"To repeat a central fact of life, there is remarkably little evidence
that macroeconomic variables have consistent strong effects on
floating exchange rates, except during extraordinary circumstances
such as hyperinflations. Such negative findings have led the profession
to a certain degree of pessimism vis-à-vis exchange-rate research."

refer to para 3 of my post above.

Page 3

"Figure 1 provides an illustration. In fundamental analysis, the mapping
from fundamentals to price is assumed to be direct and immediate. In order-flow
analysis, information flows through orders on its way to price. More recent,
hybrid analysis, allows for both channels to affect price.4"

refer to the last page of the pdf for figure and the last line of my post.

Page 3

"What type of information is the order flow conveying? (Or, if you prefer:
What is driving the order flow?) This is the right question—order flow is a
proximate cause, not an underlying cause. There are many examples of dispersed
information that needs to be aggregated for pricing assets: differential interpretation
of news, shocks to hedging demands, shocks to liquidity demands, timevarying
risk tolerances (of financial institutions, for example), and so on."

Need I say anything on this that I had not already said.

Should I carry on? Have you actually read this paper that you have linked?

Dec 3, 2012 1:27pm

This is just getting silly. Okay ill take you up on your math. After trying to wonder where exactly your math was, i figure you are referring to this part of your post.

"This means that in any cause and effect model (whether formal econometric models or "commonsensical" models such as traders like you use) forecasts will go massively off track only after a very few iterations because you cannot employ deterministic (linear) models in a chaotic (non linear) system"

Okay so firstly no data which is regressed in a liner fashion has structural linearity. The regression is based upon the distribution the data represents whether it is normal, T, F etc..... There is no such thing as a chaotic system. Your speaking like a true existentialist here. Every set of data in nature or man made can be represented and understood through numbers. However subjective, patterns can be created. You seem like an educated person and if you have read empirical methods then you know this to be true otherwise all that money you used in uni has gone to the dogs. You should ask for a refund.

"forecasts will go massively off track only after a very few iterations"

then you are obviously not including enough variables in the model and you are not testing them for efficiency, consistency and unbiased-ness appropriately.

Think of it this way. The world has a specific economic system of trading good and services. activities that occur inside this system have to be represented by the price of those goods traded. what else would that price be representing. Elephant migration patterns?

Whether proven or not fundamentals are the only driver of price. It is an endogenous variable of fundamentals. Measuring the effect of fundamentals on price however is a completely different story which is where technicals come in, which in my opinion is a way of measuring market sentiment which is created by the fundamentals.

Hope this helps..

Pip_tracker

Dec 2, 2012 6:39am

this is the week nr 3 when they are bearish. in the last 2 EUR/USD have been bullish

Dec 3, 2012 1:37pm

"you are at that point yet where we can engage in a useful exchange"

Quite obvious from your one liner replies.lol

adieu

Dec 2, 2012 9:03am

Tbh I disagree. These analyst articles are two a penny but I do concede that Yohay's are better than most given they concentrate more on the fundamental issues. They infect this space continually whilst always following the same narrative; "euro might go up it might go down, we don't know, no one does but we'll pad out an article then post it on sites to get a bit of traffic." It's a very tired format and should have no place in a news section IMHO. Adding a few more trend lines, indicators etc won't improve the article.

Quoting Petar_Serbia

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Hello everyone,
Again i see well written article but very modest chart,so i can say that technical analysis may be on higher level from this one...

Best Regards,
Petar

Ignored

Petar_Serbia

Dec 2, 2012 2:06pm

Quoting Spreadbetter

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Tbh I disagree. These analyst articles are two a penny but I do concede that Yohay's are better than most given they concentrate more on the fundamental issues. They infect this space continually whilst always following the same narrative; "euro might go up it might go down, we don't know, no one does but we'll pad out an article then post it on sites to get a bit of traffic." It's a very tired format and should have no place in a news section IMHO. Adding a few more trend lines, indicators etc won't improve the article.

Ignored

Hello there,
As i wrote, well written article but from my opinion technical aspect need to be on higher level...

Petar

Dec 2, 2012 2:48pm

There is no "higher level". It's all the same, gypsies using a crystal ball might get it right 50% of the time as would a coin toss and reading your 'stuff' you just provide more of the same, adding to the irrelevant publicity seeking noise.

Quoting Petar_Serbia

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Hello there,
As i wrote, well written article but from my opinion technical aspect need to be on higher level...

Petar

Ignored

Dec 2, 2012 3:03pm — Edited

Quoting Spreadbetter

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Tbh I disagree. These analyst articles are two a penny but I do concede that Yohay's are better than most given they concentrate more on the fundamental issues.

Ignored

There is nothing like fundamental issues - we have shown and can prove at the drop of a hat that it is deeply ignorant to make such an assertion. No economist will insist that the market trades by or is moved by fundamentals in the way claimed by those still resisting the truth because of their disinvestment in progressive thinking. If I who studied the subject and is certified can make the assertion I simply do not understand why those without any schooling whatsoever in the subject insist as if they know what they are talking about.

That a whole generation of traders have lived in delusion is not justification for such absurdity. Ask yourself this - if you are put on a scale of understanding with say a professor of macroeconomics you will not register at all. Yet how many professors of economics rank among the best traders? Tell me how many? If trading then differs in it's essence as not to admit their knowledge and know how as seasoned economists how is it some trader can get up and make the claim?

Those who have studied economics to at least the intermediate level would know what I am talking about. The theories we study in school such as UIP etc DO NOT APPLY - indeed most studies at the tertiary level are focused on how and why economic theories DO NOT APPLY.

In addition, empirical studies have found 2 key facts over the years (1) MOST TRADERS INCLUDING INSTITUTIONALS do not (I repeat do not) depend on fundamentals to trade (2) Fundamentals is a zero predictor of price in the time span that most traders including institutionals wish to realize profit or loss.

Even more fundamentally chaos mathematics demonstrates why it is impossible to employ fundamentals and expect any result better than visiting a witch doctor in my hometown for guidance on trading outcomes (and therefore irrational to maintain this silly idea that fundamentals is anything one wants to worry about). The proof is this - IT IS IMPOSSIBLE IN THEORY AND PRACTICE TO SPECIFY INITIAL CONDITIONS TO ABSOLUTE INFINITY. This means that in any cause and effect model (whether formal econometric models or "commonsensical" models such as traders like you use) forecasts will go massively off track only after a very few iterations because you cannot employ deterministic (linear) models in a chaotic (non linear) system. Very simple if you are educated - and I guarantee that no one with academic knowledge of the subject areas will dispute this as it is as simple as abc.

This posturing over fundamentals is totally ignorant and sad. ONLY chaotic and pseudo chaotic methods make sense in the realm - PLEASE, PLEASE, PLEASE it is ignorant to persist in the face of informed research publications or simply because one needs to compensate for the lack of educational attainment by wishing to pass for a "knowledgeable trader".

Dec 2, 2012 3:10pm

tldr

Quoting Loadedgun

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There is nothing like fundamental issues - we have shown and can prove at the drop of hat that it is deeply ignorant to make such an assertion. No economist will insist that the market trades by or is moved by fundamentals in the way claimed by those still resisting the truth because of their disinvestment in progressive thinking. If I who studied the subject and is certified can make the assertion I simply do not understand why those without any schooling whatsoever in the subject insist as if they know what they are talking about.

That a whole...

Ignored

Petar_Serbia

Dec 2, 2012 3:59pm — Edited

Quoting Loadedgun

Disliked

Those who have studied economics to the intermediate level at least would know what I am talking about. The theories we study in school such as UIP etc DO NOT APPLY -

Ignored

Hello,
Nice post and i will also add one very important thing.I am professional technical analyst for 5+ years and i can tell you that i dont use any fundamental aspect in trading and i have very good succes.Technical aspect is heart of market simply because you follow price action (volume) and what strong holders doing so you just ride with them.All markets move on supply and demand not on news...
Fundamental aspect is a big question how will news react on real market.
Anyway,at end of day only long term consistent result is guaranty for good work everything else is just nothing.

Best Regards,
Petar

Dec 2, 2012 4:21pm

That's shocking, truly shocking advice and commentary.

Quoting Petar_Serbia

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Hello, and i can tell you that i dont use any fundamental aspect in trading and Technical aspect is heart of market simply because you follow price action (volume), everything else is just nothing.

Best Regards,
Petar

Ignored

Dec 3, 2012 3:48am

Quoting Spreadbetter

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That's shocking, truly shocking advice and commentary.

Ignored

Not if you are disposed to progressive ideas and thinking. That a generation of traders have been deceived into thinking fundamentals has merit and have thus invested time, money and trading personality in it does not dispute the facts. For instance can you dispute the math that disclaims fundamentals as a rational approach? So why persist in that situation?

Dec 3, 2012 7:30am

Quoting Guest

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No one has been deceived.

Ignored

Just dispute the math above, empirical papers on the subject and I will go away forever. Anecdotal and or exceptional experiences and individual perceptions will not suffice. If you cannot sir, then a rethink is in order me thinks!

jaygee

Dec 3, 2012 7:53am

ahhhhh, excellent analysis.

Quoting Guest

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No one has been deceived. Fundamentals used to be an integral part of trading when tick volumes used to be lower and forex was traded on exchanges. It was a major determinant of price equilibrium in fact technical traders back in the day were so rare that they were considered to be some sort of pseudo finance cult. Institutions in search of liquidity, when they opened trading to retailers like us, is when they started paying more emphasis on techs because they could not use simple market sentiment derived from fundamentals to trade anymore. What...

Ignored

Dec 3, 2012 8:14am

Quoting goldfish3

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yes I will. Name a paper that you have read that has conducted these hypothesis tests and and I will show you how statistically significant they are. By the way the guest is me, I was using a VPN at the time i wrote the post

Ignored

Right here and take your time. Cheers

http://www.google.com.ng/url?sa=t&rct=j&q=&esrc=s&source=web&cd=6&cad=rja&ved=0CFgQFjAF&url=http%3A%2F%2Fciteseerx.ist.psu.edu%2Fviewdoc%2Fdownload%3Fdoi%3D10.1.1.20.8427%26rep%3Drep1%26type%3Dpdf&ei=H7O8UISAG8uShgeS34HIAg&usg=AFQjCNHW-qZXrOfeGTVHlWVw44s8sExrAQ&sig2=3-CO2vfjGkqmj9m82BlEsQ

Dec 3, 2012 8:35am — Edited

@goldfish do what you can to spend time on the topic not gloss over issues - the references are there to read all the empirical work done in recent times. Secondly, dispute the math I have above then we can talk. Else I do not see a proposition from you so far that holds any water. Cheers and good luck.

Dec 3, 2012 1:34pm — Edited

You have wasted my time and passed up an opportunity to educate yourself. I do not think that you are at that point yet where we can engage in a useful exchange. No offence but let us leave it at this for always. Takre

Dec 3, 2012 10:16pm

BTW this is the math:

"IT IS IMPOSSIBLE IN THEORY AND PRACTICE TO SPECIFY INITIAL CONDITIONS TO ABSOLUTE INFINITY"

Had goldfish understood this he would not have been insisting in the way he was and clearly unless a person understands what this means - rational discussion on the subject will be difficult to the point of impossibility.

Regardless, the above word statement discredits fundamentals as a rational approach until Kingdom come and ain't nothing anybody can do about that. Sorry folks there is NOTHING IN FUNDAMENTAL ANALYSIS but pure voodoo.

cm C

Dec 2, 2012 6:12am

this news is brillant but i believe so on the downward trend of usd because the month chart of the eurusd have reached a certain good level of resistance and have to drop down

cm C

Dec 2, 2012 8:24am

expect good on eurusd. eurjpy. eurcad. chfjpy on downward trend and usdchf. cadchf and gbpchf on upward.... goodluck trader.

Petar_Serbia

Dec 2, 2012 8:26am

Hello everyone,
Again i see well written article but very modest chart,so i can say that technical analysis may be on higher level from this one...

Best Regards,
Petar

Trader#9279

Dec 3, 2012 4:55am

No one has been deceived. Fundamentals used to be an integral part of trading when tick volumes used to be lower and forex was traded on exchanges. It was a major determinant of price equilibrium in fact technical traders back in the day were so rare that they were considered to be some sort of pseudo finance cult. Institutions in search of liquidity, when they opened trading to retailers like us, is when they started paying more emphasis on techs because they could not use simple market sentiment derived from fundamentals to trade anymore. What are techs in the first place? they are analysis of speculators trying to figure out what the institutions are doing so that they can follow them and they are analysis of institutions to figure out what speculators are doing so that they can kill them. finding order flow, taking our stops etc etc... For us yes trading is a matter of techs. But a central bank would not buy billions of euros based on random subjective lines and numbers. They book futures because they have derived a market sentiment from the fundamentals for the short and medium term, which can be changed in a heart beat if new information were to present itself. These central banks invest in forex to hedge transaction, translation and economic risks that arise from running a country, they do not trade for 10 or 20 pips to make profits like we do (this includes hedge funds, trading desks in fact all profit making institutions trading on high leverage. They may as well be using techs).

Rest assured I am refuting the math behind correlating fundamentals with currency. Show me a paper that is accurately quantifying fundamental results of the entire globe to to determine risk sentiment of a particular currency. This is as impossible to regress as is behavioral finance. dismissing the fact that fundamentals are rubbish without have the proper technology to prove it is naive.

We can all understand that when there is no major impact (like us unemp increased by 50k) it wont have any major effect and that any impulsive moves arising from such news would be immediately reversed. But when the US goes bankrupt, like it almost did in 2008, then there's is no technical tool in the world that can save you. go back see your charts from that year. see anything technical about that drop from 1.6 to 1.2 in a matter on 3 months?

Case in point:
Why is euro still rising? Is it risk on sentiments. Unlikely with all that is happening. Then it must be risk off. But then why isn't it dropping? Maybe looking for a better price? Because fundamentals are not stable yet? Because traders are waiting for the outcome of Greece? (the deal is not guaranteed to save them or the euro zone) is there uncertainty? Quite likely?

Again if Hercules decides to fart on EU, no tech will tell you the bearish move coming, until of course half of it is gone. On the other hand if EU finds a post of gold at the end of a rainbow, it will also not be a very technical scenario until most of the move has passed. But the end results in both cases would be driven by fundamentals.

Price is a function of fundamentals and technical are a function of price. There is no other math behind it..

Dec 3, 2012 8:16am

Quoting jaygee

Disliked

ahhhhh, excellent analysis.

Ignored

You want to read the document I posted above too.

Trader#5F52

Dec 3, 2012 8:36pm

I must agree with your point of view goldfish.
Some people are better at mastering technical analyse and some are better at fundamentals analyse and I think the best traders are those who combine both of them.

Trader#5F52

Dec 4, 2012 7:31am