EurAnalysis

AMEN and AMEN

Been there as well. Nice place.

Thanks DaEdge !!!

,well done.i quite agree with that and ur a very decent and well mannered person.ur parents must be very proud of u.God bless u with success.

now its my turn to laugh at u but u still cant beat me to be on sisse list.

Thank you Dr. Zakir for the kind words.

You also seem like a good man worthy of God's smile in all areas of your life.

Being steadfast in character is what I strive for even above filthy lucre. In the end its your integrity that you will be remembered by...not by how much money you made.

As a side note: Some here may have issues with one's religion forgetting we are all created in His image. It doesnt matter if its Christianity, Islam, Judaism, Hinduism...ect. Like different markets the destination is the same.

One closing thought about last night's unprovoked verbal battle with another trader who shall remain nameless....

"I have always tried to be true to myself, to pick those battles I felt were important. My ultimate responsibility is to myself. I could never be anything else."... Arthur Ashe

While the markets are closed I wanted to send the deepest respect to our fearless yet humble leader PT. Always a true gentleman.

“True heroism is remarkably sober, very undramatic. It is not the urge to surpass all others at whatever cost, but the urge to serve others at whatever cost.”

LOL. Maybe next year I will be #1 on Sisse's list and you will be the next runner up...

By the way, thanks for the Vouch Doc! Enjoy your weekend and try not to castrate any more bulls with your scalpel... Hahahaha.

Good Morning Turtle Man

Excellent Charts and Thoughts from you...

I had a very hectic week and in the last three days I have been away from Forex and I was somewhat surprised to see the strength in EUR/USD. I put a short on three positions of 100K of EUR/USD around noon on Friday.

I do my research in a very focused way on Saturday and I just came across the following article which offers myself a good explanation which I am now sharing with you and my other friends here for discussion purposes. All points of view and comments are welcome.

http://www.moneyandmarkets.com/fomc-...d-bubble-51203

Snippet:

Previously it was thought that the Fed would keep their QE program through the end of the year. And while this isn’t a declaration that QE is going to end imminently, the minutes were particularly surprising to markets because no one thought ending the current QE program was on the Fed’s mind, much less being openly discussed and argued about.

The surprise news, combined with the positive sentiment emanating from the fiscal cliff deal, sent Treasury yields to seven-month highs. As you can see in the chart below, the 30-year Treasury yield jumped to 3 percent for the first time since late April.

http://images.moneyandmarkets.com/2626/chart.png
[Click chart for larger version]

This is important not so much because of what the Fed minutes revealed (we all know at some point the Fed will remove accommodation) but instead how the market reacted.

The market reaction to this news was pretty violent. And the sharp selling that hit Treasurys (and spiked yields) is yet another sign that the top is “in” in the bond market. Now the question you should be asking isn’t so much, “will bond yields rise” but instead “how fast and how far will they rise.”

Four-plus years into unprecedented Fed easing, last week’s price action in response to the Fed minutes tells me that markets are accepting the fact that we are closer to the end than we are to the beginning. And as such they are starting to anticipate rising interest rates.

Bond yields have already moved to multi-month highs based on the perception that the Fed may dial back QE sooner than expected. So we can only expect yields to accelerate once it becomes clear that the Fed is actually goingto remove QE from the markets — something that by the Fed’s own admission could start much sooner than is the general consensus.

Yields have been kept low by the Fed’s mass bond-buying program, and by their safe-haven status as a series of crises threatened elsewhere. But once the QE punchbowl is removed, holders of long-term bonds could take a beating. I hope you’re not one of them.

CurrencyMan:

As we can see as the US Bonds have sold off the MONEY has to go elsewhere. Where has the money gone and why ?

Money always goes for safety first and YIELD second.

Draghi gave some PERCEPTION of safety and the markets reacted by starting a flow into the Euro. Look at what the British Pound did. Now I turn my focus to the Yen. As I have pointed out in the past there is a relationship between USD/JPY and EUR/JPY. As EUR/JPY moves up, gets stronger OR weaker it moves EUR/USD with it.

On my FXCM UK platform, the first three currencies that I monitor is EUR/USD EUR/JPY and USD/JPY.

The money has flowed into EUR/USD for all the reasons that I have just posted and because for EUR/USD we now have short term RISK ON.

I welcome feedback to my thoughts.

Good Day

I like your thoughts and your methods. I always trade using intramarket analysis. I just posted an explanation for what happened to the EUR/USD in the last few days since Draghi spoke on Thursday, January 10, 2013.

I did not have a chance the read all the posts before I posted my explanation so yours was the one I just choose to reply to to continue with my views on the recent strength in EUR/USD.

Forex trading is about PERCEPTION and MONEY FLOW.

Of course there are many other factors however I am only focusing on what happened so I can determine if the trend in EUR/USD is up or down.

When Draghi removed FEAR then the PERCEPTION changed. Then we had the surprise FOMC comments as I pointed out in my previous post.

You can see by the charts where the MONEY flowed once the US Bonds sold off because of what the FED said.

Added to this we have Uncle Abe moving things around as we have had DRAMATIC moves in the YEN as it got weaker.

There is correlation between EUR/USD and EUR/JPY.

The movement of USD/JPY as it moves up (Gets Weaker) causes EUR/JPY to move up which moves EUR/USD up.

Then add to that the Fiscal Cliff first and now the DEBT CEILING coming up into February.

We have these major fundamentals unfolding in front of us. We have changing PERCEPTIONS in the USA, EUROPE and JAPAN and bottom line nothing for the better has changed.

Europe is in a mess. The USA is in a mess. Japan is in a mess.

Are you in a mess ?

Stay calm, stay focused and have a Trade Plan and know why you are putting on a trade.

Use Risk Management and understand what is happening.

I hope I have added to the answers with my point of view. I hope to see more posts from you here on the best Forex thread on the internet.

Great Charts and Thank You Very Much for your contribution.

Could you do a daily chart for EUR/USD, EUR/JPY, USD/JPY and US Dollar Index ?

I think it would be very helpful in seeing where the MONEY has flowed in the last week.

I have not mentioned Gold in my last posts. Gold is a KEY in the Money Flow Analysis.

The Central Banks are now clearly buying Gold and it is now a Tier One Collateral Asset as of January 1, 2013.

The paper Gold market is manipulated as they short it to keep the price of Gold down as the Real Gold is purchased by China, Russia, those in the know and so it goes.

Gold is no parties debt. Gold cannot be printed. Gold is a store of value and wealth. Gold can be sold in any currency.

A Daily Chart on Gold ties the correlation together. Thanks for your participation here.
Nice to see you post here...

https://petitions.whitehouse.gov/pet...sales/rGyFTLwD

CurrencyMan:

As an American which I am not don't you think it is proper and is common sense for an audit to be done ?

I wonder why this has not happened ?

Where do you think the Gold is ?

Answer ... It is NOT in my house and it probably is NOT at Fort Knox either.

Perhaps Benny might know where some of it is.

http://www.financialsense.com/contri...etization-gold

Snippet:

In a report published today, the Official Monetary and Financial Institutions Forum (OMFIF), a global organization of central banks and sovereign wealth funds, recommends that gold be remonetized for use as international money, alongside major currencies. OMFIF gives a number of reasons for this but they boil down it to gold's historical role in establishing and maintaining confidence and stability in international monetary relations. Such confidence and stability have dramatically declined as a result of the global financial crisis that began in 2008, to the detriment of the global economy. Falling back on the solid foundation of gold is the best available way to eventually move forward with healthy and sustainable growth in global trade, to all countries' mutual benefit, and to bring an end to the escalating 'currency wars' that increasingly threaten the global economy.

The link to the report, Gold, the Renminbi and the Multi-Currency Reserve System, can be found here.

This development is one that I have predicted in some detail, for example in THE BUCK STOPS HERE: A BRIC WALL, and also through chapters 6-10 of my book, The Golden Revolution (Wiley, 2012).

I believe this is of great historical significance. The economic and financial market implications are substantial. The global 'savers', that is, the countries that export more than they import, are finally forcing the world back onto a more stable monetary foundation that will make it far harder to print money to paper over fundamental economic problems and 'kick the can'. Yes, this implies that profligate governments will find it more difficult to finance deficits in future.

Globally, interest rates may now be on the way up. Dollars, euros, yen, sterling, etc, will now need to compete more directly with gold for use not only as reserves but as actual international money to be used to settle international balance of payments transactions between countries. And as those currencies find it difficult to compete and one country after another expresses a preference to settle transactions in gold primarily or exclusively, well then the world is going to end up on a gold standard. It is just a matter of time.

http://www.financialsense.com/contri...here-bric-wall

Snippet:

IN THIS EDITION
Already on the defensive due to a persistent failure to achieve its stated policy aims, the US Fed was subject to much fresh criticism over the past week, including from the BRIC nations, collectively the largest foreign holders of US dollar reserves. While the dollar remains the world’s pre-eminent reserve currency, there is growing recognition everywhere, except inside the Fed itself, that a choice will soon have to be made: Either the Fed must move to implement a credible, rules-based monetary policy, focused primarily on preserving the purchasing power of the dollar, or the dollar will lose reserve currency status, initiating a vicious spiral of dollar and US Treasury market weakness, which would quickly spill over into the financial system generally. Were that to happen, the current debate about how to reduce the US budget deficit would be promptly settled, as it would become impossible for the US to finance public sector deficits in the first place. Does the Fed, or the government, see the danger? Regardless, investors need not only to see it, but to understand it and to act accordingly. Time may be shorter than I previously thought.
Professor Taylor Channels Friedman

Few US monetary economists have as solid a reputation as Professor John Taylor of Stanford University and the Hoover Institution. In a recent op-ed in the Wall Street Journal, “The Dangers of an Interventionist Fed,” he succinctly and persuasively argues that the Fed is damaging both the economy and its own credibility with serial, extraordinary market interventions. Here is a relevant excerpt:

The combination of the prolonged zero interest rate and the bloated supply of bank money is potentially lethal. The Fed has effectively replaced the entire interbank money market and large segments of other markets with itself.1

Arbitrary intervention in or manipulation of financial markets is anathema to Taylor and other members of the Monetarist, Chicago school of economics, associated with the late Milton Friedman. Rather, the central bank should follow strict rules instead. As long as the central bank can maintain a stable money supply, or at least a stable, low rate of growth thereof, it is assumed that economic stability will generally follow or, at a minimum, that the central bank will not be the source of instability. (Bad economic policy will always be a source of instability, regardless of the quality of monetary policy.)

Taylor goes on to write that consequences of recent and possible future arbitrary actions are likely to be severe, as “the Fed is distorting incentives and interfering with price discovery with unintended consequences throughout the economy”. As I wrote in a similar if less diplomatic vein in last month’s Amphora Report, “Through the Broken Window”:

CurrencyMan:

For those that really want to understand that the STATUS QUO that we have all lived with will start to change this year then you would be well advised to invest some time to read the information that I am sharing here.

For myself I need to understand what is really going on in the world that I live in so that I can prepare for my future. This information makes it much more easy to understand forex which is just the changing of hands of asset classes. When we know what might change the values and perception then we can better follow why the charts go up and down.

The charts are the instant picture and the information, perception and MONEY FLOW creates the changes in values.

I have finished my forex work for the moment and now it is time to SMELL THE ROSES and maybe feed the deer. Later tonight I hope to feed the other "DEAR"

Food is a wonderful aphrodisiac.... Did I spell that right ?

Have a great weekend everyone...

CM

Thank you Currency Man for your insightful contributions.

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http://i1356.photobucket.com/albums/...pse93443ef.jpg

http://i1356.photobucket.com/albums/...ps56edee4b.jpg

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Hey currencyman figured I'd post the charts 1st & we can discuss from here. Sorry about the poor scaling but some of the levels were at on some of these pairs require a lot of bars to really get any idea of the bigger picture. As we open up the discussion ill zoom in on the them so we can get a clearer picture of exact levels.

Here's the gold daily, daily PA on this one is very sloppy so I posted the weekly to get a cleaner view, much less noise.

http://i1356.photobucket.com/albums/...psdab78463.jpg

DaEdge

You have my sincere thanks for the posting of the requested charts. It is so much easier to explain correlation and money flow when you can see what happens with the good picture the charts provide. My skill is in understanding the fundamentals and the money flow and the correlation.

The money flow leads the charts and once you can see and understand both it becomes easier to show profits.

What happened to EUR/USD in the last week is easier to understand and follow by looking at the bigger picture and seeing where money was moving to. Once you know why then you can determine if it will continue. When I trade on a daily basis I use the 5 minute and 15 minute charts for entry and exit.

The 1 hour, 4 hour and daily charts are excellent to see things in context.

Thanks again for your contribution here and I look forward to many interesting discussions with you.

Gold is a form of currency in itself. When the US Dollar Index goes down Gold usually rises however now that is not always the case because of the attempt by the powers that be to try to hold down the price of Gold as they Print Trillions of Dollars at pushing of a mouse.

QE first for America then LTRO for the ECB and now Japan jumps aboard or so it appears.

A currency race to the bottom while Gold moved from $250 US during 1999 to over $1700 US and during 2013 I expect it to go over $2000 US on the way to whatever it reaches as more and more people realize the security of Gold.

Have a nice weekend.

Eldorado golden dreams... flashes of Yukon fever... or... just a general fascination with the "barbarous relic."

Whatever might compel you to keep tabs on gold, one thing is for sure:

You may have not considered a few things.

Gold above $1,000 can't really be used to rationalize anything other than speculation. Assuming, you don't already have some stored away as insurance. That is really the correct purpose. Just know that it is a hedge against inflation, but it won't pay a premium to it, it will track inflation, but won't pay a premium over it. People actually think Gold is an investment, it actually is NOT an investment. You don't hedge stocks against gold. Gold does not hedge against market downturns, believe it or not, this can be seen time and time again.

Peter Brandt, famous commodity trader puts it like this, "speculators trade price and price alone, falling in love with an underlying asset represented by price and price only is a fool's game." Speculation is not bad, but die hard speculators that think a dormant commodity that has zero growth potential outside of price is an investment, you're barking up the wrong tree. Example: A gun, like a bar of gold, is inert, its passive. You have to do something with the gun to create value, and just like Gold it should be seen as an insurance policy you wish to never use.

Right now, I personally wouldn't touch Gold! Look at a 10 year chart! 10 year Gold channel support being tested! Whether it bounces up to $2,000 who cares, at this time why worry about it? Put it this way, the longer ago you bought gold the greater the chance you'll have that you still might get a return. WHY? It is out of WHACK! Typically, from a historical perspective, markets that are price movement based that are out of "whack" tend to get back in balance. So, let's say price goes back to $1,000 an ounce again and you bought at a little over / under $1,000 an ounce, you are teetering against break even. What if you buy now? Risk / Reward ratio is nowhere close to where it was in the past decade.

I would like the Gold bugs to ask themselves what is it that has you fixed on Gold? Why are you in it? If it's about trading price movement does gold have to be the market? What is it about stocks, for instance, that are different than an inert commodity. Companies that produce profits, pay out dividends, etc... Why Gold?


My Theory: We are going to break below the 10 year channel support line and are going to stay there for quite some time. If you're wondering where this support number is it is roughly $1,645 an ounce. So we are currently at the edge....


Let me also ask the Gold Bugs this, is it possible for the USD to collapse say this year? How about next year? Or the year after that? Simple answer is NO! What would replace the USD as the reserve currency? Nothing comes close at this time... The following article is some food for thought.


A Reminder of U.S. Strength… From My Visit to The Dominican Republic
By Dr. Steve Sjuggerud
Tuesday, January 8, 2013

Greetings from the sunny, windy Dominican Republic…

I've been in the Dominican Republic for a week. I've spent hours traveling the roads, stopping in small towns along the way. And I've paid for everything in U.S. dollars, no questions asked.

You might think you'd need Dominican money while in the Dominican Republic. But you really don't… U.S. dollars work just fine here.

This trip reminded me that the U.S. dollar is clearly the most important currency on our slice of the globe. And I don't expect that to change anytime soon. A U.S. dollar crisis is certain someday… but that day is not today.

The U.S. dollar is headed for a major crisis at some point. This is certain. The U.S. government is already broke and digging a deeper hole daily. The only question is: "When will the big crisis arrive?"

My short answer is, not in the next couple years. Let me explain briefly, starting with my trip to the Dominican Republic…

For the entire trip, I haven't exchanged U.S. dollars for a single Dominican peso. I've done the same thing recently in Costa Rica, Nicaragua, Belize, Mexico, the Bahamas, and other Latin American/Caribbean countries. The U.S. dollar works just as well.

Nobody ever says, "No, U.S. dollars are not accepted here – you must pay in Costa Rican colones."

When you think about it the other way around, you see just how important the U.S. dollar is to this region…

For example, can you imagine going to your local grocery store and paying in Dominican pesos instead of U.S. dollars – even though you are in the United States? Can you imagine using money from a country that most people have never been to? That's what people in the Dominican Republic are doing today…

I talked with two successful Dominicans. Neither has left the Dominican Republic before…

"It's very hard to get a visa to leave the Dominican Republic," they told me. "It's very hard to get permission from the government to leave. The government thinks that if we leave, we will never come back."

Wow. And I thought we had it tough in the States. Successful Dominicans can't even leave their country. Ouch.

Dominicans happily accept U.S. dollars, though. And it's not just here…The U.S. dollar is the most widely accepted unit of money in the Americas… and to a lesser extent, the world.

Being the world's "reserve" currency provides the United States with an enormous advantage – we can print the world's currency.

I believe the U.S.' ability to print the world's currency will buy the U.S. government a lot of time – years – before a true debt/currency crisis would happen.

Think about this… what would replace it as the "reserve" currency here in the Dominican Republic?

The euro? The euro is actually accepted here in the Dominican Republic, too. But Europe's problems are just as bad as those in the U.S.

Gold? Hard to imagine right this second. China's currency? Not for decades.

What about a currency from some other country in the Americas?

As mismanaged as the U.S. dollar is, the currencies in many of these countries are treated even worse. For example, Mexico had its own currency crisis in 1994. Inflation grew to over 50% by the end of 1995. Even after things settled down, Mexico's inflation has doubled U.S. inflation since 2000 (4.8% a year versus 2.4%, respectively).

Argentina is a similar story. Inflation hit 40% in 2002, as the Argentinian peso collapsed. Post-crisis, inflation in Argentina still hovers around 10%… four times more than it is in the U.S.

Here's a look at the year-over-year inflation numbers since 2000 for several other key countries in the region, as well…

Year-Over-Year Inflation Since 2000

Country / Inflation

Dominican Republic / 11.7%
Nicaragua / 7.9%
Costa Rica / 9.3%
Venezuela / 22.4%
Colombia / 5.3%
United States / 2.4%

This trip was a great reminder of just how much the U.S. dollar is still king.

A U.S. currency crisis is certain someday. As I said, the U.S. government is broke AND digging a deeper hole daily. But I believe the day of reckoning won't be here tomorrow.

Thanks to the "Global Bernanke Asset Bubble," we have time – possibly years – to make a fortune in U.S. stocks and real estate… before the dollar's day of reckoning arrives.

Good investing,

Steve

Gold's Bull Run Has Hit A Long-Term Brick Wall


The whole of the 2000's as a decade, in fact, was characterized by paper asset inflation (not to mention hard asset inflation) and broad currency debasement, driven by easy monetary policy, aggressive feedback loops and exacerbating macro factors. This was a goldilocks environment for gold.

But how long do such goldilocks environments prevail? All good things come to an end… and most bad things too. Even as the long-term charts have gone from “unquestionable uptrend” to “question mark,” so too have the macro drivers for gold’s bull run become a giant unknown.

To put it another way: As a trader who respect price, the charts alone are enough to make me wary of gold. But the fundamentals are a concern too because the conditions that supported gold’s rise may no longer exist.

Consider:

1) For most of the 2000?s, central banks (primarily the Fed) were openly accommodative. Now they are talking about withdrawal.

2) For most of the 2000?s, the U.S. “vendor finance” relationship with China and the Middle East was intact. That relationship could now be ending.

3) For most of the 2000?s — and actually the past few decades — U.S. interest rates have been falling (long bond bull market). That could now be ending.

4) Gold’s potential “climax run” in 2011 — reference a weekly gold chart — may have also coincided with a coordinated crescendo of global central bank intervention. If the global economy is truly recovering, this is almost certainly the case.



Bullish Gold and Bearish Long Bonds? Really?

Here is another funny thing: Many of those who are staunch long-term bulls on gold, are also anticipating a ferocious bear market in U.S. treasury bonds. They are rubbing their hands and waiting for the collapse of the long bond market, at which point U.S. interest rates will be forced to sharply rise.

I also like the long bond short trade (and have said as much repeatedly). That is some price action I can get behind! But can you really expect sharply rising interest rates and rising gold simultaneously? To borrow a British slang phrase, “not bloody likely.”