Currency Scan

EUR/USD starting to pull back just a bit from that area of resistance. Could see a little grind back down. Now I've got to un-lazy myself and get to work on the Index integration... (hacking photo's doesn't count)

Tiny little move in the USD/JPY, nothing to write home about yet. Little bit of front running to the BoJ Report. Outside of that the markets have calmed considerably. I'll take a look again before the EU session unless something triggers and I get a message.

Just came across your thread, look forward to learning from your analysis and scan matrix.

Thank you for all the support and interest in the analysis. Ten days in and I just hit the "Medium Impact Zone". That really means a lot. Thanks again. - JP

Thanks grenell, it's a work in progress, hopefully it's useful and continues to get more so as time goes on.

A lot of this move in Yen is going to be the result of the markets being thin, that's why there was such a strong move and immediate correction. I also think that's the danger going forward through the balance of this session, things could continue to be erratic until the EU session kicks in and we get some more liquidity in the market. Most of the pairs have broken out of their current ranges. Price action tends to stall outside of here, or make very little further gain after the initial break in the first twenty four hours. Look for the markets to try and digest this over the next day and find some equilibrium.

London Lunch
Momentum Watchlist: Handful of movers mid-day in the UK. Charts, analysis and correlation are attached for:
AUDNZD
EURCHF
EURGBP
EURJPY
GBPUSD
USDCAD
USDCHF

There aren't any of these that really stand out to me as great entry points and several of them have moved from the break-out mode into momentum mode. There could still be some room to run but that is often a signal of a fairly late entry. The downside risk in the short-term tends to be a little skewed.

On the slower side of things the USDCAD has made a little grind higher, I would love to see that begin to creep back up into the heart of this range through February. I'm still mentally short this thing and wouldn't mind re-building that position if we can get back up in there.

Cyclical Watchlist to follow.

Cyclical Watchlist:

I've kept anything Yen off this for right now, not looking to analyze technical trades until the fundamental picture has completely played out. I've also eliminated pairs where the intraday techs are mixed or the pair is dead neutral, which doesn't really lend itself to good cyclical moves.

Probably don't need to say this, but it can't hurt. When you have a strong fundamental impact the way we did last night with the Yen, it get's much harder to trade straight technical models. Ranges, levels, cycles, regressions, overshoot, undershoot etc all go out the window. Everything gets unhinged and the "why" behind a move tends to be much more complex, difficult to decipher. Usually for me this is no-mans land. I let the people who "have" to adjust their exposure do it, let the markets move, then look for imbalances after it has calmed. We could very well in the next week or two see some of this price action unwind as it's possible there will be too much participation on the selling side. That is a much safer time to make a play, than when the complexity is at a level that makes even blended analysis (fundamental and technical) make any sense. If you're new to trading, this is a good day to go watch a movie. - JP

Regression Watchlist:

EUR/CHF continues to push higher overall, little bit of sell-off right now as the entire market has been re-positioning since last nights BOJ announcement. This thing is literally within a tick of triggering the weekly signal and i'm going to have to make a decision soon if I want to start building shorts. The problem with this pair is it can run. It has had some really long and strong trends over the years. Granted there were Central Banking policies that made that happen and you would think (hope) that now we're going to get into a more natural rythem.. Who know. If it does trigger into the weekly I'm going to dig into the fundamentals a little deeper, build some "what-if" scenarios and make a decision. Part of me want's to take a stab, the other part wants to wait on the USD/CAD to grind higher and get short again.

This is going to wrap it up for me... I've got to get back onto the Index integration and get my weekend started. I hope you all have a great W/E see you Sunday night / Monday morning. - JP

Something worth reading when you have time. Of note is the willingness to cut rates further to get to the 2% inflation target. So we have to ask ourselves, is another cut already priced in and what are the ramifications if it doesn't occur? Now could quite possibly be the time to ride the Yen south as this develops and plays out, but care needs to be exercised with exposure to each new announcement. The first that doesn't match the expectations of the market will see a sharp increase in that currency. Inflation is your target. The BOJ is targeting 2%, the first signs they are about to get there will be your que to dial back exposure.

https://www.boj.or.jp/en/announcemen...6/k160129a.pdf

well said.
have a great weekend, buddy

As time permits I'm going to edit the first post of this thread and turn it into a more thorough introduction of my trade style and how the currency scan fits into it and how I use it. I'll update when there are changes (there were changes...). On a different note I did finally get the "Index Integration" monkey off my back... A full detailing of those will also hit the first post when time allows. I'm still doing the final math check etc on the formulas and code, they will be ready to go by tomorrow night. Here's a sneak peak.

This is what I've been looking for in the USD/CAD, we'll have to see what the impact is.
http://www.forexfactory.com/news.php?do=news&id=576676.

When the pair was moving higher in Dec/Jan, and I was building my shorts, it was based primarily on the fact that I felt my models for the US were pointing to contraction and possibly recession - although the latter could be a ways a way. That pretty much flew in the face of the general outlook especially with the Fed raising rates for the first time and signaling they would probably continue to do so with most expectations being for four total.


[As of right now the REC is signaling contraction and I don't have a lot of reason to think this is going to change, it could (it always can - nothing is set in stone), but there tends to be a slow momentum to economic cycles. So, for me personally, I'll continue to build the "what-if's" with this weakening model in the back of my head.]

With the USD/CAD being at such high levels technically, and seemingly pricing in a BOC rate cut as well as four Fed rate increases, it would leave the pair vulnerable if either of those fundamental scenarios didn't play out. The BOC didn't cut rates which halted the uptrend and saw some re-balancing, if the Fed doesn't raise rates to the anticipated level we could see further decline, maybe even a new trend, depending on subsequent data and how much emphasis models and analysts begin to put on that data.



If the market reacts sharply to this announcement on Monday, my re-entry could be toast. I don't want to short at current levels, I'd rather the thing pushed higher into some of January's upper range, then get short again. Hopefully the markets sits on this and waits for some data to confirm - although if there is any drop in employment that may be enough to spook the market, and my model on that isn't all that inspiring. Overall I'm factoring in a slowing in hiring and think we're seeing some decline in employment momentum right now.



It will be interesting to see how this all plays out in February.

As of right now the markets aren't paying any attention to the statement by Williams. Hoping he's right and the market on the whole brushes it off. Friday NFP remains the wildcard. Ready for February.

E/U is neutral this morning as we head into the US open. It's starting to push closer to trend-line resistance in both the pair and the index. We also have a fairly mature top in place in the cyclical indicator. Technically the pair looks like it could sell off a little in the 24 hours.

Starting to see some of the London session break outs gain traction as the US kicks off. If you're in these they may have room to run, check your S&R areas. If you're about to jump check your correlations.

Thank you sincerely for opening a thread for your very interesting tool mate. I may have weird and somewhat newbie questions time to time. I would be happy if you could show some patience for those Very good job you have here.

lol.. Conner I've come to believe every question around FX is weird. We're dealing with a puzzle that has no answer... that makes it all wierd.